Table of Contents
PART II THE ECONOMICS OF A SOCIALIST COMMUNITY
SECTION III Particular Forms of Socialism and Pseudo-Socialism
1 The Nature of Socialism
Particular Forms of Socialism
The essence of Socialism is this: All the means of production are in the exclusive
control of the organized community. This and this alone is Socialism. All other
definitions are misleading.
It is possible to believe that Socialism can only be brought about under quite definite
political and cultural conditions. Such a belief however is no justification for
confining the term to one particular form of Socialism and withholding it from all
other conceivable ways of realizing the socialist ideal. Marxian socialists have
been very zealous in commending their own particular brand of Socialism as the only
true Socialism and in insisting that all other socialist ideals and methods of realizing
Socialism have nothing to do with genuine Socialism. Politically this attitude of
the socialists has been extremely astute. It would have greatly increased the difficulties
of their campaign if they had been prepared to admit that their ideal had anything
in common with the ideals advocated by the leaders of other parties. They would
never have rallied millions of discontented Germans to their banners if they had
openly admitted that their aims were not fundamentally different from those of the
governing classes of the Prussian state. If a Marxian had been asked before October
1917 in what way his Socialism differed from the Socialism of other movements, especially
from that of the Conservatives, he would have replied that under Marxian Socialism,
Democracy and Socialism were indissolubly united, and moreover that Marxian Socialism
was a stateless Socialism because it intended to abolish the State.
We have seen already how much these arguments are worth, and as a matter of fact,
since the victory of the Bolsheviks, they have rapidly disappeared from the list
of Marxian commonplaces. At any rate the conceptions of democracy and statelessness
which the Marxians hold today are quite different from those which they held previously.
But the Marxians might have answered the question another way. They might have said
that their Socialism was revolutionary, as opposed to the reactionary and conservative
Socialism of others. Such an answer leads much sooner to a recognition of the difference
between Marxian social democracy and other socialist movements. For to a Marxian,
revolution does not merely signify a forcible alteration of the existing state of
affairs, but, as befits his peculiar fatalism, a process which brings mankind nearer
the fulfillment of its destiny. For him the impending social revolution which
will bring about Socialism is the last step to eternal salvation. Revolutionaries
are those whom history has chosen to be the instruments for the realization of its
plan. The revolutionary spirit is the sacred fire which has descended upon them
and enables them to accomplish this great work. In this sense the Marxian socialist
regards it as the most notable characteristic of his party that it is a revolutionary
party. In this sense he regards all other parties as a single, uniform, reactionary
mass because they are opposed to his methods of achieving ultimate bliss.
It is obvious that all this has nothing to do with the sociological concept of the
socialist community. It is certainly a remarkable thing that a group of persons
should claim to be the only people elected to bring us to salvation; but when these
persons know of no other road to salvation than one which many others have believed
in, the assertion that they exclusively are ordained for the task is not sufficient
to differentiate their aim fundamentally from that of others.
2 State Socialism
To understand the concept of State Socialism it is not sufficient to explain the
term etymologically. The history of the word reflects only the fact that State Socialism
was the Socialism professed by the authorities of the Prussian and other German
states. Because they identified themselves with the State and with the form taken
by the State and with the idea of the State generally, it suggested calling the
Socialism which they adopted State Socialism. The more Marxian teaching about the
class character of the State and the decay of the State obscured the fundamental
idea of the State, the easier it became to use the term.
Marxian Socialism was vitally concerned in making a distinction between nationalization
and socialization of the means of production. The slogans of the Social Democratic
party would never have become popular if they had represented nationalization of
the means of production as the ultimate aim of socialist change. For the state known
to the people among whom Marxism found its widest acceptance was not such as to
inspire much hope from its incursions into economic activity. The German, Austrian
and Russian disciples of Marxism lived in open feud with the powers which to them
represented the State. In addition they had the opportunity of gauging the results
of nationalization and municipalization; and, with the best will in the world, they
could not overlook the great shortcomings of state and municipal enterprise. It
was quite impossible to arouse enthusiasm for a programme aiming at nationalization.
A party of opposition was bound above all things to attack the hated authoritarian
state; only in this way could it win over the discontented. From this need of political
agitation arose the Marxian doctrine of the withering away of the state. The liberals
had demanded the limitation of the authority of the state and the transfer of government
to the representatives of the people; they had demanded the free state. Marx and
Engels tried to outbid them by unscrupulously adopting the anarchistic doctrine
of the abolition of all state authority regardless of the fact that Socialism would
not mean the abolition, but rather the unrestricted expansion of the power of the
Equally untenable and absurd as the doctrine of the withering away of the state
under Socialism is the academic distinction between nationalization and socialization
which is closely bound up with it. The Marxians themselves are so conscious of the
weakness of their line of argument that they usually avoid discussing this point
and confine themselves to talking of the socialization of the means of production,
without any further elaboration of the idea, so as to create the impression that
socialization is something different from the nationalization with which everybody
is acquainted. When they cannot avoid discussing this ticklish point they are obliged
to admit that the nationalization of undertakings is a "preliminary stage in the
acquisition of all productive powers by society itself" or "the natural jumping-off
point in the process leading to the socialist community."
Thus Engels finally contents himself with entering a caveat against accepting without
further ado "every" form of nationalization as socialistic. He would not in the
first place describe as "steps towards Socialism," nationalization carried out for
purposes of state finance, such as might be adopted "chiefly to provide new sources
of revenue independent of Parliamentary sanction." Nevertheless for these reasons
nationalization would also mean, in the Marxian language, that in one branch of
production, the appropriation of surplus value by the capitalist was abolished.
