Socialism and International Economic Order

CHAPTER V THE COLLECTIVIST STATE-THE TRANSITIONAL STAGE FROM CAPITALISM TO WORLD PLANNING

MARXISM AND THE NATIONAL STATE

The man who had summoned the proletarians of the world to unite never allowed himself to speculate along the lines described in Chapter IV. He bitterly attacked Bakunin’s anti-State view of the future international order, even though both subscribed to the doctrine defining the State as the institutionalized form of oppression. Yet, for Marx, the latter was also a necessary historical category. As capitalism had a specific historical task to fulfill, so had the national state, created by the capitalist class and used as its instrument:

The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.1

Consequently, a collision between the ruling classes and the forces of socialism became inevitable, but, and this is the essential point, the State was not to be destroyed by the “international proletariat”; it was instead to be conquered by the national working classes in each state:

Though not in substance, yet in form, the struggle of the proletariat with the bourgeoisie is at first a national struggle.2

The proletariat’s aim is to achieve political power:

Political power, properly so called, is merely the organized power of one class for oppressing the other. If the proletariat during its contest with the bourgeoisie is compelled, by the force of circumstances, to organize itself as a class; if, by means of a revolution, it makes itself the ruling class, and, as such, sweeps away by force the old conditions of production, then it will, along with these conditions, have swept away the conditions for the existence of class antagonisms, and of classes generally, and will thereby have abolished its own supremacy as a class.3

For international relations this means:

In proportion, as the exploitation of one individual by another is put an end to, the exploitation of one nation by another will also be put an end to. In proportion, as the antagonism between classes within the nation vanishes, the hostility of one nation to another will come to an end.4

This is an early statement of the familiar “withering away” theory. But this process, according to Marx, is able to begin only in a “higher phase of communistic society” when both individual character and the forces of production have reached a stage of development which makes possible its organization on the principle “from each according to his ability, to each according to his needs.”5 However,

between capitalist and communist society lies the period of the revolutionary transformation of the one into the other. There corresponds to this also a political transition period in which the State can be nothing but the revolutionary dictatorship of the proletariat.6

The dictatorship of the proletariat is characterized by two basic functions : the gradual extinction of all traces of capitalism and the construction of socialism. To fulfill these tasks, the State must undergo a complete transformation. There can be no question of the socialist state’s continuing to operate (fortwirtschaften) with the administrative apparatus inherited from capitalism; it must shatter it. Parliamentary control, being regarded as the control by the possessing classes,7 is to be replaced by a pyramid of workers’ councils wielding both executive and legislative powers.8 This system is called, by Lenin, democratic centralism. “Insofar as these councils are representative institutions, there is democracy. Insofar as the greater power goes with the higher council and insofar as the unity of the nation is not to be broken, there is centralism.”9 Both Marx and Lenin stress the fact that this system has nothing in common with traditional federalism. In fact, it is an entirely new form of community which could best be characterized, as Engels has suggested, by the word “Gemeinwesen,” as opposed to “State.”

It follows from Marx’s writings that the dictatorship of the proletariat is to be instituted in the wake of a victorious and separate revolution of the working class in each state and that “the unity of the nation should not be broken up.” But this postulate is clearly in contradiction to Point 9 of the program adopted by the Social Democratic Workers’ Party of Russia in 1903 containing “the recognition of the right of self-determination to all nationalities contained in a State.”10 It is impossible, in this context, to trace the various views held by the major socialist protagonists such as Rosa Luxemburg, Otto Bauer, Karl Renner, and Karl Kautsky—on this question at the turn of the century. Both Marx and Lenin have unmistakably pointed out that “it is to the class-struggle that we must subordinate the demand for national self-determination.”11 And Lenin argues dialectically:

We demand the freedom of self-determination—not because we dream of an economically atomized world, nor because we cherish the ideal of small states, but on the contrary, because we are for large states and for a coming closer, even a fusion, of nations, but on a truly democratic, truly international basis. . . .12 For the advantages of large states, both from the point of view of economic progress and from the point of view of the interest of the masses, are beyond doubt, and these advantages increase with the growth of capitalism.13

Socialism will

lead to the complete elimination of all national friction, of all national suspicion, to the speedy establishment of intimacy between and amalgamation of nations, culminating in the “withering away” of the state.14

This process will result in

the creation of a single world economy regulated by the proletariat of all nations according to a common plan.15

The practical solution of the self-determination issue, adopted by Lenin and his successor, sheds important light on the major point of interest in this context—the kind of internal order corresponding to the dictatorship of the proletariat. In an article published in Pravda on October 10, 1920, Stalin analyzed the proper relations to be established between Central Russia and the different nationalities which have been united under Czarist domination:

The demand for the secession of the border regions from Russia . . . must be rejected . . . because it is fundamentally opposed to the interests of the mass of the peoples both of the centre and of the border regions. Apart from the fact that the separation of the border regions would undermine the revolutionary might of Central Russia . . . , the seceded border regions themselves would inevitably fall into bondage to international imperialism.16

In 1922, only two years later, considerations relating to the internal economic situation, foreign policy, and the “structure of Soviet power” led to the establishment of the Union of Soviet Socialist Republics. This structure, “being international by its intrinsic nature . . . systematically fosters the idea of unity among the masses and impels them towards amalgamation.”17 Stalin described the nature of unified economic cooperation as follows:

The People’s Commissariats of Finance, National Economy, Food, Labor and Inspection shall continue within each of the contracting republics, but in such a way as to operate in accordance with the instructions of the corresponding central Commissariats of the Union.18

Some months later, at the 12th Congress of the Communist Party of the Soviet Union, he said:

The political basis of the dictatorship of the proletariat consists mainly and primarily of the central, the industrial regions, and not the border regions which are peasant countries. If we over-emphasize the peasant border regions at the expense of the proletarian districts, a fissure in the system of the dictatorship of the proletariat may result. . . . It should be borne in mind that besides the right of nations to self-determination there is also the right of the working class to consolidate its power and to this latter right the right of self-determination is subordinate.19

MARXISM AND ECONOMIC ORGANIZATION

Marx and Engels

To the transitional political period—the dictatorship of the proletariat—there will correspond, according to Marx, a “first phase” of economic organization:

What we have to deal with here is a communist society, not as it has developed on its own foundation, but, on the contrary, just as it emerges from capitalist society; and which is thus in every respect, economically, morally and intellectually, stamped with the birthmarks of the old society from whose womb it emerges. Accordingly, the individual producer receives back from society—after the deductions have been made—exactly what he contributes to it. What he has contributed to it is his individual quantum of labor. . . .

