Socialism and International Economic Order

CHAPTER IV ORGANIZATION INSTEAD OF LAISSEZ-FAIRE; INTERWAR PROGRAMS FOR A SOCIALIST WORLD ORDER

What shape is the socialist world economy to assume? We have seen that Marx and his followers were primarily concerned with depicting capitalist society in its historical development; very rare and short are the passages in Capital that refer to the guiding principles of the system which is to replace the existing one. But one need not be too surprised at this fact: if it is History which ultimately governs human affairs, there is as yet no necessity (it is in fact quite out of place) to speculate on the details of the future order. When the time becomes ripe, all questions will be resolved and the parts will merge into a marvelous whole.

Nevertheless, one thing in the writings of socialists was certain: that the new order would be stripped of all those evils which characterized capitalism and imperialism. War was the most detestable of these evils; hence, after the termination of hostilities in 1918, a general feeling was spreading throughout the world that peace and socialism were identical and that man must consciously set about creating a new, international society based on socialist fundaments.

According to socialist doctrine, under capitalism, “freedom” means the unrestricted faculty of the rich to amass wealth at the expense of the poor. It also implies the unbridled course of history toward “the highest stage of capitalism.” In contrast, under socialism, man will deliberately plan the present as well as the future order, with a view to the attainment of universal peace and social justice, that is, to the achievement of “real” liberty. Thereby, all human beings will benefit equally from technical progress and the rational organization of industry and agriculture. This will become possible because the profit motive will be replaced by the conscious collective control of all economic activity.1

The general idea of international planning today is based upon a conception of world development which is both rational and hopeful. In discussing world planning we have in mind the fact that the world is grappling with difficult economic and social issues and that a concentrated effort must be made to substitute peaceful and progressive change for mere drift or for arbitrary and violent action.2

Albert Thomas defines the basic socialist attitude toward the future world order as follows

For protectionism and free trade, both considered to be formulas of struggle and competition, we substitute the principle of association among the peoples by the international organization of exchange.3

And he adds what Hilferding already had implied:4 “Our position is thus not half way between protectionism and free trade, but outside of it.”5

GENERAL IDEAS

Let us begin with a review of the general principles on which this new world order is to be built. Again it must be emphasized that we are interested in the ideas of authors proposing a collectivist solution to the problem of international economic order and not in their party membership.

Production for Needs

Economic activity will henceforth be subjected to the “real” needs of man. But, one may ask, do not needs also underlie effective demand in the capitalist system? Since the incomes of consumers differ widely, socialists answer, an economic system guided by the price mechanism alone leads to the production of luxury goods, while at the same time some basic needs of the masses go unsatisfied.6 In addition, it is argued, people do not accumulate wealth merely to provide for their subsistence or to enhance their physical comfort; rather, the possession of property has become an accepted symbol of status and honor, a measure of social importance attained by its owner. Wealth is therefore spent not according to the owner’s personal propensities, but according to the conventional standards of the “leisure class,” resulting in “conspicuous waste.”7 H. D. Dickinson distinguished between “needs,” which “are what we really require for life, efficiency, and enjoyment,” and “wants,” which “are what we think we require.”8 If the consumer, as asserted by orthodox economic theory, was really the autonomous judge of his own needs, advertising and salesmanship, the great “waste caused by another waste,”9 would be senseless.

It follows that, with the elimination of the squandering of time and resources, “the aggregate economic wants of a community might conceivably be satisfied at some point in the advance of industrial efficiency.”10 When this point is reached, the problem of income distribution will lose its relevance.

In the meantime, however, the dilemma between “distributive justice” and maximum incentive to productive effort persists and is recognized by many socialists. There is no agreement among them on how to solve this important question.

Science

But even if the interests of income receivers may not be identical, another powerful factor working for compromise still exists: science. In the first place, the progress of the natural sciences leads to more efficient production techniques; secondly, it is thought, the perfection of “scientific management” contributes to the rational organization of production units;11 and thirdly, extensive statistical research12 is to be placed in the service of economic planning. These three branches of modern science will supply the central authority with all the necessary information to carry out its planning task to general satisfaction and to expand wealth to hitherto unknown dimensions.

Research is the handmaiden of planning. It helps, by eliminating mere opinion and whim,

to narrow the area of conflict within which compromise had to be achieved in order that any plan may be formulated.13

Science enables men to control the present as well as the future. It will teach statesmen “to think in terms of centuries instead of, at most, in terms of one or two decades.”14 It will “throw a mighty beam far into the future, enabling progress to forge ahead with a new speed, a new purposefulness, and a new security from quagmires, blind alleys and precipices.”15 As steam gives way to electricity and as electricity will some day be superseded by atomic energy production, so scientific progress demands that an obsolete economic order be replaced by a system better adapted to newly created requirements and possibilities. And this system will be collective control.

The Representatives of Collectivity

If control is synonymous with comprehensive centralized planning, what exactly does “collective” mean? Various answers are given to this decisive question:

The solidity and permanence of the organization itself can be guaranteed only by recourse to a higher principle, to an authority guiding, coordinating and controlling the whole movement. . . . It will no doubt appear at once that this body can only be the League of Nations.16

writes G. de Michelis. “The greatest need of modern age,” says A. Salter, “is to bring the specialized inventions and specialized activities of mankind under the control of collective reason.”17 To which, however, G. A. Johnston comments:

The collectivity contains many ingredients in addition to reason, and for the control of social economic planning it is necessary to distil the reason from the unreason in the collectivity.18

Yet he admits that, “as to the manner in which collective reason should exercise control over social economic planning, it is as yet too soon to expect any agreement.”19

Lenin is more precise. In a socialist society, the supreme political and economic power is to reside with the Communist Party. The Party is to be “the conscious expression of the struggle of the proletariat for the overthrow of the yoke of the bourgeoisie.”20 This follows from his own theory and from that of Marx that socialism will not come peacefully, but must be preceded by the revolutionary smashing of the ruling classes. But, “not a single class in history has achieved power without producing its political leaders, its prominent representatives able to organize a movement and lead it.”21 These representatives must therefore assume “the role of vanguard” which, however, “can be fulfilled only by a party that is guided by an advanced theory.”22 This theory the workers are unable to produce;23 therefore, the enlightened Party must give a definite direction to the spontaneous awakening of the masses, that is, turn it into “the awakening to conscious life and struggle.”24

Lenin repeatedly emphasized the contrast which exists between the spontaneity of the masses and the conscious action of the Party. Spontaneity must never be allowed to put “restraint on the initiative and energy of class conscious fighters,” because

Marxism, on the contrary, gives a gigantic impetus to the initiative and energy of Social Democrats, opens up for them the widest perspectives and, if one may so express it, places at their disposal the mighty force of millions and millions of workers “spontaneously” rising for the struggle.25

In this context, Lenin cites with approval Kautsky’s remarks on the new draft program of the Austrian Social Democratic Party:

Modem socialist consciousness can arise only on the basis of profound scientific knowledge. Indeed, modern economic science is as much a condition for socialist production as, say, modern technology, and the proletariat can create neither the one nor the other, no matter how much it may desire to do so . . . both arise out of the modern social progress. . . . Thus, socialist consciousness is something introduced into the proletarian class struggle from without (von Aussen Hineingetragenes) and not something that arose within spontaneously (urwüchsig).26

Lenin concludes:

Since there can be no talk of an independent ideology being developed by the masses of the workers in the process of their movement, the only choice is: either bourgeois or socialist ideology. There is no middle course. . . . Hence, to belittle socialist ideology in any way, to deviate from it in the slightest degree, means strengthening bourgeois ideology.27

Thus, science, or rather socialist ideology—the two are synonymous in Lenin’s parlance—does not only “narrow the area of conflict,” it indeed excludes it. If, nevertheless, economic, social, and political problems subsist under socialism, this will be due to remnants of “bourgeois ideology.”

Already Marx had foreseen that these remnants will die hard. He therefore considered the dictatorship of the proletariat to be a necessary historical stage on the road toward complete communism, the final era when classes, and with them national states, would have, as Engels put it, withered away. Then, and only then, would there reign “association, in which the free development of each is the condition for the free development of all.”28

Human Solidarity

Underlying this theory is the Marxist assumption of an unconditional class solidarity among the toiling peoples of the world. E. Milhaud extends this solidarity, as the pre-Marxian socialists had done before him, to embrace all mankind. This solidarity is for him “the primordial reality of our time.” Thus,

the problem does not consist of artificially establishing this solidarity, but of allowing it to assert itself and to develop naturally, within a normal framework, for the benefit of all.29

Hence, there can be no doubt about the objectives of economic planning which is “defined as a system wherein the competent authority or authorities give a general direction to economic activities, in pursuance of definite aims and in accordance with plans for the realization of these aims.”30 These are: wealth, security, happiness, and progress. Only the methods of achieving them are subject to discussion. But these discussions received a definite direction through wartime experience during 1914-18:

All economic and military efforts aimed at victory, and the main factors capable of ensuring victory, were the material resources placed at the disposal of the armies and the people’s morale. Tremendous needs had to be satisfied and supplies were not adequate to meet these needs. It was therefore necessary to weigh up the respective importance of various needs and to regulate their satisfaction according to priority. . . . When, in 1917, the United States also entered into the coalition, its economic field of operation covered the whole globe and regulated to an ever-increasing extent the production as well as the purchase and distribution of goods. . . . The principle of distribution according to needs was supplemented by the principle of production according to needs. . . . The method by which the war had been won would make possible the reconstruction of devastated areas and the development of the wealth and resources of the world for the common good of all its peoples.31

If socialism thus means the general direction of economic activities by a central authority, the all-important question must again be raised: what is to be the geographical area within which this authority may exercise its functions? In other words: will the future international order constitute a system in which economic relations are being conducted between socialistically organized states or communities, or will it be governed by one single world plan, set up by a powerful, supranational authority? The remainder of this chapter deals with ideas relating to the second alternative; the next chapter will describe the major aspects of the collectivist state, and Marxian state doctrine in particular.

THE INTERNATIONALIST APPROACH

The internationalist approach received a strong impetus from the establishment, after World War I, of the League of Nations and the International Labor Organization (I.L.O.). The former was regarded as the manifestation of the peoples’ determination to establish universal peace, while the latter proved that social justice was really an international postulate and had become generally recognized as such.