The same is true of nationalization carried out for political or military reasons
which Engels also refused to accept as socialistic. He regards it as the criterion
of socialistic nationalization that the means of production and trade taken over
"should have actually out-grown the direction by joint stock companies, so that
nationalization has become economically inevitable." This necessity arises first
in the case of "the large scale communications: posts, telegraphs and railways."
But it is precisely the largest railways in the world—the North American—and the
most important telegraph lines—the deep sea cables—that have not been nationalized,
whilst small unimportant lines in the etatistic countries have long been nationalized.
The nationalization of the postal service moreover was primarily for political reasons
and that of the railways for military ones. Can it be said that these nationalizations
were "economically inevitable?" And what on earth does "economically inevitable"
Kautsky, too, contents himself with rejecting the view "that every nationalization
of an economic function or of an economic enterprise is a step towards Socialism
and that this can be brought about by a general nationalization of the whole economic
machine without the need for a fundamental change in the nature of the State."
But no one has ever disputed that the fundamental nature of the State would be greatly
changed if it were transformed into a socialist community through the nationalization
of the whole economic apparatus. Thus Kautsky is unable to say anything more than
that "as long as the possessing classes are the governing classes" complete nationalization
is impossible. It will be achieved when "the workers become the governing classes
in the state." Only when the proletariat has seized political power will it "transform
the state into a great fundamentally self-sufficient economic society." The main
question—the question which alone needs an answer—whether complete nationalization
carried out by another party than the socialist one would also constitute Socialism,
Kautsky carefully avoids.
There is, of course, a fundamental distinction of the highest importance between
the nationalization or municipalization of individual undertakings which are publicly
or communally run in a society otherwise maintaining the principle of private property
in the means of production, and the complete socialization which tolerates no private
ownership by individuals in the means of production alongside that of the socialist
community. As long as only a few undertakings are run by the State, prices for the
means of production will be established in the market, and it is thus still possible
for State undertakings to make calculations. How far the conduct of the undertakings
would be based on the results of these calculations is another question; but the
very fact that to a certain extent the results of operations can be quantitatively
ascertained provides the business administration of such undertakings with a gauge
which would not be available to the administration of a purely socialist community.
The way in which State undertakings are run may justifiably be called bad business
but it is still business. In a socialist community, as we have seen, economy in
the strict sense of the word, cannot exist.
Nationalization of all the means of production involves complete Socialism. Nationalization
of some of the means of production is a step towards complete Socialism. Whether
we are to remain satisfied with the first step or whether we desire to proceed further
does not alter its fundamental character. In the same way, if we wish to transfer
all undertakings to the ownership of the organized community we cannot do otherwise
than nationalize every single undertaking, simultaneously or successively.
The obscurity thrown by Marxism on the idea of socialization was strikingly illustrated
in Germany and Austria when the Social Democrats came into power in November 1918.
A new and hitherto almost unheard slogan became popular overnight: Socialization
(Sozialisierung) was the solution. This was merely the paraphrasing of the German
word Vergesellschaftung into a fine-sounding foreign word. The idea that Sozialisierung
was nothing more than nationalization or municipalization could not occur to anybody;
anyone who maintained this was simply believed to know nothing about it, since it
was thought that between the two things yawned an abysmal gap. The Socialization
Commissions set up soon after the Social Democrats acquired power were set the problem
of defining Sozialisierung in such a way that, ostensibly at least, it could be
distinguished from the nationalization and municipalization of the previous regime.
The first report issued by the German commission dealt with the socialization of
the coal industry, and in rejecting the idea of achieving this by the nationalization
of the coal mines and the coal trade it emphasized in a striking manner the shortcomings
of a national coal industry. But nothing was said as to how socialization differed
actually from nationalization. The report professed the opinion that "an isolated
nationalization of the coal industry cannot be considered as socialization while
capitalist enterprise continues in other branches of production: it would only mean
the replacement of one employer by another." But it left open the question whether
an isolated "socialization" such as it intended and proposed could mean anything
else under the same conditions. It would have been understandable if the commission
had gone on to say that in order to fulfil the happy results of a socialist order
of society it was not sufficient to nationalize one branch of production, and had
recommended that the State should take over all undertakings at one blow, as the
Bolsheviks in Russia and Hungary had done and as the Spartacists in Germany wanted
to do. But it did not do this. On the contrary, it elaborated proposals for socialization
which advocated the isolated nationalization of various branches of production,
beginning with coal production and distribution. That the commission avoided using
the term nationalization makes no difference. It was mere juristic hair-splitting
when the commission proposed that the owners of the socialized German coal industry
should not be the German State but a "German public coal trust" and when it went
on to assert that this ownership should be conceived "only in a formal juristic
sense," but that "the material position of the private employer and thereby the
possibility of exploiting workers and consumers" is denied to this public trust,
the commission was using the emptiest of gutter catchwords. Indeed the whole report
is nothing but a collection of all the popular fallacies about the evils of the
capitalist system. The only way in which the coal industry, socialized in accordance
with the proposals of the majority, would differ from other public undertakings
is the composition of its directorate. At the head of the coal mines there should
be no single official but a committee constituted in a certain way. Parturiunt montes,
nascetur ridiculus mus! (The mountain labors and a ridiculous mouse is born!)
State Socialism, therefore, is not distinguished by the fact that the State is the
pivot of the communal organization, since Socialism is quite inconceivable otherwise.
If we wish to understand its nature we must not look to the term itself. This would
take us no further than would an attempt to grasp the concept of metaphysics from
an examination of the meaning of the parts that make up the word. We must ask ourselves
what ideas have been associated with the expression by those who are generally regarded
as the followers of the state socialistic movements, that is, the out-and-out etatists.
Etatistic Socialism is distinguished from other socialist systems in two ways. In
contradistinction to many other socialist movements which contemplate the greatest
possible measure of equality in the distribution of the social income between individuals,
Etatistic Socialism makes the basis of distribution the merit and rank of the individual.
