LIBRARY UNIVERSITY OF CALIFORNIA RIVERSIDE COLLECTIVISM COLLECTIVISM I i ^_ A STUDY OF SOME OF THE LEADING SOCIAL QUESTIONS OF THE DAY BY PAUL LEEOY BEAULIEU MEMBER OF THE INSTITUTE AND PROFESSOR Or THE COLLEGE OF FRANCB TRANSLATED AND ABRIDGED BY SIR ARTHUR CLAY, BAET. CAPiiG LIBRARY NEW YORK, 9 t -^...y^l/.j s ,c t 3 a fe. P. BUTTON AND COMPANY 1908 Printed in Great Britain. PREFACE M. LE PAUL LEROY BEAULIEU'S great reputation as a writer on social subjects is a guarantee of the knowledge and thoroughness with which the subject of this book has been treated. His statement and explanation of the doctrine is con- spicuously fair, his examination of its various forms is exhaustive, and his exposure of the fallacies upon which the claims of collectivism are based is clear and complete. The translator felt, therefore, that if this work were made available to the British public, it would be of great value in assisting the formation of a sound opinion upon a question of such vital importance to the future of humanity. M. P. Leroy Beaulieu very readily gave his permission for its translation into English. The book, however, is of considerable length, and the cost of publica- tion of a full translation would have greatly restricted the circulation ; the translator therefore requested permission to publish an abridgment a request to which M. P. Leroy Beaulieu very kindly acceded. Whilst the translator is painfully conscious of the loss arising from curtailment, and of his inability to do justice to the delicate precision of the French language, he ventures to hope that nothing essential to the argument has been omitted. The translator desires to record his gratitude to M. P. Leroy Beaulieu for the permission so graciously given. ARTHUR CLAY. July 1908. a 2 CONTENTS BOOK I CHAPTER I Definition of the meaning of the terms Socialism, Collectivism, and Communism. Description of the objects and pro- posed methods of Collectivism .... CHAPTER II Relation of capital and labour. Position of workman not im- proved under a collectivist regime. What is Capitalism ? Origin of capital ...... 10 CHAPTER III Origin of private property in land. Cause of increase in value. Prescriptive right. Marx' indictment of personal pro- perty. Distribution of wealth. "Unearned Increment." Influence of social conditions external to the individual upon the acquisition and ownership of wealth. The element of " chance " or " luck." Can collectivism find an efficient substitute for the incentive of personal interest ? . . 19 vii viii CONTENTS CHAPTER IV PAGE Arguments against private ownership of land founded upon natural justice and historical precedent. Development of individual out of collective ownership of land . . 33 CHAPTER V Existing systems of collective ownership of land . . .41 CHAPTER VI Land can never have been, strictly speaking, common property. First appearance of social inequality. Features common to all collective systems of land tenure. Causes of the general disappearance of these systems. Claim of nations to their land the same as that of individuals. Modern attempts to re-establish collectivist ownership of land. Effect of proposed nationalisation of land in France. In- demnity or confiscation. Various methods proposed for indemnifying owners. Hypothetical purchase of the land by the English Government. Unearned Increment. Func- tions of a landowner . . . . -59 BOOK II CHAPTER I Industrial collectivism. Marx and Lassalle. Definition of capital. " Les liens sociaux." Use of " money." Capital not the result of saving. Lassalle's explanation of origin of capital ....... 93 CONTENTS ix CHAPTER II PAGE Capital itself is unproductive. Definition of "profit" or "plus- value." Marx' theory of "plus-value," and his explanation of the origin of capital. "Constant" and "variable" capital. "Values-in-exchange" and "values-in-utility." Labour-force and its value. Iron law of Lassalle. Claim of capital to interest ...... 109 CHAPTER III Variation of "plus-value." "Absolute" and "relative plus- value." Function of the capitalist. "Competition." Methods for the increase of "plus-value." Legislative remedies. Excess of wage earners. Introduction of machinery. Machinery a defence of wage earners. Im- proved condition of wage earners. Decrease of pauperism 129 CHAPTER IV The practical application of collectivism. Quintessence of Socialism only available source of information. Automatic performance of social functions. Free choice of personal requirements. National production. Variation of salaries and wages. Statistics and national production. Mutual surveillance by workmen. Joint stock companies and state management. Individuals and the progress of humanity . 154 CHAPTER V Distribution under a collectivist regitne. Social labour-time as a standard of value. Labour cheques. Usury and private trading. Choice of domicile. Relations of a collectivist state with other countries. International trade . . 185 CONTENTS CHAPTER VI PAOK Economy of labour under a collectivist system. Evils of com- petition, and the remedy for them. Effect of general diffusion of education. The production of luxuries. The abolition of " rentiers." Fashion . . . .214 BOOK III CHAPTER I The Quintessence of Socialism as a source of information. Bernstein's criticism of Marxian doctrine. Socialisme Manque et Sociale democratic pratique. Concentration of wealth and concentration of industry. Agricultural hold- ings in the German Empire . . . . .245 CHAPTER II Concentration of industry. Census of 1896. Survival of small industries. Marx' theory of industrial and commercial crises. Bernstein and his critics. Chaotic period of in- dustrial organisations. Sources from which Marx obtained information. Socialisme et Science. Criticism of " scientific socialism." Jaures and Etudes Socialistes. Millerand and the Socialisme Rlformiste. Destruction of theoretical socialism . . . . . . .259 CHAPTER III The " Parti Socialiste frangais," the " Parti Ouvrier," and the " Parti Socialiste de France." Enquiry into political differ- ences amongst socialists by George Renard. The five points of the new programme. Co-operative associations : (i) for production ; (2) for consumption. Administration of industries by the state and by municipalities . . 278 CONTENTS xi CHAPTER IV PAOR Municipal socialism. Trades-unions. Progressive taxation. " Solidarism." The " intellectuals." The barriers of educa- tion. The two divisions of the new middle class. The position of officials under a democratic government. The essential similarity of the aims of the different schools of socialism ....... 303 CONCLUSION ....... 326 INDEX ........ 331 BOOK I N.B. The Translator's notes are enclosed in square brackets MERCAtYhlEbBRARY NEW YORK. CHAPTER I Definition of the meaning of the terms Socialism, Collectivism, and Communism. Description of the objects and proposed methods of Collectivism. THE difficulty of making a critical examination of the doc- trines of " Collectivism " or " Socialism " is greatly increased by the fact that they have never been formulated with precision by any well-known socialist writer, and, except in a small book by M. Schaffle, 1 no serious attempt has been made either to give a definite meaning to the word " socialism," or to show how a socialistic system could be established. The task of criticism would also be simplified if the leading exponents of socialism were in agreement upon fundamental principles, but reference to the writings of Lassalle, Karl Marx, Schaffle, and others, shows that this is far from being the case, and that, on the contrary, the divisions between them are both wide and deep. In place, therefore, of dealing separately with the exponents of these varying doctrines, it is proposed first to ascertain the general content of the " New Socialism," and then to consider this doctrine in relation to the principles of economy. The terms Socialism, Collectivism, and Communism may be thus defined : Socialism is a generic term, and 1 The Quintessence of Socialism, by Dr A. Schaffle, English edition. Swan, Sonnenschein & Co., Ltd., 1902. [For the convenience of English readers, references are given to the English edition of the Quintessence of Socialism^ 4 DEFINITIONS AND DIFFERENCES denotes state interference with the relations between producers and consumers, with the object of rectifying social inequality, of establishing official control of con- tractual obligations, now freely entered into between individuals, and of nullifying the influence of natural or economic advantages possessed by employers in making bargains with workmen. Socialism hopes to succeed by means of state rule and state competition with private enterprise ; its field of action is therefore undefined, and it assumes the most varied forms : for this reason its effect would be, to some extent, superficial ; it would more or less alter existing social relations in respect of the organisation of production and the distribution of products, but the change would not be complete. Communism, however, would involve the entire alteration of social conditions : under this regime all private ownership would be suppressed ; not only the work and the remuneration of every member of society, but even their personal requirements, would be regulated by authority, and no place would be left in the economic world for individual initiative, for personal responsibility, or even for liberty. Collectivism, as defined by Schaffle, consists in the state ownership of all means of production without excep- tion, in the substitution of state for private organisation of labour, and in the distribution of the products by the state to workmen in proportion to the quantity and the value of their labour. Were it not for this last provision, there would seem to be but little difference between collectivism and communism ; but if in the distribution of produce regard is paid, not only to the quantity, but also to the quality of the work, it is obvious that the system is widely differentiated in theory from that of communism pure and simple, although the difference would be difficult to maintain in practice. Collectivism professes that it would nationalise the means of production only, and not the products; that under its regime everyone would retain the free determina- tion of his requirements and possession of the means of RECRUDESCENCE OF SOCIALISM 5 consumption ; even private wealth would not be altogether suppressed, but it would consist only of the means of consumption ; " money " would cease to exist, but a measure of value would be provided by means of vouchers representing credit for the performance of social work, and private saving might be effected by the accumulation of these vouchers. This form of saving, however, would be of a very primitive character, and would produce no return. Even the right of inheritance would, it is said, be respected, and national savings, in the most perfect and remunerative form, would be established. For the transformation of existing social conditions, collectivism would make use of a system of terminable annuities, and, in expropriating capitalists, would allot them indemnities payable annually by instalments for periods varying in duration according to the patience or generosity of collectivist writers and legislators. The question whether or not these doctrines are logical, and whether collectivism thus conceived would not necessarily lead step by step to pure communism, will be considered later. Socialistic ideas have of late regained ascendancy in many minds the infection spares neither class nor country and a large number of persons, more or less unconscious of the tendency of their action, are urging modern govern- ments to follow the path which leads to collectivism. The present time therefore appears to be particularly opportune for an examination of this doctrine. Collectivism, although more restricted in scope, is more definite than communism, and, at any rate in appearance, is more capable of practical application, and more com- patible with individual liberty. Schaffle lays stress upon this point, and declares that if the establishment of col- lectivism would entail the destruction of liberty, it must be regarded as the mortal foe of civilisation and of all intellectual and material well-being. Collectivism requires that all instruments and means of production must be the property of the state (that is, of the community as a whole), personal property being restricted to means of 6 COLLECTIVISM consumption only ; but how are these to be distinguished ? It is obvious that many products, as, for example, a house, a garden, a piece of cloth, a horse, apples or grapes, may assume either character at the will of the possessor ; no such differentiation is, in fact, possible ; there is no product which may not be either the material or the means of ulterior production. The difficulty of enforcing a regulation that no one should own any means of production, such as a needle or a sewing machine, except for personal use, would be practically insuperable. It is clear that collectivism, as described by Schaffle, would soon end in one of two ways either in the clandestine reappearance of most of the social inequalities it professes to abolish, or in pure communism a system to which the majority of collectivists are strongly opposed. They are, however, far from being agreed upon their own proposals. Whilst some advocate the total abolition of all rents for houses or land, others, as for instance collectivists of the Franco-Belgian school, propose that the state should own the land, but should grant leases of it to individuals. Thus, whilst one section of collectivists would attack real property only, another would absorb all the means of pro- duction. To prove the necessity for the establishment of their system, collectivists assert that the existing social system, based upon private property and private contract, is contrary to justice an assertion they attempt to justify by the following arguments. Private property, they say, has possessed itself of things which by their nature are common to all mankind, such as land and minerals, which are not products of human labour, and ought not, therefore, to be subjects of private ownership. Private possession of other kinds of wealth they declare to be equally unjust, since " capital," falsely asserted by economists to be the result of thrift, has in reality been created by the fraudulent retention of a portion of the product of labour to which the labourer is entitled. The appropriation by the community of all means of production is therefore declared to be necessary THE "PROLETARIAT" 7 for social harmony and for the progress of humanity. They also assert that under existing social conditions man- kind is divided into two numerically very unequal parts plutocrats on the one side, and the proletariat on the other that this division is becoming more and more accentuated, that intermediate classes have disappeared, and that graduation of society has consequently ceased to exist The term proletariat, divorced from its original mean- ing, is used by collectivists to designate that section of society which, although it depends upon manual labour for its existence, does not possess the instruments necessary for that labour. Men thus situated, it is said, cannot be free ; they are compelled to rely upon others for the means of work, without which they could not exist, and are therefore forced to accept as remuneration a fraction only of the product of their toil. Another argument advanced in favour of the collective ownership of all means of pro- duction is, that to allow capital, described as being inert or dead matter, to dictate the conditions of labour, is an insult to humanity ; it is rather labour that ought to direct the employment of capital. These arguments are put forward as being conclusive, but it is obvious that there is much to be said in reply. The definition of the " proletariat " as men who do not themselves possess the instruments necessary for their work, would include almost the whole of mankind, and in this respect the class referred to is in no worse a position than the rest of humanity ; to assert that capital, being inert material, dictates the conditions of labour, is equally misleading; it is not "inert matter," but living men, themselves the possessors of capital, and either its creators, or heirs of its creators, who impose conditions for its use. These arguments, based upon the relations between labour and capital, are put forward as being self-evident propositions which require no proof, or as being supported by the dicta of certain well-known economists ; these dicta, however, although possibly true of a particular country or at a particular time, cannot be accepted as being universally applicable. The pronouncements of 8 BASIS OF SOCIAL THEORIES Turgot, Adam Smith, Ricardo, and J. S. Mill, are those principally relied upon by collectivists ; but apart from these eminent economists, collectivists employ an original and ingenious dialectic, in order to prove that capital is not created by saving, and that wages do not constitute the full remuneration of labour assertions which are supported by Lassalle with much ingenuity and with a wealth of illustration, and by Marx with great subtlety ; but before dealing with their arguments, the following points may be considered. All social theories ought to be inspired by, and founded upon, the three ideas of justice, of utility, and of individual liberty; and, broadly speaking, the existing economic system, with some exceptions, fulfils these conditions. Of these exceptions, some would be unavoid- able under any social system, whilst the remainder will gradually disappear with the progress of social ameliora- tion. The existing economic organisation is not the conception of any one man or collection of men ; it is a natural system spontaneously evolved by humanity. Is it to be supposed that the ideas of justice, of utility, and of liberty, by which a social system must be conditioned, are more likely to be combined in the artificial regime it is proposed to establish, than under the naturally developed system now in existence? Granting the possibility of a more equitable distribution of products, this alone would be insufficient, unless the total production under the new would be at least as great as under the existing system, and capable of an equal rate of expansion ; and if the new regime, whilst partly eliminating inequalities of distribution, should at the same time lessen individual enterprise and restrict production, mankind would gain nothing and lose much ; even admitting that these evil consequences might be avoided, there would still be no adequate reason for abandoning the present system, since there would be no security for liberty, which is an essential element of justice. Collectivism no doubt professes to assure individual liberty, but since under its regime all instruments of work would be the property not of the labourer but of the community, THE STATE THE ONLY MASTER 9 no man could use them except in the social workshops and under official direction, and the workman, in place of having, as he now has, the whole field of industry open to him, and liberty of choice amongst a multitude of employers, would have only one master to whom to apply, the state, with its rigid regulations and its intolerance of spontaneous individual action. How could industrial liberty exist under such a system ? CHAPTER II Relation of capital and labour. Position of workman not improved under a collectivist regime. What is Capitalism ? Origin of capital. COLLECTIVISM has both a negative and a positive side. It is the former which has hitherto received most attention, and the efforts of collectivist writers have been directed rather to criticism of the abuses of a capitalistic society than to the exposition of the system by which they propose to replace it. The examination of the origin and growth of capital by Marx, in his book Das Kapital, is, according to Schaffle, the critical evangel of the European workmen of the present day, and in another place the same author writes : " Criticism of capital is the most important prepara- tory work at the present time." Before proceeding, it will be useful to reconsider some of the more general objections made to capital in its present form. It is said to be contrary to reason that capital, which represents the labour of yesterday and is dead, should direct the work of to-day ; but, as has already been pointed out, it is living men, who direct the way in which their capital shall be employed. There are many reasons why this should be so ; for instance, there is the financial risk, which is infinitely greater for the capitalist than for the workman, whose wages are practically secure from risk; but there is a far more important reason namely, the advantage secured by the division of labour, which without capital would be unattainable. Collectivists them- selves admit that this principle must govern all modern industry ; but for its application, skilled direction is indispensable, and this would necessarily involve the 10 DIVISION OF LABOUR 11 separation of administrative from executive functions. Under a collectivist regime the manual labourer would be no more capable of efficiently co-ordinating and directing industrial operations than he is now, and this function would inevitably fall into the hands of men who have made it their business to acquire the necessary knowledge and experience. This separation of function is not only essential to industrial production upon a large scale, but it may be said to be an absolute condition of all civilisation, and all attempts to dispense with it have resulted in failure. This fact is illustrated by the history of industrial associations for production. In England and Germany, as well as in France and elsewhere, the common fate of these associations, with but the rarest exceptions, is either to dissolve after a more or less prolonged struggle, or to lose their original character and become transformed into a kind of joint stock company. 