To socialists, however, it appeared to be insufficient to lay down only the legal, political, and social groundwork of peace. In 1924, Leon Jouhaux expressed this general current of thought as follows:

Can we forget the role of economic factors in this field? How can we conceive of having truly organized peace among peoples if we have allowed antagonisms of interest to arise and grow between them, which, at certain moments, may cause them to fall upon each other? . . . Only security in political relations gives rise to an economic policy based on agreement and cooperation and only an economic policy of agreement and cooperation gives rise to security in political relations.32

Jouhaux considered the Economic Committee of the League and the I.L.O. as constituting the starting point for an International Economic Council

which will appear, beyond doubt, to be necessary to the final organization of peaceful economic relations among peoples.33

“To extirpate the very causes of war, particularly its economic causes,”34 by economic organization—this becomes the Leitmotiv of constitutional socialists. Charles Gide, in a memorandum addressed to the French government in 1919, defined the peaceful collaboration of peoples as the “organizing of world production as economically as possible, so as to utilize all the earth’s resources and the capacities of each nation in the best interests of all.”35 And, Paul Boncour further developed Jouhaux’s proposals in a speech to the 1924 League Assembly:

The financial and economic agencies of the League of Nations and its assemblies will one day, when security will have been firmly built, have to deliberate on such great issues as raw material quotas, markets, and problems of immigration and emigration. Without a solution of these problems—let there be no illusions on this—our entire edifice would be ruined by internal upheavals.36

Two years later, Painlevé again emphasized the necessity of taming the brutal economic forces by rational means dictated by the internationalist spirit. And President Wilson’s declaration in 1917 was not forgotten, claiming “equal rights for all peoples, big and small, to participate under just conditions in the economic resources of the globe.”

Hence, socialists thought it imperative

that for the purpose of developing a concrete programme for the realization of these general objectives, a series of permanent expert committees be set up to study the application of these principles37 to such problems as migration, raw materials, and so on. Such committees would be required to prepare not only general factual statements, but specific proposals of policy.38

International Control of Raw Materials

After the termination of the war in 1918, the general shortage of goods and services, particularly that of basic raw materials, was acutely felt everywhere. The buying and selling of vital commodities across national frontiers had increasingly come under the control of nationalistic governments. It was thus considered necessary to grasp the nature of the problem and then to find the means of remedying it. Lawley distinguished two main aspects; on the one hand,

there is this question of the monopoly of certain raw materials by a small number of countries and the necessity of providing an adequate access to supplies of such materials for all countries.39

And on the other,

it is essential to prevent disequilibrium between production and consumption, and to provide regular and ample markets for producing countries at prices which are fair to producers.40

He concluded:

In both cases, the need for action is urgent; and the only permanent solution is along the lines of international collective control.41

The Inter-Allied and Neutral Cooperative Conference held in Paris in 1919 had come to the same conclusion when it stated the principles to guide international cooperative policy: (1) distribution of raw materials among nations according to their needs, (2) collaboration of public bodies with national cooperative organizations to ensure the just distribution of imported and all other commodities at a just price, (3) creation of an international statistical office compiling data relating to needs, resources, and conditions of production and consumption in each country, and preparing plans for an organized international division of labor.42

These three principles form, in fact, the essence of the solution of the raw materials problem as proposed by collectivist speakers and authors, although they are given different stress. Baldesi, the Italian workers delegate at the first Session of the International Labor Conference, considered the scarcity of raw materials to be chiefly responsible for unemployment.43 Tittoni, in 1920 an Italian representative on the League Council, stated that, in many respects, “raw materials are unearned commodities for people who hold them.”44 And Balfour outright advocated the Proudhonian idea that

raw materials, found on a country’s territory should, in all fairness, be considered as the common property of the whole world. They are the work of nature and man should not monopolize them.45

In a report presented in 1921 to the Economic and Financial Commission of the League, Professor Gini came to the conclusion that “economic considerations agree in demonstrating the inopportuneness of a policy which abandons the nations to the slow restorative work of natural forces.”46 Therefore, in his view, the League should accept as its duty the equitable control of raw materials and food supplies, especially with a view to the event of a blockade against an aggressor state.

What are the concrete steps to be taken to prevent the disequilibrium between the production and consumption of raw materials? Lawley drew up an impressive, though somewhat undifferentiated list of economic, political, and religious personalities—among whom neither the Japanese Foreign Minister Hirota nor the names of Dr. Goebbels and “Herr Hitler”47 are missing. These personalities denounced the present system, and some of them urged the League to summon a world conference for the sole purpose of “discussing how the vast stores of national resources and the tremendous unsatisfied markets of the world can be organized and regulated for the service of mankind.”48

This conference never took place. However, some interesting proposals were forthcoming to solve the problem. In the first place, it was considered necessary that the Colonial Powers should abandon their exclusive rights over colonies and place them under League mandate.49 Secondly, a “co-ordinating international body” was to be created:

This body will, at once, control production and, in controlling markets, will ensure fair distribution to all countries according to ascertained needs. Doubtless, eventually it will exercise this function of controlling production without the intervention of national producers through their international organizations and agreements; but, as a first step, it could have a Section to register, and thus control, international agreements concluded by producers, which have become necessary.50

Such agreements—whatever form they may take—are already being concluded with a special effort to protect producers from excessive market fluctuations and to assure them not only stable, but also higher than equilibrium prices. Although the partners are still the owners or directors of private enterprise, guided solely by the aim of maximizing profits,

it is better that such enterprises should be organized internationally than that competition and international anarchy should prevail. Moreover, embodying in some degree the collective principle, they prepare the way for a larger and firmer form of international organization.51

As a next step, negotiations should be opened between the major interest groups which are (1) “all producing countries . . . and all branches of production of the raw material, together with all artificial or synthetic products or substitutes therefor”;52 (2) the consuming countries and industries; (3) the representatives of the final consumers; (4) the workers’ representatives. When “complete understanding” is reached between these four groups about quantities, prices and mutual control,53

then, Agreements should ultimately be made by the responsible Governments in the producing countries, which should (and this would) ensure the effective execution of the Agreements.

These

should be registered with the League of Nations with a special Office or Section of its Economic Organization . . . and a measure of coordination of the production and distribution of these various essential commodities would be effected.54

Once it is recognized that the real problem is “economic rather than political and territorial,” that its essence is “the fear of monopoly, of the withholding of essential colonial raw materials,”55 and once the above-mentioned mechanism is set into motion,

in due course, doubtless, there will be public international undertakings, performing the necessary functions in the production and distribution of these commodities in relation to the central world economic organization. As a stage on the road in that direction, central organizations, under public ownership or control may be created, as happened during 1914-1919, for a cooperative purchase of such commodities and distribution on a quota-basis according to ascertained needs.56

International Migrations

As regards the force represented by labor, it has become almost a commonplace that some countries, which suffer from serious overpopulation, are without one or both of the other two factors of production, while others, which are better off as to raw materials or capital, are still very sparsely populated.57

Two possible solutions offer themselves: (1) the overpopulated areas receive a just share in the world’s natural resources —as is advocated by Baldesi—or (2) the world population itself be more evenly distributed:

To relieve the congestion in overcrowded countries by transferring their surplus to unpopulated areas, would open the way to the full exploitation and consummation of the economic potentialities of the world.58

But, according to the theory of the Reserve Army, relative overpopulation does exist also due to technical progress. Therefore a careful planning of international migratory movements becomes necessary. De Michelis considers the I.L.O. to be the most suitable agency for the task

of evaluating in countries suffering from severe unemployment or severe overpopulation the volume of labor available for transference and permanent settlement abroad. In the process of execution this investigation will gain increasing precision as progress is made in the correlative inquiry concerning the land suitable for receiving the workers, and therefore capable of undergoing profound economic transformation.59

Other authors imply that in a future world order absolute overpopulation may become an acute danger.60 They therefore take account not only of numbers, but also of races and do not exclude the “scientific” planning of the globe’s population itself.61

The problem of international migrations was discussed at the Stuttgart Congress of the Second International in 1907. The Australian, South African, and some American delegates wished to exclude nonwhite immigrants on the grounds that they threatened the living standards of the white workers. The other delegations, while not accepting any discrimination according to race and color, “were however, quite prepared to take a stand against the deliberate importation of bodies of immigrants for the purpose of undermining the standards of living of the workers in the countries of immigration and to press for public regulation of immigration with this end in view.”62 At the same time, however, “the resolution carried by the Congress stressed the need for the education and organization of immigrant workers and for the extension to them of the same wages, working conditions, and social and economic rights as were accorded to the indigenous workers.”63

International Money and Credit Control

In a system of private appropriation, most capital originates from accumulated profits, that is, “the absorption of an unjust share of the product of industry.”64 In reality, however, capital is regarded as a “collective surplus,”65 produced by cooperative effort. But under capitalism, “the surplus is invested not where it is most needed from the point of view of the needs of the world’s peoples as a whole, but from the point of view of private and national interests, of maximizing quickly obtainable profits.”66

Thus, to form the obvious counterpart to the international control of raw materials, international collective intervention is pre-eminently required in this field also. However, the ultimate goal is much broader than this: the main objective of international investment control is to be the equalization of living standards among all workers, and of economic development in general.67 With private appropriation the exclusiveness of nationalistic property claims will also disappear. Instead, the principle will prevail

that workers as a whole have a right to the accumulations of property and knowledge from the past.68

Consequently,

rich nations must be compelled to make some surrender of possessions and wealth to poor ones.69

With the general recognition of government deficit spending as an effective countercyclical measure, numerous proposals were advanced for the international coordination of national public works schemes. For this purpose, the Employers’ Delegate from the 1933 International Labor Conference urged the establishment, under League auspices, of a permanent international agency. Albert Thomas suggested the construction of an international net of motor roads through Europe, totaling nearly nine thousand miles and costing about eight hundred million dollars. Other plans were put forward for the development of Eastern European infrastructure.

The precondition for the realization of these plans is of course the existence of an efficient international monetary and credit system, important now, but considered still more important in the future world order:

When one renounces laissez-faire policy and takes to intervention, it becomes natural to look for more radical measures and to attempt to go to the source of the evil, and to aim at a priori directing economic activities instead of merely correcting their disordered outcome.70

What is therefore most urgently needed is a universal monetary standard, furnishing the planning authorities “with a reliable financial instrument to serve both as a medium of exchange and as a store of value.”71 As human intelligence has successfully evolved “universal, reliable, stable, and unchanging measures of length and weight,”72 it must at last invent

a monetary system which will enable planners to plan without fear that uncontrolled price fluctuations will wash their plans away like castles in the sand.73

Albert Thomas, speaking for the I.L.O., still believed that gold provided the most suitable fundament for an international monetary system. But, he asked,

should gold be allowed to be affected by all those political, economic, financial, and industrial circumstances which sometimes so profoundly alter its purchasing power?74

And he answered by quoting R. McKenna:

Let the gold standard be made to work satisfactorily—that is, let it give a stable value to money—and they will be quite ready to go back to it.75

What conditions must be fulfilled for this purpose? “The Rt. Hon. Reginald McKenna (Great Britain) suggests, as a credit policy, that trade requirements should be met without regard to gold movements, the discount rate being fixed in relation to general economic conditions, e.g. the volume of production, the conditions of employment, home and foreign price movements, the growth of population and potential productive capacity.”76 Other authors proposed the pooling of the world’s gold resources; Professor Edie, of Chicago University, for example, came out for the creation of a “gold League of Nations.”