It is obviously superfluous to point out that judgment of merit is purely subjective
and cannot in any way be tested from a scientific view of human relations. Etatism
has quite definite views about the ethical value of individual classes in the community.
It is imbued with a high esteem for the monarchy, the nobility, big landowners,
the clergy, professional soldiers, especially the officer class, and officials.
With certain reservations it also allots a privileged position to savants and to
artists. Peasants and small tradesmen are in a special class and below them come
the manual labourers. At the bottom are the unreliable elements which are discontented
with the sphere of action and the income allotted to them by the etatist plan and
strive to improve their material position. The etatist mentally arranges a hierarchy
of the members composing his future state. The more noble will have more power,
more honours and more income than the less noble. What is noble and what is ignoble
will be decided above all by tradition. To the etatist the worst feature of the
capitalist system is that it does not assign income according to his valuation of
merit. That a milk dealer or a manufacturer of trouser buttons should draw a larger
income than the sprig of a noble family, than a privy councillor or a lieutenant,
strikes him as intolerable. In order to remedy this state of affairs the capitalist
system must be replaced by the etatistic.
This attempt on the part of the etatists to maintain the traditional social order
of rank and the ethical valuation of different classes, in no way contemplates transferring
all property in the means of production to the formal ownership of the State. This
indeed, in the etatistic view, would be a complete subversion of all historical
rights. Only the large undertakings would be nationalized, and even then an exception
would be made in favour of large scale agriculture, especially inherited family
property. In agriculture and in small and medium-sized industries private property
is to continue in name at least. In the same way the free professions will be allowed
scope, with certain limitations. But all enterprises must become essentially state
undertakings. The agriculturist will retain the name and title of owner, but he
will be forbidden "egotistically to look merely to mercantile profit"; he has the
"duty to execute the aims of the State." For agriculture, according to the etatist,
is a public office. "The agriculturist is a state official and must cultivate for
the needs of the State according to his best knowledge and conscience, or according
to state orders. If he gets his interest and sufficient to maintain himself he has
everything he is entitled to demand." The same applies to the artisan and the
trader. For the independent entrepreneur with free control over the means of production
there is as little room in State Socialism as in any other Socialism. The authorities
control prices and decide what and how much shall be produced and in what way. There
will be no speculation for "excessive" profit. Officials will see to it that no
one draws more than the appropriate "fair income," that is to say an income ensuring
him a standard of life appropriate to his rank. Any excess will be "taxed away."
Marxian writers are also of the opinion that to bring Socialism about, small undertakings
need not necessarily be transferred directly to public ownership. Indeed they have
regarded this as quite impossible; the only way in which socialization can be carried
out for these small undertakings is to leave them in the formal possession of their
owners and simply subject them to the all-embracing supervision of the State. Kautsky
himself says that "no socialist worthy of serious consideration has ever demanded
that peasants should be expropriated, let alone their property confiscated."
Neither does Kautsky propose to socialize small producers by expropriating their
property. The peasant and the craftsman will be fitted into the machinery of
the socialist community in such a way that their production and the valuation of
their products will be regulated by the economic administration whilst nominally
the property will remain theirs. The abolition of the free market will transform
them from independent owners and entrepreneurs into functionaries of the socialist
community, distinguished from other citizens only by the form of the remuneration.
It cannot therefore be regarded as a peculiarity of the etatistic socialist scheme
that in this way remnants of private property in the means of production formally
persist. The only characteristic peculiarity is the extent to which this method
of arranging the social conditions of production is applied. It has already been
said that etatism in general proposes in the same way to leave the large landowners—with
the exception perhaps of the latifundia owners—in formal possession of their property.
What is still more important is that it proceeds upon the assumption that the greater
part of the population will find work in agriculture and small concerns, and that
comparatively few will enter the direct service of the State as employees in large
undertakings. Not only is etatism opposed to orthodox Marxists, as represented by
Kautsky, through its theory that small scale agriculture is not less productive
than large scale agriculture, but it is also of the opinion that in industry too,
small scale undertakings have a great scope for operation at the side of the large
concerns. This is the second peculiarity which distinguishes State Socialism from
other socialist systems, especially social-democracy.
It is perhaps unnecessary further to elaborate the picture of the ideal State drawn
by the state socialists. Over a large part of Europe it has been for decades the
tacit ideal of millions, and everyone knows it even if no one has clearly defined
it. It is the Socialism of the peaceful loyal civil servant, of the land-owner,
the peasant, the small producer and of countless workers and employees. It is the
Socialism of the professors, the famous "socialists of the chair"—the Kathedersozialismus—it
is the Socialism of artists, poets, writers in an epoch of the history of art plainly
bearing all the signs of decay. It is the Socialism supported by the churches of
all denominations. It is the Socialism of Caesarism and of Imperialism, the ideal
of the so-called "social monarchy." It is this that the policy of most European
states, especially the German states, envisaged as the distant goal of man's endeavours.
It is the social ideal of the age which prepared the Great War and perished with
A Socialism which allots the shares of individuals in the social dividend according
to merit and rank can be conceived only in the form of State Socialism. The hierarchy
on which it bases its distribution is the only one popular enough not to arouse
overwhelming opposition. Although it is less able to withstand rationalist criticism
than many others that might be suggested, nevertheless it has the sanction of age.