1 Confirmation of this state- ment may be found in the report of the Government En- quiry on Workmen's Associations, recently made in France. Although this enquiry dealt only with small societies of artisans, mention is constantly made in it of paid assistants : some of these so-called co-operative associations had no more than from four to fifteen or twenty members ; and of those which appeared to be the most successful, some actually boasted of possessing a dictatorial adminis- tration. 2 It is, indeed, admitted by the more enlightened and sincere collectivists, that it would not be possible to entrust the conduct of enterprises to manual labourers ; no doubt, as frequently happens now, a workman may rise and eventually become an administrator, but the members of a committee of direction must always be few in number compared with the mass of the labourers, and, since direction demands both experience and talent, constant change would be impossible, and the office could not be held by each one in rotation. 1 See La Question Ouvrttre au XIX Sihle, P. Leroy Beaulieu, 2nd ed., Paris, 1882. 2 See UEnquete de la Commission extra-parlementaire dcs Associ- ations Ouvrttres. Paris, 1'Imprimerie Nationale, 1883. 12 THE WAGE EARNER AND COLLECTIVISM Whether conferred by election or by nomination, author- ity, to a large extent discretionary, would be centred in the committees by which labour would be directed and controlled, and the position of the great majority of the labourers, under a collectivist regime, would be one of subordination possibly more absolute than at present. The promise that the position of the workmen would be greatly improved in this respect is therefore delusive, as is also the assurance that workmen would become owners of the instruments of labour. Those who make such promises are either deceivers or are themselves deceived, and to secure their fulfilment would be beyond the power of collectivism. All instruments would be the property of the community as a whole, and to it a workman would be compelled to apply for the privilege of using them, just as at the present time he has to apply to an employer. But the community is an abstraction, and for practical purposes must be represented by officials, who would have the absolute control and direction of all industries, even of the most insignificant ; and to them the workmen would have to apply, not only for the instruments, but also for the necessary material of labour, for a place wherein to work, and for wages. To-day, if rejected by one employer, a workman can seek another ; if he finds his work insuffi- ciently paid, he can adopt some other kind of industry ; if his surroundings are unsympathetic or work unattain- able, he can go elsewhere ; but under a collectivist regime his only resource would be to apply to officials, who would be in a position to exercise a despotism hitherto unknown to humanity. It may be said that these officials would have no right to refuse work and remuneration to any individual under their jurisdiction ; this might be so, but it would still be in their power to impose onerous and humiliating conditions in granting the request. To the argument that an appeal would lie to a higher authority, it is sufficient to reply, that however intricate and ingenious the system, it would be impossible to protect a workman who has no choice of employers, who would have to depend entirely upon the officials representing the com- SOCIALISM AND THE SUFFRAGE 13 munity for work, and who could not change his pro- fession or his domicile without official sanction from a state of serfdom more complete than that of the serfs of the middle ages, who, under the sanction of inviolable custom, were at any rate in possession of the land they occupied. Thus collectivism would be unable to secure independ- ence for the workman ; he would not, any more than under the present system, possess the instruments neces- sary for his labour, or be better able to influence the direction of enterprise. His only resource would be the indirect and intermittent action of the franchise, and on this point it should be noted that collectivists carefully avoid committing themselves; they appear indeed to be but little inclined to encourage representative institu- tions. " Universal suffrage," says Schaffle, " would not be absolutely necessary to a victorious socialism. It is true that during the transition period of the struggle during the progress of the conflict with liberalism, socialism will adhere to the principle of universal suffrage." 1 Further on this same author speaks of the representative system as being delusive and misleading. This is not encouraging, nor is his statement that under a collectivist regime "individual freedom, free migration, free choice of occupation, might perhaps be maintained in force." 2 Schaffle is well advised in thus refraining from more positive assertions, seeing that these " liberties," which he enumerates, are entirely incompatible with the theory and the practice of the system he advocates. The inference to be drawn from this preliminary examination of the doctrine of collectivism is : that in respect of liberty and independence, the workman would gain nothing, since neither as regards possession of the instruments of production, nor in the control of the enterprises, by which he lives, would he be in any better position than he is at the present time ; rather the contrary, for in a country such as France, at least half of the workmen are already either partly or wholly in possession of the 1 Schaffle, op. '/., p. 51. 2 Ibid., p. 84. 14 CAPITALISM NOT CAPITAL IS THE ENEMY instruments necessary for their work, such, for instance, as peasant proprietors, village blacksmiths, carpenters, shoemakers, and many others. Collectivism would rob these people, and would hand over their possessions to officials, and thus would make the evil of the separation of the workman from his tools, which it denounces, universal instead of partial ! Since a collectivist is contrasted with a capitalist system, and collectivist with capitalist society, it is im- portant, in order to avoid attributing ideas to our opponents which they would repudiate, to define clearly what is intended by these terms. Capital itself is not the object of attack, for collectivists declare that " capital," notwithstanding its detrimental effects, is in itself a desir- able thing, and assert that having taken possession of it, they would maintain and even increase it : it is, indeed, manifest from categorical statements made by the prin- cipal collectivist writers, that it is not against "capital," but against "capitalism" and a capitalistic society, that they declare war. What, then, is " capitalism " ? A distinctive feature of the industry of the present day, according to Marx, is that production is carried on in large manufactories, in place of the home, in which production has now almost disappeared. Formerly the greater part of the produce of each family was intended for its own consumption, and this had two consequences firstly, that hardly any- thing but objects of real and essential utility were produced ; and secondly, that since each producer con- sumed the greater part of his own produce, profit on exchange was restricted, and thus large fortunes rapidly acquired by means of commercial or industrial gains could not be made. The distinction here made between "values in use" and "values in exchange" plays an important part in Marx' "criticism of capital," and his dialectic is based upon it. He asserts that by an abuse of human industry, human labour is diverted from the production of commodities essentially useful to humanity, to the production of superfluities and luxuries, and that MARX ON PRIVATE PROPERTY 15 in this way, a particular direction is given to human industry, to the detriment of society as a whole. This, he says, is the great evil, and according to him, it is one with which economists do not concern themselves. This criticism has some force, and will be examined later on, but it is not the argument to which collectivists attach most importance. A dominant characteristic of a capitalistic regime is said to be a tendency to the concentration of capital, a tendency which it is asserted will ultimately bring about its own destruction. It is also asserted that small in- dustries have been, and are being, annihilated, and that the existing system tends more and more to the division of the population into two parts the " proletariat " on the one side and a handful of "plutocrats" on the other. Collectivists say also that the " capitalist " society of to-day bears no resemblance either to the " collectivist " society of the future or to the conditions of society in the past. They look upon the social organisation of the middle ages as possessing some desirable characteristics which might well be borrowed, and they declare that the liberal economic system which slowly grew out of it, and by which it has been replaced, is for the majority of mankind the worst of servitude. According to Marx, private property, acquired by individual labour, and based upon close association of the independent isolated workman with his work, has now been supplanted by private capitalist property derived from the labour of others, nominally free men. The capital of to-day originated in the destruction of the small property of the artisan and the peasant, in the production of which the workmen and the product were so intimately connected that it became their private property in a true sense. This system, now no longer in existence, although temporarily satisfactory and relatively equitable, had a serious drawback, in that it involved the dispersion of the means of production. The pro- ducts therefore suffered, both in quantity and in facility of manufacture; thus, however interesting and meri- 16 MARX ON THE ORIGIN OF CAPITAL torious it might be, such an economical system was certain to disappear when exposed to the pressure of accumulated industrial and commercial capital. Marx also asserts that existing capital, said by economists to be the result of thrift, in reality owes its origin to the confiscation of the property of serfs, monasteries, and communes, as well as to " protection," and to the colonial system, and that at the present time it is being continu- ally increased by the unjust retention of a portion of the wages of labour. The plutocratic evolution of capital continues, and when, at a time which cannot be far distant, this evolution is completed, capital, self-destructive, will find all the world in antagonism to it When accumu- lated capital has suppressed all its weaker competitors, when huge manufactories have swallowed up their humbler rivals, when great stores have destroyed the small shops, when gigantic landed estates have absorbed all the old patrimonial properties, when almost the whole population have become either salaried officials or labourers, and capital belongs only to joint stock companies or to plutocrats, then the kingdom of col- lectivism will be at hand. The huge company, with its concentrated bureaucratic organisation, its lack of a master's supervision, and its thousands of workmen, will, it is said, constitute an easy and natural means of transition from individualism to collectivism. Such is the idea which collectivists have evolved of the existing capitalistic society ; but the criticisms on which they rely, some of which are no doubt well founded, are based upon an incomplete analysis. Even if in some cases large inherited fortunes owe their origin to spoliation, it should be remembered that the present owners hold them by prescriptive right, which is rightly said to be the " patron and protector of the human race " ; without it there could be no social stability, nations would have no more right to the possession of the countries they inhabit, than individuals to the fields they inherit ; " pre- scription," in fact, is the only safeguard against continual and universal warfare. Again, if in some cases long- COLLECTIVISM AND JOINT STOCK COMPANIES 17 descended fortunes can be traced to confiscation of the property of serfs, of monasteries, or of communes, to "protection," or to the colonial rtgime, or if fraudulent speculation accounts for a certain number of recently acquired fortunes, it is not by these means, either now or for a long time past, that private wealth has been chiefly created. The use made of analogy by collectivists is as mislead- ing as is their interpretation of history. To believe that the increase of joint stock companies will pave the way for the establishment of collectivism, is to disregard the fundamental difference between private industry, even in the form of joint stock companies, and the authoritative organisation of all industry by the state. It is necessary to insist upon this essential difference, because collectivists hope that by ignoring it, and by asserting that their system is nothing more than a " company " upon a grander scale and of wider scope, they may be able to persuade the public to believe their doctrines to be capable of practical application. 1 1 It is often supposed that the great trusts which have grown up in the United States form a prelude to, and a step towards, the nationalisation of industry or collectivism, but this view is a super- ficial one. Great trusts are one of the most characteristic and in some ways most triumphant forms of individualism ; they spring from a principle altogether opposed to that of state bureaucracy, and possess an entirely different character. In these great associations, an individual or a very small group of individuals, unusually able and enterprising, and having an exceptional talent for combination, succeed in securing a preponderating control and sometimes a monopoly of action in the conduct of a great undertaking. They effect a radical improvement in manufacture and methods of business, in such a way as to reduce the cost of production and the general expenses. They are not restrained or hampered by meticulous regulations, and they derive immense personal gains from the reforms they so completely carry out. Nothing could be more opposed to the red-tapism, the indifference, and the lethargy of state administration. These great trusts, moreover, rarely have long lives ; they seldom survive the active period of the life of the individual who establishes them ; they are difficult to initiate and develop in those countries which depart but little from the practice of " free exchange," such as B 18 COLLECTIVISM AND TRUSTS England, and the greater number of them have but a precarious existence. (Cf. Traite thforique et pratique (fconomie polttique, P. Leroy Beaulieu, 3rd ed., vol. iv., pp. 41-58). Thus the organisation of great trusts and of joint stock companies has nothing in common with that of the state, and the multiplication of the former in no way prepares the way for collectivism. (Note to the 4th ed.) CHAPTER III Origin of private property in land. Cause of increase in value. Prescriptive right. Marx' indictment of personal property. Dis- tribution of wealth. " Unearned Increment." Influence of social conditions external to the individual upon the acquisition and ownership of wealth. The element of " chance " or " luck." Can collectivism find an efficient substitute for the incentive of personal interest ? COLLECTIVISTS assert that capital under existing condi- tions has been produced neither by thrift nor by the intelligence of capitalists, but that it is in reality the " plus- value" of labour unjustly retained by capitalists. This thesis is maintained by Marx with much subtlety, and must be carefully examined in connection with the origin of capital ; but it will be as well first to consider the historical aspect of collectivist criticism, a question which is only referred to by Marx towards the end of his book. He maintains, but without adducing any adequate evidence for the assertion, that private wealth owes its origin to spolia- tion. Agricultural wealth, he says, was derived from the confiscation of church property in the sixteenth, and the dispersion of state domains in the following century, from the transformation of feudal property subject to state charges, into " bourgeois " property subject to none, and from continual encroachments made upon communal property, both by large and by small proprietors. He makes the further statement that, under the name of " liberalism," the Revolution in England gave a sanction to the spoliation of the peasant for the benefit of the upper 19 20 HOW LAND IS HELD IN FRANCE classes, that land formerly subject to communal grazing rights was brought under tillage for the profit of individuals, then reconverted into pasture land, and in some cases, as in Scotland, denuded of inhabitants and dedicated to sport. It cannot be denied that in respect of the past there is some truth in these statements ; no doubt the French Revolution, which abolished feudal rights and with them a number of charges on landed property, [originally imposed in the public interest], was advantageous to most landed proprietors ; l but these assertions are nevertheless incorrect in three respects. In the first place, as previously pointed out, prescrip- tive right, in respect of present ownership, must be accepted as a necessary condition of human society ; next, the causes enumerated are far from supplying an adequate explanation of the real origin of the greater part of existing landed property. In France about half the soil belongs to small proprietors, who obtained it, not by force or by unjust legislation, but by the patient exercise of thrift. From a quarter to a third of the land is in medium- sized holdings, and not more than a fifth, or at the outside a quarter, is in the form of large properties, not half of which are now in the possession of descendants of the original proprietors. Rural landed property, whatever its extent, owes its present increased value to labour, to thrift, to co-operation, and to the careful management of its proprietors. If interest on the capital sunk in the land (calculated at a fair average rate) were deducted from its revenue, there would in most cases be nothing left, and even if any balance remained, it would be very small. It is not necessary to go far back in history in order to prove this, and to show that the net return on the majority of properties does not give even a moderate rate of interest on the amount expended on the soil and buildings, and that during the last fifty years landed proprietors have sunk more capital in the soil than is 1 Traiti de la science des finances, P. Leroy Beaulieu, 6th ed., vol. i., pp. 358 and 578-84. INCREASED VALUE OF LAND 21 represented by the increase of the saleable value of their property. 