Conversely, there are authors who believe that the retention of the gold standard constitutes a serious obstacle to efficient industrial activity and economic progress. They also point to the waste of productive capacity and effort involved in the production and storage of gold. Lawley is one in this group:

World production and trade have been throttled by the worship of gold. . . . The suffering peoples are ready for revolutionary economic changes. They await deliverance through an enlightened national and international financial monetary policy, ministering to human needs. They do not exclude very unorthodox financial measures as experiments. This crisis has shown that gold and cash or currency are not essential to international trade which is exchange of commodities and services.77

Great hopes were attached, by socialists, to the Bank of International Settlements (B.I.S.) created in 1930. Lawley writes:

Animated by a desire to promote collective economy, the Bank could dictate the world’s monetary evolution along collective lines. It could use its funds to develop backward regions and to promote public works, such as electrification and improved transport facilities. In fact, it could plan the world’s economic development in cooperation with a League organ planning world economic development as a whole.78

An interim proposal was made by Professor Edgar Milhaud, based on the experiences gained by the general recourse to international barter, and assigning a major role to the B.I.S. During the period from 1928 to 1932, he writes, there occurred a severe drain of gold reserves in forty countries; they therefore looked for methods apt to eliminate, as far as possible, the use of money in international trade. There emerged a network of bilateral trade agreements which, in spite of all its disadvantages, prevented international economic relations from collapsing. Furthermore, “the principle of reciprocity in foreign trade found increasing acceptance.”79 What Milhaud suggested then, was to retain this international compensation and clearing system, but to place it on a “plurilateral,” and eventually an “omnilaterai” basis.

The essential objective to be attained is to enable the various countries to resume their buying abroad without having to fear that the equilibrium of their economy will be upset and thereby their financial situation worsened and their currency exposed to renewed dangers. . . . Hence, it is vital to link every foreign purchase made by a country to the certainty of a corresponding sale from this country. To this end, the states agree among themselves to the effect that foreign transactions are settled not by the transfer of gold or exchange reserves, but by means of special vouchers (bons d’achat) the only function of which is to buy goods and services from the issuing country.80

By this system of international bills of exchange issued and honored by governments, which would replace the gold standard, Milhaud sought to ensure equality of value in international transactions. Furthermore, international credits—given in the form of bons d’achat—would automatically become tied to the subsequent delivery of goods and services. Consequently,

financial difficulties, which today stand in the way of solving the problem of large-scale international public works, would be lessened due to the interest which creditor countries would acquire in lending funds.81

Lawley comments:

The widespread resort to organized barter is another indication that only collective action can solve modern economic and, in particular, trading problems.82

Methods of Achieving World Planning

What are the fundamental measures proposed by socialists to achieve the rational economic organization of the world?

Association of the three factors in the production of wealth—labor, land and raw materials, and capital—and their combination with a view to maximum output.83

writes an author rather vaguely. “Syndical organization of national and international industries,”84 suggests E. Milhaud, reviving Louis Blanc’s formula, but stressing the necessity of adequate control. But this control, he thinks, will not be difficult:

The State, the industries consuming the output of the syndicated industry, and the workers of these industries form the elements, the concurrence of which ensures the organization of such control from within.85

Albert Thomas wholeheartedly agrees with the program of the International Cooperative Alliance which he quotes:

the creation of a cooperative order established in the interest of the entire community and based on mutual assistance and “self-help.”86

The system of cooperation establishes direct relationships between production and consumption; and, by its efforts to use savings rationally, it gives a satisfactory answer to the requirement expressed in many resolutions “regarding the necessary regulation of capital movements.”87 Cooperation is the manifestation of “a converging effort of wills:”88

Already we see that . . . coordinating international bodies are emerging which confront needs and resources and ensure stable transactions based on equitable reciprocity.89

At the same time, however, Albert Thomas stresses the necessity to respect

the desire of each nation and of each people to preserve the degree of independence which is indispensable if it is to peacefully develop the resources of its genius, all of its moral and spiritual values.90

A writer in Politique91 suggested the creation of an International Bureau of Production to be directed by intelligent and competent businessmen. Just as a certain coordination of central bank policies was achieved by regular contacts within the B.I.S., so managers and directors should come together and deliberate on vital questions of production. Their conclusions reached after careful study would become public and binding. The Bureau, cooperating with the League and the I.L.O., would have adequate authority to have its decisions observed by the industries of the various countries. It would also supervise producers’ agreements and entertain close contacts between cartels.

Another similar suggestion was made in 1935 by the U.S. Secretary of Commerce, D. Rooper, with respect to the establishment of an international board to divide the world export makers among the producing and manufacturing nations.92

Consciously or unconsciously following Jaurès, many socialists are not unwilling to approach international economic control from the basis of the “latest” forms of private initiative, especially of international cartels:

Businessmen have started to abandon more completely as obsolete the idea that unrestricted competition ensures the best interests of producers, while certainly consumers are coming to see that, whatever dangers unregulated trusts and monopolies may present, competition does not give them the best terms. Reduced costs, as the basis of lower prices and stability, ensuring the worker smoother employment and thus augmenting his purchasing power, and as a source of economy to the employer, especially through the enabling of a wiser use of capital, and surer and accessible markets, these are some of the fruits of large scale, coordinated organizations.93

It is clear: every kind of control is welcomed by socialists as the useful starting point for further control and as a hopeful step on the way to achieving comprehensive world planning.

For the conception of unorganized labor, which is translated by the law of supply and demand, and leads to the “struggle for life,” socialism substituted a scientific organization of production and exchange whose elevated moral and social aims are unassailable from the point of view of justice and human fraternity.94

But what about the economic point of view? Albert Thomas’ answer is clear:

We have arrived at the most perilous stage of economic evolution. To pass beyond it, we must not be held back by the illusions of the doctrines, now outworn of laissez-faire. . . .95

And, in his last speech, held in 1932 at the International Labor Conference, he said:

They say: impossibility of social security charges; they say: economic impossibilities, and at the same time the world seems to overflow with possibilities of wealth and production. Raw materials—they are there. Stocks are not diminishing—they are increasing! Men and workers—they are there. . . . What then is lacking? What is lacking is organization; the possibility of combining all these elements, the desire to put all these resources to work . . . according to the postulates of social justice. What is lacking is the supreme initiative which makes possible international decision-making.96

This initiative must be embodied, in Lawley’s view, in a central organization. Production plans must be drawn up according to the comparative advantage of the various regions of the world:

It will be most essential that the central body is equipped with an expert staff to provide it with a thorough knowledge of production costs. When international production is organized on the true basis of international collective economy, the international organization will fix prices, on which the exchange of goods will occur, bearing in mind the payment of proper wages and salaries, collective transportation, the covering of capital costs, and the cost of maintenance and repairs of plant and machinery.97

On the basis of such “true economic prices,”98 international exchange will be centrally planned and stable:

The manipulations and instability of the capitalist exchange system—with varying exchange rates (and quotations of stocks and shares) will no longer exist.99

As to the monetary system, “the best solution would be a uniform international currency,”100 managed and controlled by the B.I.S. But this will be of relatively minor importance because the Milhaud plan

contains the seeds of the new forms of economic practice in regard to international exchange of the future, inasmuch as it emphasizes that the distribution of goods and services and not the passage of money is the vital thing in economic life.101

As regards investment, “only a central International Authority can determine in the world’s general interest, where credit should be allocated.”102 The capital charges included in prices will, because of the eventual collective ownership of funds,

not be at all similar to those when a return on private capital has to be envisaged. . . . What is now called interest on such capital will go to the collectivity.103

Yet, whatever the approach to the question of international collective organization and whatever forces are stressed as the most appropriate for its achievement, it is generally recognized that the final goal cannot be realized without the active participation of national governments—which must of course be collectivist governments. Great hopes were attached by socialists to the National Economic Councils established by France and Germany, as well as to the Italian National Corporations System; such organs were to join, under League auspices, into a World Economic Council, eventually to be responsible for world planning. Plans were proposed to give representation, in this Council, also to workers’ and consumers’ interests—in an analogy to the International Labor Organization in which governments, as well as employers and workers, are represented. However,

the basis of its work must be a firm foundation laid by authoritative National Economic Councils.104*

Here then, the “internationalist” approach merges with the theory of those socialists who have considered, from the beginning, the complete collectivization of national economies to constitute the sine qua non for a planned world order. Thus, there is lastly only one way leading to this order: and it leads through the separate political unit that is formed by the State.

SUMMARY AND CONCLUSIONS

In this chapter, the future socialist international order, conceived as the final stage of historical, economic, and human development, has been presented in full outline. It is a world united under one single control: for the first time, efforts were made to convert the age-old dream of a world government into concrete reality. Political conflicts, arising from national sovereignty, will be replaced by the complete integration of the world’s peoples into one great community. Economic disputes will, so socialists believe, equally belong to the inglorious past, because economic affairs are no longer to be conducted by individuals. A central authority will take care of them, and will direct men, capital, and raw materials to those places and uses which are the most beneficial to the world as a whole.

It is tacitly implied that with the aid of science, an objective order of priority can be established between all possible economic objectives; this already traditional socialist belief is coupled with the conviction that a thus wisely balanced world plan will meet with the full approval of all segments of the world population. They will therefore joyfully accept and carry out the decisions and directions of the universal government, knowing that they are in their best interests.

Marx and Lenin are more realistic on this subject. They expect this solidarity to come forth from the working class only. For them, a socialist world order can only be thought of after the revolutionary annihilation of the bourgeoisie and of the economic, political, and ethical principles for which it stands. Thus, as they see it, the immediate future has no peaceful international order, but an embittered struggle for domination in store, the outcome of which must be the victory of the proletariat. This is, for Lenin, synonymous with the arrival to power of the Communist Party. The leaders of this party do not derive power from any kind of democratic consent on the part of the workers, but from History and from their advanced knowledge based on History. It is one of their very tasks to render this truth accessible to the masses and to awaken their class consciousness. Hence, the Party’s scope of action must be unrestricted.