Here obviously the same principle prevails as that which regulates the exchange of commodities, as far as this is exchange of equal values. Content and form are changed, because under the altered conditions no one can give anything except his labor, and because, on the other hand, nothing can pass into the ownership of individuals except individual means of consumption. . . . Hence, equal right here is still in principle—bourgeois right, although principle and practice are no longer at loggerheads.20

This right, however, has severe defects:

One man is superior to another physically or mentally and so supplies more labor in the same time, or can labor for a longer time; and labor, to serve as a measure, must be defined by its duration or intensity, otherwise it ceases to be a standard of measurement. The equal right is an unequal right for unequal labor. It recognizes . . . unequal individual endowment, and thus natural privileges in respect to productive capacity. . . . Further, one worker is married, another not; one has more children than another, and so on. Thus, . . . one individual will in fact receive more than another, one will be richer than another. . . . Right can never be higher than the economic structure of society, and the cultural development conditioned by it.21

The “altered conditions” to which Marx refers, are, of course, the outcome of the fact

that society openly and directly takes possession of the productive forces which have outgrown all control except that of society as a whole.22

Friedrich Engels devotes particular attention to the production side of a socialist economy:

As soon as society takes possession of the means of production and uses them in direct socialization for production, the labor of everyone, however different may be its specifically useful character, immediately becomes social labor. The quantity of labor contained in a product no longer needs to be determined in a roundabout way; everyday experience directly shows how much of it is needed on the average. Society can simply compute how many labor hours are contained in a steam-engine, in a hectolitre of wheat of last year’s crop, in a hundred square yards of cloth of a certain quality. It will not even consider expressing labor quantities specified for production . . . in any other unit . . . than in its natural, adequate, absolute measure: time. . . . Hence, society, under the above conditions, does not ascribe values to the products. . . . To be sure, society will continue to be aware of how much labor will be required for the production of each commodity. It will have to draw up its production plan according to the available means of production including, in particular, labor forces. It is the utility of the various commodities, balanced against each other and with respect to the quantities of labor necessary to their production that will eventually determine the plan. People will settle everything very simply, without interference of the much talked of value.23

Socialist planning will, according to Engels, achieve considerable economies of productive resources first because of its superior organization, secondly because there will be no more crises, and thirdly, because

it sets free for the community at large a mass of means of production and of products, by doing away with the senseless extravagance of the ruling classes of today, and their political representatives.24

Consequently,

the government of persons is replaced by the administration of things, and by the conduct of processes of production. The state is not “abolished.” It withers away.25

With respect to the international division of labor, Engels writes:

Capitalistic industry has already made itself relatively independent of local barriers of its raw materials’ production sources. . . . A society freed from the barriers of capitalistic production can go much farther. By producing a generation of universally educated producers who understand the scientific foundations of the entire industrial production and of whom each has worked himself through numerous production branches, it creates a new productive force that more than counterbalances the work of transport involved in the supply of raw materials and fuels from longer distances.26

Lenin

The “higher phase of communistic society,” Lenin maintained, was foreseen, though never “promised” by the great socialists, since it “presupposed both a productivity of labor unlike the present and a person unlike the present man in the street.”27 For the time being,

the Socialists demand the strictest control by society and by the state of the amount of labor and the amount of consumption. But this control must start with the expropriation of the capitalists and must be carried out. . . by a state of armed workers.28

The Communist Party, having fulfilled its task “to capture political power and to suppress the resistance of the exploiters”29 was now faced with

the organization of accounting, of the control of large enterprises, the transformation of the whole of the state economic mechanism into a single huge machine, into an economic organism that will work in such a way as to enable hundreds of millions of people to be guided by a single plan. Such was the enormous organizational task that rested on our shoulders.30

However,

our work of organizing nation-wide accounting and control of production and distribution under the guidance of the proletariat has lagged very much behind our work of directly expropriating the expropriators.31

And this in spite of the fact that accounting and control

have been so utterly simplified by capitalism that they have become the extraordinary simple operations of checking, recording and issuing receipts which anyone who can read and write and who knows the first four rules of arithmetic can perform.32

The Soviet government must make use of the latest achievements of capitalism33 as regards the best auditing methods as well as such devices as the Taylor system and scientific management. But its principal task is an educational one:

The fight to instill into the minds of the masses the idea of Soviet state control and accounting . . . the fight to break with the cursed past which taught the people to regard the gaining of bread and clothes as a “private” matter, as buying and selling, as a transaction “which concerns only myself”—is a great fight of world-historical significance, a fight between socialist consciousness and bourgeois-anarchist spontaneity.34

The authorities must also, by all means, raise labor productivity. This “first of all requires that the material basis of large-scale industry shall be assured, viz. the development of the production of fuel, iron, the engineering and chemical industries.”35

It is also necessary to improve the discipline and organization of labor:

The form of coercion is determined by the degree of development of the given revolutionary class. . . . Large-scale machine industry—. . . the material productive source and foundation of socialism—calls for absolute and strict unity of will which directs the joint labors of hundreds, thousands and tens of thousands of people. . . . But how can strict unity of will be assured? By thousands subordinating their will to the will of one.36

The Communist Party, “with the transition of all power—this time not only political and not even mainly political, but economic power, that is, power that affects the most deep-seated foundations of every-day human experience—to a new class,”37 is faced with a historically unique and therefore particularly difficult task.

It goes without saying that in view of the supreme importance and the supreme difficulty of the organizational tasks that confront us, when we must organize the most deep-seated foundations of the human existence of hundreds of millions of people on entirely new lines, it is impossible to proceed according to the proverb “measure your cloth seven times before you cut it.” Indeed, we are not in a position to measure a thing innumerable times and then cut out and fix what has been finally measured and fitted. We must build our economic edifice in the process of work, trying out this or that institution, watching their work, testing them by the collective common experience of the toilers and, above all, by the results of their work. . . . It goes without saying that if even in a short space of time we have again and again to alter types, regulations and organs of administration in various branches of national economy, there is nothing in this that can give grounds for pessimism, although, of course, it may give considerable grounds for angry outbursts on the part of the bourgeoisie.38

However, Lenin points out that

the possibility of building up socialism depends entirely upon whether we shall be able . . . to safeguard our internal economic independence for a given transitional period.39

Hence, one of the first measures of the Soviet government was the establishment of a state monopoly of foreign trade.

Stalin

Stalin, with more than a decade of centralized state planning to look back upon, contributed three “new” aspects to the theory of socialist economy. The first refers to the character of economic laws: while it is true that they exist independently of the mode of production adopted,

it has been proven that society is not powerless with respect to the laws; that it can, by knowing the economic laws and by relying on them, limit the sphere of their action, use them in the interest of society and take them into account as this is done with the forces of nature and its laws.40

The author illustrates this by “the objective law of harmonious and proportioned development of the national economy” governing socialism, which he contrasts to “the law of competition and anarchy of production prevailing under the capitalist regime.”41 What is the nature of the first-mentioned objective law? Here is Stalin’s dialectic answer:

The law of a harmonious development of the national economy offers to our planning agencies the possibility of correctly planning social production. But possibility should not be confused with reality. . . . In order to convert this possibility into reality, one has to study this economic law, to master it, one has to learn how to apply it with full knowledge of what is involved. . . . One cannot say that our annual plans and our five-year plans fully reflect the requirements of this economic law.42

Secondly, Stalin analyzes the role of the law of value under socialism. As far as commodity production in the USSR still exists and it does at the present stage of historical development—the law of value asserts itself. Is this a good thing? the author asks and answers:

