Socialism and International Economic Order

We have seen in Part I that socialism leads to a profound transformation of the internal order of national states which, nevertheless, continue to exist as independent political units. There will be only national “collectivities” represented by their respective national governments. A world state, acting on behalf of humanity as a whole, will still be a far-off goal; its establishment would presuppose the subjection of the hitherto sovereign states to a world authority in the same way as the individuals are subjected, within each state, to the comprehensive control of all activities by their respective state authorities. But at the same time, the state, or the party with which the state is identified, is regarded as a vital autonomous personality evolving according to its proper laws, which are considered to be entirely independent of individual will. Hence, this higher entity demands freedom, not subjection. It can recognize no authority above itself other than “history.”

In Part II we propose, from a theoretical point of view, to investigate the basic changes brought about by the introduction of socialism into the internal economic order of each national state. Only by acquiring a thorough understanding of the way in which this order must necessarily function can one grasp the fundamental problem underlying international economic relations between collectivist states.

Under socialism, obviously, goods and services will continue to be produced and their output will require land, raw materials, labor, buildings, machines, and managerial talent. Under certain conditions and with certain combinations of these factors, production results will be more favorable than under other conditions and combinations. Or again, production in one branch of industry or factory can only be increased if in another branch productive resources are either withdrawn or not increased in the same rhythm as in the former. This is so because productive resources continue to be scarce. Therefore, the problem that arises, just as in a liberal economic order, is how to allocate and combine given factors of production so as to achieve optimum output relative to demand, i.e. to maximize the utility of production.

Today, the clash between the collectivist and the liberal conceptions of economic order is particularly felt in the newly independent states of Asia and Africa and manifests itself in the propagation of rival and mutually exclusive theories and policies of development. The analysis of the international economic consequences of these theories, in Chapter IX, will complement the results of our investigations. In Chapter X, we shall examine the prospects concerning the formation of a collectivist world state.