Leninist theory thus continues the already familiar utopistic tradition by relying on the fundament of socialist philosophy: the autonomous life of the corps social. The Party constitutes, just as Plato’s State and the Saint-Simonian être collectif had done, a body independent of the will of the individuals which it claims to represent. The terms “working class” and “Communist Party” are nevertheless used interchangeably; although individual party members may err, “the Party is always right.” It is, like Utopia, the model of human perfection. At the same time, it is regarded as the only truly international force. Claiming to be the outward expression of Marx’s class theory, it apparently suffers no territorial limitation. It follows that the Communist Party must, by its nature, aim at world domination. It is to constitute that supreme authority of which Pecqueur had spoken, the center of all countries and continents, la force qui dirige, qui attire et qui renvoie.

To be sure, constitutional socialists and collectivists, to whose views this chapter has largely been devoted, would reject the concentration of such absolute power in the hands of a small elite. Nevertheless, they too fall victim to Utopian thinking. The term “collective” has for them a magic attraction; all their various and often contradictory theories and proposals rest on the assumption that there exists a higher reality than that in which individuals and national governments are the main actors. They believe that the representatives of collectivity, whoever they are, alone possess the necessary insight to solve all those problems with which “capitalism” grapples in vain. This way of thinking is best illustrated by the demand to place colonies under collective administration. Does the problem of colonies not arise from the fact that the states possessing them deliberately exclude the citizens of other nations from free access to them? How is it then to be expected that a state practicing such a policy will readily consent to relinquish these territories to a supranational agency? It seems very improbable that it will allow itself to be convinced by “collective reason” to renounce its power politics. Hence, unless force is applied, everything must remain as it was before. In the same way, the other problems with which the authors of this chapter were concerned have their origin in an extensive use (and abuse), by national governments, of their sovereignty. Is there any chance of these governments suddenly becoming “reasonable” and submitting their actions to the dictates of an international organization?

The socialist authors attempt to evade this basic dilemma by postulating collectivist states, that is, states which have abolished, within their jurisdiction, private economic initiative and replaced it with a central national plan. This, according to them, is the necessary precondition for a rationally planned world order. Now it is clear that this change in the internal economic order may only occur (again setting aside force) if the citizens can be persuaded that the economic power, henceforth to be invested with their governments, will be used for their best interest, i.e. to raise their standards of living more effectively than could be accomplished by a free market economy. On the other hand, the authors under review presuppose that the new socialist governments will abolish national power politics and be inspired by true international solidarity. Hence we must ask the decisive question: are the national obligations of these governments toward their citizens and their international solidarity mutually compatible? Only if it could be shown that the world planning authority would allocate the various resources precisely in the same way as do national governments; only if, therefore, national plans could be regarded as different, but complementary parts of a single world plan, so that it would be irrelevant which particular authority is drawing them up—only then would the problem of world planning be, theoretically, solved. However, because a socialist world order openly aims at a redistribution of resources, a taking from the rich and a giving to the poor, and because the different peoples of the world have reached widely differing stages of economic development, the criteria which would determine the world plan would be entirely different from those of the national plan. Consequently, who is to dispose of the productive resources in the various parts of the globe becomes an issue of utmost importance.

Thus, not a fundamental solidarity, but rather a fundamental conflict of interests prevails among collectivist states for which, as we shall see, the necessity of politically and economically controlling as many raw material sources and strategic points as possible becomes even more imperative than for their “imperialist” predecessors. Hence, a voluntary abolishment of political power, to which, under collectivism, all spheres of a country’s internal life are subjected, and a corresponding “growth” of a unified socialist world economy, must be regarded as Utopian.

NOTES TO CHAPTER IV

105“The cure for world disorder is not the replacing of closed national economies by open ones and the encouragement of freedom of trade between nations. What is required is international collective intervention to ensure that the dominant force in international economic life is no longer the quest for private and national profit. National and private economic ambition and self-assertion must submit to the collective will.” Lawley, F. E., The Growth of Collective Economy. Vol. II: The Growth of International Collective Economy. London, King & Son, 1938, pp. 4-5.

106Lorwin, L. L., “The I.L.O. and World Economic Policy.” International Labour Review No. 4, April, 1936, p. 458.

107“Protectionnisme, Libre-échangisme et Organisation Internationale des échanges.” Report presented to the XIIIth Congress of Fédération Nationale des Coopératives de Consummation held in Lille on May 13 and 14, 1926, reprinted in Annalse de l’Economie Collective, Vol. 18, Nos. 202-4, April-June, 1926, p. 97.

108“To the bourgeois dilemma: protection or free trade, the proletariat provides the answer: neither protection, nor free trade, but socialism, organization and production, conscious control of the economy not to the advantage of the capital magnates, but to the advantage of all society which eventually will subject to itself the economy as it has subjected nature since it had discovered its basic laws of motion.” Hilferding, R., op. cit., p. 472.

109Thomas, A., loc. cit., p. 99.

110These ideas were first expressed by Sismondi.

111Veblen, T., The Theory of the Leisure Class. In What Vehlen Thought. Selected Writings. Edited by W. C. Mitchell, New York, The Viking Press, 1936.

112Dickinson, H. D., Economics of Socialism. London, Oxford University Press, 1939, p. 31.

113Ibid., p. 36.

114Vehlen, T., op. cit., p. 226.

115“The principle of scientific management is being applied to national industries and to national economy. It must be carried a step further and be applied to the whole international economic system.” H. S. Person’s address to the World Social and Economic Planning Congress, quoted in Lawley, F. E., op. cit., p. 371.

116Statistics—the quantitative study of social and economic phenomena—is in fact regarded as the essential preliminary instrument of planning. “Stock taking must evidently be the first step toward any comprehensive scheme of world order.” Archer, W., The Great Analysis. A Plea for a Rational World Order. London, Williams & Norgate, 1931, p. 25.

117Lorwin, L. L., loc. cit., p. 461.

118Archer, W., op. cit., p. 21.

119Ibid.

120“A World Programme of Organic Economic Reconstruction.” International Labour Review, Vol. XXIV, No. 5, November, 1931, p. 504.

121Quoted in Johnston, G. A., “Social Economic Planning.” International Labour Review, Vol. XXV, No. 1, January, 1932, pp. 76-77.

122Ibid., p. 77. Cf. also W. Archer: “At any rate, we assume that some group of men (and women?) capable not merely of voting ‘aye’ or ‘no’ on a cut-and-dried proposition, but of sustained and accurate collective thinking, is entrusted with the task of planning the new order of things.” Op. cit., p. 11, italics added. And elsewhere: “A collective thought, emanating from a collective brain, consciously organized for inquiry and reflection on a planetary scale, would command . . . a wholly new order of critical attention.” Ibid., p. 37.

123Johnston, G. A., loc. cit., p. 77.

124Lenin, V. I., Preliminary Draft of Theses on the National and Colonial Questions (June, 1920). Selected Works in Twelve Volumes, translated from the Russian and issued by the Marx-Engels-Lenin Institute, Moscow and London, Lawrence & Wishart, 1936-39, Vol. X, p. 232.

125Lenin, V. I., The Urgent Tasks of Our Movement (December, 1900). Ibid., Vol. II, p. 13.

126Lenin, V. I., What Is To Be Done? (1901-2). Ibid., p. 48, italics original.

127“The history of all countries shows that the working class, exclusively by its own effort, is able to develop only trade union consciousness, i.e. it may itself realize the necessity for combining in unions, for fighting against the employers, and for striving to compel the government to pass necessary labor legislation, etc. The theory of socialism, however, grew out of the philosophic, historical, and economic theories that were elaborated by the educated representatives of the propertied classes, the intellectuals. According to their social status, the founders of modem scientific socialism, Marx and Engels, themselves belonged to the bourgeois intelligentsia.” Ibid., p. 53.

128Ibid.

129Ibid., p. 70. At the time this pamphlet was written, no split had occurred as yet between “Social Democrats” and “Communists.” The Russian Party adopted the name “communist” only in 1918.

130Neue Zeit, 1901-2, quoted ibid., p. 79, Lenin’s italics.

131What Is To Be Done? Ibid., p. 63, italics original.

132Communist Manifesto, in Ebenstein, W., op. cit., p. 703.

133Milhaud, E., “La paix, la coopération et les accords économiques entre Etats.” Annales de l’Economie Collective, Vol. XVII, Nos. 187-89, January-March 1925, p. 39.

134Milhaud, E., “National Planning, International Planning, and International Exchanges.” Annals of Collective Economy, Vol. XXI, No. 1, January-March, 1950, p. 145.

135Ibid., p. 148, italics added.

136Speech held before the Third Commission of the League Assembly, quoted in Milhaud, E., “La paix, etc.,” loc. cit., pp. 31-32.

137Ibid., p. 32.

138Boncour, P., quoted ibid, p. 33.

139Quoted in Lawley, F. E., op. cit., p. 31.

140Quoted in Milhaud, E., loc. cit., p. 33.

141I.e. “the equalization of opportunities of all countries with regard to raw materials, credits, markets, etc’

142Lorwin, L. L., loc. cit., p. 464.

143Lawley, F. E., op. cit., p. 160.

144Ibid.

145Ibid., pp. 160-61.

146Quoted ibid., p. 20.

147“Before the war we witnessed periodic crises due to over-production which caused distress among the working masses, in spite of abundance of products. Since the war we have noticed, in certain countries, the contrary phenomenon of insufficiency of production due to the scarcity of raw materials to industry. This phenomenon had similar results, that is to say very grave unemployment, accompanied by the misery which follows the closing of factories or reduction of their staff. Wherefore it is very important to demand that the League of Nations should study the question of a just distribution of raw materials. . . .” Quoted in Lawley, F. E., op. cit., p. 22.

148Quoted ibid., p. 24.

149Quoted ibid., p. 25.

150Ibid., p. 27.

151Ibid., p. 246.

152G. Lansbury in a letter to The Times, August 28, 1935.

153“The time is long overdue when the League should face manfully, with the willing cooperation of the Great Powers, the task of putting on a mandate and perhaps a joint mandate basis all colonial possessions. To achieve this would remove a potent cause of war.” Lawley, F. E., op. cit., p. 244.

154Ibid., pp. 235-36.

155Ibid., p. 237.

156Ibid., p. 238.