It is not bad. . . . The calamity is not that the law of value influences our production. The calamity is that our economic and planning experts, with few exceptions, have a poor knowledge of the effect of the law of value, that they fail to study it and do not know how to account for it. This explains the confusion which still exists in our price policy. Here is an example among so many others. Some time ago, it was decided to adjust the relation of cotton and corn prices in the interest of cotton cultivation, to fix the price of corn sold to the cultivators of cotton, and to raise the price of cotton delivered to the State. Our economic and planning experts now came out with a proposition which could not but surprise the members of the Central Committee since it was suggested to fix the price of a ton of corn almost at the same level as that of a ton of cotton, the price of a ton of corn being identical with that for a ton of bread. . . . Perforce, the Central Committee itself had to attend to this matter, to lower the price of corn and to raise that of cotton.43

This does not mean, however, that the law of value directs production with respect either to its volume or to its proportions, as under capitalism.44 It is only allowed to work insofar as it does not collide with the law of proportional and harmonious development and the centrally established plans based upon it. If its sphere of action had a greater scope, as some comrades suggested that it should have, one could rightly ask:

Why should not our light industries be fundamentally developed since they are more remunerative than heavy industry which is sometimes less remunerative or at times not remunerative at all? . . . It is clear that, by following the recommendations of these comrades, we had to renounce the primacy of the production of the means of production on the production of consumer goods. . . . This would mean the impossibility of an increasing growth of our national economy.45

Stalin’s third contribution to socialist economic theory is found in this statement:

The most important economic result of the second world war and of its consequences for the economy has been the disintegration of the single universal world market. . . . One has witnessed . . . the detachment of China and the other European countries having adopted popular democracy from the capitalist system in order to form, with the Soviet Union, a sole and powerful socialist camp, opposed to the camp of capitalism. . . . We have now two parallel world markets and they, too, are opposed to each other.46

This is how the author views the nature of the socialist world market:

The experience of this cooperation shows that no capitalist country could have given equally efficient and technically qualified assistance to the people’s democracies than that which they received from the Soviet Union. The fact is that on the basis of this cooperation there is the sincere desire to help one another and to achieve general economic progress. As a result, we observe rapid industrial development in these countries. One can say with assurance that, with such a rhythm of industrial development, these countries will soon no longer need to import goods from capitalist countries, but will themselves feel the necessity of selling the surplus of their production abroad.47

When reading this passage, one must wonder whether Stalin had read More’s Utopia. We shall examine more closely these contentions, along with the nature and results of socialist international economic cooperation, in the last part of this study.

THE NATIONAL SOCIALIST APPROACH

It is interesting to note that the internal structure of the collectivist state became equally elaborated by another line of thought, represented with particular force and clarity in Germany. The authors in question, philosophers and historians alike, approached the subject not from the premise of international solidarity, but from the viewpoint of national might and greatness. They drew their inspiration from the Prussian state which, as we have already seen, was regarded by Hegel as the most perfect manifestation of historical development, the identification of reason with reality.48 It is impossible, in this context, to give more than a few highlights to illustrate this line of economic and political speculation which eventually resulted in the establishment of the National Socialist state.

The State is seen as an “ideal, total personality placed above the individual.”49 Or one can read:

The State . . . is the intimate union of the entire physical and spiritual needs, of the entire physical and spiritual wealth, of the entire internal and external life of a nation to a great, energetic, infinitely moved and living whole.50

It is impossible to achieve the national state

as long as minds are divided by a twofold desire, the one to live in civic order in the state . . . the other to exempt oneself again from the entire civic order, to cut oneself out of the same state with one’s family, one’s private life, one’s most intimate feelings, even with one’s religion.51

Hence, there can exist no human sphere outside the State. All property should lastly belong to the State. The Ministry of Foreign Affairs is to supervise if not outright to conduct foreign trade. It is only “the free and powerful intercourse of the states among them”52 which has ultimate reality in international relations. At the same time, states cannot possibly be subjected to international law, for it would far exceed the capacity of any single human being to act as an arbitrator in international disputes.53

Clearly, this doctrine has its roots in the theory of the Utopian State. It was radically restated by Oswald Spengler after the end of the first world war:

World history is the history of states. The history of states is the history of wars. Ideas, if they press toward a decision, assume the form of political units, states, peoples, parties. They will be fought out with weapons, not with words. . . . War is the eternal form of higher, human existence and states exist for the sake of wars; they are the expression of the readiness for war.54

States are thus not only territorial and political units, they are also the embodiment of ideas. In our day, and this is Spengler’s main contribution, two sets of ideas are clashing: the Prussian state idea and British parliamentary liberalism.

English society is founded on the difference between rich and poor, the Prussian one on that of command and obedience.55

Therefore,

the old Prussian spirit and the socialist way of thinking, which today hate each other with the hatred of brothers, are one and the same.56

The deep, inner antagonism between Prussia and Britain is therefore that between socialism and capitalism. The socialist idea is basically “will to power, struggle for the happiness not of the individual, but of the whole. Frederick William I and not Marx was, in this sense, the first conscious socialist.”57

International socialism does not as yet exist,58 since socialism necessarily differs in each country:

A true international is only possible by the victory of one race over all others and not through the dissolution of opinions into a colorless mass. . . . We Germans who are placed in this century, interwoven with our being into faustic civilization, have rich, untapped possibilities in us and huge tasks before us. To the international which is irrevocably in the making, we have the idea of world organization, of world state, the English that of world trusts and world exploitation, the French nothing to contribute. . . . With Prussianism, the idea of order in true socialism stands and falls. . . . The true international is imperialism, domination of the faustic civilization, hence of the whole earth, by one creative principle, not by compromise and concession, but by victory and destruction.59

Spengler, as Marx before him, thus envisages, for the time being, not a peaceful international order, but a war or series of wars for supremacy. A war, to be sure, not between classes, but between national states for the “leading principle” (Leitprinzip) they stand for. And that also other motives besides the ideological ones will play a decisive role in these conflicts, is expressed by Moeller van den Bruck, the famous author of Das dritte Reich:

The German nation is astir. Its path is blocked. It has lost its bearings. It seeks peace. It seeks work: and fails to find it. We are becoming a nation of proletarians.60

Germany’s overpopulation is a severe problem although it “is part of Nature’s design. Nature must solve the problem.”61 It will do so by allowing Germany to found a “Third Empire” which will include territories large enough to provide ample living space for its population.