In so far as State Socialism attempts to perpetuate this hierarchy and to prevent
any change in the scale of social relationships, the description "conservative socialism,"
sometimes applied to it, is justified. In fact it is imbued more than any other
form of Socialism with ideas that credit the possibility of complete crystallization
and changelessness of economic conditions: its followers regard every economic innovation
as superfluous and even harmful. And corresponding to this attitude is the method
by which Etatism wishes to attain its ends. If Marxian Socialism is the social ideal
of those who expect nothing except through a radical subversion of the existing
order by bloody revolutions, State Socialism is the ideal of those who call in the
police at the slightest sign of trouble. Marxism relies upon the infallible judgment
of a proletariat filled with the revolutionary spirit, Etatism upon the infallibility
of the reigning authority. They both agree in belief in a political absolutism which
does not admit the possibility of error.
In contrast to State Socialism, Municipal Socialism presents no special form of
the socialist ideal. The municipalization of undertakings is not regarded as a general
principle on which to base a new arrangement of economic life. It would affect only
undertakings with a market limited in space. In a rigorous system of State Socialism
the municipal undertakings would be subordinated to the chief economic administration
and would be no freer to develop than the agricultural and industrial undertakings
nominally remaining in private hands.
3 Military Socialism
Military Socialism is the Socialism of a state in which all institutions are designed
for the prosecution of war. It is a State Socialism in which the scale of values
for determining social status and the income of citizens is based exclusively or
preferably on the position held in the fighting forces. The higher the military
rank the greater the social value and the claim on the national dividend.
The military state, that is the state of the fighting man in which everything is
subordinated to war purposes, cannot admit private ownership in the means of production.
Standing preparedness for war is impossible if aims other than war influence the
life of individuals. All warrior castes whose members have been supported by the
assignment of manorial rights or of grants of land, or even by industries based
on a supply of unfree labour, have in time lost their warlike nature. The feudal
lord became absorbed in economic activity and acquired other interests than waging
war and reaping military honours. All over the world the feudal system demilitarized
the warrior. The knights were succeeded by the junkers. Ownership turns the fighting
man into the economic man. Only the exclusion of private property can maintain the
military character of the State. Only the warrior, who has no other occupation apart
from war than preparation for war, is always ready for war. Men occupied in affairs
may wage wars of defence but not long wars of conquest.
The military state is a state of bandits. It prefers to live on booty and tribute.
Compared with this source of income the product of economic activity plays only
a subordinate role; often it is completely lacking. And if booty and tribute accrue
from abroad it is clear that they cannot go direct to individuals but only to the
common treasury, which can distribute them only according to military rank. The
army which alone assures the continuance of this source of income would not tolerate
any other method of distribution. And this suggests that the same principle of distribution
should be applied to the products of home production, which similarly accrue to
citizens as the tribute and yield of serfdom.
In this way the communism of the Hellenic pirates of Lipara and all other robber
states can be explained. It is the "communism of robbers and freebooters,"
arising from the application of military ideas to all social relationships. Caesar
relates of the Suebi, whom he calls gens longe bellicosissima Germanorum omnium
(a people long the most warlike of the German tribes), that they sent warriors over
the borders every year for plunder. Those who remained behind carried on economic
activity for those in the field; in the following year. the roles were exchanged.
There was no land in the exclusive ownership of individuals. Only by each sharing
in the product of the military and economic activity carried on with a common purpose
and subject to a common danger, can the warrior state make every citizen a soldier
and every soldier a citizen. Once it allows some to remain soldiers and others to
remain citizens working with their own property the two callings will soon stand
out in contrast. Either the warriors must subjugate the citizens and in that case
it would be doubtful if they could set out on plundering expeditions leaving an
oppressed population at home—or the citizens will succeed in gaining the upper hand.
In the latter event the warriors will be reduced to mercenaries and forbidden to
set out in search of plunder because, as a standing danger, they cannot be allowed
to grow too powerful. In either case the state must lose its purely military character.
Therefore any weakening of "communistic" institutions involves a weakening of the
military nature of the state, and the warrior society is slowly transformed into
an industrial one.
The forces driving a military state to Socialism could be clearly observed in the
Great War. The longer the war lasted and the more the states of Europe were transformed
into armed camps, the more politically untenable seemed the distinction between
the fighting man, who had to endure the hardships and danger of the war, and the
man who remained at home to profit from the war boom. The burden was distributed
too unequally. If the distinction had been allowed to persist and the war had continued
longer the countries would infallibly have been split into two factions and the
armies would have finally turned their weapons against their own kinsmen. The Socialism
of conscript armies demands for its complement the Socialism of conscript labour
The fact that they cannot preserve their military character without a communistic
organization does not strengthen the warrior states in the war. Communism is for
them an evil which they must accept; it produces a weakness by which they eventually
perish. Germany in the first years of the war trod the path to Socialism because
the military etatistic spirit, which was responsible for the policy leading to the
war, drove it towards State Socialism. Towards the end of the war socialization
was more and more energetically carried out because, for the reasons just stated,
it was necessary to make conditions at home similar to those at the front. State
Socialism did not alleviate the situation in Germany, however, but worsened it;
it did not stimulate production but restricted it; it did not improve the provisioning
of the army and those at home but made it worse. And needless to say it was the
fault of the etatistic spirit that in the tremendous convulsions of the war and
the subsequent revolution not one strong individual arose from the German people.
The lesser productivity of communistic methods of economic activity is a disadvantage
to the communistic warrior state when it comes into clash with the richer and therefore
better armed and provisioned members of nations which acknowledge the principle
of private property. The destruction of initiative in the individual, unavoidable
under Socialism, deprives it in the decisive hour of battle of leaders who can show
the way to victory, and subordinates who can carry out their instructions. The great
military communist state of the Incas was easily overthrown by a handful of Spaniards.
If the enemy against which the warrior state has to fight is to be found at home
then we can speak of a communism of overlords. "Casino communism" was the name given
by Max Weber to the social arrangements of the Dorians in Sparta because of their
habits of eating together. If the ruling caste, instead of adopting communistic
institutions assigns land together with its inhabitants to the ownership of individuals
sooner or later it will be ethnically absorbed by the conquered. It becomes transformed
into a land-owning nobility, which eventually draws even the conquered into military
service. In this way the state loses the character based upon the waging of war.