157But “international agreement and organization must not be on the basis of restricted production. . . . There must be a central mechanism for attempting to relate production to real needs and to make these needs into effective purchasing power. All nations must have an equal right of access to supplies according to needs. Prices must remunerate producers on a reasonable ‘public utility’ basis but there must be no artificial maintenance of a high price level.” Ibid., pp. 238-39.

158Ibid., pp. 239-40.

159Ibid., p. 242.

160Ibid., p. 238.

161De Michelis, G., “A World Programme of Organic Economic Reconstruction.” International Labour Review, Vol. XXIV, No. 5, November, 1931, p. 497.

162Ibid., p. 498.

163Ibid., p. 502.

164“When once the routine of life was established, the chief difficulty would be to maintain the just balance between population and subsistence; for the people would probably show a constant tendency to breed beyond the margin fixed by the established standard of comfort.” Archer, W., op. cit., p. 15.

165Ibid., p. 35.

166Cole, G. D. H., op. cit., Vol. III/I, p. 74.

167Ibid.

168Lawley, F. E., op. cit, p. 2.

169Ibid., p. 3, cf. also pp. 44 seq.

170Ibid., p. 3. Milhaud describes the same process in terms more akin to the theory of Hilferding. Cf. “Les Accords économiques entre Etats.” Annales de l’Economie Collective, Vol. XVII, Nos. 187-89, January-March, 1925, p. 66.

171Ibid.

172Hall, R. L., Economic System of a Socialist State. London, Macmillan, 1937, p. 230.

173Lawley, F. E., op. cit., p. 5. This idea reoccurs in the closing chapter of his book: “All large economic enterprises should be governmentalized in some form, so as to internationalize all wealth whose utility is too general to allow its exploitation to be reserved for one single nation.” Ibid., p. 425.

174Milhaud, E., ibid., p. 63, italics original.

175Johnston, G. A., loc. cit., p. 74.

176Ibid., p. 75.

177Blackett, Sir Basil, The Function of Finance in International Planning. Quoted in Johnston, G. A., ibid., p. 75.

178Report of the Director. International Labor Conference, 16th Session, Geneva, 1932, p. 60.

179Speech made at the Ordinary Assembly of Shareholders of the Midland Bank Limited, January 30, 1933, quoted ibid., p. 60.

180Lawley, F. E., op. cit, p. 390. The author refers to McKenna’s Post-War Banking Policy. A Series of Addresses. London, 1928.

181Ibid., pp. 391-92.

182Ibid., p. 115.

183Ibid., p. 326.

184Milhaud, E., “Trève de l’Or et Clearing des Transactions. Plan pour le rétablissement des échanges internationaux.” Annales de l’Economie Collective, Vol. XXV, Nos. 284-88, February-June, 1933, p. 73, italics added.

185Ibid., p. 94.

186Lawley, F. E., op. cit., p. 334.

187De Michelis, G., loc. cit., p. 496.

188Milhaud, E., “Accords, etc.,” loc. cit., p. 70.

189Ibid., p. 72.

190Thomas, A., “Protectionnisme, etc.,” loc. cit., p. 109.

191Ibid., p. 112.

192Ibid.

193Ibid.

194Ibid., pp. 109-10.

195“Politique” (journal), mentioned in text on p. 81. No. 6, June 15, 1930.

196Daily Herald, January 31, 1935.

197Lawley, F. E., op. cit., p. 378.

198Franq, R., L’économie rationnelle. Quoted in Lawley, F. E., op. cit., p. 371.

199Report presented to the Thirteenth Congress of the National Federation of Consumers’ Cooperative Societies at Lille, 1926, quoted in Lawley, F. E., op. cit., p. 364.

200“L’O.I.T. face au problème de l’organisation de l’économie. Les derniers enseignements et le suprême appel d’Albert Thomas.” Annales de l’Economie Collective, Vol. XXIX, Nos. 335-42, May-December, 1937, p. 166.

201Lawley, F. E., op. cit., p. 374.

202“The theory of the capitalist market price, which dies hard among economists, will then have died. Market price, under capitalism, has no relation to the true economic price which is based on actual economic services conceived as collective functions, without reference to the need, under private capitalism, of assigning part of the product of industry to be utilized as private profit in a competitive market.” Ibid., pp. 387-88.

203Ibid., p. 388.

204Ibid., p. 392.

205Ibid., pp. 386-87.

206Ibid., p. 390.

207Ibid., pp. 374-75.

208Ibid., italics added.