The only question is whether the national elements in the German working-classes will have the power and the will to wheel the proletarian battle front in a “national-socialist” direction; or rather to wheel it right round, so that the forces which were directed to class war against our own nation shall face the foreign foe. Our political fate hangs on the answer.62

These themes were discussed earlier by the “realpolitische Sozialisten” in their monthly review, Sozialistische Monatshefte, of whom Karl Kautsky, the spokesman of the German Social Democrats, admitted that “many of their lines of thought live on today in national socialism.”63 These socialists openly advocated an active colonial policy to be pursued by the Social Democratic Party of Germany:

The vital economic interests of the peoples cannot be violated by whatsoever principles, they wipe out these principles and prevail.64

Concerning postwar plans for a closer economic cooperation in Central Europe, another author writes:

The central European plans for a rapprochement are good insofar as they fit into the framework of general German economic and world political progress.65

It is important to grasp the fact

that the organization of the world through economic imperialism (wirtschaftlichimperiale Durchorganisierung der Welt), in which the European continent represents one big economic complex, forms the essential prerequisite for the creation of a socialistic way of production.66

But this process of “Durchorganisierung” can only take place at the basis of national policies;67 hence it becomes decisive for the socialist parties to pursue an independent foreign policy. This evidently presupposes a strong state and a corresponding government endowed with full power.68 In regard to this, Werner Sombart develops his “Führerprinzip” which

culminates in the assumption of a supreme will of the leader who can receive his orders only from God. . . . The volonté générale which is to be realized, is a metaphysical, not an empirical reality, it has nothing to do with the volonte de tous, the leader cannot ascertain it by a plebiscite, he must know it and he can have learned it only by revelation. Therefore also, he does not need the consent of the “people” for the justification of his acts . . . the statesman serves not the interest of the people, only the national idea.69

The national economy is to be centrally planned “since only this leads to the necessary unity and consistency”:70

The “whole” we have in mind is the national economy merged into a harmonious unity. It follows from this that the national economy must have a certain completion, seclusion, self-sufficiency which give it a stable equilibrium. We stand for this national economic principle (nationalwirtschaftliche Prinzip) for strategic, ethnical, and economic reasons. But mainly out of the consideration that socialism, that is, as we know, a well planned order of the community, requires for its realization an economic body which, in all its activities, is essentially independent of occurrences abroad.71

THE FOREIGN TRADE SYSTEM IN A COLLECTIVIST STATE

The above statement coincides remarkably, in its essence, with Lenin’s determination “to safeguard our internal economic independence” and in fact with the theories of most socialists reviewed so far. During the 1930’s, a growing number of economists attempted to elaborate a general theoretical framework for a collectivist economy, parallel to the one developed for a liberal economic order. Naturally, these theoretical investigations drew much of their inspiration from the introduction, in 1928, of the first Russian Five-Year Plan. In fact, most of them consisted of a more or less detailed description of the economic system, or more precisely the organizational structure, of the world’s First Socialist Power. But gradually, some basic features of a centrally planned economy were worked out, one of which was indeed the fact that the corollary to this order was “a watertight economic system.”72

The State Monopoly of Foreign Trade

Whether the problem of international economic relations was approached from the viewpoint of “international solidarity,” as was done for example by G. D. H. Cole,73 or from the internal nature of the collectivist economic order itself, all authors agreed that national planning implied a “unified control over its foreign trade.”74 Hall, Mossé, and Dickinson developed a consistent theory of collectivist foreign trade on the basis of the “national” approach. Mossé, after having shown that free trade is utterly incompatible with a centrally planned economic order,’’75 asserts that a trade organization directed by a state monopoly of foreign trade necessarily corresponds to this order:

The directing bodies of the economy determine the goals and limits of foreign trade. The principal objective is to procure to the country, first, goods and services which are indispensable and which it cannot obtain at home and, secondly, those which can be obtained by international exchange more advantageously than by producing them at home. However, in order not to depend on foreign countries, extra-economic concerns may demand home production, even under unfavorable conditions. Economic considerations regarding the future may yield the same result (List), because it may be advantageous, for the time being, to renounce profitable purchases in order to develop productive forces internally.76

Thus, state planning necessarily begins with fixing general economic goals to be achieved in a given period of time. This authoritative decision is made, as implied in the above passage, with respect to national interests, even if this means a temporary reduction of international trade and hence world welfare. The next step consists of so combining and balancing all available productive resources as to ensure fulfillment of the plan. In this process, foreign trade has an important task:

The main objective of foreign trade is to acquire certain foreign goods and services. It is thus imports which are the goal, exports being only the means to pay for them, that is, to force the supplier to deliver them. This reduces the problem of foreign trade to its true position whereas, in the liberal-individualistic economy, the fragmentary vision of particular interests arbitrarily cuts out a portion of reality and makes the means, exports, appear to be the end, and neglects the essential thing: imports.77

Hence, it falls to the monopoly of foreign trade, assisted by its various specialized departments, (1) to set up national import and export plans which are to be integrated into the general plan; (2) on the basis of these plans, to conclude international treaties and individual contracts; (3) to supervise, in every aspect, the correct execution of foreign trade operations.78 However, it cannot do all these things unless it finds itself in close cooperation with another state monopoly: the monopoly handling international payments.

The monopoly of foreign trade entails the monopoly of foreign exchange, since foreign exchange operations are nothing but the means of settling commercial operations. The maintenance of a foreign exchange market is no longer required when external operations are no longer conducted by private enterprises.79

Mossé clearly outlines the full consequences of this system, but by doing so, he essentially repeats what Fichte had said 140 years earlier:

The state monopoly of foreign payments implies the complete separation of the monetary system from the external monetary systems. . . . The conversion rate of internal money into external currencies is fixed by the Administration of Foreign Trade as are the conditions under which it is permitted to obtain foreign exchange (tourists, students, etc.)80. . . . The Administration of Foreign Trade deals with internal enterprises on the basis of internal money and with foreign enterprises in an international unit of general use, that is a certain gold weight. . . . In order to assure the watertightness of the internal monetary system, the export and re-import of internal means of payment are prohibited.81

Collectivist Foreign Trade and the Theory of Comparative Costs

All authors under review maintain that the principle of comparative costs will not only be observed under collectivism, but will be much more effective than in an individualist economic order. Yet, Mossé admits that

in a planned economy, the volume of operations is determined by the plan which may not go as far as the optimum.82

And Dickinson enumerates the following qualifications to this principle:

(1) The State Economic Commission must discriminate between supplies of cheap foreign goods that are permanently cheap owing to low real costs of production and those that are only temporarily cheap;. . .

(2) A planning authority ought to be able to look ahead and forecast future trends a) in costs of export goods, b) in costs of goods that compete with or might compete with imports and c) in the barter terms of trade.83

Mossé underlines the particularities of collectivist foreign trade based on comparative costs. In the first place,

there is no need for a fixed relation between the two currencies; nevertheless, profitability calculations are easy. The Administration of Foreign Trade, in fact, expressly combines imports with exports. It has a complete vision of the phenomenon of exchange. It reasons and calculates as do the theoreticians of international trade.84

Secondly, “internal disturbances, caused by international exchange, can be remedied.”85 What Mossé and other authors have in mind are the social as well as the economic costs which, they assert, can now correctly be assessed by the central planning authority, the social costs including the losses due to transference of productive resources, especially of labor, to new economic uses as a result of foreign trade.

The cost of change can and must be calculated in its entirety by adding to the internal value of the product exported in “payment” the losses incurred by the renunciation of an existing line of production. The exchange is deemed advantageous only if the value of the imported product is higher than the value of the exported product—including these costs.86

Socialists recognize, however, that the actual problem of collectivist foreign trade does not merely consist of determining the quantities of two given goods to be exchanged—the case on which the above reasoning is based—but also of knowing what groups of commodities should most rationally be exported and imported. Several methods of calculation were proposed in this respect, but the main difficulty is found to exist in the fact that “for want of a free foreign exchange market, there does not exist an objectively determined exchange rate.”87

The Problem of External and Internal Equilibrium

It is deemed essential for a collectivist state to seek a balance of the current account. Short-term borrowing and lending to cover temporary surplus and deficits are to be used only to a very restricted extent. This applies especially to trade relations with capitalist countries where the danger exists “that the socialist community would find itself more deeply involved than it cared to be in the financial complexities of non-socialist countries.”88 According to Mossé neither credit taking nor the export of gold is an appropriate means of achieving international equilibrium “since they invoke a certain dependence on foreign countries or a loss of substance and, what is more, they cannot be used permanently.”89

The foreign trade administration has the great advantage “of knowing, with precision and exactness, the true situation of the international accounts”90 at any moment in time. If an important deficit is appearing, the agency can easily modify its foreign trade plans by making more home goods available for export or by cutting down imports.