1 It may be gathered from official agricultural returns, that during the last fifty years 2 1,882,0x30 hectares of land, formerly common or waste, have been brought under cultivation, whilst the area occupied by vineyards, orchards, gardens, and fruit farms, has also largely increased. It cannot be maintained that the increased value thus created is owing to the beneficence of nature and a spontaneous increase of return from the soil, and if during so short a period so large an extent of land has been subjected to improved cultivation, the credit is due to labour, to intelligence, and to thrift, and not to spoliation either by force or by legal artifice. Besides the increase of cultivated land, much advantage has been derived from the improvement of agriculture, from the construction of dams and canals for irrigation, and from the great increase in the number of farm buildings of all kinds. This is the true explanation of the increased value of landed property in recent years, and if the net revenue from land during this period has also increased, the gain cannot be attributed to the gratuitous gift of providence, but is in nearly every case due to the persevering labour of small proprietors, and the intelligent management of large landowners. In a third respect also Marx' assertions are incorrect. There are many countries in which land is privately owned, but in which no monasteries have ever existed, where the domains of the king or of the state have never been distributed in gifts, and where there has been no plunder of communal rights ; this is the case in all new countries, in New Zealand and Australia, as well as in the far west of Canada, or the United States. The objections made, however, by collectivists, and even by some economists, to the method of alienating or giving concessions of land in 1 Essai sur la repartition des richesses, P. Leroy Beaulieu, 4th ed., chapter Hi. 2 Enqucte ddcennale de 1892 (publtie en 1897), 2nd part, pp. 114, 115. 22 PRIVATE OWNERSHIP NO INJUSTICE America and in Australia must not be disregarded ; they contend that, in place of perpetual ownership, leases for a term of years only should have been granted ; but while the vast allocations of land made by the United States and Canada may be open to criticism in this respect, it is nevertheless clear to an impartial observer, that the actual conditions of grant are by no means unduly favourable to settlers. The proof of this is that the majority of the "bourgeoisie" and of the so-called "proletariat" in the great towns of America prefer to work for wages rather than to become proprietors in the Far West, although the cost of the change would be within the means of millions of their number. If the acquisition of land were so profit- able a business and so certain to lead to fortune, as is asserted, the young shopkeepers and the young artisans of American towns would hasten to become pioneers and proprietors of land, but nothing of the kind occurs ; they prefer to remain at home and gain their living by service for wages, rather than to become landowners, and there can be no doubt that the wage system, with all its draw- backs, still appears to the majority of Americans to be a less precarious means of living than the possession of virgin soil. Thus the alleged injustice of a system of private owner- ship of land appears to be either non-existent or negligible. The question as to what, apart from their origin, are the respective advantages of the systems of private or public ownership of the soil, for the community as a whole, will be considered later on. Another part of the collectivist indictment relates to personal property, and Marx imagines that this is strongly supported by the result of his examination into the origin of commercial capital, 1 which, according to him, is due entirely to the following causes : the colonial system, national indebtedness, the system of protection, the abuse of child labour, dishonest practices, and usury. It is impossible to deny that in some instances commercial wealth has been amassed by fraud, but to assert that all 1 Das Kapital-zweitekterbesserte Auflage^ 1872, pp. 781-91. ORIGIN OF PRIVATE WEALTH 23 commercial wealth is derived from dishonest practices, is as extravagantly false, as it would be to say, that since blind men and cripples are occasionally to be met with in the streets of a town, the whole of the population must be deformed. Amongst the causes given by Marx as being the origin of private wealth are some which are in no way censurable ; for instance, the most rigid moralist would not blame a person who derives a profit from lending his money to the state for national purposes. It is strange that Marx should include " protection " amongst the vicious causes of private commercial capital, since he himself, as well as Schaffle and other collectivists, far from sharing the antagonism to " protection " entertained by most economists, constantly derides and scoffs at the principle of "free exchange," and professes to see in it nothing but an empty formula, void of meaning, used by " bourgeois " theorists to mislead the simple. Schaffle does not hesitate to say that the tendency of collectivism is not towards freedom of international exchange, and, as will be seen later, it is altogether repugnant to the collectivist system of social organisation. If great manufacturers use their wealth to obtain an increase of duty on the articles they produce by bribing legislators or electors, and thus secure profit for themselves at the expense of the consumer, no doubt they inflict a wrong on the community, but a high tariff affects only a small and continually decreasing part of national produc- tion, and private fortunes can no longer be attributed to this source. Personal property acquired during the last century has a widely different origin from this, as is shown by an enquiry into the source of the annual increase of the national wealth of France, which amounts to two milliards of francs. From this it is clear that the part played by the abuses described by Marx in the production of this saving is infinitesimal, and that it is in truth the result of labour, in which term is included intellectual work, inven- tion, co-operation, and thrift. On the subject of the distribution of national income, and the proportion borne by great fortunes to the total 24 DISTRIBUTION OF WEALTH amount of national wealth, many enquiries have been made and much labour has been expended by eminent econom- ists. Although the results obtained are necessarily only approximate, since absolute accuracy on a question so complex is unattainable, the evidence that modern civilisa- tion does not, as is commonly supposed, encourage an increasing concentration of wealth, is overwhelming, and goes to show that the aggregate of the enormous fortunes of which we hear so much hardly amounts in any country to a tithe of the national income. It was in England that Marx wrote, and from the English economical system that he derived his inspiration. Here wealth is highly concentrated, and artificial causes, historical antecedents, and legal arrangements have hitherto restrained the tendency of modern civilisation towards a more general distribution of wealth ; but the publications of eminent English statisticians, especially those of Sir Robert Giffen, have shown that even in this country the years that have passed since Marx wrote have altogether falsified his confident prediction that society would resolve itself into two groups a few " plutocrats " on the one side, the confused multitude of the proletariat on the other : no such sharp division exists ; between the pauper in the workhouse and the richest London banker there are infinite gradations; and if a geometrical figure were constructed to illustrate the distribution of private incomes in the United Kingdom, it would take the form of a regular pyramid diminishing very gradually from the base to the apex. 1 [ l With regard to the distribution of national income, Sir Robert Giffen thus summarised the conclusions to be drawn from the papers on the " Progress of the Working Classes in the last Century," read by him before the Statistical Society in 1883 and 1886 : "Whereas fifty years ago the working masses of the United Kingdom, amounting to 9 millions, earned in all about 171 millions, or 1 9 per head, the working masses, now amounting to 13 millions, earn about 550 millions, or nearly 4-2 per head, an increase of much more than 100 per cent. " When the increase of earnings from labour and capital is com- pared, it is found that the increase from capital is from 190 to 400 ILL-GOTTEN WEALTH THE EXCEPTION 25 If in England there is so little justification for Marx' indictment, it is far more trivial when made against France and Belgium, or other countries in which political action has destroyed all traces of the feudal system. It is no doubt true that some modern methods of accumulation of wealth are as blameworthy as the violence of the middle ages, and it cannot be denied that a certain number of fortunes far fewer, however, than is generally supposed are thus obtained ; but it is no less true that these are the exceptions amongst the multitude of fortunes laboriously and honestly gained, and are traceable to causes the influence of which will be diminished as civilisation advances ; they are due either to defective legislation, which does not sufficiently check fraud in the initiation or management of joint stock companies, or to the lack of education, to the carelessness and credulity, which is often allied to cupidity, of the public, and the remedy lies in the better education and larger experience of small capitalists. Lastly, there is another cause, less easy to define, which will be as potent under a collectivist as under a free regime: this is the fact that humanity can never liberate itself altogether from its defects, that there will always be men inclined to, and expert at, rascality, and others always ready to allow themselves to be duped and despoiled ; but when all this is admitted, these exceptions, deplorable as they are, are not more so than the physical deformities or moral sufferings, which civilisation cannot altogether remove. Besides their indictment of the origin of certain classes of private wealth upon historic grounds, and in addition to the inferences they declare to be derivable from an millions only, or about 100 per cent. ; the increase from the "work- ing " of the upper and middle classes is from 1 54 to 320 millions, or about 100 per cent. ; and the increase of the income of the manual labour classes is from 171 to 550 millions, or over 200 per cent. In amount, the increase due to capital is about 210 millions, to labour of the upper and middle classes 166 millions, and to labour of the manual labour classes 379 millions, a total increase of 755 millions." (Essays in Finance, by Sir Robert Giflfen, 2nd series, 2nd ed., P- 472.)] 26 "UNEARNED INCREMENT" analysis of economic phenomena, collectivists assert that private wealth is, to a large extent, created by causes which are independent of the individual who profits by them. Whilst they admit that this may not be altogether correct as regards its origin, it is, they affirm, strictly true in respect of the increments of value due to lapse of time and as a consequence of the progress of civilisation : this increment or " plus-value " is, they maintain, but rarely owing to the action of the capitalist himself. Ingeniously handled, this argument is no doubt a striking one ; the use made of it with reference to the rent of land since Ricardo's time is well known, and it is capable of application with almost equal justice to nearly all kinds of private wealth. Mr Henry George, in Progress and Poverty?- describes in sarcastic terms the fortunate position of the judicious purchaser of land on the site of a developing city who, without personal exertion, profits by this " unearned increment," and dwells upon his life of ease as contrasted with the lot of those to whose labour the constant increase of his wealth is due, but who themselves derive no advantage from their toil. There is, however, another side to the picture : it is impossible to ascertain beforehand whether some little town will develop into a wealthy city ; the purchase of land in the hope that it will increase in value is mere speculation, by which it is probable that more men have been ruined than enriched. The assertion that it is only the owners of the land who benefit by the growth of a city is false ; in reality every citizen down to the lowest labourer has a share in its increasing wealth. Priority of settlement is almost as valuable to commerce and industry as monopoly of situation is to the proprietor of the soil : doctors, architects, or agents who by good luck establish themselves in a rising community secure a rapidly increas- ing and profitable business, and although no doubt they, in common with merchants, will be exposed to the com- petition which is certain to follow in the track of successful trade, yet it follows but slowly, and the first comers will 1 Progress and Poverty, by Henry George. New York, 1879. "CHANCE" 27 have had time to secure their connection and will for long retain the advantage of priority. The element of chance plays a large part in all human undertakings ; " unearned increment " due to no personal merit or effort is by no means confined to the fortunate possessor of land in an improving city, and undeserved loss and ruin are as common as unmerited success. Who has not seen the growth of commercial or industrial fortunes of which good luck was the creator? In the accumulation of private property, " luck " has almost always a share ; it is an element to be reckoned with, and in human affairs it stands on the same footing as good looks or intelligence, which in no way depend upon the will of the individual. If man, with all his diverse faculties derived from heredity and from education and environment, is analysed, who can determine which of his qualities can be fairly considered as being entirely due to his own individu- ality ? Why, then, should " luck " be considered as being a corrupt source of wealth? It is not only the well-to-do classes who benefit by " luck " : the " proletariat " participate equally in its favours ; and the question sarcastically put by George, as to whether the increase of wealth in a growing city would be likely to ameliorate the condition of the labourer, either in respect of the amenities of his life or the amount of his wages, can be confidently answered in the affirmative. Between 1875 and 1882 wages in Paris increased by 50 to 60 per cent, whilst the cost of living, with the exception of house rent, remained un- altered. This great advance, therefore, was not attributable to increased cost of living, nor was it due to any addition to the hours of labour which, on the contrary, had been reduced ; it was caused by the growth of Paris, and the advantages gained by the wage-earning classes were owing to their good luck in happening to live in an improving city. Again, if the position of the Silesian miner earning from is. 3d. to 2s. id. a day is contrasted with that of the English miner, who receives from 5s. to 6s. 8d., it is obvious that the better position of the latter is solely owing to the 28 PRESCRIPTIVE RIGHT good luck which placed him in a highly capitalised country with an extended commerce, and in a locality where his work is in demand and well paid for. It may be objected that both capital and labour can change their domicile ; this is true, but the process is a slow one. The transfer of capital involves risk and additional anxiety, and to quit their native country is to most men an affliction : neither human beings nor capital find their level like liquids in connected vessels : they do not spread equally over all the earth ; it is incontestably an advantage for a skilled artisan, such as a cabinetmaker or a jeweller, to be a native of Paris or Berlin rather than of some small village. To take a wider point of view, is it not a happy chance for the French to inhabit the valleys of the Seine, the Loire, the Garonne, and the Rhine, rather than the Steppes of Central Asia ? But if good luck is not to be considered as conferring a legitimate title to possession on the individuals who benefit by it, neither can it give any right to a nation to retain the land they occupy, and the French ought to share the rich pastures of Normandy and the splendid vineyards of Languedoc or the Gironde with the Esquimaux, the Laps, or the Tuaregs ; for it is not their own merit that has placed Frenchmen in their favoured land, it is by luck alone that they were born there, rather than in the north of Lapland or in the Sahara. That which is called " providence," " luck," or " chance," is in no case solely due to merit, but it is to this uncontrollable power, external to themselves, that nations, like individuals, owe a great part of their prosperity and their wealth. The fact, therefore, that the private property held by an individual is due to good fortune, and not to merit, is no valid argument against his right to possess it. It is the title conferred by prior occupation and by prescriptive right, which protects nations as it does individuals, and which justifies them in resisting the incursions and depredations of nations less fortunately situated. If this title be not acknowledged, then nations fortunately placed ought in justice to share these advantages with those less happily situated. Again, if social co-operation and conditions INFLUENCE OF SOCIAL CONDITIONS 29 external to the individual tend in certain instances to the augmentation of private fortunes, it often happens that they have the contrary effect, and destroy wealth labori- ously acquired by men who are innocent of offence. There are towns or parts of towns from which prosperity has vanished, districts whose products have fallen in value owing to increased facilities of transit caused by the advent of railways, discoveries which by the substitution of a chemically manufactured article for a natural product have destroyed an industry, as in the case of the discovery of alizarine and its effect upon the cultivation of madder. Illustrations of this statement might be indefinitely multi- plied : some, indeed, are almost classical, as, for instance, the destruction of the industry of copying manuscripts, caused by the advent of printing, the ruin of the great inns built upon the coaching roads, and of the posting business, caused by the construction of railways, or the effect of the substitution of coal for wood fuel upon the iron industry, or the replacement of sailing ships by steamers. Another example is afforded by the reduction of incomes of investors due to increasing prosperity, which enables a nation to reduce the rate of interest it has to pay for public loans. The assertion, therefore, that social conditions external to the individual necessarily conduce to the increase of private wealth is incorrect : their effect is quite as likely to be in the opposite direction, and this is why it is so rare, even in the absence of prodigality or incapacity, to find large fortunes transmitted intact from generation to generation for any long period of time. The truth that luck plays a great part in the distribution of wealth, and is the great leveller, was ignored by Marx and Lassalle ; but it was, to some extent, recognised by Schaffle, who, with curious ingenuity, twists it into an argument in favour of collectivism. According to him, the impossibility of pro- viding against the innumerable accidents which menace the wealthy, is a good reason why they ought to welcome collectivism. If, however, external social conditions are so hostile to the continued possession of wealth, why 30 THE INCENTIVE OF COMPETITION should collectivists represent capitalists as being a kind of automata who, without intelligence and without effort, infallibly secure for themselves continual accretions of wealth ? In reality, the hazards which attend all human efforts perform a useful function in our social system, and act as a spur to exertion : it is the chance of good fortune and of exceptional profit that develops individual initiative to a far greater extent than would be possible under a collective regime. In the inception of great undertakings there must always be an element of speculation and a necessity for prevision which, if it cannot control the future, endeavours at any rate to anticipate and provide for possible contingencies. It is the hope that this pre- vision will be successful, that is the mainspring of enterprise, and induces capitalists to risk their wealth. It is true their hopes are never entirely fulfilled, but each man confides not only in his own judgment but in his " star," an expression which epitomises man's reliance upon luck and which will long survive the pseudo-science which originated it. The more intelligent collectivists find themselves compelled to recognise this potent incentive to human action ; and Schaffle, although he speaks of " anarchic competition," acknowledges and even eulogises the " powerful influence of capitalistic competition " and the " strength of individual interest," whilst he recognises " the inadequacy of official injunctions," and asks himself whether, with his " social organisation of the middle ages," with his " committees of directors of production and dis- tribution " and his vouchers for " labour hours," it would be possible to retain, or if lost to compensate for, the influence of "this great psychological truth and the economic fertility of the principle of individualism, in accordance with which private interest is urged to the accomplishment of social functions." This question and this doubt are of extreme importance. It must be remem- bered that the personal wealth secured by the originator of the most successful enterprise, or the discoverer of the most useful invention, is quite insignificant in comparison with the gain to the community generally resulting from COULD IT BE REPLACED? 