This development took place in the kingdoms of the Langobards, the West Goths and
the Franks and in all the regions where the Normans appeared as conquerors.
4 Christian Socialism
A theocratic organization of the state demands either a self-sufficing family economy
or the socialist organization of industry. It is incompatible with an economic order
which allows the individual free play to develop his powers. Simple faith and economic
rationalism cannot dwell together. It is unthinkable that priests should govern
Christian Socialism, as it has taken root in the last few decades among countless
followers of all Christian churches, is merely a variety of State Socialism. State
Socialism and Christian Socialism are so entangled that it is difficult to draw
any clear line between them, or to say of individual socialists whether they belong
to the one or the other. Even more than etatism, Christian Socialism is governed
by the idea that the economic system would be perfectly stationary if the desire
for profit and personal gain by men directing their efforts solely to the satisfaction
of material interests did not disturb its smooth course. The advantage of progressive
improvements in methods of production is admitted, if only with limitations; but
the Christian socialist does not clearly understand that it is just these innovations
which disturb the peaceful course of the economic system. In so far as this is recognized,
the existing state of affairs is preferred to any further progress. Agriculture
and handicraft, with perhaps small shopkeeping, are the only admissible occupations.
Trade and speculation are superfluous, injurious, and evil. Factories and large
scale industries are a wicked invention of the "Jewish spirit"; they produce only
bad goods which are foisted on buyers by the large stores and by other monstrosities
of modern trade to the detriment of purchasers. It is the duty of legislation to
suppress these excesses of the business spirit and to restore to handicraft the
place in production from which it has been displaced by the machinations of big
capital. Large transport undertakings that cannot be abolished should be nationalized.
The basic idea of Christian Socialism that runs through all the teachings of its
representatives is purely stationary in outlook. In the economic system which they
have in mind there is no entrepreneur, no speculation, and no "inordinate" profit.
The prices and wages demanded and given are "just." Everyone is satisfied with his
lot because dissatisfaction would signify rebellion against divine and human laws.
For those incapable of work Christian charity will provide. This ideal it is asserted
was achieved in medieval times. Only unbelief could have driven mankind out of this
paradise. If it is to be regained mankind must first find the way back to the Church.
Enlightenment and liberal thought have created all the evil which afflicts the world
The protagonists of Christian social reform as a rule do not regard their ideal
Society of Christian Socialism as in any way socialistic. But this is simply self-deception.
Christian Socialism appears to be conservative because it desires to maintain the
existing order of property, or more properly it appears reactionary because it wishes
to restore and then maintain an order of property that prevailed in the past. It
is also true that it combats with great energy the plans of socialists of other
persuasions for a radical abolition of private property, and in contradistinction
to them asserts that not Socialism but social reform is its aim. But Conservatism
can only be achieved by Socialism. Where private property in the means of production
exists not only in name but in fact, income cannot be distributed according to an
historically determined or an any other way permanently established order. Where
private property exists, only market prices can determine the formation of income.
To the degree in which this is realized, the Christian social reformer is step by
step driven to Socialism, which for him can be only State Socialism. He must see
that otherwise there cannot be that complete adherence to the traditional state
of affairs which his ideal demands. He sees that fixed prices and wages cannot be
maintained, unless deviations from them are menaced by threats of punishment from
a supreme authority. He must also realize that wages and prices cannot be arbitrarily
determined according to the ideas of a world improver, because every deviation from
market prices destroys the equilibrium of economic life. He must therefore progressively
move from a demand for price regulation to a demand for a supreme control over production
and distribution. It is the same path that practical etatism has followed. At the
end in both cases, is a rigid Socialism which leaves private property only in name,
and in fact transfers all control over the means of production to the State.
Only a part of the Christian socialist movement has openly subscribed to this radical
programme. The others have shunned an open declaration. They have anxiously avoided
drawing the logical conclusions of their premises. They give one to understand that
they are combating only the excrescences and abuses of the capitalist order; they
protest that they have not the slightest desire to abolish private property; and
they constantly emphasize their opposition to Marxian Socialism. But they characteristically
perceive that this opposition mainly consists in differences of opinion as to the
way in which the best state of society can be attained. They are not revolutionary
and expect everything from an increasing realization that reform is necessary. For
the rest they constantly proclaim that they do no wish to attack private property.
But what they would retain is only the name of private property. If the control
of private property is transferred to the State the property owner is only an official,
a deputy of the economic administration.
It can be seen at once how the Christian Socialism of today corresponds to the economic
ideal of the medieval Scholastics. The starting point, the demand for "just" wages
and prices, that is, for a definite historically attained distribution of income,
is common to both. Only the realization that this is impossible, if the economic
system retains private property in the means of production, forces the modern Christian
reform movement towards Socialism. In order to achieve their demands, they must
advocate measures which, even if formally retaining private property, lead to the
complete socialization of society.
It will be shown later that this modern Christian Socialism has nothing to do with
the suppositious but often cited Communism of the Early Christians. The socialist
idea is new to the Church. This is not altered by the fact that the most recent
development of Christian social theory has led the Church to recognize the fundamental
rightfulness of private property in the means of production, whereas the early church
teaching, in view of the command of the gospels condemning all economic activity,
had avoided unconditionally accepting even the name of private property. For we
must understand what the Church has done in recognizing the rightfulness of private
property, only as opposition to the efforts of the socialists to overthrow the existing
order forcibly. In reality the Church desires nothing but State Socialism of a particular
The nature of socialistic methods of production is independent of the concrete methods
involved in the attempt to realize it. Every attempt at Socialism, however brought
about, must founder on the impracticability of setting up a purely socialistic economy.