Mossé maintains that a collectivist economy is better adapted than a liberal-individualist economic order to solve the basic dilemma91 which exists between optimum international economic relations and internal equilibrium:

The Administration of Foreign Trade assumes, in this respect the role of a sluice; it buys foreign goods at world market prices and sells them again, at internal prices, to internal enterprises. In the same way, it buys at internal prices and resells on the basis of world market prices; the sluice is the means of preventing the operation of the law of communicating vessels which imposes an identical level on each vessel. At the same time, it makes possible relations between two water pools with different levels. The error of the classical theory consisted of the belief that relations are possible only among systems which are on the same horizontal level and that they bring about this levelling. The collectivist economy, on the contrary, admits the difference of levels as a given fact and seeks to establish relations all the same.92

Mossé thus contrasts the subordination of national to international equilibrium and the corresponding world economy conceived by the classics as a unified, interdependent system to its exact opposite, represented as the ideal of collectivism: the breaking up of the world system into separate national economies which tolerate international economic intercourse only insofar as they do not upset the painfully calculated international equilibrium.

Long-Term Capital Movements

We remember that according to socialist theory, capital export is closely tied to the “basic contradictions of capitalism,” especially those of its imperialistic phase. It was thought that, with the introduction of a socialist economic order, the “maldistribution of consuming power which prevents the absorption of commodities and capital within the country”93 would eo ipso be eliminated. Hence, it would be quite consistent with the just-mentioned doctrine if international economic relations between collectivist states were to be strictly limited to the movement of goods and services. This, in fact, is Mossé’s position, as we have seen.

Nevertheless, most socialist authors concede in principle that international long-term borrowing and lending may have advantages to both partners if they take place in accordance with the relative abundance of capital at home and abroad, as expressed by interest rates.94 Dickinson observes, however, that

in making these calculations95 the planning organ of a socialist community would need to take into consideration the net effect on the national dividend of foreign borrowing and lending. That is to say, it would have to compute not only the return on capital at home and abroad, but also the effect of the import or export of capital on the return of labor. This suggests that a socialist community, acting on purely economic calculations, would be more ready to import capital and less ready to export capital than a capitalist economy under similar conditions.96

But there are other difficulties. Hall points to the fact that international borrowing requires “careful adjustment of the industrial structure”97 by the borrowing country at the moment of importing capital as well as at the time when it must pay it back by additional exports. And he warns:

It is easy to make mistakes about the gain to be expected from expenditure of capital on a large scale; and when the saving required is to be done by others, the temptation to resort to borrowing to overcome temporary difficulties is great.98

Considerations of a political nature must also be taken into account:

It seems to be inexpedient to allow private capital to develop the country . . . since the success of the whole system depends on the possibility of unified control. The borrowing must be done by the state, and in order to take advantage of the lower rates available elsewhere, strict guarantees would be necessary which would hamper the political relations of the country.99

And Dickinson comments:

Borrowing from abroad makes the socialist community dependent on foreign and possibly hostile countries; hence it should be avoided as much as possible on political grounds. Lending abroad, if carried out on a large scale and over a long period of time, would turn the community into a corporate exploiter of workers living in other communities; it would undermine its morale and create in the debtor country a sense of resentment that would embitter international relations and might lead to conflict. On social and political grounds, therefore, there is a case against it.100

Owing to the socialist theory that capital export is simply the transfer of value destined to produce surplus value abroad, this problem is usually viewed only from the lender’s point of view which is regarded as immoral. But does not the rationale of international capital movements lie in the raising of labor productivity in those countries where capital is relatively scarce? Socialists do not ignore this problem, but, in their opinion, it must be solved by truly socialistic principles, that is, by gifts and disinterested aid to be given by the more advanced states to their poorer brethren. However, the realization of these principles, it is maintained, must await the time when all states will have become socialist communities.

The Future Socialist International Order

Thus, the authors reviewed in this section, like those reviewed earlier, firmly believe that a true system of international division of labor cannot be achieved unless its participants become collectivist states:

Trade between socialist countries will exemplify the principles of nineteenth-century economic liberalism: it will be a mutual benefit and a force making for peace.101

Yet, the results of his analysis led the author who wrote these lines to the following complementary remarks:

Strictly speaking . . . , this harmony of interests applies without any serious qualification to the exchange of goods. . . .102 The import and export of capital, although beneficial to both parties, may give rise to conflicts of interest between debtor and creditor communities. . . . The migration of peoples, especially where they are of widely different social conditions, may also be grounds of economic disharmony. . . . War for possession of territory is conceivable between a community with a sparse population, abundant national resources and a high standard of life and a community with a dense population, few natural resources and a low standard of life.103

But the author minimizes the force of his objections by asserting that such disharmonies would be “improbable in practice.”104 As a matter of fact,

It is improbable that a number of independent socialist commonwealths would isolate themselves, each in its own distinctive economic system, when self-interest and socialist principle alike would impel them to adopt an integrated system of economic planning and costing.105

Thus, the socialists of all denominations strictly adhere to the conception of a gradual and progressing fusion of socialist states into a worldwide system of planned economic cooperation. C. Bettelheim consistently applied Marx’s distinction between the two phases of communism to international economic relations when he wrote:

In the first phase, economic relations are essentially trading relations, but their purpose is not mercantile. It is a question of coordinating exchanges in such a way that these may contribute to the parallel development of the various planned economies. The nature and magnitude of the exchanges are then determined by the various national economic plans. External trade is an instrument of coordination and of “mutual collaboration in economic development” (Mikojan). The political significance of external trade becomes decisive. This signification can be expressed, in particular, in the prices charged, which can be “privileged prices”; credit conditions and the various forms of reciprocal technical aid that supplement purely trading relations.

In the second phase it seems that the integration of the various economic plans must progressively increase which means that it will be necessary to consider more and more the possibility of redistributing certain productive forces among the planned economy countries and taking into consideration not only relative saving of labor, but also absolute saving.106

SUMMARY AND CONCLUSIONS

The internal structure of a collectivist state is comparable to a pyramid in which the “unquestioning submission to a single will” (Lenin) is an absolute necessity, a will that governs “the most deep-seated foundations of the human existence of hundreds of millions of people.” Yet, this will is independent of the wishes of these millions; it is “a metaphysical, not an empirical reality” (W. Sombart). The state organization that it requires is the exact opposite of Proudhon’s federation: the greatest, indeed all, power resides at the top of the pyramid. The lower agencies are reduced to receiving and executing central “instructions,” whether they are ethnic groups, “democratically elected workers’ councils,” or appointed state officials. This is the implication of “democratic centralism” and this, also, is interpreted by Spengler as forming the essence of the “old Prussian spirit.”