31 their labour ; for instance, it is calculated that the aggre- gate sum of the profits made by the inventor of " Bessemer " steel, since the date of his discovery, would only amount to about per cent, on the total amount of money saved by his process. The rapid development of this great invention suggests a contrast with what would probably have happened if it had been necessary to submit it to the officials of a collectivist regime and to obtain the consent of the bureaucracy appointed by the nation to direct its industries. It is indeed to the belauded " solid social organisation of the middle ages " that the sterility of that epoch in industrial inventions must be attributed. When inventors are compelled to obtain approval of their ideas by committees, or to submit them to a corporation and get the assent of the majority, what likelihood is there that they could overcome the jealousy of rivals or the prejudices and inertia of opinion- ated and indolent officials ? In almost all cases of great remunerative enterprises, it is the same as in the case of " Bessemer " steel the gain to the inventors or initiators is small compared to the gain to the world at large. In the case of the Suez Canal, it is estimated that the profit received by the shareholders does not at the present time represent more than from I to 2 per cent, on the economy effected in transit by the existence of the canal, and in the not distant future it will not probably amount to more than I or even per cent. Is it conceivable that the bureaucratic organisation of collectivism can effectively replace the inventive fertility of private enterprise ? Schaffle, who is a conscientious writer, is compelled to admit that this vital question, although decisive, is not yet decided, and yet it is upon the answer to this question that the possibility of a collectivist social organisation depends. If such a regime would dry up the sources of invention and enterprise, the advantages it offers would be purchased at too high a price. It is noteworthy that Schaffle hesitates in the same way when he speaks of the possibility of retaining " freedom of domicile " and " freedom of work " under a collectivist 32 COULD PERSONAL LIBERTY SURVIVE ? regime, and dares not affirm that both or either could be maintained. We see, then, that even one of the most capable exponents of the doctrines of collectivism can seriously propose that humanity should abandon its most precious possessions " individual initiative " and "individual liberty" although he dares not give any assurance that compensating advantages will be secured. CHAPTER IV Arguments against private ownership of land founded upon natural justice and historical precedent. Development of individual out of collective ownership of land. THE preliminary objections made by collectivist writers to the existing capitalistic social system have been cursorily dealt with, and a closer examination of the analysis made by Marx of economic phenomena, such as "value" and the nature and origin of capital, is now desirable. There are two distinct theories of collectivism, one of limited, and the other of unlimited, application ; the former proposes to hand over or restore to the state the possession of the land, mines, water power, and all such sources of wealth as are really or apparently of natural origin, and to deal with the means of communication and certain of the larger industries in a similar way. The other theory, more thorough and more logical, advocates the nationalisation of all means of production without exception. These two schools of collectivist thought entertain a profound contempt for each other ; the thorough-going collectivists regard the doctrines of those who advocate a restricted form of state control as being puerile, pusillanimous, and illogical, whilst the more moderate party retort that the system advocated by the former is " Utopian" and unrealisable, and would lead to the reversion of society to barbarism. Consider first the more restricted form of collectivism. The book by Henry George already referred to 1 gave 1 V. ante t p. 26. 38 34 NATURAL JUSTICE HISTORICAL PRECEDENT an impulse to this doctrine, and several well - known economists, de Laveleye amongst others, 1 were attracted by it. The advocates of this kind of com- munism appeal both to natural and to historic justice. As a rule, they ignore the accumulated value added to the soil by successive generations of proprietors, and but seldom pay attention to the social change which has substituted leases of greater or less duration for perpetual ownership, matters which they appear to consider negligible and not worthy of argument. They assert that land is not, and cannot be, the property of an individual, that it is res nullius, and is the one thing that is in its essence common to all. History, they declare, supports this theory, since it shows that up to a comparatively recent date, land, amongst all peoples, has been more or less common property. These two arguments, the one based on natural justice, the other upon historical precedent, deserve exa- mination, although the question of the best method of utilising land for the benefit of the human race appears to be one of far greater importance. Except in uninhabited islands, land, since man existed, has never been entirely res nullius; originally, as de Laveleye remarks, it was parcours, or hunting-ground. Take the case of Australia : here a huge extent of land, capable of supporting fifty or more millions of human beings, was inhabited by a small number of savages who lived by the chase, each family requiring for its subsistence an extent of ground which to-day affords ample sustenance for several hundreds, and in the future may well support thousands of civilised men. May it not be said of these vast regions thus thinly peopled by men incapable of developing their natural resources, not that such an occupation was illegitimate, but that it was incomplete and provisional ? 1 Fawcett appears to admit that in new countries the communal system should be maintained. Gide, professor at Montpelier, seems to consider that real estate should again become the property of the state, and Wallace is also one of the principal supporters of rural collectivism in England. PRIORITY OF OCCUPATION 35 If the rights of the colonist and of the aboriginal inhabitant are compared, which of the two should be called the usurper? The colonist appropriates only as much land as he can cultivate, in addition to a run for his cattle, and from this comparatively small area he produces sustenance, not only for himself, but for a large number of human beings in addition, whilst the indigenous family replaced by him, maintained a miserable existence by the occupation of an immense extent of ground, leaving its capabilities of production entirely undeveloped ; the real " usurper," in fact, was not the colonist, but the aboriginal inhabitant. Thus, the argument that, since land has never been occupied, no portion, however small, can be justly appropriated, is both equitably and historically unsound. Supposing that a member of a tribe, existing solely by hunting, more intelligent than his fellows, becomes a shepherd or an agriculturist, he would require in the one case not a tenth, and in the other not a hundredth of the extent of land he would need as a hunter ; if, then, relin- quishing his share of the tribal area, he should appropriate to himself sufficient land for his changed method of life, his tribe would suffer no wrong, but would be actually gainers by the considerable difference between the area necessary for him as a hunter and that which would suffice for his subsistence as a shepherd or agriculturist; if a whole tribe were to act in the way described, no loss but rather gain would accrue to neighbouring tribes of hunters, who would be relieved from its competition, and would benefit by the additional territory open to them as hunting ground. Priority of occupation confers a title to property, and carries with it the right of voluntary or hereditary trans- mission, and this title is by general consent and by mutual concession universally recognised as authentic and as being in harmony with the dictates of reason and equity : if this were not the case, human society would fall into an indescribable chaos. Under certain conditions, the title conferred by prior occupation of land has been the real basis of all civilisation. Property in land, considered 36 THE ELEMENTS OF PROPERTY generally and apart from some unimportant exceptions, rests upon three elements first, occupation, then cultiva- tion, and lastly, social utility. These three elements will be examined in sequence. If private property is held to be illegitimate on the ground that an individual cannot appropriate that which by its nature is common to all, the same principle must be applied to the ownership of land by a community or by a nation, or by the inhabitants of a continent. In each case the title has precisely the same origin namely, priority of occupation. Logically, the collectivist theory would involve the abolition of communi- ties and nations ; or, if we imagine the existence of other inhabited worlds, with soil less fertile than that of the earth, and intercommunication to be possible, the present inhabitants of our little planet would have no moral right to claim its exclusive possession : they would be bound to share their advantages with the peoples of these worlds, since their only title would be that of prior occupation, the legitimacy of which is denied. In equity, a circumstance carries with it the same consequences, whether it applies to one or to many ; if, then, priority of occupation is held to confer no title upon the individual, neither can it do so upon a collection of individuals, however numerous. The acceptance of such a theory would entail consequences unforseen by its advocates. If priority of occupation and continuous labour do not create a good title, by what right can communities in possession of land of exceptional fertility defend even the collective ownership of their territory? The inhabitants of other less favoured lands would, on this theory, have the right to expropriate them or to insist upon some tribute as compensation for the exceptional advantages they enjoy. What reply can be made by these favoured communities ? If appeal to the right conferred by occupation is of no avail in the case of the individual, neither is it a valid defence for a community ; if they base their defence upon the labour which they have devoted to the cultivation and development of their land, individual proprietors can advance an equally just claim to their property. Thus, if this theory is accepted, nations in PRIVATE PROPERTY AND LIBERTY 37 possession of fertile lands would have no good defence against the claims of poorer communities to a share of their advantages. Some collectivists are prepared to accept this consequence, and admit that the right of a commune to exclusive property in land is no more valid than that of an individual. They assert that the lot of all citizens of a nation ought to be precisely equal in this respect : even so, the dilemma would not be avoided, since a nation has no other or better title to exclusive possession than a commune, or than an individual : in each case, the elements of title are the same, and if the claim of the individual is disallowed, a similar veto applies with equal justice to the claim both to communal and to national property. If private ownership is to be supplanted, it cannot be logically replaced by either communal or national ownership, and the only method of carrying out the theory would be by making the whole world the common posses- sion of the whole human race. Thus, a state which denies the right of its citizens the individual ownership of land, cannot with justice resist the claim of any other state less happily situated, and the establishment of such a theory would ultimately lead to the general payment of tribute by nations in possession of fertile territories to those less favoured by natural advantages. The objection to private property, founded upon the nullity of title conferred by priority of occupation, is therefore baseless. Again, it is argued that since land is indispensable as a means of production, its possession is an essential condition of individual liberty. Every man, therefore, ought to possess land, either by effective occupation or by representation. This reasoning has now lost much of its force ; formerly, before the establishment of co- operative industry and the division of labour, such an arrangement might have been advisable, but nowadays land is no longer the one indispensable instrument of labour. Private property is indeed a necessary con- dition of liberty ; but it can no longer be asserted that to secure individual liberty, the effective or even repre- sentative possession of land is necessary. The assertion 38 SHADOW AND SUBSTANCE that no man is really free unless he is assured of his future and of his ability to support himself without support from his fellow-men, is obviously baseless. A member of a tribe of hunters can have no such assurance : his subsistence depends from day to day upon the con- tinuance of his bodily activity and the abundance of game ; but it cannot be said that this uncertainty deprives him of liberty. In the same way, men, under the existing social system, are free, although they also are equally subject to the changes and chances of this mortal life. Liberty, indeed, does not demand so impossible a condi- tion as a guaranteed security against the risks of life: its essential elements are freedom of choice and action. If the possession of land is to be a necessary condition of liberty, it is obvious that the human race can never be free, since, with the growth of population, it would become increasingly impracticable for each man to hold sufficient land for his support. Intelligent collectivists, however, do not propose this ; they offer to individuals a kind of ideal possession, which is to real ownership as the shadow is to the substance. The system by means of which they propose to bestow this ideal owner- ship, is that the state should own the land and lease it for the benefit of the community ; but under such an arrangement the individual would be no more the owner than he is now he would have no power to use the land for his own subsistence, except by agreement with the tenant farmers of the state, who would have no motive for acting differently from the farmers who now hold leases under individual proprietors. This " ideal possession" is indeed a mere delusion, and could in no way satisfy the formula that property in land is a condi- tion of liberty. Are collectivists, then, more fortunate in the arguments they derive from history than in those they base on natural justice? Can they find there any proof that collective property is the true system for a free people ? History indeed makes one fact clear namely, that as property in land gradually ceased to be collective and PRIVATE OWNERSHIP A USURPATION 39 became individual, agricultural methods improved and production increased : these two phenomena are found in all countries, and occur simultaneously ; and the question whether this relation is that of cause and effect, or is merely fortuitous, is one of much importance. According to collective authors, private property in land is a usurpation of the collective ownership which was the ancient and normal custom : they point out that formerly land was the common property of the tribe or the clan, and that at even the present time this system still continues amongst peoples uncontaminated by modern civilisation. The eminent publicist de Laveleye has supported this assertion with much learning and ingenuity, and although no doubt he would repudiate the appellation of " collectivist," yet that party can with justice claim him as an ally, since one of his most original works is in effect an indictment of the existing system of private ownership of land. 1 In this book he describes the ancient systems of land tenure from all points of view. The fact that what has been exists no longer, is in itself an indication of some defect ; if collective owner- ship so fully secured justice and content, how is it that it has so generally disappeared? Its destruction has not been the result of accident, for accident is essentially local and limited, whereas, with insignificant exceptions, collective proprietorship has vanished. Its advocates are compelled to recognise the fact that over the whole inhabited surface of the globe, a slow, progressive change has taken place, the effect of which has been to substitute individual for collective ownership of land. So long as people lived by hunting, collective ownership of land was obviously the only possible system, but history shows that neither then nor later, when the change to a pastoral regime took place, did this system secure peace and content. Competition for the best land was the 1 6mile de Laveleye, Lapropritte et ses formes primitives. Malon, formerly a member of the "Commune de Paris," translator of Schaffle and Lassalle, refers to de Laveleye as an auxiliary of collectivism. 