For that reason, and not because of deficiencies in the moral character of mankind,
Socialism must fail.
It may be granted, that the moral qualities required of the members of a socialist
community could best be fostered by the Church. The spirit which must prevail in
a socialist community is most akin to that of a religious community. But to overcome
the difficulties in the way of establishing a socialist community would require
a change in human nature or in the laws of the nature by which we are surrounded,
and even faith cannot bring this to pass.
5 The Planned Economy
The so-called planned economy (Planwirtschaft) is a more recent variety of Socialism.
Every attempt to realize Socialism comes up quickly against insurmountable difficulties.
This is what happened to Prussian State Socialism. The failure of nationalization
was so striking that it could not be overlooked. Conditions in government undertakings
were not such as to encourage further steps along the road to state and municipal
control. The blame for this was thrown upon the officials. It had been a mistake
to exclude the "business man." In some way or other the abilities of the entrepreneur
must be brought to the service of Socialism. From this notion came the arrangement
of "mixed" enterprises. Instead of complete nationalization or municipalization
we have the private undertaking in which the state or municipality is interested.
In this way, on the one side, regard is paid to the demand of those who think it
is not right that the state and municipalities should not share in the yield of
undertakings carried on under their august sway. (Of course the State might get
and gets its share more effectively by taxation without exposing the public finances
to the possibility of loss. On the other hand it is thought by this system to bring
all the active powers of the entrepreneur into the service of the common enterprise—a
gross error. For as soon as representatives of the government take part in administration
all the hindrances which cripple the initiative of public officials come into play.
The "mixed" form of undertaking makes it possible to exempt employees and workers
from the regulations applying to public officials and thereby to mitigate slightly
the harmful effects which the official spirit exerts upon the profitability of undertakings.
The mixed undertakings have certainly turned out better on the whole than the purely
governmental undertakings. But this no more shows that Socialism is practicable
than do the good results occasionally shown by individual public undertakings. That
it is possible under certain favourable circumstances to carry on a public enterprise
with some success in the midst of an economic society otherwise based on private
property in the means of production does not prove that a complete socialization
of society is practicable.
During the Great War the authorities in Germany and Austria tried, under war Socialism,
to leave to the entrepreneurs the direction of nationalized undertakings. The haste
with which socialist measures were adopted under very difficult war conditions and
the fact that at the outset no one had any clear idea of the fundamental implications
of the new policy, nor of the lengths to which it was to be carried, left no other
means open. The direction of individual branches of production was made over to
compulsory associations of employers, who were put under government supervision.
Price regulation on the one hand and drastic taxation of profits on the other hand
were to ensure that the employer was no more than an employee sharing the yield.
The system worked very badly. Nevertheless it was necessary to adhere to it, unless
all attempts at Socialism were to be abandoned, because no one knew anything better
to put in its place. The memorandum of the German Economic Ministry (May 7th, 1919),
drawn up by Wissell and Moellendorff, states in plain words, that there was nothing
else for a socialist government to do but to maintain the system known during the
war as "war economy." "A socialist government" it says "cannot ignore the fact that,
because of a few abuses, public opinion is being poisoned by interested criticisms
against a systematic planned economy; it may improve the planned system; it may
reorganize the old bureaucracy; it may even in the form of self-government make
over the responsibility to the people concerned in the business; but it must proclaim
itself an adherent of the compulsory planned economy: that is to say an adherent
of the most unpopular concepts of duty and coercion."
Planned economy is a scheme of a socialist community that attempts to solve in a
particular way the insoluble problem of the responsibility of the acting organ.
Not only is the idea on which this attempt is based deficient, but the solution
itself is only a sham, and that the creators and supporters of this scheme should
overlook this, is particularly characteristic of the mental attitude of officialdom.
The self-government granted to individual areas and to individual branches of production
is important only in minor matters, for the centre of gravity of economic activity
lies in the adjustment between individual areas and individual branches of production.
This adjustment can only proceed uniformly; if this is not provided for, the whole
plan would have to be regarded as syndicalist. In fact Wissell and Möllendorff envisage
a State Economic Council which has "supreme control of the German economic system
in co-operation with the highest competent organs of the State." In essence,
therefore, the whole proposal comes to nothing more than that responsibility for
the economic administration is to be shared between the ministers and a second authority.
The Socialism of the planned economy is distinguished from the State Socialism of
the Prussian State under the Hohenzollerns chiefly by the fact that the privileged
position in business control and in the distribution of income, which the latter
allotted to the Junkers and the bureaucrats, is here assigned to the ci-devant entrepreneur.
This is an innovation dictated by the change in the political situation resulting
from the catastrophe which has overwhelmed the Crown, the nobility, the bureaucracy
and the officer class; apart from this it is without significance for the problem
In the last few years, a new word has been found for that which was covered by the
expression "planned economy": State Capitalism, and no doubt in the future many
more proposals for the salvaging of Socialism will be brought forward. We shall
learn many new names for the same old thing. But the thing, not its names, is what
matters, and all schemes of this sort will not alter the nature of Socialism.
6 Guild Socialism
In the first years after the World War, people in England and on the Continent looked
on Guild Socialism as the panacea. It has long since been forgotten. Nevertheless,
we must not pass it over in silence, when discussing socialist projects; for it
represents the one contribution to modern socialist plans made by the Anglo-Saxons,
in economic matters the most advanced of peoples. Guild Socialism is another attempt
to surmount the insoluble problem of a socialist direction of industry. It did not
need the failure of state socialistic activities to open the eyes of the English
people, preserved by the long reign of liberal ideas from that over-valuation of
the State which has been prevalent in modern Germany. Socialism in England has never
been able to overcome the mistrust of the government's capacity to regulate all
human affairs for the best. The English have always recognized the great problem
which other Europeans before 1914 had scarcely grasped.