Because state planning is identical with “unified control,” it is self-evident that this control is to include all factors and resources of production available within the political frontiers of existing national states. The breaking up of these into smaller units is considered to be contrary to historical development. In fact, larger and larger states are called for by the progressing forces of production and this means that more and more productive resources are to be united under a single control. This process is to find its completion when the “supreme will” will have extended its droit à la richesse over the entire globe.

Whose will and whose right?

That of the working class, represented by the Communist Party, is one answer. But, because “the struggle of the proletariat with the bourgeoisie is at first a national struggle” (Communist Manifesto), each state will emerge, after a successful revolution, with separate directing “single wills,” embodied by national communist parties. Whose droit à la richesse is gradually to be increased at the expense of whom and from whose will is the common world plan finally to emanate? These issues will be taken up again in Part II.

The “national socialist” thinkers have replaced the concept of class war by the “national idea.” In their theory, international socialism is identical with imperialism, the “domination of . . . the whole earth by one creative principle” (Spengler). Or, as Plenge expressed it:

The most important and critical question for socialism . . . is necessarily this : what people is pre-eminently summoned to power, because it is the exemplary leader in the organization of peoples?107

The fourth section of this chapter showed that interwar economists concerned with the theory of a collectivist economy fully confirmed Fichte’s theories with respect to foreign trade. A full discussion of its implications will follow in Chapter VII.

NOTES TO CHAPTER V

108Communist Manifesto, quoted in Ebenstein, W., op. cit., p. 692.

109Quoted ibid., p. 697.

110Quoted ibid., p. 703.

111Quoted ibid., p. 701.

112Critique of the Gotha Programme. Published by F. Engels in Neue Zeit, 1891, newly translated by Bottomore, T. B., in Karl Marx. Selected Writings in Sociolgy and Social Philosophy. New York, McGraw-Hill, 1964, p. 258.

113Ibid., p. 256.

114Marx, K., Adresse des Generalrats (der Internationalen Arbeiter-Assoziation) über den Bürgerkrieg in Frankreich 1871. In Borkenau, F. (ed.), Karl Marx. Frankfurt/M., Fischer, 1956, p. 173.

115Ibid., p. 176.

116Chang, S. H. M., The Marxian Theory of the State. Ph.D. Dissertation, Philadelphia, University of Pennsylvania, 1931, p. 116.

117 Farner, K., and Pinkus, R. (eds.), Der Weg des Sozialismus. Quellen und Dokumente vom Erfurter Programm 1891 bis zur Erklärung von Havanna 1962. Hamburg, Rowohlt, 1964, p. 21.

118Lenin, V. I., The National Question in Our Programme (July, 1903). Selected Works, Vol. II, p. 330, italics original.

119The Right of Nations to Self-Determination. New York, International Publishers, 1951, p. 72.

120Ibid., p. 76.

121Ibid., p. 90.

122Preliminary Draft of Theses on the National and Colonial Questions, prepared for the Second Congress of the Communist International in June, 1920. Point 8. Selected Works, Vol. VIII, p. 234.

123Reprinted in Marxism and the National and Colonial Question. New York, International Publishers, 1936, p. 79.

124Ibid., p. 123.

125Ibid., p. 125, italics added.

126Ibid., p. 168, italics added.

127Critique of the Gotha Programme, quoted in Bottomore, T. B., op. cit., pp. 256-57, italics original.

128Ibid., pp. 257-58.

129Engels, F., Herrn Eugen Dührings Umwälzungen der Wissenschaft. 6th ed., Stuttgart, Dietz, 1907, p. 300.

130Ibid., pp. 335-36, italics original.

131Ibid., p. 304.

132Ibid., p. 302, italics original.

133Ibid., p. 320. Karl Kautsky envisages the future international order as follows: “State boundaries will lose . . . the character they had up to the present. Since production will no longer be private, but social, since the profit of individual entrepreneurs ceases to be their propelling force, all ‘protective tariffs,’ the source of artificial profits and capital accumulation, will lose their significance. But, with the abolition of tariffs the seclusion of states into artificial economic units will also come to an end.” Die Befreiung der Nationen. Stuttgart, Dietz, 1917, p. 46. Elsewhere, however, the same author writes: “The final goal of development, once the proletariat has achieved political power, is the unification of all production units into one huge state firm, that is the transformation of the state into one single economic cooperative. . . . Production of commodities and private ownership of the means of production are overcome; the new economic cooperative which grows out of the state possesses all means of production which it needs and it produces essentially by itself all that is necessary to itself and to its members.” Grundsätze und Forderungen der Sozialdemokratie, 2nd ed., Berlin, Verlag Vorwärts, 1898, p. 25, italics original.

134State and Revolution. Selected Works, Vol. VII, pp. 88-89, italics added.

135Ibid., p. 89, italics original. “The Soviet government is nothing more nor less than the organizational form of the dictatorship of the proletariat, the dictatorship of the advanced class.” Immediate Tasks of the Soviet Government. Selected Works, Vol. VII, p. 338.

136The Fundamental Tasks of the Party after the Seizure of Power by the Proletariat, Vol. VII, p. 315.

137Ibid., p. 287.

138Ibid., p. 325.

139State and Revolution, loc. cit., pp. 92-93.

140“We, the party of the proletariat, have no other way of acquiring the ability to organize large-scale production of the trust-type except by acquiring it from the first-class capitalist specialists.” Fundamental Tasks, loc. cit., p. 375, italics original.

141Ibid., p. 328, italics original.

142Immediate Tasks, loc. cit., p. 330.

143Fundamental Tasks, loc. cit., pp. 341-42, italics added. Lenin continues: “Given ideal class consciousness and discipline on the part of those taking part in the common work, this subordination would more than anything remind one of the mild leadership of a conductor of an orchestra. It may assume the sharp forms of a dictatorship if ideal discipline and class consciousness are lacking. But be that as it may, unquestioning submission to a single will is absolutely necessary for the success of labor processes that are based on large-scale industry. . . . The technical, economic and historical necessity of this is obvious, and all those who have thought about socialism have always regarded it as one of the conditions of socialism.” Ibid., p. 342, italics original.

144Ibid., p. 387. It may, here, be referred to a controversy between Lenin on the one and Trotsky and Bucharin on the other side, who reproached the former of approaching production problems “politically” instead of “economically.” This is how Lenin defends himself: “The theoretical uncorrectness of this is most striking. Politics are the concentrated expression of economics. . . . Politics cannot but have precedence over economics. To argue differently means forgetting the ABC of Marxism. . . . Without a proper political approach to the subject the given class cannot maintain its rule, and consequently cannot solve its own production problems.” Once Again the Trade Unions. The Present Situation and the Mistakes of Trotsky and Bucharin (January, 1921). Selected Works, Vol. IX, pp. 54-55, italics added.

145Ibid.

146Fundamental Tasks, loc. cit., p. 326, italics added.