40 OWNERSHIP AND AGRICULTURE cause of constant warfare between tribes and nations, and during the middle ages, as well as in ancient times, pastoral communities were a constant menace to their more civilised neighbours. By slow degrees portions of the land, which in the hands of a pastoral people yielded only such return as was spontaneously produced, became regularly cultivated, and an agricultural system was established. At first cultivation was entirely communal, later the land was divided and allotted annually to individuals, then a further step was taken, and in place of an annual division, the allotments were made for a period of years. It happened occasionally that the same family would remain in continuous occupa- tion of the same lot, which thus came to be considered as their own property, and so in process of time a system of private possession of land was evolved, and, once initiated, it continually spread, until it became the general custom. The cause of this transformation and of the rapid extension of private ownership is clearly pointed out by de Laveleye, who is compelled to admit that the improvement of agriculture progressed part passu with private ownership an admission which strongly suggests the presumption that this system is the most beneficial for the human race, a thesis which is confirmed by examination of the various systems of collectivist land tenure. CHAPTER V Existing systems of collective ownership of land. No institution is more frequently cited as an illustration of the advantages of collective ownership than the Russian " Mir." l In Russia all land which is not owned by the crown or by the nobility is the common property of the community, and in that country communes possess a greater degree of autonomy than in the East ; they are responsible to the state for taxes and recruits, but enjoy complete self-government. The heads of families, meeting under the presidency of the " starosta," or mayor, who is elected by them, discuss and regulate all communal affairs. The "starosta" is chief of police, and judge in case of breaches of the law. The aggregate of the inhabitants of a village possessing the land in common is known as a Mir, an old word which is equivalent to commune. In principle, every male inhabitant of full age has an equal share in the Mir. True collective ownership implies communal cultiva- tion, which necessitates an irksome routine, and involves the complete suppression of individual initiative and personal interest ; in the Mir this method of cultivation has long been abandoned the common land is divided into small plots which at varying intervals are divided either by lot, or are allocated according to some other system, amongst its members. Under such an arrangement, 1 For a complete study of the " Mir," see L Empire des Tsars et les Russes, by Anatole Leroy Beaulieu, vol. i., 2nd ed. 42 THE "MIR" no man has a lasting interest in the land allotted to him, the practice of a due rotation of crops is impossible, and, since each one knows that after a longer or shorter period the result of any extra toil and care he may bestow on his land will be lost to him and his family, it is not to be expected that he will do more than is necessary to secure a bare subsistence. The strong incentive of personal and family interest which impels the French peasant proprietors to lavish thought and toil on the improvement on their little plots of ground is here entirely wanting. To increase the interval between the periodical divisions would be no remedy. Formerly the division took place every year ; now, according to de Laveleye, the period is from six to nine years, but the longer the interval (de Laveleye suggests eighteen or twenty years) the greater would be the viola- tion of the principles on which the Mir is founded, and the greater would be the difficulty of providing for new- comers. Whatever device might be adopted, the economic objections to the Mir would remain immense ; the work of Anatole Beaulieu referred to above, and the admissions of de Laveleye, show that this system possesses no moral advantages to compensate for the economic evils it produces. The rural proletariat co-exists with, and is produced by, the Mir, and its evils are even less remediable than under any other system ; its ranks are recruited by those who, returning after unsuccessful emigration, have lost their rights of membership of the Mir, and by those who, remaining in the commune, possess neither a horse nor any other agricultural capital. The industrious workman has no means of utilising his surplus labour ; his own " lot " is no larger than that of his indolent neighbour, and if he bestows extra labour upon it, the result will be lost at the next partition. He cannot hire out his own labour, since each man cultivates his own ground, and it is only on the seignorial estates that he can obtain paid employment. The Russian peasant, in spite of his " lot," perhaps in consequence of it, is more in debt than the peasants USURY 43 of the West, and, being unable to give adequate security, is compelled to pay a higher rate of interest. When the more intelligent and astute peasants succeed in amassing some personal wealth, the only employment they can find for it, under this system, is " usury," un- restricted and unashamed. These men are described in Russian as " eaters of the Mir," and, being unable to use their means either in the employment of labour in creat- ing new sources of wealth, or in the direction of enterprise, they play the role of the Jew of the middle ages, and thus in time inequality of social condition is created. There are other ways also in which this system leads to the degradation of its members, as appears from the following account of the Mir of Arachine, given by Anatole Beaulieu. He divides the families in this Commune into four classes. The first comprises those who, "owing to default of workers or to the want of agricultural implements, are incapable of the profitable cultivation of land or of supporting any portion of the communal charges." Out of eighty-seven families in Arachine, three belong to this class. They are excluded from all participa- tion in profit, and are relieved from all imposts. In Russian phraseology, " they are without souls." After these " soulless " families come the class of those who are weak or incompetent, who include an able-bodied labourer, but are unprovided with that indispensable auxiliary of the farmer, a horse. Of these families there are ten, they each receive only one " lot," and are taxed as one " soul." To the third and far more numerous class belong the households which have one labourer and one or two horses ; these each pay imposts as two " souls," and hold two " lots." Lastly, to the number of thirty, come the most numerous and the wealthiest families, each cultivating more than two " lots," generally three or four, some five or even five and a half, and who are taxed accordingly. " An unlocked for result of this method of distribution, is that, under a procedure in appearance so entirely collectivist, it is not the personal ability of the labourer that constitutes a preferential claim to land, but the resources 44 PEASANTS WITHOUT "LOTS" of which he can dispose ; of a Mir such as that of Arachine, it might almost be said that it is " capital " that gives a claim to the soil, and that the land is allotted preferentially to those who possess the best means for making the most of it." l A. Beaulieu says elsewhere that in the Government of Kostroma 98,000 peasants are without lots, in that of Tambof 94,000, and in that of Koursk 77,000 ; and with much justice he concludes : " The evil, it appears, can only increase ; families quitting their village communities cannot regain access to them except by paying for the right of re-entry, divisions (of land) are almost everywhere becoming less and less frequent, and the lots distributed more and more exiguous, owing to the mere fact of the increase of population ; collectivist ownership is thus doubly convicted of inefficiency, of ability to put land within the reach of all, and of incapacity to raise the families whom it endows with land from misery." The Russian Mir, then, offers no social advantages to compensate for the serious economic evils it involves. It is destructive of individual initiative, it closes the door against the useful employment of capital, and it discourages the exercise of thrift. These observations made by Anatole Beaulieu receive striking confirmation in a communication from the St Petersburg correspondent of the London Times, published by that paper on loth November 1902 under the title of "The Russian Village Commune." In this article it is pointed out that since the appointment of a special committee under the presidency of Witte, a tendency to advocate the abolition of the Mir has become more and more evident. It is, indeed, only the reverence in which all ancient Muscovite customs are held in Russia which now protects this institution. An important Russian journal, the Novoye Vremya^ also brings forward evidence, from which it appears that the peasants themselves are by no means so enamoured of this institution as its admirers assert. As a general rule, the 1 A. Beaulieu, op. tit.) vol. i., p. 529. THE PEASANT AND HIS MIR 45 opinions of peasants asked by local agricultural com- missions have been unfavourable to the Mir. A memorandum upon this question has been addressed by Ivan Polyahoff, a peasant of the province of Novgorod, to the Russian Minister of Finance, in which he cites his own village as an example which, as he knows from his frequent travels in Russia, differs in no way from others. This village consists of 170 holdings, and has not to complain of want of land. The average distance of the peasant's cottage from his " lot " is about two miles, and owing to this fact a large addition is made to the average distance to be traversed by the cultivator, which adds considerably to the cost of production. Ivan Polyakoff further declares that the peasant does not look upon the land as his own, but as belonging to unknown persons or to the government, a belief which deprives him of any desire to improve it. A third of the property of the commune is composed of use- less land, hill, or marsh ; the hills were formerly covered with woods, but the peasants have exhausted them. It would be easy to drain the marshes, but the Mir has no funds, and there are difficulties in the way of obtaining money on loan, or of getting the work done by the forced labour of the members of the commune. He asserts that those peasants who have the full ownership of marshy or forest land, show far more thrift in the management of the woods and far greater energy in improving the marshes. Where the land is communal and is divided from time to time, the peasants are compelled to live in cottages so arranged as to form one street, which greatly augments the danger from the fires so frequent in Russia. He himself now inhabits his third house, and remembers two large fires in his village, when 82 cottages were burnt. In conclusion, Polyakoff maintains that to obtain economical improve- ment in the condition of the peasants, they must be liberated from the yoke of the commune. Relics of a system of collective property are still to be found in some of the more remote and mountainous parts of Switzerland. De Laveleye writes : " The minister 46 THE ALLMEND Becker believes that in the ' All mend ' he has discovered the solution of the social question, and I fully agree with him : not that it is always possible, as at Stanz, to provide every one with 1400 'klafter' 1 of good ground, but because the Allmend is the antique type of the true system of land tenure, which ought to be the basis of future society." 2 The Allmend is a system of collective land tenure peculiar to Switzerland. De Laveleye says that he has found much difficulty in collecting materials for a study of it : this is in itself an admission which shows that the system is not widely spread or well established ; it is to be found only in the cantons of Uri, Claris, Unterwald, Soleure, Appenzell, and Le Valais more especially in the three first named. The word " Allmend " appears to mean the "domain common to all." This domain consists of forest, grass, and cultivated land (wald, weide, und feld), and is thus able to provide the primitive requirements of life, peat for fuel, wood for construction and burning, summer pasturage, and cultivable ground ; the co-existence of these capabilities in one locality is unusual, and is only to be found amongst mountain ranges. The cultivable land assigned to each family of the Allmend is small in extent, at most 80, usually not more than 10 to 15 ares, and is generally used for the cultivation of vegetables and fruit ; it provides, therefore, only a small part of the necessary subsistence. This land is periodically divided and allotted. To be an inhabitant of the commune, or even to exercise rights of political citizenship, is not a sufficient qualification for membership of the Allmend : it is necessary to be descended from a family which has possessed this right from time immemorial, or at all events from a date anterior to the commencement of this [the nineteenth] century. This restriction is both logical and necessary : logical because the descendants of the ancient clan have an hereditary claim to a share in the Allmend, 1 1400 klafter represents 45 ares, an "are" = 100 square metres. 2 De Laveleye, op. cit.> p. 282. PERPETUATES INEQUALITY 47 and necessary, because the share of each member, already small, would become indefinitely less if new co-partners were admitted. Thus, in the same village some of the inhabitants are full members of the Allmend, whilst others are excluded from it. Between these two classes of persons, who often live side by side for many genera- tions, but who possess unequal privileges, strife is frequent and prolonged. The system, therefore, does not secure equality ; on the contrary, it perpetuates inequality. With the object of mitigating this trouble, certain restricted forest rights are, in some places, granted to inhabitants who are not members of the Allmend, but who have long been established in the district. This concession modifies, but does not abolish the inequality. Speaking of the method of administration of the Allmend, de Laveleye says 1 that in former times, when the population was small compared to the extent of land, no regulations were necessary each member used timber as he required it, and pastured as many beasts as he possessed ; but later, when the number of co-partners became too large to allow of this unlimited user, regulations were imposed, which became more precise and stringent as the necessities of the community increased. At the present day the regulations of the Allmenden vary considerably in different localities; some features are, however, common to all ; when villages have grown into towns, the participation of the members in natural advantages, with the exception of forest rights, has generally disappeared. In these cases the communal lands are let to defray public expenses, and the proprietor- ship of the soil by each member is only nominal. In those communes which have remained rural, the methods of user may be reduced to three typical forms to be found in the cantons of Uri, Valais, and Claris. In 1852, according to de Laveleye, Uri, with 2700 families, possessed 5417 "kuhessen," 2 communal woods of the value of 4,000,000 fr., and 400 hectares of culti- 1 De Laveleye, op. cz't., p. 280. 2 A "kuhess" is the feed for a cow during the summer. 48 AND EXCLUDES THE POOR vable land at the disposal of the Allmenden. The division of this property amongst the co-partners was by no means equal, the rule being " to each one according to his wants " ; this formula, however, is not to be taken as referring to personal wants, but to the capabilities of the capital possessed by each ; thus the greater the wealth of the member, the larger would be his share of the common property. Schaddorf, a village near Altdorf, is cited as a typical example of this method of division. In respect of forest rights, the members of the Allmend in this village are divided into four classes. The first class, 120 in number, consist of those members who have had fire and light throughout the year, who use an oven, and who possess private property ; these are entitled to six large pine trees. The second class, 30 in number, includes those who have had fire and light and an oven, but have no private property ; they have a right to four trees. The third class, 9 in number, are those who live alone and possess no property ; they are entitled to three trees. And finally, in the fourth class are those who have fire and light but no private dwelling; they are 25 in number, and are only entitled to two trees each. No member can add to his house or farm buildings without the consent of the authorities ; the reason for this restriction being that since the timber required is supplied out of the common property, it is to the interest of the community that the demand should not be excessive. The division of the mountain pasturage is even more unequal than that of the forest rights. It is an accepted principle in Uri that each member's share of his pasture shall correspond to the extent of his private property, and the rule is, that each shall be entitled to send to the common pasturage as many beasts as he can keep through the winter. This rule excludes the poor and favours the well-to-do, in direct proportion to the amount of their wealth. Here, as elsewhere, we find the population divided into rich and poor ; and what socialists term the contraste pauperiste is to be found even in these remote places, which, we are told, " exhibit to-day a faithful picture THE INTEREST OF THE COMMUNITY 49 of the primitive life of our ancestors upon the plateaus of Iran." In Uri, according to de Laveleye, the rich families outnumber the poor ; 1665 families possess cattle, against 1036 who do not; these latter claimed a more equal division of the common property, but were unsuccessful : ultimately the occupation of from 15 to 20 ares of land, subject to periodic re-allotment, not the fiftieth or the hundredth part of the extent necessary for the subsistence of a family, was given to each of these poorer members, as well as wood for cooking and firing. This is the first type of Allmend. Three classes are to be met with in these villages. First, those who, although they may have lived in the district for many generations, are not descended from the ancient members of the clan, and therefore have no claim upon the communal property ; secondly, the poorer members of the Allmend, who, since they possess no property and are unable to maintain cattle during the winter, are excluded from any share of the pasturage, but participate to some extent in the forest rights, and also enjoy upon a precarious tenure the occupancy of 15 to 20 ares of land ; and lastly, those well-to-do members, who, in addition to their share of the arable land, profit by the pasturage and the forest rights in direct proportion to their wealth. Thus, under this collectivistic regime, the more wealthy families obtain the larger share of the common property, and this arrangement is clearly advantageous to the community, whose object must be to obtain the largest possible return from the soil. Claris is an example of another type of Allmend. Here the greater portion of the land is let in farms, some- times to strangers, but a certain portion is retained for division amongst the members in lots of from 10 to 30 ares, which are held for periods of from 10 up to 30 consecutive years, after which the lots are remeasured and subjected to a fresh lottery. Claris possesses some com- munal vineyards and wheatfields, but these are used solely for the purpose of supplying wine and bread for D 50 DIFFICULTIES OF SYSTEM national or communal fetes. Some of the rifle-shooting associations also hold some plots of land for a similar purpose ; but these customs, estimable and poetic as they are, can have no material influence upon the condition of the inhabitants. In the canton of Valais, as in Uri and elsewhere, the mountain pasture is allotted in such a way as to augment the private wealth of the well-to-do members of the Allmend. It is unfortunate that no statistics exist which give the communal property for the whole of Switzerland. De Laveleye, however, gives figures relating to those cantons possessing the largest extent of communal property, which varies considerably in the different cantons. The All- mend system is largely in force in the cantons of Uri, Zug, and Schwytz. 