In Guild Socialism three different things must be distinguished. It establishes
the necessity for replacing the capitalist system by a socialist one; this thoroughly
eclectic theory need not worry us further. It also provides a way by which Socialism
may be realized; this is only important for us inasmuch as it could very easily
lead to Syndicalism instead of Socialism. Finally it draws up the programme of a
future socialist order of society. It is with this that we are concerned.
The aim of Guild Socialism is the socialization of the means of production. We are
therefore justified in calling it socialism. Its unique feature is the particular
structure which it gives to the administrative organization of the future socialist
state. Production is to be controlled by the workers in individual branches of productions.
They elect foremen, managers and other business leaders, and they regulate directly
and indirectly the conditions of labour and order the methods and aims of production.
The Guilds as organizations of the producers in the individual branches of industry,
face the State as the organization of the consumers. The State has the right to
tax the Guilds, and is thus able to regulate their price—and wages-policy.
Guild Socialism greatly deceives itself if it believes that in this way it could
create a socialist order of society which would not endanger the freedom of the
individual and would avoid all those evils of centralized Socialism which the English
detest as Prussianism. Even in a guild socialist society the whole control of
production belongs to the State. The State alone sets the aim of production and
determines what must be done in order to achieve this aim. Directly or indirectly
through its taxation policy, it determines the conditions of labour, moves capital
and labour from one branch of industry to another, makes adjustments and acts as
intermediary between the guilds themselves and between producers and consumers.
These tasks falling to the State are the only important ones and they constitute
the essence of economic control. What is left to the individual guilds, and,
inside them, to the local unions and individual concerns is the execution of work
assigned to them by the State. The whole system is an attempt to translate the political
constitution of the English State into the sphere of production; its model is the
relation in which local government stands to central government. Guild Socialism
expressly describes itself as economic Federalism. But in the political constitution
of a liberal state it is not difficult to concede a certain independence to local
government. The necessary co-ordination of the parts within the whole is sufficiently
ensured by the compulsion enforced on every territorial unit to manage its affairs
in accordance with the laws. But in the case of production this is far from sufficient.
Society cannot leave it to the workers themselves in individual branches of production
to determine the amount and the quality of the labour they perform and how the material
means of production thereby involved shall be applied. If the workers of a guild
work less zealously or use the means of production wastefully, this is a matter
which concerns not only them but the whole society. The State entrusted with the
direction of production cannot therefore refrain from occupying itself with the
internal affairs of the guild. If it is not allowed to exercise direct control by
appointing managers and works directors, then in some other way—perhaps by the means
which lie at hand in the right of taxation, or the influence it has over the distribution
of consumption goods—it must endeavour to reduce the independence of the guilds
to a meaningless facade. It is the foremen who are in daily and hourly contact with
the individual worker to direct and supervise his work who are hated most by the
worker. Social reformers, who take over naively the sentiments of the workers, may
believe it possible to replace these organs of control by trustworthy men chosen
by the workers themselves. This is not quite as absurd as the belief of the anarchists
that everyone would be prepared without compulsion to observe the rules indispensable
for communal life; but it is not much better. Social production is a unity in which
every part must perform exactly its function in the framework of the whole. It cannot
be left to the discretion of the part to determine how it will accommodate itself
to the general scheme. If the freely chosen foreman does not display the same zeal
and energy in his supervisory work as one not chosen by the workers, the productivity
of labour will fall.
Guild Socialism therefore does not abolish any of the difficulties in the way of
establishing a socialist order of society. It makes Socialism more acceptable to
the English spirit by replacing the word nationalization, which sounds disagreeable
in English ears, by the catchword "Self-Government in Industry." But in essence
it does not offer anything different from what continental socialists recommend
today, namely, the proposal to leave the direction of production to committees of
the workers and employees engaged in production, and of consumers. We have already
seen that this brings us no nearer to solving the problem of Socialism.
Guild Socialism owes much of its popularity to the syndicalistic elements which
many of its adherents believe are to be found in it. Guild Socialism as its literary
representatives conceive it, is doubtless not syndicalistic. But the way in which
it proposes to attain its end might very easily lead to Syndicalism. If, to begin
with, national guilds were established in certain important branches of production
which would have to work in an otherwise capitalist system, this would mean the
syndicalization of individual branches of industry. As everywhere else, so here
too, what appears to be the road to Socialism can in fact easily prove to be really
the path to Syndicalism.
On the other meanings which the term Revolution
has for the Marxists see pp. 81 ff.
Engels, Herrn Eugen Dührings Umwälzung der
Wissenschaft, p. 299.
Kautsky, Das Erfurter Programm, 12th ed.
(Stuttgart, 1914), p. 129.
Engels, Herrn Eugen Dührings Umwälzung der
Wissenschaft, pp. 298 ff.
Kautsky, Das Erfurter Programm, p. 129.
Kautsky, Das Erfurter Programm, p. 130
See, pp. 119 ff.
Bericht der Sozialisierungskommission über die
Frage der Sozialisierung des Kohlenbergbaues vom 31 Juli 1920, with appendix: Vorläufiger
Bericht vom 15 Februar 1919 2nd ed. (Berlin, 1920), pp. 32 ff.
Bericht der Sozialisierungskommission über die
Frage der Sozialisierung des Kohlenbergbaues vom 31 Juli, 1920, with appendix: Vorläufiger
Bericht vom 15 Februar 1919, 2nd ed. (Berlin, 1920), p. 37. 216 245
Philipp v. Arnim, Ideen zu einer vollständigen
landwirtschaftlichen Buchhaltung, 1805, p. vi (quoted by Waltz, Vom Reinertrag in der
Landwirtschaft, p. 20).