• 1.“Socialism, then, will flourish in proportion as the consciousness grows that there is something vitally wrong in the industrial organization of society.” Guthrie, W. B., Socialism Before the French Revolution. New York, Macmillan, 1907, p. 68. As Robert Owen expresses it: “Until society can be made to understand the impracticability of improving its conditions under the existing circumstances and can be induced to change these circumstances in toto, no real advantages can be obtained for mankind.” Lectures on an Entire New State of Society. London, 1820, p. 138.
• 2.Cf. Karl Marx’s 11th Thesis on Feuerbach. In Borkenau, F. (ed.), Karl Marx. Frankfurt/M., Fischer, 1956, p. 42.
• 3.The term “liberal” is used here in its original European sense. “Liberalism is a belief in the value of human personality, and a conviction that the source of all progress lies in free exercise of individual energy; . . . it therefore involves a readiness to use the power of the state for the purposes of creating the conditions within which individual energy can thrive, of preventing all abuses of power, of affording to every citizen the means of acquiring mastery of his own capacities and of estabhshing a real equality of opportunity. . . .” Encyclopaedia Britannica, Vol. XIII, 1959, p. 999d.
• 4“It follows from what has been said that the system here established, if it is to be realized, should be adopted or rejected in entirety.” Fichte, J. G., op. cit., p. 103.
• 5Freyer, H., op. cit., p. 26.
• 6Heuss, A., “Hellas. Die archaische Zeit.” Propyläen Weltgeschichte, ed., G. Mann and A. Heuss, Berlin, Propyläen Verlag, 1962, III, p. 373.
• 7Ibid.
• 8“They will go to mess and live together like soldiers in a camp. . . . They alone of all the citizens may not touch or handle silver or gold, or be under the same roof with them or wear them, or drink from them. And this will be their salvation, and they will be the saviors of the State.” Quoted from Republic, Book I, in Gray, A., The Socialist Tradition. Moses to Lenin. London, Longmans, 1946, p. 19.
• 9Plato, Laws. With an English translation by R. G. Bury, London, Heinemann, 1926, Vol. I, Book I, p. 9.
• 10Ibid., Vol. II, Book XII, p. 477.
• 11Ibid., Book VII, p. 135.
• 12Ibid., p. 149.
• 13Ibid., Book XII, p. 547.
• 14Ibid., p. 537.
• 15Ibid., p. 521.
• 16Ibid., Book VII, p. 185.
• 17Ibid., Book XI, p. 413.
• 18Ibid., Book VIII, p. 171.
• 19Ibid., Vol. I, Book IV, pp. 257-59, italics added.
• 20Ibid., Vol. II, Book VIII, p. 185.
• 21Ibid.
• 22Ibid., p. 187.
• 23Ibid., Book XII, p. 503.
• 24Ibid. Plato lays down the following rules: “First, no man under forty years old shall be permitted to go abroad to any place whatsoever; next, no man shall be permitted to go abroad in private capacity, but in a public capacity permission shall be granted to heralds, embassies, and certain commissions of inspection. . . . These men, when they return home, will teach the youth that the political institutions of other countries are inferior to their own.” Ibid., p. 505.
• 25Ibid., p. 507.
• 26Ibid.
• 27Ibid., p. 509.
• 28Ibid., p. 511.
• 29Ibid. “The officials . . . shall have a care lest any such strangers introduce any innovation, and they shall duly dispense justice to them, and shall hold such intercourse as is necessary with them, but to the least extent possible.” Ibid., p. 513.
• 30Guthrie, W. B., op. cit., p. 64.
• 31Ibid.
• 32Ibid., p. 68.
• 33More, Sir Thomas, The Utopia. In Latin from the edition of March 1518 and in English from the first edition of Ralph Robynson, translated in 1551, edited by J. H. Lupton. Oxford, Clarendon Press, 1895, p. 118.
• 34Ibid., p. 119.
• 35Ibid., p. 140.
• 36Ibid., p. 157.
• 37Ibid., pp. 170-71.
• 38Ibid., pp. 171-72.
• 39Ibid., p. 245.
• 40Ibid., p. 244.
• 41Ibid., p. 154.
• 42Ibid., pp. 154-55, italics added.
• 43Ibid., p. 179.
• 44Ibid., p. 251.
• 45Guthrie, W. B., op. cit., p. 54.
• 46Fichte, J. G., op. cit., pp. 4-5.
• 47“I have described property as the exclusive right to actions, by no means to things.” Ibid., pp. 5-6, italics original.
• 48Ibid., p. 4.
• 49Ibid., p. 56, italics original.
• 50Ibid., p. 14.
• 51Ibid., p. 19.
• 52Ibid., p. 26, italics added.
• 53Ibid.
• 54Ibid., p. 27, italics original.
• 55Ibid.
• 56Ibid.
• 57Ibid., p. 41, italics original.
• 58“The wealth of a person does not depend on how many pieces of money he possesses, but on how large a part of total circulating money he holds.” Ibid., p. 42.
• 59“Every possibility of world trade presupposes the availability of a universally accepted means of exchange. . . . Hence, our task should be solved in the following way: all world money possessed by the citizens, that is all gold and silver, should be brought out of circulation and exchanged for a new national currency which would be valid only inside the country.” Ibid., pp. 99-100, italics original.
• 60Ibid., p. 111.
• 61Ibid.
• 62“The import and use of commodities which serve prestige purposes only can at once be prohibited.” Ibid., p. 115.
• 63Ibid., p. 113, italics original.
• 64Fichte clearly realized this and also the danger of inflation it implies. Therefore, in order to assure the success of the monetary reform, “the government formally renounces, for eternal times, to increase arbitrarily and to its own advantage the quantity of circulating national money.” Ibid., p. 103. The author goes so far as demanding that the centrally fixed prices must be constitutionally laid down and guaranteed.
• 65Ibid., p. 114.
• 66Ibid., p. 90, italics original.
• 67Ibid., p. 119.
• 68Ibid., pp. 94-95, italics added.
• 69Ibid., pp. 95-96.
• 70Ibid.
• 71Ibid., p. 98.
• 72Ibid., p. 94.
• 73Ibid., p. 93.
• 74Ibid., p. 118 (note). This, however, is in contradiction to Fichte’s apprehensions against inflation. Cf. footnote 64 of this chapter.
• 75“Foreign machines should be bought and imitated at home. Promise of money defeats any prohibition.” Ibid., p. 117. Moreover, the government “should attract, from abroad, at whatever cost, great personalities who are competent in the applied sciences. . . . By paying rewards which no other governments can afford, people will hurry to offer their services.” Ibid., p. 116.
• 76Ibid., p. 119.
• 77Ibid., pp. 122-23.
• 78Ibid., p. 16.
• 79Du Principe Fédératif, p. 274. It is to be expected that an absolutist government “will be the more insufficient, oppressive, odious to its subjects and consequently instable in that the State will have become larger. History has conserved the memory of, and modern centuries have supplied examples of, these frightful monarchies, shapeless monsters, real poltitical mastodons which a better civilization should progressively eliminate.” Ibid., p. 289.
• 80Ibid., pp. 275 and 279.
• 81Ibid., p. 307.
• 82Ibid., pp. 319-20. Proudhon defines the socialist communities as the “miniature image of all absolutist states. One who joins an association of this kind, particularly if it is to be perpetual, is surrounded by more fetters and is subject to more charges than he had initially.” Ibid., p. 319.
• 83Ibid., p. 354. Proudhon adds, however, that a free economic order must not rest on exploitation.
• 84Ibid., p. 334, italics original.
• 85Ibid., p. 335, italics added.
• 86Ibid., p. 550.
• 87Ibid., p. 112.
• 88Ibid.
• 89Ibid.
• 90Ibid., pp. 109-10.
• 91“Politique” (journal), mentioned in text on p. 81. No. 6, June 15, 1930.
• 92Daily Herald, January 31, 1935.
• 93Lawley, F. E., op. cit., p. 378.
• 94Franq, R., L’économie rationnelle. Quoted in Lawley, F. E., op. cit., p. 371.
• 95Report presented to the Thirteenth Congress of the National Federation of Consumers’ Cooperative Societies at Lille, 1926, quoted in Lawley, F. E., op. cit., p. 364.
• 96“L’O.I.T. face au problème de l’organisation de l’économie. Les derniers enseignements et le suprême appel d’Albert Thomas.” Annales de l’Economie Collective, Vol. XXIX, Nos. 335-42, May-December, 1937, p. 166.
• 97Lawley, F. E., op. cit., p. 374.
• 98“The theory of the capitalist market price, which dies hard among economists, will then have died. Market price, under capitalism, has no relation to the true economic price which is based on actual economic services conceived as collective functions, without reference to the need, under private capitalism, of assigning part of the product of industry to be utilized as private profit in a competitive market.” Ibid., pp. 387-88.
• 99Ibid., p. 388.
• 100Ibid., p. 392.
• 101Ibid., pp. 386-87.
• 102Ibid., p. 390.
• 103Ibid., pp. 374-75.
• 104Ibid., italics added.
• 105SOCIALISTS HAVE CONCLUDED that something is fundamentally wrong with the “society” in which they live. Consequently, they feel compelled to change it.
• 106SOCIALISTS HAVE CONCLUDED that something is fundamentally wrong with the “society” in which they live. Consequently, they feel compelled to change it.
• 107The main target of socialist criticism, therefore, is the liberals’ stress on individual freedom and utility. Such freedom and utility, it is argued, lead to particularism and chaos. Since the profit motive is founded on considerations of individual as distinct from collective welfare, it is, in the opinion of socialists, totally unsuitable as a means of regulating the economy. Unlike the liberals, therefore, the socialists are primarily preoccupied with the exaltation of the community, and the subordination of the individual to it.
• 108Freyer compares the inner organizational structure of an ideal commonwealth with the “cosmos of the Greek philosophers: finite, round and numerically ordered so that it can simply and clearly be governed by static laws.” To this self-inclusive system all forces not rooted in its laws, and which therefore threaten to interfere with its proper functioning, must appear hostile and dangerous. The only choice a Utopian author leaves his reader is an uncompromising take it or leave it. Hence, a utopia must be strictly isolated from the rest of the world; “all factors and forces which by their nature transgress borderlines and join countries, must at the outset be viewed suspiciously in utopias.”
• 109Freyer compares the inner organizational structure of an ideal commonwealth with the “cosmos of the Greek philosophers: finite, round and numerically ordered so that it can simply and clearly be governed by static laws.” To this self-inclusive system all forces not rooted in its laws, and which therefore threaten to interfere with its proper functioning, must appear hostile and dangerous. The only choice a Utopian author leaves his reader is an uncompromising take it or leave it. Hence, a utopia must be strictly isolated from the rest of the world; “all factors and forces which by their nature transgress borderlines and join countries, must at the outset be viewed suspiciously in utopias.”
• 110Mankind will always be indebted to Plato for the prototype of the ideal commonwealth. This author lived at a time when democracy, the long cherished political order of Athens, had degenerated into a “bustle of rancour and baseness.” In this period of political disintegration and liberated individualism, Socrates had been sentenced to death and executed by the Athenian authorities. The rising philosophical school of the Sophists relativized all moral institutions as being solely dependent on human will in general, and that of the strong in particular.
• 111Against this philosophical anarchism Plato set his theory of the objective existence of absolute principles, the highest of which was justice. Justice may be recognized by an intelligible act and thus refuses to tolerate any authority besides itself, not even that of laws. “What is just can only be discerned for each individual case with respect to the Idea and by the one who possesses the necessary capability; that is, by the philosopher. . . . The just in the highest sense, hence the one who discerns, is therefore himself the law and thus above the rigid letter.”
• 112Human domination is thus openly admitted, but it must be domination by the chosen few endowed by nature, as an old Greek legend has it, with golden hearts. Plato’s goal is to found a state which would personify the moral Idea. The first prerequisite for such a state is unity of purpose, directed at the attainment of absolute justice. The second step is to devise a way of life for the “lovers of wisdom” which would bring them into closest communication with the Idea and its dictates. To achieve this end, Plato established severe rules for the philosophers, forbidding them to have families and private possessions and forcing them into a life of military discipline. Here, for the first time, the ideal of asceticism was linked with the denunciation of gold and silver which was identified with wealth and was regarded as the last cause of human greed and egoism.
• 113Plato, well aware that his Politeia was not realizable on this earth, designed, in his “Nomoi,” a second-best State in which the rulers were less enlightened and therefore, as the title indicates, in need of a coherent framework of guiding laws. Plato retains the military structure in the interior, he even defines “the well-constituted State” as one which “ought to be organized in such a way as to be victorious in war over all other States.” Elsewhere he writes:
• 114The main principle is this: that nobody, male or female, should ever be left without control, nor should anyone, whether at work or in play, grow habituated in mind to acting alone and on his own initiative, but he should live always, both in war and peace, with his eyes fixed constantly on his commander and following his lead.
• 115For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 116For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 117For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 118For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 119For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 120Internal economic life is strictly regimented. Thus, “each several craftsman in the State shall have one single craft and gain from it his living.” Or again:
• 121The Law-wardens must meet in consultation with experts in every branch of retail trade, and at their meetings they must consider what standard of profits and expenses produces a moderate gain for the trader, and the standard of profits and expenses thus arrived at they must prescribe in writing; and this they must insist on—the market stewards, the city stewards and the rural stewards, each in their own sphere.
• 122Most of the Greeks arrange for their food to be derived from both land and sea, but our people will derive it only from the land. This makes the lawgiver’s task easier.
• 123For if the State was to be on the sea-coast, and to have fine harbors, and to be deficient in many products, instead of productive of everything—in that case it would need a mighty savior and divine lawgivers, if, with such a character, it was to avoid having a variety of luxurious and depraved habits. As things are, however, there is consolation in the fact of that eighty stades. Still, it lies unduly near the sea, and the more so because, as you say, its harbors are good; that, however, we must make the best of. . . . Our State has compensation in the fact that it is all-productive; and since it is hilly, it cannot be highly productive as well as all-productive; if it were, and supplied many exports, it would be flooded in return with gold and silver money—the one condition of all, perhaps, that is most fatal, in a State, to the acquisition of noble and just habits of life.
• 124What remains of foreign trade is severely guarded by the State. It is true that “no toll shall be paid in the State by anyone either on exported goods or on imports,” but this is practically meaningless since