1 Of the forests by far the larger part (20,588 jucharts out of a total of 29,188) is communal property, whilst in France the state and the communes together own only about half the total area of forests and waste lands. Examination of the figures given by de Laveleye shows that even in those cantons which have the largest extent, the area of communal land is but small when considered in relation to the number of the inhabitants, and that the revenue derived from the Allmenden, at any rate by their poorer members, is quite insignificant. An analogous system is to be found in France, especially in the mountainous district which lies between Aveyron and Herault. The general application of this system of collective property would present many difficulties, especially of administration. De Laveleye describes the regulations adopted in Switzerland with this object, and gives an account of the constitution of the commune of Gross, in the canton of Schwytz. All members over the age of eighteen are entitled to take part in a session held annually in the month of April, at which accounts are presented and ordinary business is transacted ; special sessions may be 1 De Laveleye, op. cit. y p. 293. ADMINISTRATION 51 summoned by the president ; all officials are elected and acceptance of office is obligatory. Executive functions are vested in an elected council of seven members, which regulates the management of the forests, allots the produce of the annual felling of trees, prepares the allot- ment of land, is the legal representative of the corporation, and may order the execution of public works up to a limit of 60 fr. ; it is also entrusted with the duty of seeing that regulations are duly observed, and fixes the amount of the fines and penalties in case of their infraction. The president convokes the council, and members absent without leave or sufficient excuse are fined. The officials are remunerated by the remission of some of their " days of work," which in common with other members of the commune, they are bound to give to the public service. The president is elected by the general assembly, which must be summoned if a hundred members demand it. The president receives a salary as an allowance for special service. Five other officials are enumerated : treasurer, secretary, clerk of the works, forester, and accountant, all of whom receive salaries. " The system of administration of these land-holding communes is, it will be seen, very complete ; they hold a middle place between the position of a political body and that of a joint stock company." Such a position, however, would be a disadvantageous one, since political bodies of all kinds allow of friction, intrigue, loss of time, and enmity, and are generally arbitrary in character, whilst companies, although indispensable for great enterprises, are also open to objection on the ground of extravagance, negligence, and absence of responsibility. It may be admitted that the small administrative bodies which direct the Allmenden might partly escape these evils ; but enlargement of their field of action would inevitably produce them in full force, and in any case they could not altogether free themselves from the trammels of routine. The Allmenden are interesting relics of an ancient organisation, but there is nothing to indicate that the germ of social renovation lies in this system. The German " Marke " was an institution analogous to 52 THE GERMAN "MARKE" the "Dessa" of Java, 1 or the Mir of Russia. The village dwellings were grouped together, the houses and orchards were private, all else was common property ; the land immediately around the village was divided into plots; the system of culture was alternating, a piece of land after cultivation for one year, was allowed to lie dormant (sometimes for eighteen or twenty years): in this way the expenditure of capital on the soil was evaded. The population was sparse. According to de Laveleye there were then about three or four people to the square kilometre that is, a population from twenty-five to thirty times less dense than at the present time in Germany, and the uncultivated land was from eighteen to twenty times as extensive as the cultivated. These ancient Germans consumed but little grain, and subsisted principally upon milk and the flesh of their cattle and upon game. At the periodical division of land, the chiefs obtained a larger portion than the others ; cultivation was uniform, under the system known as " Flurzwang." The rotation of crops and the regulations for work was decided by the inhabitants of a village in general assembly. At this time the word " eigenthum " (personal property) was unknown. How, then, in such a community did individual property arise ? It originated in the reclama- tion of land by individuals, and the evolution of private ownership, which took place amongst the ancient Germans, was precisely analogous to that which, 2000 years later and at 3000 leagues of distance, occurred in the island of Java. De Laveleye says : " The man who enclosed a part of the vacant communal land or forest for the purpose of cultivation became the hereditary proprietor of it. The lands thus reclaimed, were not subject to division, for which reason they were termed ' exsortes ' in Latin, and in the Teutonic tongue ' bifang,' from the verb ' bifahan,' signifying to seize, to surround, or to enclose. The word ' perprisa,' in French ' pourpris, pourprinse,' has precisely the same meaning. Many of the title-deeds of the early 1 See p. 55. ORIGIN OF PRIVATE OWNERSHIP 53 middle ages give occupation of the desert or waste land as the origin of the properties to which they relate. In France the charters of the first two dynasties frequently refer to it. Ancient records speak of it as being an ordinary method of acquiring property. Dareste de la Chavanne cites the ' custom of Mont Jura,' which confers upon the first occupier free and unfettered possession of all reclaimed land ; but it was forbidden, under severe penalties, to enclose or circumscribe the common lands, unless this was done in the presence and with the consent of the other members entitled to a share of the communal property." l This explanation is important, and shows that when land was reclaimed by an individual, it became his private property, with the tacit or expressly given consent of the community. Lands thus reclaimed were not included in the periodic division, and justly, since the community suffered no appreciable loss by these enclosures, or if it did, a formal contract was made between the community and the new proprietor, who undertook to pay compensa- tion either by service or by rent. 2 The enclosure and cultivation of waste land was necessarily undertaken by families who possessed some capital, and were able to hire and pay for labour. When once enclosed, relatively intensive cultivation of these lands became practicable, and historians consider that the first great agricultural improvement, the rotation of crops, which tripled or quad- rupled the production of the soil, was thus made possible. The benefit which arose from these enclosures, therefore, 1 De Laveleye, op, cit. t p. 1 10. 2 De Laveleye expresses himself thus : "All demands imposed upon the community were borne by the common lands. The proprietor of independent and enclosed property, having no right to share in the common pasturage and forests, was naturally relieved from the contributions in labour or in kind to which the members of the commune were liable." It might be inferred from this passage, that in some cases the owners of independent property, when they obtained it, renounced their claim to a share of the common property remaining. If so, the title to private property would be strengthened, since the arrangement would be in the nature of an exchange. 54 COLLECTIVISM IN MOHAMMEDAN COUNTRIES afforded a justification for private ownership of land. De Laveleye draws an attractive picture of the lot of the ancient German, and contrasts it with that of the peasant who to-day occupies his place ; * but if the members of the Marke were so fortunately situated, how was it that they so readily abandoned their native soil and the benefits of this system? What was the cause of the migrations of barbarians, especially of the Germans, if not privation and famine, against which the collective system was unable to protect even so small a population scattered over so vast an extent of territory. To eulogise the happy condition of these barbarians, who poured their famished hordes out from their vast uncultivated lands upon their gentler and more civilised neighbours, is to make an undue use of poetical license. Some account of systems of collective ownership amongst peoples whose climate and whose civilisation differ widely from ours may be useful. The village communities of Java and of India are types of this kind of organisation, which have attracted the approving notice of de Laveleye. In all Mohammedan countries the sovereign is, by the authority of the Koran, the supreme owner of the land ; the men who occupy and cultivate it, are, in the eye of the law, civil as well as religious, merely tenants ; and it is as owner, and not as a taxing authority, that he levies an impost, which is, in fact, rent. It is also as owner of the soil that the sovereign exacts forced labour from his people. This regime is responsible for the almost complete absence of personal initiative which characterises Mohammedan countries. The manifestation of individual energy is, in truth, in inverse proportion to the extent to which a community is under the influence of collectivism, a term which may be said to be almost synonymous with fatalism ; and where, as in a Mohammedan country, the individual is crushed under the weight of traditional habit, and where even his actions and his thoughts are guided by immutable usage, collectivism, to which such a 1 De Laveleye, op. at., pp. 91-92. THE "DESSA" OF JAVA 55 condition of mind and soul is indispensable, is certain to find adherents. Although similar in principle, the methods of tenure vary in detail in these countries. In Java the cultivator yielded to his lord one-fifth part of the produce of his land, and one day's labour out of five ; but by gradual encroachments, the native princes came to exact one-half the produce of irrigated, and one-third of that of dry, rice fields. The Dutch, desiring to gain popularity, re-established the old custom, and even modified it, demanding only one day's work in seven. As in the case of the Russian Mir, the village community in Java, called the " Dessa," is collectively responsible, both for taxes and for labour. In details the system of land tenure varies somewhat, but communal possession by the village prevails throughout the country. The principal product is rice, which is well adapted for collective cultivation ; it depends chiefly upon a good system of irrigation, and it requires but little individual ability or effort. The method of partition of the " sawahs " or rice lands, although not precisely the same everywhere, always conforms to a certain type ; it does not, however, secure equality amongst all members of the Dessa, even amongst the heads of families. In some places labourers who do not possess draft animals, are excluded from the ballot. The Dutch Government sought to correct this abuse, and to secure that each head of a family should have a share in the land, but the attempt was unsuccessful. The general custom, according to de Laveleye, is, that in order to obtain a " lot," a peasant must possess a yoke that is, two buffaloes or oxen and he says that the labourers thus excluded from allotments are very numerous. The allotments are settled by the chief of the Dessa, under the supervision of the district commissioners and the European " residents," who dis- charge functions analogous to those of "prefects" in France. A rotation is arranged, so that each family should occupy all the available lots in succession. The chiefs, who remain in office for a year, are chosen from amongst the most prominent, the wealthiest, or, since 56 PRIVATE OWNERSHIP IN JAVA custom is hostile to youth, the oldest, inhabitants ; and in almost all places they, as well as the principal village officials, obtain larger or better allotments than the rest. Side by side with the collectivist system of land tenure in Java, a system of private ownership has grown up. The cause of this phenomenon is of interest, since it throws considerable light on the system of freehold personal property in land which is now so severely criticised. In the majority of provinces any one who reclaims land belonging to the community becomes the owner of it, with hereditary succession, so long as it continues to be cultivated ; since, however, it is the object of the local authority to secure the greatest extent possible of land for partition, it frequently happens that private property thus created is in some way reabsorbed by the Dessa. In other provinces reclamation only confers possession for three or four years, after which it becomes communal property. This work, says de Laveleye, is performed by the richer inhabitants, who alone have the means required for constructing the irrigation works, which are indispensable for the culture of rice. The extent of land held by private owners in Java varies greatly in the different provinces : thus, according to de Laveleye, in the district of Talaga, out of 8884 "bouws," 1 only 43 are recognised as being private hereditary property ; but in Yapara, 7454 proprietors hold 8701 "bouws," and in Rembang, out of 158,425 bouws, 48,185, or nearly one- third, are private property, one-half having been acquired by reclamation carried out by the present possessors, and the other half obtained by inheritance or by purchase. 2 But although the principle of private ownership has obtained a footing in Java, its position is a precarious one. If a proprietor leaves his Dessa, his property reverts to the community. According to Sir Stamford Raffles, whose knowledge of Java was intimate, hardly one-eighth of the land was reclaimed and occupied at the commencement of the 1 A "bouw" = 7i ares. 2 Op. cit., pp. 53-54. nineteenth century, and it is estimated that at the present time four-fifths of the country is still uncultivated. Since the population increases at the rate of from 300,000 to 400,000 yearly, there is always a large number of adults who are unprovided with lots ; in the majority of Dessas the lot is continually decreasing in size, and in some districts the peasants consider that at the present time, they have less than a third of the extent allotted to their fathers, the area having fallen to a third or a quarter of a " bouw." It has been proposed to forbid division into lots of less than one-half of a bouw, but in that case a large number of adults would have no portions. Not- withstanding the insufficient size of their lots, the peasants do not dare to emigrate, since they would lose their rights in the Dessa they quit, without acquiring any rights in that to which they desired to go. The remedy for this evil is reclamation of land, either by individual or collective effort. The obstacle to the first of these methods, is the precarious nature of private property, and the paralysis of energy, produced by the reign of collectivism ; the objection to the second, is the difficulty of finding the capital required. De Laveleye proposes that a guarantee of undisturbed possession of their land for thirty or forty years, should be given to those who would carry out the work of reclamation. The suggestion is excellent, but it would involve a serious violation of the principle of collective ownership, and the proposal shows that when the question is one of extension of cultivation, even those who are strongly predisposed in favour of the system of collective property in land, are compelled to suggest recourse, either to private ownership, or to some substitute for or approximation to it. Collectivism, by diminishing personal responsibility, and by weakening moral restraint, encourages a rapid increase of population, which in Java always presses closely upon the means of subsistence: in 1808 it was reckoned at 3,700,000; in 1863 at 13,500,000; in 1872 at 17,300,000, and in 1897 at 26,335,000. An excessive increase of population, combined with a general want of 58 SUITABLE ONLY TO A PASTORAL PEOPLE foresight and a lack of individual enterprise, are the worst social conditions conceivable, and the effect of the collectivist system of land tenure in Java, so far from improving the condition of the rural " proletariat," appears to be more likely to transform the Javanese into a nation of paupers. It is conjectured that collectivist agrarianism was imported into Java from India : in that country, however, the substitution of an agricultural for a pastoral system was unfavourable to the survival of the collectivist tenure of land, and it is now only to be found in some remote districts. Agrarian collectivism is, indeed, only suitable to a pastoral people, or to people still in the preliminary stage of transformation from a pastoral to an agricultural regime, and the collectivist tenure of land was, in fact, on the point of disappearing from Hindoostan when the English took possession of the country. CHAPTER VI Land can never have been, strictly speaking, common property. First appearance of social inequality. Features common to all collective systems of land tenure. Causes of the general dis- appearance of these systems. Claim of nations to their land the same as that of individuals. Modern attempts to re-establish collectivist ownership of land. Effect of proposed nationalisation of land in France. Indemnity or confiscation. Various methods proposed for indemnifying owners. Hypothetical purchase of the land by the English Government. Unearned Increment. Functions of a landowner. THE preceding description of various collectivist systems of land tenure, shows that in all places they tend to develop into a system of private ownership. If this world is not the result of mere accident, social facts, when found to be universal, must be deemed to be in conformity with natural laws ; the presumption, therefore, must be, that this evolution is in accordance with those laws ; it is also in harmony with modern civilisation, with the free development of the individual, and with the improvement of agriculture. When humanity first appeared, no doubt the earth would appear to be common property ; but even in the most primitive society, a family, or group of families, would soon regard the portion of land on which they lived as belonging especially to them, and would consider an attempt on the part of others to establish themselves upon it as being contrary to natural law; the mere occupation of land would naturally appear to confer a title to its continued possession, and the family, the clan or the tribe, would soon assert an exclusive right to the area 59 60 FIRST APPEARANCE OF INDIVIDUALISM occupied by them. Land, therefore, can never, even in the earliest times, have been common property, except in a relative sense : it might be so in respect of the individuals of a tribe or clan, but not in relation to humanity generally. In this restricted sense, land occupied by people who lived by the chase may be regarded as their common property, and with some exceptions the same conditions would continue with pastoral peoples ; but when an agricultural regime supervened, and a community, relin- quishing a nomad life, became settled, then the germs of individual, or at any rate of family, property at once appeared, and amongst all peoples, in all climates and in all times, the house and its surroundings were claimed as the exclusive and hereditary property of the family which occupied them. There are two reasons for this. From the dawn of civilisation, promiscuity of habitation has always been repugnant to men who naturally desire to live with those nearest to and dependent upon them ; and in all countries, in the East as well as in the West, we find a strong spontaneous desire for a separate house and for