Philipp v. Arnim, Ideen zu einer vollständigen
landwirtschaftlichen Buchhaltung, 1805, p. 2 (quoted in Waltz, op. cit., p. 21). See also
Lenz, Agrarlehre und Agrarpolitik der deutschen Romantik, Berlin, 1912, p. 84. See similar
remarks of Prince Alois Liechtenstein, a leader of the Austrian Christian Socialists, quoted
in Nitti, Le Socialisme Catholique (Paris, 1894), pp. 370 ff.
Kautsky, Die Soziale Revolution, II, p. 33.
Ibid., p. 35.
Bourguin, Die sozialistischen Systeme, pp. 62 ff.
Andler, Les Origines du Socialisme d'Etat
en Allemagne, 2nd ed. (Paris, 1911), p. 2, specially stresses this character of state
On Lipara see Poehlmann, Geschichte der sozialen
Frage und des Sozialismus in der antiken welt, Vol.I, pp. 44 ff.
Max Weber, "Der Streit um den Charakter der
altgermanischen Sozialverfassung in der deutschen Literatur des letzten Jahrzehnts,"
(Jahrbücher für Nationalökonomie und Statistik, Vol. XXVIII, 1904, p. 445).
Caesar, De bello Gallico, iv, 1.
Herbert Spencer, Die Prinzipien der Soziologie,
trans. Vetter, Vol. II (Stuttgart, 1899), pp. 720 ff.
See my Nation, Staat und Wirtschaft, pp. 115 ff.;
Wiener, Essai sur les Institutions Politiques,
Religieuses, Économiques et Sociales de l'Empire des Incas (Paris, 1874), pp. 64, 90 ff.
attributes Pizarro's easy conquest of Peru to the fact that communism had unnerved the
Max Weber, "Der Streit um der Charakter der
altgermanischen Sozialverfassung in der deutschen Literatur des letzten Jahrzehnts,"
(Jahrbücher für Nationalökonomie und Statistik, Vol. XXVIII, 1904), p. 445.
See the criticism of the economic policy of the
Austrian Christian Socialist Party in Sigmund Mayer, Die Aufhebung des Befähigungsnachweises
in Österreich (Leipzig, 1894), especially pp. 124 ff.
In the above text we have always spoken only of
the Church in general, without considering the differences between the various denominations.
This is quite admissible. The evolution towards Socialism is common to all denominations.
In Catholicism, Leo XIII's encyclical, "Rerum Novarum," of 1891, has recognized the origin
of private property in Natural Law; but simultaneously the Church laid down a series of
fundamental ethical principles for the distribution of incomes, which could be put into
practice only under State Socialism. On this basis stands also Pius XI's encyclical,
"Quadragesimo anno" of 1931. In German Protestantism the Christian Socialist idea is so
tied up with State Socialism that the two can hardly be distinguished.
On War Socialism and its consequences,
see my Nation, Staat und Wirtschaft, pp. 140 ff.
Denkschrift des Reichswirtschaftsministeriums,
reprinted in Wissell, p. 106.
Denkschrift des Reichswirtschaftsministeriums,
reprinted in Wissell, p. 116.
"Guildsmen are opposed to private ownership of
industry, and strongly in favour of public ownership. Of course, this does not mean that
they desire to see industry bureaucratically administered by State departments. They aim at
the control of industry by National Guilds including the whole personnel of the industry.
But they do not desire the ownership of any industry by the workers employed in it. Their
aim is to establish industrial democracy by placing the administration in the hands of the
workers, but at the same time to eliminate profit by placing the ownership in the hands of
the public. Thus the workers in a Guild will not be working for profit: the prices of their
commodities and, indirectly at least, the level of their remuneration will be subject to a
considerable measure of public control. The Guild system is one of industrial partnership
between the workers and the public, and is thereby sharply distinguished from the proposals
described as 'Syndicalist' ... The governing idea of National Guilds is that of industrial
self-government and democracy. Guildsmen hold that democratic principles are fully as
applicable to industry as to politics." Cole, Chaos and Order in Industry (London, 1920),
p. 58 ff.
Cole, Self-Government in Industry, 5th ed.
(London, 1920), pp. 235 ff.; also Schuster, "Zum englischen Gildensozialismus"
(Jahrbücher für Nationalökonomie und Statistik, Vol. CXV), pp. 487 ff.
Cole, Self-Government in Industry, p. 255.
"A moment's consideration will show that it is
one thing to lay drains, another to decide where drains are to be laid; it is one thing to
make bread, another to decide how much bread is to be made; it is one thing to build houses,
another to decide where the houses are to be built. This list of opposites can be lengthened
indefinitely, and no amount of democratic fervour will destroy them. Faced with these facts,
the Guild Socialist says that there is need for local and central authorities whose business
it shall be to watch over that important part of life that lies outside production. A builder
may think it advisable to be forever building, but the same man lives in some locality and
has a right to say whether this purely industrial point of view shall have absolutely free
play. Everyone, in fact, is not a producer but also a citizen." G. D. H. Cole and W. Mellor,
The Meaning of Industrial Freedom (London, 1918), p. 30.
Tawney, The Acquisitive Society (London, 1921),
p. 122, considers that the advantage of the Guild System for the worker is that it puts an
end to "the odious and degrading system under which he is thrown aside like unused material
whenever his services do not happen to be required." But just this reveals the gravest defect
of the system recommended. If one needs no more building because relatively sufficient
buildings exist, yet must build so as to occupy the workers in the building trades who are
unwilling to change over to other branches of production that suffer from a comparative
scarcity of labour, the position is uneconomic and wasteful. The very fact that Capitalism
forces men to change their occupations is its advantage from the standpoint of the General
Best, even though it may directly disadvantage the special interests of small groups.
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