Socialism and International Economic Order

The three basic approaches to the subject of this investigation have yielded identical results. They can be summarized under the following points:

(1) loss of objective national and international value criteria;

(2) politicalization of the economy, or in other words, the subjection of dominium to imperium and the nationalization of the economic process;

(3) a corresponding disintegration of the international economy.

The political and economic system concomitant with socialism is characterized by utmost centralization. All vital decisions are made at the top of a power pyramid by one man or by a restricted group of persons. In theory, the intermediary and lower agencies’ only function consists of the faithful implementation of these decisions and orders. Underlying this conception of political and economic government is, as we have seen, the idea of a confined circle of individuals to whom, either because of their extraordinary intellectual capacity, their moral standing, or because of their advanced knowledge of the course of history, the fate of mankind must be entrusted. These aristoi should be endowed with unlimited power: only this is thought to guarantee the final victory of reason and solidarity over selfishness and inequality.

But since no generally valid principle exists which would unobjectionably qualify these persons for their high responsibility, their selection, in practice, is made in accordance with their expertise in the game of power. Power therefore becomes the pivot of any socialist order. And because power, in order to be efficient, must be exclusive, care must be taken that neither the will of other men or groups, nor any “spontaneous” mechanism interferes with the will of the supreme leader or group. Yet, this power is by nature limited: it is limited by a state’s territory; it is also limited by the fact that the economic process of modern society demands the delegation of important competences to subordinate agencies. The latter in turn tend to develop exclusive power positions that rival both each other and the central authorities. Because, however, these various human wills clash without the intervention of an autonomous principle of order, the result is either chaos or the stern subordination of all to the will of the strongest. This alternative applies to the internal situation of collectivist states no less than to international relations between them and with free market economies.

What are the reasons, in view of the logical unassailability of these arguments—and of practical experience confirming them—for the fact that most men have failed to recognize their impact, that they indeed continue to associate socialism with a true international order?

In the first place, whenever traditional social relations were being broken up in the course of history, the resulting physical and psychic insecurity experienced by the masses caused them to eagerly accept prophecies for a millenium in which they would combine freedom from material worries with domination over (and punishment of) the evildoers of this world. In an ideal future, where the distinction between rich and poor and indeed all “artificial” barriers separating humanity would be abolished, it was felt to be self-evident that national border lines would be the first to disappear. And historical materialism added a new dimension to this hope: since “already” under capitalism, important strides had been made in the direction of internationalism, socialism would complete this historical process and lead to a “withering away” of the state.

It is, secondly, in opposition to the interests of socialist rulers to have the conflict between these ideological assertions and actual political practice scientifically investigated. However, under the coverage of orthodox language, small Eastern European governments have tacitly abandoned Marxist-Leninist internationalism and have adopted Otto Bauer’s views on autonomous nationality.

One can observe, thirdly, a marked reluctance on the part of Western intellectuals to think these matters to their end and take a definite stand. Many of them uncritically accept collectivist ideas as the most “progressive” ones; others fail to see the forest for the trees; they become confused by the countless propaganda phrases, humanitarian appeals, and arguments pro and contra socialism. Still others are deeply concerned over the defects of “capitalism” itself, especially over the rise of powerful monopolies and pressure groups which ruthlessly override the public interest as well as the legitimate cause of the small and the weak.

This study has shown that socialism cannot solve these deficiencies. Furthermore, despite its internationalist aspirations, it is not capable of accomplishing stable international peace and order. If we postulate a true democracy, society is to be built not on centralization, but on federalism and decentralized decision making much as Proudhon had outlined it a century ago. But it is impossible to realize this political order without its economic counterpart: a free market economy based on competition. The demand of modern liberals for a political framework to be established and for policies to be conducted by the state to ensure a smooth national and international functioning of this economy fundamentally distinguishes itself from the recommendations of the laissez-faire protagonists. It aims at combining the individual’s rightful desire for protection against undeserved blows with the maximum possible separation of dominium from imperium. Whether such a system can still be called capitalism is irrelevant; what matters alone is that the solution of today’s pressing economic problems must be sought not in the undifferentiated enhancement of government power, but in a carefully planned economic policy that is “in conformity with the market.”

The author of this study was warned by a Western socialist professor against indiscriminately using the term socialism for the manifold shades and aspirations of this movement. He pointed out that his socialism had nothing in common with the economic and political system in force in the Eastern European countries. We do not know whether his conceptions fall under the definition of socialism underlying this investigation—the core of which is the postulate for centralized state direction of the economic process. What can be affirmed with certainty is that every measure decreed by the state that represents a direct interference with the forces of supply and demand—such as price stops, import quotas, exchange control, and prohibitive tariffs—constitutes one step away not only from a free enterprise economy, but also from an integrated international economic order.