the liberty and privacy of independent family life. This is the first manifestation of individualism, and the origin of private property in early times. So far the claim is the outcome of natural and universal instinct ; but there is another and an equitable reason for it : a house is peculiarly the work of an individual man, and he has therefore a just claim to its exclusive possession, as also to the ground immediately adjoining, which he cultivates, and which his labour has reclaimed from the surrounding waste. Private property in house and garden was thus evolved in Asia as well as in Europe contemporaneously with the establishment of an agricultural regime. Private possession of house and garden or "real" property involved the private ownership of " personal " property, which in pre-industrial times consisted merely of the instruments of labour and the products of the soil. The more laborious, more able, or more thrifty members of the community would secure a larger share of this wealth, AND OF SOCIAL INEQUALITY 61 and thus inequality of social condition and the consequential differentiation of classes into rich and poor, would soon appear even in those cases where the land, with the exception of houses and gardens, was common property. The poorer people would be compelled to sell their labour to the more wealthy, in return for wages. The hire of labour for wages was no doubt a means by which personal wealth was created, and Lassalle's ingenious theory that it was attributable to slavery is unnecessary ; no doubt slavery played a part in the early history of most peoples, and was often merely a form of the hire of labour, but the hire of free and independent labour is amply sufficient to explain the growth of private wealth. The inequality of personal property brought about a like inequality in the distribution of land or real property, since it was natural, and even necessary, in the interest of the community, that, in the allotment of communal land, regard should be paid to the means of cultivation that is, to the personal property possessed by those amongst whom it was to be divided. Another cause of social inequality in these distant ages, was the remuneration of intellectual and moral services, with which no society, however rude, could altogether dispense ; and thus, the director of the partition of the land, the village administrators and surveyors, and others, having special claims, apart from merely manual labour, would receive larger allotments of land. It is in this way that, in the nature of things, and owing to the necessities of social progress, inequality of social condition appeared and gradually increased in communities where the system was originally one of complete equality. The features common to all systems of collective property in land, are these : in the first place, the territory must be very large relatively to the number of the inhabi- tants, in consequence of the unavoidable imperfection of culture under this regime ; secondly, the system entails restriction of the liberty of domicile and a kind of adscrip- tion to the soil, since those who once leave the community lose their rights ; and thirdly, it involves the rigorous 62 PROGRESS DUE TO INDIVIDUALS exclusion of strangers. Another characteristic is the slowness and difficulty with which a community can reclaim their waste land when compared with the rapidity with which similar work is carried out by private enter- prise. These four points show the restricted and anti- progressive character of this kind of land tenure. To what cause is the general disappearance of these systems, and the gradual but unlimited extension of the principle of private property, to be attributed, and what is the explanation of the fact that primitive societies have found it impossible to maintain equality of condition amongst their members? It is no doubt true that in certain countries the issue has been precipitated by the action of the feudal system, or by conquest or usurpation but wherever man exists these conditions are found, and for so universal an effect there must be a universal cause. The answer is that all social improvement, inventions, the progress of agriculture, and of the arts and sciences, are due to individuals, and not to communities, who can assist but cannot initiate improvements : it is the indi- vidual, therefore, who ought to reap the reward. 1 This, then, is the cause to which the creation and extension of private property, the consequent inequality of social con- ditions, and the decay of collective systems is owing. If the system of collective ownership of land had never had a trial, it might be maintained that either by ratiocina- tion or by experiment its advantages would have become evident, and that in order to secure this superior regime the human race would have gradually relinquished the system of private ownership. But it was the collective, and not the private ownership of land, that was the first 1 Proudhon has admirably described this phenomenon: "I observe," he says, " that social life manifests itself in a double way by conserva- tion and by development. The development is effected through the agency of individual energy ; the mass is by nature unfruitful, passive, and refractory to innovation. It is, if I may venture upon the com- parison, the matrix, sterile in itself, wherein are deposited the germs (of improvement) springing from the individual initiative which represents the male element of a hermaphrodite society." Contradictions faonomiques, 4th ed., vol. i., p. 223. AN EXPERIMENT THAT FAILED 63 system tried, and it was only by slow degrees, in spite of many obstacles, and under the pressure of necessity, of social advantages, of instinct, and of reflection, that the system of collective property was abandoned and that of private property established. Can it be wise to repeat an experiment which has been tried for long ages throughout the world and has everywhere failed? Yet writers in increasing numbers urge that this attempt should be made, and extol what they term the nationalisation of the soil ; but the word nationalisation itself shows that what is proposed would be but a half-measure. On what ground has a nation, any more than a family or an individual, a claim to exclusive possession of the land on which accident has placed it ? When the Americans interdict their country to the Chinese, the only ground on which they can claim a right to do so, is that of occupation and hereditary possession ; but this is the basis of the claim of the individual to his land, and if the claim is bad in the one case it is equally untenable in the other, and " nationalisa- tion of the soil " would therefore be unjust, since it would involve the possession of land by one nation to the exclusion of others. There can be no middle course ; either the claim of the individual to his land must be accepted as just, or land must be held to be the common property of the whole human race ; and in this case, if the Americans deny their land to the Chinese, they are de- priving the latter of their natural rights as human beings. Advocates of the collective ownership of land belong to different categories. There are avowed and logical collectivists, such as those of the Franco-Belgian school of Colins, and there are publicists with collectivist tendencies, such as de Laveleye, Stuart Mill, and, more especially, Henry George. Leaving on one side the philosophers such as Herbert Spencer 1 and Francois Huet, who, ignorant of facts and lacking experience, were guided solely by speculative reasoning, and showed more or less hostility 1 [Spencer's opinion upon land tenure was greatly modified in later years. Vide Life and Letters of Herbert Spencer, by D. Duncan, 1908, p. 338.] 64 INADEQUACY OF COLLECTIVIST PROPOSALS to the principle of private ownership of the soil, passing over also for the present the more thorough-going collectivists such as Marx and his followers, it will be useful to restate the assertions from which these col- lectivist theories are derived. The following arguments are common to all these theorists namely, that every man has a primordial and indefeasible right to the enjoyment of the soil, which, they say, is an indispensable instrument of labour, without which a man cannot support himself, and is merely a slave who exists only by the sufferance of others ; again, they assert that the value of land and the return from it increase continually without any exertion on the part of its owner, that this increase is a gratuitous benefaction of nature, and that it is therefore unjust that the possessor should retain the perpetual property in this, which they call an " unearned increment." Another state- ment urged in support of the doctrine of the nationalisa- tion of land is, that since private property has lost its social character, it has become a privilege without any corresponding obligation, and now fulfils no purpose except the personal advantage of its possessor. These, besides the arguments derived from history, constitute the premises of collectivists, and of writers with collectivist proclivities. It follows, therefore, that any system which it is proposed to substitute for the present regime ought to guarantee to each individual direct possession and use of the land, and at the same time ought to secure greater advantages for the community generally that is, increased production and greater moral satisfaction. These are the objects which, on their own showing, the system advocated by collectivists must realise to redeem their promises and justify their criticism of the existing regime ; but when their proposals are examined, their inadequacy to secure these ends becomes obvious. No serious writer would propose to reinstate in its entirety the primitive system of village communal property, with its exclusiveness and its allotment of land by lottery. De Laveleye himself recognises that the early forms of rural collectivism have been destroyed, not by accident or A BASIS OF HOPES AND ASPIRATIONS 65 by extraneous events, but by the inherent force of circum- stances and the tendencies of human nature. He says : " It must be admitted that agricultural co-operation will be difficult to generalise. The success of the experiments made at Assington, in England, and on the estate of Tellow, in Germany, was largely due to the influence of J. Gurdon and von Thunen. The ancient agrarian com- munities were, in fact, agricultural co-operative societies. For basis they had the ties of relationship, family affection, and immemorial tradition ; and yet they have disappeared, not destroyed by the hostility of public authorities, but slowly undermined by the sentiment of individualism or egotism, which is characteristic of modern times. Can it be hoped that a sentiment of collective fraternity will develop itself with sufficient force to take the place of family affection and serve as cement for the association of the future? One may hope this will be so, and the difficulties of the present position make it eminently desirable." * To rely solely on hopes and aspirations, and upon so fragile a basis to attempt to reconstruct society, beginning by destroying the system under which civilised humanity has enjoyed so large a measure of material comfort and leisure, and so much intellectual and moral happiness, shows the reckless spirit of a gambler. Neither old tradi- tions, nor family ties, nor religious sentiments have sufficed to maintain intact the collectivist systems of early times ; and now, when family ties are less binding and religious feeling is enfeebled, is the permanent reconstitution of these vanished institutions conceivable ? These reformers contradict themselves : on the one hand they censure the individualism and egotism of modern times ; on the other they can hardly find words forcible enough to condemn, or penalties severe enough to punish associations, such as religious bodies, in which the individual is subordinated to the community, of which he is a member. Since the ancient systems of communal village property are thus inapplicable to modern life, what is the alternative 1 De Laveleye, op. '/., p. 249. E 66 THE STATE AS OWNER proposed? The "nationalisation of the soil" would merely substitute inequality between nations for that between individuals or between communes : a kind of inequality which would be not more, but less justifiable, since the difference between individuals, in respect of merit, is far greater than that between two civilised countries. If the state proposes to possess itself of the land, it must proceed either by negotiation with the present owners, or by their compulsory expropriation. It is admitted that the present proprietors have a just claim to an indemnity, which would be paid ; but, neglecting for the moment the proposed method of payment, how would the state deal with the land when purchased ? Two plans are proposed : one is to grant leases to co-operative associa- tions, the other to let to ordinary farmers by auction. No doubt there are other possible systems, such as cultivation under the direct administration of the state, or by the grant of concessions to communes, but the first of these methods is obviously impracticable. The enormous area of France, with its 528,000 square kilometres of land, could not be successfully cultivated by a central official admini- stration. The concession of land to communes appears at first sight to be more practicable, but there are serious objections to this method also. In the first place, there is the natural inequality of productiveness between different communes which could not be satisfactorily met by any adjustment of the rents payable to the state ; then there is the ignorance and the subservience to routine so frequently to be found amongst communal authorities ; and lastly, there is the danger of the yoke which the mayor or the municipal councillors, if they were sole directors of cultivation or of the division of land and employers of labour, would be able, by the arbitrary use of their authority, to impose upon the citizens, and no one is now so ingenuous as to believe that popular suffrage will always place the most capable, honest, or impartial men in municipal offices. The choice, therefore, lies between the two first-named methods, the grant of leases AGRARIAN CO-OPERATION 67 to co-operative associations, or to individual farmers. The former has the approval of Stuart Mill, the latter of the Franco-Belgian collectivists. The system of granting leases to co-operative associations of workmen is supposed to receive support from experiments made in England and Germany. A well-known and frequently described experiment is that referred to by de Laveleye of an association founded at Assington about 1 830 by a philan- thropic landowner, J. Gurdon. He established fifteen labourers on 60 acres of land, each of whom provided 3 towards the necessary capital, Gurdon lending them ,400; one of the co-operators, elected by the rest and assisted by four others, directed the work of cultivation. Members were permitted to sell their shares, but only with the consent of the proprietor and the association. The experiment was quite successful, and the area of land occupied was extended to 130 acres. Encouraged by this success, Gurdon started another association under similar conditions in 1854. This also was successful. In this case also the area originally occupied was largely increased, the loan of capital was repaid, and the shares, originally 3, i os., are now (1884) worth 30. An organisation often compared to these co-operative agricultural associations, and also quoted by de Laveleye, was instituted by von Thunen upon his property at Tellow, in Mecklenbourg. Here the profit made was divided amongst the workers, each receiving an annual dividend, which on an average for some years amounted to 93-75 fr., whilst some of the oldest members had 500 thalers (1875 fr-) in the savings bank. The celebrated English economist, Stuart Mill, followed by many contemporaneous writers, strongly urged the extension of these agricultural co-operative societies, but it is doubtful whether, if the system were to become general, the result would be satisfactory. Every one knows that the success of a laboratory experiment is no guarantee of success upon a large scale, and the experiments at Assington and elsewhere were in truth nothing but laboratory experiments, conducted under the most favour- 68 able circumstances ; success was largely due to the influence of their founders, and the evidence they give is quite inadequate to serve as a basis upon which to found a general system ; this is thoroughly recognised by the more sober advocates of collectivist ownership. There is indeed no reason to suppose that agricultural co-operative associations initiated without special protection and support, would be universally or even generally successful ; but even if assured of success, they would not solve the problem propounded by collectivists. Such associations cannot include the whole of the inhabitants of a country, but only the more thrifty or able, or those who already possess some capital. Some of the members would renounce their shares, the associations would tend to become more and more concentrated, and however numerous these co-operative societies might be, the ideal, that each man should be put in possession of land, could never be realised by their agency. De Laveleye illustrates his criticism of private property in land, by supposing a shipwrecked man to be cast upon an island already fully occupied, if then the inhabitants refused to admit, that as a human being, he possessed a natural right to a share of the land occupied by them, their only course, according to de Laveleye, would be to throw him back into the sea. In this case it would make no difference to the castaway whether the island was owned by private individuals or by an association of individuals. There would, however, be no necessity to condemn him to death ; he could gain his subsistence by working for wages, and if able bodied and thrifty he would have a chance of owning a piece of the land to a share of which he had in vain urged his natural claim as a human being. There are therefore two objections to a system of co- operative agriculture one that its success is uncertain, and the other that it would produce a privileged class, quite as exclusive, if not more so, than the class of individual proprietors ; it should be added that whilst this latter class is essentially mobile and entrance to its ranks is always IS A COLLECTIVIST SYSTEM POSSIBLE? 69 open to every one who possesses courage and intelligence, or who is thrifty, it would be far more difficult to obtain admittance to a co-operative association. In what way, then, would it be possible to establish a collectivist system of land ownership ? No one would now propose direct cultivation by the state, nor indeed is this plan approved of by collectivists, a majority of whom advocate letting the land to individual farmers for the benefit of the community, a system which at first sight appears to be both simple and easy of application : its advocates go so far as to assert that the establishment of such a system would not affect the general organisation of society, and that it would involve no difficulty of administration : the only change would be, that farmers would pay their rent to the state instead of to the private owner. If, however, this system would cause so slight a disturbance of the existing social organisation, how could it be expected to effect the great results claimed for it, and satisfy the alleged moral and material requirements of humanity in respect of the soil? An attempt has been made to demonstrate that possession of land is necessary for every one, and that without it no true liberty can exist. On these grounds private property in land stands condemned ; but what would be the probable effect of the system it is proposed to substitute for it? In France, the land which to-day gives occupation to about 20,000,000 human beings, of whom some 7,000,000 or 8,000,000 at least are pro- prietors, 1 would then be cultivated by the farmers of the state. How would the general condition of the peasants 1 According to the Bulletin de statistique et de legislation com- parc'e, issued by the Ministry of Finance in May 1883, p. 60 1, the total number of rural proprietors (excluding house property) in France was 8,454,218 in 1879. The Agricultural Enquiry of 1892 (2nd part, p. 249) gives the number of owners who cultivate their own land as 3,387,245 : to this number must be added that of the owners who are not themselves cultivators and that of the members of the families of both classes, making a total of from 14,000,000 to 15,000,000 persons. 