147Les problèmes économiques du socialisme en U.R.S.S. Numéro spécial des Cahiers du communisme, Revue théorique et politique mensuelle du Comité Central du Parti Communiste Français, November, 1952, p. 6.

148Ibid., p. 7.

149Ibid.

150Ibid., p. 16.

151“Naturally not. In reality, in our economic system the law of value asserts itself within a strictly limited framework.” Ibid.

152Ibid., pp. 17-18. Increasing economic growth is regarded as another “fundamental law of socialism.” As concerns the problem of profitability, Stalin explains: “If one considers profitability not from the point of view of the various enterprises or branches of production, nor for the period of one single year, but from the point of view of the entire national economy and for a period of ten to fifteen years for example—which would be the only means of correctly approaching the question . . . , then the momentary and precarious profitability of the various enterprises and branches of production cannot maintain any comparison with the superior form of a solid and constant profitability: the profitability which we derive from the effect of the law of harmonious development and planning of national economy.” Ibid., p. 18.

153Ibid., pp. 22-23, italics added.

154Ibid., p. 23.

155It must be stressed that, in what follows, we are not concerned with describing the real nature of the Prussian state, the appreciation of which would require a separate, differentiated study. We are interested solely in the interpretation which Prussianism received by certain German political thinkers and in the influence of this interpretation on the theory of the collectivist state.

156“Personality means not only greatest possible autonomy, but also greatest possible autarky and a harmonious union and development of all inner forces and abilities.” Meinecke, F., Weltbürgertum und Nationalstaat. Studien zur Genesis des deutschen Nationalstaates. München and Berlin, O. Oldenbourg, 1919, p. 819.

157Müller, A., Die Elemente der Staatskunst. Berlin, 1809, Vol. I, p. 51.

158Müller, A., Vorlesungen über Friedrich II. Quoted in Meinecke, F., op. cit., p. 152.

159Die Elemente der Staatskunst, Vol. III, p. 215.

160“How would he be able to omnipresently permeate the life of these powerful individuals?” Ibid., Vol. I, p. 283.

161Spengler, O., Preussentum und Sozialismus. München, Becksche Verlagsbuchhandlung, 1919, p. 54, italics added.

162Ibid., p. 45.

163Ibid., p. 8.

164Ibid., p. 43.

165“What really exists, the international of slogans, Marxism as a phrase, can only for decades and, at that, to a much lesser degree than the noise of congresses and the optimism of proclamations makes one assume, awaken in the workers of all countries a feeling of solidarity. In reality, this union is restricted to the belief that it exists.” Ibid., p. 83.

166Ibid., pp. 84-85, italics original.

167Quoted in Butler, R. D., The Roots of National-Socialism. London, Faber & Faber, 1941, p. 258.

168Quoted ibid.

169Quoted ibid., p. 262. Moeller observes “a regrouping of men and nations. All anti-liberal forces are combining against everything that is liberal.” Quoted ibid., p. 259.

170Kautsky, K., Sozialisten und Krieg. Ein Beitrag zur Ideengeschichte des Sozialismus von den Hussiten bis zum Völkerbund. Prag, Orbis, 1937, p. 345.

171Winnig, A., “Die Kolonien und die Arbeiter.” Sozialistische Monatshefte, May 18, 1915, p. 222. The reaction of the French socialists to the German socialists’ suggestion to surrender overseas territories in the name of international justice and proletarian brotherhood is well summarized by the socialist Charles Andler: “Since it [our colonial empire, E.T.] was constituted at the immense expenditure of billions, scientific efforts and blood, it may be a good teutonic joke to intend to persuade us that it must be ‘shared’ with the more prolific countries of industrial Europe, but not much more of this is needed to increase, in the French socialists, that repugnance against the German ‘comradeship’ which is intensified after each international congress.” Le socialisme imperialistic dans I’ Allemagne contemporaine. Dossier d’une polémique avec J. Jaurès (1912-13). Paris, Bossard, 1918, p. 57.

172Schippel, M., “Mitteleuropa und Partei.” Sozialistische Monatshefte, May 31, 1916, p. 541.

173Cohen, M., “Sozialdemokratische Aussenpolitik und sozialdemokratischer Parteitag.” Ibid., October 4, 1920, p. 741.

174Poetzsch, H., “Der Krieg und die sozialistische Internationale.” Ibid., December 9, 1914, p. 1227.

175Sombart, W., Deutscher Sozialismus. Berlin-Charlottenburg, Buchholz & Weisswange, 1934, p. 212. Cf. also the socialist professor Plenge: “It is high time to recognize the fact that socialism must be power policy, because it is organization.” Quoted from an article in the socialist journal Die Glocke in Hayek, F. A., The Road to Serfdom. London, Routledge, 1944, p. 128, italics added.

176Deutscher Sozialismus, p. 213, italics added.

177Ibid., p. 280.

178Ibid., p. 284, italics added. The author continues: “It is self-evident from what has just been said that German socialism rejects the hitherto prevailing order of the world economy as contrary to its innermost nature.”

179“The Theory of Planned Economy. A Study of Some Recent Works.” International Labour Review, Vol. XXXVI, No. 3, September, 1937, pp. 371-93.

180This author distinguishes between nationalistic planning, such as is increasingly being adopted by capitalist governments, and planning “under the right auspices” which is to be effected “by those who mean to use it . . . for the liberation of the vast productive energy which is now lying unused all over the world by creating a system of organized international exchange on a basis of mutual advantage and superseding tariffs and other restrictive devices by large-scale arrangements for the collective interchange of complementary products.” This is what Cole calls a “fully developed system of international planning.” Cf. “The Planning of International Trade.” In: Studies of World Economics. London, Macmillan, 1935, p. 185.

181Ibid., p. 178.

182“In the particular case of a collectivist economy, especially during the period of construction, the danger of external influences is much greater [than in a liberal-individualistic economic order, E.T.]. Free communication with foreigners may lead to wastes of energy and, to say the least, tend to constitute, within, a heterogeneous economic sector; its contacts with the dominant collectivist system create additional difficulties. Moreover, free relations with the outside world cannot even be thought of in a system in which economic activity is no longer a private affair; from the moment the state and its agencies administer the whole of economic activity, there is no reason for making an exception in favor of external relations and to withdraw them from its control.” Mossé, R., L’économie collectiviste. Paris, Pichon, 1939, p. 179, italics added.

183Ibid., p. 180. Cf. also Hall, R. L., Economic System of a Socialist State. London, Macmillan, 1937, p. 218: Before any foreign trade is to take place, the “Socialist state . . . should first decide the question as to whether there are any key industries which are necessary to the economic structure or to the conduct of any wars in which it has reason to expect that it may be involved. . . . The importance to be attached to this factor will obviously depend on the likelihood of supplies being interrupted, whether by wars or by other circumstances which may alter the world supplies.” As to the infant industry argument, H. D. Dickinson writes: “A socialist community could foster infant industries without the fear that they would become infant Gargantuas devouring the substance of whole provinces in their greed. No private vested interests would be created by such a policy of development nor would protected industries develop that penumbra of submarginal undertakings which makes it almost impossible to remove protection from an industry under capitalism even though the more efficient establishments no longer need it.” Economics of Socialism, p. 175.