• 125Frankincense and all such foreign spices for use in religious rites, and purple and all dyes not produced in the country, and all pertaining to any other craft requiring foreign imported materials for a use that is not necessary, no one shall import; nor, on the other hand, shall he export any of the stuff which would of necessity remain in the country. . . .
• 126In regard to arms and all instruments of war, if there is need to import any craft or plant or metal or rope or animal for military purposes, the hipparchs and generals shall have control of both imports and exports, when the State both gives and takes, and the Law-wardens shall enact suitable and adequate laws therefor; but no trading for the sake of gain, either in this matter or in any other, shall be carried on anywhere within the boundaries of our State and country.
• 127the intermixture of States with States naturally results in a blending of characters of every kind, as strangers import among strangers novel customs: and this result would cause immense damage to peoples who enjoy a good polity under right laws.
• 128reputation in the eyes of others, whether for goodness or the reverse, is a thing that should never be lightly esteemed.
• 129The State may send out “inspectors,” i.e. men over fifty years of age and of great merit, “who desire to survey the doings of the outside world in a leisurely way.” But they must be “incorruptible, so as to confirm thereby such of his native laws as are rightly enacted, and to amend any that are deficient.” On their return, the inspectors will report to a “mixed body of young men and old” on “anything important they may have learnt elsewhere.”
• 130The State may send out “inspectors,” i.e. men over fifty years of age and of great merit, “who desire to survey the doings of the outside world in a leisurely way.” But they must be “incorruptible, so as to confirm thereby such of his native laws as are rightly enacted, and to amend any that are deficient.” On their return, the inspectors will report to a “mixed body of young men and old” on “anything important they may have learnt elsewhere.”
• 131The State may send out “inspectors,” i.e. men over fifty years of age and of great merit, “who desire to survey the doings of the outside world in a leisurely way.” But they must be “incorruptible, so as to confirm thereby such of his native laws as are rightly enacted, and to amend any that are deficient.” On their return, the inspectors will report to a “mixed body of young men and old” on “anything important they may have learnt elsewhere.”
• 132But if, on the other hand, such an inspector appears to be corrupted on his return, in spite of his pretensions to wisdom, he shall be forbidden to associate with anyone, young or old; wherein if he obeys the magistrates, he shall live as a private person, but if not, he shall be put to death.
• 133All foreigners—whether in a public capacity or on a private visit—are, immediately upon their arrival, taken care of by State officials or by priests. Plato is especially distrustful of that “inevitable emigrant” choosing “summer, as a rule, for his annual visits.”
• 134“Plato was the intellectual father of socialists as well as of philosophers.” But whereas he “had a more general abstract end in view . . . , More was interested in the practical solution of actual and present social problems, and busied himself with plans to alleviate existing unfortunate conditions.” These conditions resulted from the enclosure movement in sixteenth-century England. Therefore, “the appearance of ‘Utopia’ marks the beginning of the modern social problems as they show themselves in the incipient stages of the capitalistic period.”
• 135“Plato was the intellectual father of socialists as well as of philosophers.” But whereas he “had a more general abstract end in view . . . , More was interested in the practical solution of actual and present social problems, and busied himself with plans to alleviate existing unfortunate conditions.” These conditions resulted from the enclosure movement in sixteenth-century England. Therefore, “the appearance of ‘Utopia’ marks the beginning of the modern social problems as they show themselves in the incipient stages of the capitalistic period.”
• 136“Plato was the intellectual father of socialists as well as of philosophers.” But whereas he “had a more general abstract end in view . . . , More was interested in the practical solution of actual and present social problems, and busied himself with plans to alleviate existing unfortunate conditions.” These conditions resulted from the enclosure movement in sixteenth-century England. Therefore, “the appearance of ‘Utopia’ marks the beginning of the modern social problems as they show themselves in the incipient stages of the capitalistic period.”
• 137The Island of which Hythloday enthusiastically reports is in the form of a horseshoe and its shores are washed by a calm and friendly sea. However, when Utopus first conquered “Abraxa,” it was a peninsula. This wise king made it an island by cutting an isthmus of fifteen miles. The entry into Utopia’s inviting bay is, moreover, made treacherous by nature because of dispersed rocks and shallows—the safe passages being known only to the fortunate inhabitants themselves.
• 138that they do not think felicity to rest in all pleasure, but only in that pleasure that is good and honest. . . . They define virtue to be a life ordered according to nature . . . and that he does follow the course of nature who in desiring and refusing things is ruled by reason.
• 139This greatly simplifies the economic process. Both men and women work and, since private property is unknown, there is no distinction between rich and poor. Hence, an idle class which must be supported does not exist. In addition, the demand for goods and services is reduced because homespun garments “are throughout all the Island of one fashion . . . seemly and comely to the eye, fit both for winter and summer.” Simple but abundant meals are taken in common, and whatever else is produced is done so in good and lasting quality. Hence, six hours of daily work are sufficient to provide for the Utopians’ necessities; the rest of the time is devoted to common recreation, games, and studies. But even so, the inhabitants cannot help producing surplus. All commodities are stored in warehouses or markets;
• 140from hence the father of every family or every householder fetches whatsoever he and his have need of, and carries it away with him without money, without exchange, without any gage or pledge. For why should anything be denied to him; seeing there is abundance in all things, and that it is not to be feared lest any man will ask more than he needs.
• 141then of those things whereof they have abundance, they carry forth into other countries great plenty; as grain, honey, wool, flax, madder, purple dye, felles, way, tallow, leather and livestock. And the seventh part of all these things they give frankly and freely to the poor of that country. The residue they sell at a reasonable and mean price. By this trade of traffic or merchandise, they bring into their own country not only great plenty of gold and silver, but also all such things as they lack at home, which is almost nothing but Iron. And by reason they have long used this trade, now they have more abundance of these things than any man will believe.
• 142Now, therefore, they do not care whether they sell for ready money or else upon trust to be paid at a day, and they have the most part in debts. But in so doing they never follow the credence of private men, but the assurance or warrantise of the whole city, by instruments and writings made in that behalf accordingly. . . . The most part of it they never ask. For that thing which is to them of no profit, to take it from others to whom it is profitable, they think it no right nor conscience. But if the case so stand that they must lend part of that money to another people, then they require their debt; or when they have war.
• 143Of course, the Utopians will never go to battle because of unsettled trade matters. But they will do so
• 144in defence of their own country or to drive out of their friends’ land the enemies that had come in or . . . to deliver from the yoke and bondage of tyranny some people that be oppressed with tyranny. Which things they do by mere pity and compassion.
• 145There may be still another occasion for war. It may happen that the Utopian population (despite institutional attempts at regulation) so increases that it “exceeds the due number throughout the whole island.” In such a case,
• 146they build up a town under their own laws on the nearest part of the mainland where the inhabitants have much waste and unoccupied ground, receiving also the inhabitants to them, if they will join and dwell with them. . . . But if the inhabitants of that land will not dwell with them, to be ordered by their laws, then they drive them out of those boundaries which they now mark out for themselves. . . . For they account this the most just cause of war when any people holds a piece of ground void and vacant to no good nor profitable use, keeping others from the use and possession of it which notwithstanding by the law of nature ought thereof to be nourished and relieved.
• 147The Utopians readily observe this law by returning the colonizers to their native cities as soon as the Island’s number of inhabitants has become deficient. Beyond that, only “very few” go to foreign countries and this only “for some reasonable cause” such as trading.
• 148Utopia’s chief instruments of war are gold and silver. These precious metals are used to hire mercenaries and to lavishly reward foreign agents charged with the outright murder of a hostile prince or to “procure occasions of debate and dissention to be spread among their enemies.” The Utopians themselves, though well trained and prepared for war, fight only if they must to defend their country.
• 149“The first socialistic theorist, Sir Thomas More,” wrote his Utopia as a reaction against the social evils of his time. General humanitarian feelings and a strong empathy with the miserable lot of the poor classes merged, in the eighteenth century, into the powerful current of thought which was set free by the Enlightenment. History and politics were now subjected to the analysis of reason. A natural and reasonable social, political, and economic order was supposed to exist, derivable from the knowledge of human character. The “social contract” offered a normative formula which indicated how society should be built if its construction were influenced only by reason and not also by error, lust for power, and custom.
• 150Johann Gottlieb Fichte, at the turn of the century, combined French rationalism and radicalism with German nationalism. Unlimited freedom, he wrote, means no freedom at all since “no one may appropriately put something into effect and rely for one moment on its duration. This antagonism of the free forces can only be counteracted by the individuals making a mutual agreement.” This agreement restricts the liberty of its participants equally and contains the assignment of an exclusive right to a determined “free” activity to each participant. The agreement thereby constitutes property.
• 151Johann Gottlieb Fichte, at the turn of the century, combined French rationalism and radicalism with German nationalism. Unlimited freedom, he wrote, means no freedom at all since “no one may appropriately put something into effect and rely for one moment on its duration. This antagonism of the free forces can only be counteracted by the individuals making a mutual agreement.” This agreement restricts the liberty of its participants equally and contains the assignment of an exclusive right to a determined “free” activity to each participant. The agreement thereby constitutes property.
• 152it is the State’s function to assign property to each and then only to protect his corresponding rights.
• 153unless it fixes the exact number of those who are permitted to work in a given branch and provides for production of the necessary means of subsistence for all. It is only through this closure that a branch of activity becomes the property of the class which works in it.
• 154the superfluous is always to be set behind the things which are indispensable or hard to dispense with. . . . All should first have enough to eat and be permanently accommodated before anyone decorates his dwelling; all should have warm and comfortable clothes before anyone puts on a sumptuous gown. . . . It is inadmissible to say ‘I can pay for it.’ It is very unjust that one person is able to afford the unnecessary whereas his fellow citizens lack the essentials.
• 155The government guarantees not only work, but also a ready market to its citizens. This is possible on the basis of the general plan. Prices are fixed by the State, and have a legal character.
• 156The State is obligated to guarantee to all citizens, by law and coercion, the conditions resulting from this equilibrium of mutual intercourse. Yet it is unable to do so if any person outside its laws and dominion has any influence on this equilibrium. It is therefore imperative to cut off the possibility of such an influence. All intercourse with foreigners must be forbidden and made impossible to its subjects.
• 157the government, in order to continuously guarantee its subjects the fulfillment of their customary needs, must be able to rely on the fact that a certain quantity of goods is being traded. How can it count on the foreigner’s contribution to this quantity since he is outside the government’s dominion? It is to fix and warrant the price of a commodity. How can it succeed with respect to the foreigner if it is unable to determine those prices which prevail in his country and at which he buys the raw materials? If the government sets him a price which he cannot afford, he will henceforth avoid its market and deficiency in the satisfaction of customary needs will result. It is to guarantee to each subject the sale of his products at the due price. How can it do so if the subject sells on foreign markets where different commodity relations prevail which it can neither survey nor influence?
• 158a closed commercial state just as it is a closed imperium of laws and individuals.
• 159Each man as well as each commodity belongs either to its jurisdiction or it does not: “there is no third choice.” It follows that any foreign trade that may be judged necessary falls to the exclusive competence of the government “just as it alone is to decide on war, peace, and alliances.”
• 160Each man as well as each commodity belongs either to its jurisdiction or it does not: “there is no third choice.” It follows that any foreign trade that may be judged necessary falls to the exclusive competence of the government “just as it alone is to decide on war, peace, and alliances.”
• 161A closed commercial state . . . can turn into money whatever it desires, provided only that it declares to accept this and no other money. . . . It would thus create a national currency without even raising the question as to whether this money would or would not be accepted abroad, since for a closed commercial state foreign countries are as good as nonexistent.
• 162A closed commercial state is utterly indifferent to whether there is, to speak in customary language, a large or a small circulation of money. The total sum of circulating money simply represents the total quantity of publicly traded goods.
• 163In the first place private foreign trade is to be made impossible by depriving citizens of all international means of payment. This deprivation must be preceded by the following measure:
• 164Immediately before the promulgation of the new national currency, the government buys all foreign goods existing in the country. . . . This purchase takes place partly in order to assess the available stock and the present needs for these commodities, and partly in order to centralize their price fixing.
• 165By the same stroke with which it introduces the new national currency, it is to take over all assets and liabilities resulting from foreign trade.
• 166Henceforth, the government will decide which commodities will continue to be exported and imported.
• 167The government pays to or claims world currency from the foreigner and then pays to or claims national currency from the citizen.
• 168The same method of control will be applied to all foreign trade transactions and their corresponding payments. The separation of currencies will be paralleled by a separation of the internal price level from that prevailing on the world market. Therefore,
• 169the citizen does not buy at the price the government pays to the foreigner for a commodity, but at the one prescribed by internal law with due consideration for the citizen’s fair subsistence during the time he resells it.
• 170Exports are to be similarly regimented. The prices of foreign goods are gradually raised so as to break the citizens of their habit of desiring them, the final aim being “that the State completely isolates itself from any foreign trade.”
• 171Fifthly, “simultaneously with the execution of these measures the State is to move into its natural frontiers.” This leads us to an interesting point of Fichte’s political theory. He writes:
• 172Certain areas of the earth’s surface, including their inhabitants, are clearly destined by nature to form political units. They are separated from the rest of the earth by large rivers, seas, inaccessible mountains. . . . It is these indications of nature as to what is to remain united and what is to be separated that one has in mind when speaking, in modern politics, of the natural frontiers of empires; a consideration which should be taken far more seriously than is commonly done. Nor is sole emphasis to be placed on strong and militarily well protected frontiers, but much rather on productive independence and self-sufficiency.
• 173will speak of the necessity of rounding off their borders and assert that, in view of their other lands, they cannot exist without this fertile province and that mine or salt work, always dimly thinking of the acquisition of their natural frontiers.
• 174Wars are therefore inevitable and must be fought by the State, though “not properly speaking by the peoples, to whom, if only they are united, it can be indifferent under whose name or dynasty this takes place.”
• 175must give and be able to give its neighbors the guarantee that it will henceforth refrain from further expansion. However, it can give this guarantee only on the condition of becoming a closed commercial state. Closure of territory, and closure of commercial intercourse are mutually interrelated and complementary measures. A state which adheres to the ordinary system of commerce and aims at supremacy in world trade, retains a continuing interest in expanding beyond its natural frontiers in order to increase its trade and hence its wealth. . . . To the closed commercial state, on the other hand, not the slightest advantage can accrue from an expansion beyond its natural frontiers since its whole constitution is calculated only for its given extension.
• 176The Vernunftsstaat, finally, establishes the foundations of the future closed economic order. It does so by systematically exploring the production possibilities of the country with respect to import substitutes and by setting up plans accordingly. In its calculations, the government must, on the one hand, distinguish “between such needs which can really contribute to well-being and others which merely serve prestige purposes.” On the other hand, it will not be difficult to find adequate substitutes for foreign products if neither trouble nor costs are spared. The government
• 177The Vernunftsstaat, finally, establishes the foundations of the future closed economic order. It does so by systematically exploring the production possibilities of the country with respect to import substitutes and by setting up plans accordingly. In its calculations, the government must, on the one hand, distinguish “between such needs which can really contribute to well-being and others which merely serve prestige purposes.” On the other hand, it will not be difficult to find adequate substitutes for foreign products if neither trouble nor costs are spared. The government
• 178has enough means to try everything at its own costs and calmly await success. Within the country, this costs nothing more than a piece of money which it can easily produce.
• 179At this time, foreign trade is still being transacted so that the State can use all foreign exchange reserves for building up the fundaments of the present and future economy. Fichte has so much confidence in the size and efficiency of the Rational State’s gold and silver stock that the latter’s purposeful devotion to the preparation of war—the acquisition of raw materials and armaments—may exclude any serious resistance of its enemies
• 180so that it may reach its goal without bloodshed and almost without striking a blow, and that its operation is more like an occupational campaign than a war.
• 181Between such states, destined by nature to a continuing barter, a trade agreement could be reached according to which one partner is pledged for eternal times to grow for the other a certain quantity of wine in exchange for the delivery of a specified quantity of corn. Neither partner is to aim at a profit, but at an absolute equality of value. Hence, there would be no need for money for such trade, only for clearing.
• 182Questions such as: why should I not have a commodity in the same perfection as that manufactured in another country, comes down to asking: why am I an inhabitant of this country, and amounts to the same as if the oak tree should ask: why am I not a palm tree and vice versa. Every man must content himself with the sphere in which nature has placed him and with everything that comes from this sphere.
• 183Although maximum freedom from government intervention is the ideal of the economic sphere, some kind of authority must exist. Proudhon’s next task is to find a balance between these two antagonistic forces. He distinguishes between two kinds of authority: monarchy and “panarchy,” or “communism,” which is characterized by centralized administration and undivided power, and democracy or self-government which is founded on liberty and law.
• 184Although maximum freedom from government intervention is the ideal of the economic sphere, some kind of authority must exist. Proudhon’s next task is to find a balance between these two antagonistic forces. He distinguishes between two kinds of authority: monarchy and “panarchy,” or “communism,” which is characterized by centralized administration and undivided power, and democracy or self-government which is founded on liberty and law.
• 185With arbitrariness fatally entering politics, corruption soon becomes the soul of power and society is dragged, without pause or mercy, on to the endless path of revolutions. That is where the world is today.
• 186A federative contract aiming, in general terms, at guaranteeing to the federated states their sovereignty, their territory, the freedom of their citizens; at settling their disputes; at providing for general measures pertaining to the security and common prosperity . . . this contract then, in spite of the magnitude of the interests involved, is essentially restricted. The authority charged with its execution is never allowed to prevail over its constituting members; I mean that the federal attributes can never exceed in number or reality, those of the communal and provincial authorities, just as the latter cannot exceed the rights and prerogatives of man and the citizen. If it were otherwise, . . . the federation would again become a centralization of the monarchic type.
• 187The internal structure of the federate system is thus seen to be the exact opposite of the internal structure of hierarchy and administrative centralization. But the political order must be complemented by a free economic order, designed so that it does not give “ceaseless causes for dissolution.”
• 188In such systems . . . one can say that the idea of natural frontiers is a fiction or rather a political fraud; rivers, mountains, and seas are regarded in them not as territorial limits, but as obstacles over which the freedom of the sovereign and of the nation provides a challange for triumph. And this is the natural outcome of its underlying principle: the faculty of possessing, accumulating, commanding, and exploiting is infinitely great, limited only by the universe itself. . . . Nothing can stop its encroaching advance [of the State, E.T.] except the collision with another State, just as aggressive, and capable of defending itself.
• 189By virtue of the principle which, by limiting the treaty of federation to mutual defense and to a few other objects of common utility, guarantees to each State its territory, its sovereignty, its constitution, the freedom of its citizens and, over and above, leaves it with more authority, initiative, and power than it gives up, federation is automatically restricted . . . with the result that a federation provides a guarantee both to its own members and to its non-federated neighbors.
• 190A federate people is a people organized for peace; what use could it make of armies? . . . No need for alliance or commercial treaties: between free nations, common law is enough. Freedom of exchange . . . freedom of circulation and residence within the limits of the respect due to the laws of each country. . . . Such is the idea of federation and such are its consequences.
• 191The system of cooperation establishes direct relationships between production and consumption; and, by its efforts to use savings rationally, it gives a satisfactory answer to the requirement expressed in many resolutions “regarding the necessary regulation of capital movements.” Cooperation is the manifestation of “a converging effort of wills:”
• 192The system of cooperation establishes direct relationships between production and consumption; and, by its efforts to use savings rationally, it gives a satisfactory answer to the requirement expressed in many resolutions “regarding the necessary regulation of capital movements.” Cooperation is the manifestation of “a converging effort of wills:”
• 193Already we see that . . . coordinating international bodies are emerging which confront needs and resources and ensure stable transactions based on equitable reciprocity.
• 194the desire of each nation and of each people to preserve the degree of independence which is indispensable if it is to peacefully develop the resources of its genius, all of its moral and spiritual values.
• 195A writer in Politique suggested the creation of an International Bureau of Production to be directed by intelligent and competent businessmen. Just as a certain coordination of central bank policies was achieved by regular contacts within the B.I.S., so managers and directors should come together and deliberate on vital questions of production. Their conclusions reached after careful study would become public and binding. The Bureau, cooperating with the League and the I.L.O., would have adequate authority to have its decisions observed by the industries of the various countries. It would also supervise producers’ agreements and entertain close contacts between cartels.
• 196Another similar suggestion was made in 1935 by the U.S. Secretary of Commerce, D. Rooper, with respect to the establishment of an international board to divide the world export makers among the producing and manufacturing nations.
• 197Businessmen have started to abandon more completely as obsolete the idea that unrestricted competition ensures the best interests of producers, while certainly consumers are coming to see that, whatever dangers unregulated trusts and monopolies may present, competition does not give them the best terms. Reduced costs, as the basis of lower prices and stability, ensuring the worker smoother employment and thus augmenting his purchasing power, and as a source of economy to the employer, especially through the enabling of a wiser use of capital, and surer and accessible markets, these are some of the fruits of large scale, coordinated organizations.
• 198For the conception of unorganized labor, which is translated by the law of supply and demand, and leads to the “struggle for life,” socialism substituted a scientific organization of production and exchange whose elevated moral and social aims are unassailable from the point of view of justice and human fraternity.
• 199We have arrived at the most perilous stage of economic evolution. To pass beyond it, we must not be held back by the illusions of the doctrines, now outworn of laissez-faire. . . .
• 200They say: impossibility of social security charges; they say: economic impossibilities, and at the same time the world seems to overflow with possibilities of wealth and production. Raw materials—they are there. Stocks are not diminishing—they are increasing! Men and workers—they are there. . . . What then is lacking? What is lacking is organization; the possibility of combining all these elements, the desire to put all these resources to work . . . according to the postulates of social justice. What is lacking is the supreme initiative which makes possible international decision-making.
• 201It will be most essential that the central body is equipped with an expert staff to provide it with a thorough knowledge of production costs. When international production is organized on the true basis of international collective economy, the international organization will fix prices, on which the exchange of goods will occur, bearing in mind the payment of proper wages and salaries, collective transportation, the covering of capital costs, and the cost of maintenance and repairs of plant and machinery.
• 202On the basis of such “true economic prices,” international exchange will be centrally planned and stable:
• 203The manipulations and instability of the capitalist exchange system—with varying exchange rates (and quotations of stocks and shares) will no longer exist.
• 204As to the monetary system, “the best solution would be a uniform international currency,” managed and controlled by the B.I.S. But this will be of relatively minor importance because the Milhaud plan
• 205contains the seeds of the new forms of economic practice in regard to international exchange of the future, inasmuch as it emphasizes that the distribution of goods and services and not the passage of money is the vital thing in economic life.
• 206As regards investment, “only a central International Authority can determine in the world’s general interest, where credit should be allocated.” The capital charges included in prices will, because of the eventual collective ownership of funds,
• 207not be at all similar to those when a return on private capital has to be envisaged. . . . What is now called interest on such capital will go to the collectivity.
• 208the basis of its work must be a firm foundation laid by authoritative National Economic Councils.*