184Mossé, R., op. cit., p. 181. The whole passage is printed in italics.

185Ibid., p. 182.

186Ibid.

187These conditions must, according to Dickinson, include “the right of individuals to order books and newspapers from abroad,” this being “an essential guarantee of political freedom.” Op. cit., p. 178, footnote 2.

188Mossé, R., op. cit., p. 184, italics original.

189Ibid., p. 190.

190Dickinson, H. D., op. cit., p. 173.

191Mossé, R., op. cit., pp. 190-91. In the original, this passage is all in italics.

192Ibid., p. 192.

193Ibid., p. 193.

194Ibid., p. 195, italics original.

195Dickinson, H. D., op. cit., p. 181.

196Mossé, R., op. cit., p. 199.

197Ibid.

198“The real problem is to maintain, and even to develop, external economic relations without disturbing the internal structure.” Ibid., p. 203.

199Ibid., italics original.

200Hobson, J. A., op. cit., p. 85.

201“The collectivist state’s own rate of interest represents its estimate of the marginal productivity of its own capital.” Hall, R. L., op. cit., pp. 27-28.

202I.e. balancing capital export against the use of additional imports bought from its proceeds.

203Dickinson, H. D., op. cit., p. 182, italics added.

204Hall, R. L., op. cit., p. 228.

205Ibid., p. 229.

206Ibid.

207.Dickinson, H. D., op. cit., p. 182.

208.Ibid., p. 187.

209.Cf., however, ibid., p. 177, where Dickinson observes: “Where a socialist community was trading with another socialist community (if such existed) or with a capitalist community that had adopted a now popular policy of totalitarian state regulation of foreign trade, a situation would arise similar to that called ‘bilateral monopoly’ by the theoretical economists, in which it is probable that there is no determinate stable position of equilibrium, but in which either party has an incentive to get the better of the other by the use of fraud and force.” Italics added.

210.Ibid.

211.“The spread of birth-control throughout the world is leading to a state of affairs in which population dearth and not population pressure is the most likely danger to civilization.” Ibid., pp. 187-88.

212.Ibid., p. 172, footnote.

213.Bettelheim, C, Les problèmes théoriques et pratiques de la planification. 2nd ed., Paris, Presses Universitaires de France, 1951, p. 345. The English translation was taken from the English edition. Bettelheim calls “relative labor costs” those which arise as a result of the fact that national economic policies are being independent of the world economy. They can only be overcome and replaced by absolute labor costs if the world economy becomes one planned unit so that “each region would specialize in the kinds of production for which it was absolutely (and not only relatively) best situated.” Ibid., p. 354, footnote 2.

214.Quoted in Hayek, F. A., op. cit., p. 128, 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.
• 105.Ibid., p. 172, footnote.
• 106.Bettelheim, C, Les problèmes théoriques et pratiques de la planification. 2nd ed., Paris, Presses Universitaires de France, 1951, p. 345. The English translation was taken from the English edition. Bettelheim calls “relative labor costs” those which arise as a result of the fact that national economic policies are being independent of the world economy. They can only be overcome and replaced by absolute labor costs if the world economy becomes one planned unit so that “each region would specialize in the kinds of production for which it was absolutely (and not only relatively) best situated.” Ibid., p. 354, footnote 2.
• 107.Quoted in Hayek, F. A., op. cit., p. 128, italics added.
• 108SOCIALISTS HAVE CONCLUDED that something is fundamentally wrong with the “society” in which they live. Consequently, they feel compelled to change it.
• 109SOCIALISTS HAVE CONCLUDED that something is fundamentally wrong with the “society” in which they live. Consequently, they feel compelled to change it.
• 110The 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.
• 111Freyer 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.”
• 112Freyer 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.”
• 113Mankind 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.
• 114Against 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.”
• 115Human 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.
• 116Plato, 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:
• 117The 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.
• 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.”
• 120For 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.”
• 121For 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.”
• 122For 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.”
• 123Internal 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:
• 124The 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.
• 125Most 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.
• 126For 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.
• 127What 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
• 128Frankincense 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. . . .
• 129In 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.
• 130the 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.
• 131reputation in the eyes of others, whether for goodness or the reverse, is a thing that should never be lightly esteemed.
• 132The 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.”
• 133The 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.”
• 134The 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.”
• 135But 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.
• 136All 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.”
• 137“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.”
• 138“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.”
• 139“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.”
• 140The 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.
• 141that 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.
• 142This 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;
• 143from 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.
• 144then 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.
• 145Now, 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.
• 146Of course, the Utopians will never go to battle because of unsettled trade matters. But they will do so
• 147in 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.
• 148There 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,
• 149they 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.
• 150The 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.
• 151Utopia’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.
• 152“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.
• 153Johann 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.
• 154Johann 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.
• 155it is the State’s function to assign property to each and then only to protect his corresponding rights.
• 156unless 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.
• 157the 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.
• 158The 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.
• 159The 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.
• 160the 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?
• 161a closed commercial state just as it is a closed imperium of laws and individuals.
• 162Each 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.”
• 163Each 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.”
• 164A 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.
• 165A 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.
• 166In 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:
• 167Immediately 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.
• 168By the same stroke with which it introduces the new national currency, it is to take over all assets and liabilities resulting from foreign trade.
• 169Henceforth, the government will decide which commodities will continue to be exported and imported.
• 170The government pays to or claims world currency from the foreigner and then pays to or claims national currency from the citizen.
• 171The 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,
• 172the 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.
• 173Exports 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.”
• 174Fifthly, “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:
• 175Certain 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.
• 176will 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.
• 177Wars 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.”
• 178must 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.
• 179The 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
• 180The 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
• 181has 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.
• 182At 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
• 183so 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.
• 184Between 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.
• 185Questions 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.
• 186Although 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.
• 187Although 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.
• 188With 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.
• 189A 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.
• 190The 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.”
• 191In 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.
• 192By 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.
• 193A 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.
• 194The 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:”
• 195The 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:”
• 196Already we see that . . . coordinating international bodies are emerging which confront needs and resources and ensure stable transactions based on equitable reciprocity.
• 197the 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.
• 198A 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.
• 199Another 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.
• 200Businessmen 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.
• 201For 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.
• 202We 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. . . .
• 203They 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.
• 204It 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.
• 205On the basis of such “true economic prices,” international exchange will be centrally planned and stable:
• 206The manipulations and instability of the capitalist exchange system—with varying exchange rates (and quotations of stocks and shares) will no longer exist.
• 207As 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
• 208contains 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.
• 209As 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,
• 210not 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.
• 211the basis of its work must be a firm foundation laid by authoritative National Economic Councils.*
• 212It is improbable that a number of independent socialist commonwealths would isolate themselves, each in its own distinctive economic system, when self-interest and socialist principle alike would impel them to adopt an integrated system of economic planning and costing.
• 213In the second phase it seems that the integration of the various economic plans must progressively increase which means that it will be necessary to consider more and more the possibility of redistributing certain productive forces among the planned economy countries and taking into consideration not only relative saving of labor, but also absolute saving.
• 214The most important and critical question for socialism . . . is necessarily this : what people is pre-eminently summoned to power, because it is the exemplary leader in the organization of peoples?