70 PEASANT PROPRIETOR AND THE LABOURER be ameliorated by this change? Those who are now proprietors would be so no longer, and admitting that from a pecuniary point of view they would not be losers, they would suffer morally by the loss of the land which they had loved and cultivated with so much care. As to the remainder of the rural population, they would be no more owners of the land than they are now, since it is merely playing with words to assert that every one is a proprietor because the whole of the land belongs to the state of which he is a citizen. With the exception of those who became tenants of the state, the millions of agricultural labourers would have no other means of subsistence than as wage earners : they would work for state instead of for private farmers ; in what way would their condition be improved by this change? Their position, on the contrary, would be altered for the worse ; none of these labourers would have his own plot of ground which he could cultivate when unable to obtain employment, or after his day's work on another's land, and since the number of farmers would be greatly diminished, the competition for his labour would be less. This so-called reform would therefore be of no direct benefit to the rural population considered as a whole. Would there be any indirect advantages to compensate for this defect? It is impossible to maintain that pro- duction would increase under such a regime more rapidly than under the present system, and the principal, indeed the only possible gain, would be that the state might, as owner of the soil, be able to remit all taxation except that paid in the form of rent by its farmers. No doubt we are assured that under the proposed system every citizen would possess " an ideal freedom of enjoyment of the public land," but since no one could use a spade, or appropriate a metre of land, for growing his vegetables, or even walk in the fields without the permission of the farmers of the state, this " ideal freedom " can hardly be looked upon as a material advantage, and remission of taxation would be feasible only if the state were to INDEMNITY 71 expropriate the proprietors of land without compen- sation. No writer of any position, however, advocates a spoliation so odious, which would throw society back into barbarism. De Laveleye, Schaffle, Marx, and George, all admit that private owners have a right to indemnity, and differ only as to the nature and amount of the compensation, and the method of providing it. If the state were to indemnify the present proprietors fully, paying them the present value of their land, what benefit would be derived from the transaction? Fawcett, an English writer, shows that no profit would accrue to the state unless it were able to borrow the amount required for purchase at a rate of interest less than the current rate obtained by the capitalisation of land values. A simple calculation shows that purchase by the state in 1884 would have involved considerable loss. Land in western Europe, free of all charges for rates and taxes, repairs, etc., does not bring in a return more than from 2| to 2f per cent., or in rare cases 3 per cent, on the cost of purchase. England, the state which is able to borrow on the most favourable terms, has rarely been able to issue a large loan under 3 per cent. : other countries pay from 3f per cent up to 5 per cent, and even to 6 per cent A loan under such exceptional circumstances, and for so huge an amount as would be necessary, could only be negotiated at a rate of interest considerably higher than that current at the time, and thus the interest payable upon the purchase money would be greatly in excess of the revenue receivable from the land purchased. The state would therefore suffer a considerable loss, and, so far from being in a position to remit taxation, it would be compelled to increase it. The operation would, however, be practically impossible ; the capital required does not exist in an available form in any country, and apart from the issue of paper money, a course which no doubt would be adopted in some countries, with the usual well-known result, the only feasible means of payment without 72 A SOCIALISTIC EXPEDIENT borrowing from the public, would be to assign to each landed proprietor a rent charge equivalent to the net revenue of his estate ; but if this were done, the community would not only gain nothing, but would be burdened with the cost of supervision and office expenses, and would not be in any better position with regard to the remission of taxation. Some prudent souls there are, who although they do not admit the existence of all these difficulties still have some intuition of them suggest various ex- pedients for evading them, such, for instance, as that of terminable annuities. Schaffle suggests that the indemnity should consist in giving the proprietor a plethora of commodities, "une richesse suffoquante de moyens de consommation," for a term of years. If this plan were adopted, the state at the end of the term would be in possession of the land free from all charges, and would be then able to remit taxation. There are, however, numerous objections to such a scheme. If the state were to convert the perpetual revenue derived from landed property into a rent charge for a fixed term, it would commit an injustice ; and where would be the gain ? Although no doubt a nation may be considered as having a perpetual existence, it is, in fact, a succession of genera- tions, no one of which ought to be sacrificed to another ; but under this plan the citizens living during the period which intervened between the date of the expropriation of the owners and the expiration of the term of years, would suffer severely, not only from the tremendous disturbance which so profound a change in the system of land tenure would produce a disturbance which would last for many years but also from the great cost of pro- viding the necessary administrative machinery. Some writers suggest an expedient for hastening the time when the state would derive full benefit from the purchase of the land ; this plan is explained with much frankness by Gide : l it consists in first imposing a tax equal to the whole net revenue, and then excepting from its 1 De quelques nouvelles doctrines sur la propricle foncttre t by Charles Gide, 1883, p. 16. LIMITATION OF INDEMNITY 73 incidence such portion of the amount as the proprietor could prove to represent the interest and sinking fund of capital sunk in the development of the land, but always under the condition that only such outlay should be taken into account as could actually be verified. Thus, supposing an estate to return a net rental of 5000 fr., the tax would be 5000 fr. ; but if the owner could prove expenditure of capital amounting to 50,000 fr., then 1000 fr. for interest at 3 per cent, and 1000 fr. for sinking fund, together 2500 fr., would be deducted, and the tax would be reduced by that amount. This procedure would no doubt be a convenient one, but it is open to criticism on two points. It will be noticed that interest is arbitrarily taken at a lower rate than that usually obtainable on first-rate securities, and no allowance is made for forced purchase, or for the loss of those amenities of possession which now induce a landed proprietor to be content with a small return on his capital. The reason is obvious : if a higher rate had been fixed, there would be many cases in which the amount charge- able against the state would be considerably in excess of the net rent of the land a result which would be disastrous for the state, and which it is thus proposed to evade by what is, in fact, downright robbery. The other criticism is this : What justification is there for the limitation of indemnity to such expenditure of capital as can be actually verified a restriction which would practically confine it to the amount expended by the actual and immediately pre- ceding owners ? Here, again, the object is to avoid loss to the state ; and the necessity for such a limitation is practi- cally an admission that the interest on the capital expended on an estate from the time when it was first reclaimed or taken over from the community, would, in the majority of cases, exceed the return from it. How is it that land has a selling value, and by what is it determined ? At some time or other, near or distant, vacant, uncultivated land has, with the express or tacit consent of the com- munity, been appropriated, enclosed, and cultivated by an individual; if sold by him, or his immediate successors, the value of the labour and capital expended upon this 74 OWNERS CONVERTED INTO LEASEHOLDERS land would necessarily be taken into account in the price paid for it It is the same at each successive sale : useful and durable expenditure must always be an element in the price paid by a purchaser, without regard to the period when the expenditure was incurred. Why should the state, in defiance both of common law and common justice, alone be relieved, as a purchaser, from this con- dition ? The answer again is : that unless the state were to act thus, the transformation of private into collectivist property would bring no advantage, but rather a loss to the community. At this point it may be objected, that in making these criticisms no account has been taken of an important consideration namely, the natural, spontaneous, and unearned increment of the soil, a gift of nature, of which the proprietor obtains the advantage when he sells his land. This variable, and as a rule insignificant, element of value has already been referred to, and will be again considered further on. The scheme now under consideration, however, deserves rejection not only as being immoral and unjust, but also as being contrary to public policy, since it would constitute so grave an attack upon personal rights, that all contracts would become insecure ; and the spirit of thrift and initiative, in all branches of social activity, would be stifled by the dread lest the state, arbitrarily fixing the amount of indemnity, should one day lay its heavy hand upon all commercial and professional incomes. Of all the schemes suggested for establishing a system of agrarian collectivism without resort to forcible expro- priation, one of the most ingenious is that proposed by Gide. 1 It is, that the state should offer proprietors an immediate payment for their property, possession to be given at the end of ninety-nine years. Gide thinks that such a proposal would be readily accepted, and that since ninety-nine years is for each individual practically equivalent to perpetuity, the offer would be looked upon as a gift, and therefore that the price demanded for the land would not be exorbitant. The state would thus secure the land on 1 Gide, op. cit.) p. 22. AN INSULT TO HUMAN NATURE 75 moderate terms. Gide could discover only two objections to the scheme, one being that collectivists would con- sider the realisation of their hopes to be too long delayed, the other, that it is open to criticism on the ground of morality, in that it proposes to take advantage of the want of prevision and the selfishness of men in order to despoil their descendants. This scheme, ingenious as it is, is unsound from a psychological point of view, and consequently as a basis of calculation for indemnities. To believe that man, himself shortlived, is indifferent to the future, is to misunder- stand human nature and to ignore the facts of daily life. A man in the prime of life will purchase the perpetual concession of a place of sepulture. The records of insurance offices and family settlements prove that the desire to secure to children or to relatives and their descendants in perpetuity, the possession of property amassed or inherited by the individual, is common to all humanity, and is a potent influence in determining human action. It is a strange illusion and an insult to human nature to imagine that men are at once so rapacious and so shortsighted, as to be tempted by a small immediate bribe to exchange a perpetual tenure for a ninety-nine years' lease. It would indeed be necessary to increase the amount offered very largely in order to overcome the disinclination of proprietors to accept it ; and if increased to a sufficient amount, it would impose a crushing burden on the state for ninety -nine years, on the vain pretext that at the end of this period taxation would cease. It would be far less costly to establish a sinking fund for the reduction of public debt, by means of which in thirty or forty years the budget might be very materially reduced. A further difficulty which this scheme would encounter lies in the exaggerated idea which owners have of the value of their property always far in excess of that which it would fetch at a forced sale and since under this scheme the price is to be settled by consent, this conviction would seriously affect the amount to be paid by the state. Another, and not the least, objec- 76 LIMITATION OF SUCCESSION tion to the scheme, is that proprietors, when transformed into tenants, would be keenly alive to the progressive diminution of the term, and, as it drew near to the end, would cease to perform all but immediately necessary work ; the decay of agriculture would thus proceed at an accelerating rate. If the state were to attempt to provide against this by agreement, the necessary arrangements would be extremely complicated, and it would in any case be difficult to induce the possessor of a rapidly expiring tenancy to devote real and efficient care to property so soon to pass from his possession. A last and fatal objection to this arrangement under which a limited tenancy is to be given in exchange for a freehold, is that the poorest peasant, as well as the richest proprietor, would feel that in giving the state capricious and arbitrary, but always irresistible rights, however remote, over his land, he would be taking a course fraught with the gravest possibilities, and would feel that a far higher inducement than that offered would be no adequate compensation for risks which although indistinctly understood would be vividly present to his imagination. Amongst the many schemes for the conversion of private property into common property, there is one which seems at first sight to be both simple and practicable, and which has the approval of de Laveleye, Stuart Mill, and many other publicists : it is neither more nor less than the restriction of the right of succession to the sixth or seventh degree of relationship. Cremieux, a member of the provisory government of 1848, advocated restriction of succession to the issue of cousins-german ; others went further and proposed that cousins-german themselves should be the last in the line of succession. It would be possible to go further in this direction without securing any but the most insignificant results. Unless the right of testamentary disposition of property were annulled, those who had anything to bequeath would take care that it should not be absorbed by the state. If, how- ever, testamentary disposition were not permitted, grave evils would at once arise, evasion, gifts during life, investments INCREASE OF SUCCESSION DUTY 77 in life annuities, the abandonment of thrift, and the pre- mature cessation of efforts to acquire wealth in short, the result would be the diminution of natural production and capital. Another plan suggested, is to increase the succession duty payable by collateral descendants. In France these duties have been very high since 1901, amounting to from 14 per cent, to i8 per cent, or with stamps and other expenses, to as much as 20 per cent. In 1900, with the duty at from 8.22 per cent, to 11.25 per cent, 141, 000,000 fr. were received. Supposing this duty were doubled, and that the receipts increased in the same proportion, the state would receive an additonal 150 to 160 millions annually. In this case, since the land in France is valued at from no to 120 milliards of francs, it would require six or seven centuries to complete the total absorption of the land by the state ; but it is very improbable that so large an additional return would be realised, since as too high a duty encourages smuggling, so would too heavy a succession tax lead to its evasion. If the state, as is suggested, were to employ the money thus obtained in the purchase of land, its selling value would be increased to an extent proportionate to the sums thus disposed of, and from the point of view of return upon capital expended, the operation would thus become continually less and less efficacious. The imposition of heavy taxes on successions does not appear to be worth while, in order to secure an end of such questionable utility, and one which might be attained in other ways and without a delay of many centuries. It is maintained that whether the state buys the whole or only a part of the land, it would receive the "unearned increment," which now goes to swell the revenues of the owner without effort on his part Facts have shown, however, that this phantom of " unearned increment," which still haunts the minds of many economists, has no real existence. It was Ricardo, whose brain was fertile in abstract ideas, who invented the famous law from which his mystified disciples drew 78 HYPOTHETICAL PURCHASE BY STATE the inference that revenue from land would increase spontaneously and continually. If the earth were fully inhabited, and all land capable of cultivation were fully cultivated if the art of agricul- ture were no longer able to add to the productiveness of the soil, and if all these conditions were to occur simultaneously, then no doubt the rent of land would continually increase, and the phenomenon of " unearned increment" would become a normal incident of the ownership of land ; facts, however, lend no support to this imaginary conception. In the Essai sur la repartition des richesses^ it has been shown that in France the total increase in rent from 1851, or even from 1821 up to i884, 2 was barely equal in amount to the interest calculated at the average rate of investment on the fresh capital which during this period had been sunk in the land. Suppose that in 1815 or 1820 the English parliament, misled by the Ricardian theory of rent, had bought up all the land in the United Kingdom, and relet it to farmers, in the belief that the constant and spontaneous increment on the land would make it possible, without inflicting loss on any one, to increase the national revenue from rent at the expiration of the leases, say in fifteen or eighteen years after the comple- tion of the purchase ; at this date, however, agriculture was in a very depressed condition, and the tenants, far from agreeing to an increase, would have declared a reduction of rent to be absolutely necessary to save them from ruin. The state would have been compelled to grant a reduction of from 10 per cent, to 20 per cent, 3 and the loss sustained, although theoretically quite incorrect, would have been a real one, which it would have been necessary to meet by the imposition of increased taxation : disgusted by this experience, the 1 P. Leroy Beaulieu, op. '/., chapter iii. [ 2 The first edition of Le Collectivisme appeared in 1884.] 3 This, in fact, is, according to the trustworthy evidence of Porter, the actual average of the reduction of land rents from 1820 to 1840. THE RESULT 79 state would probably have abandoned the collectivist system, and would have re-sold the land to private persons. After the lapse of a further twenty-five years, rents, which had decreased between the years 1820-30 and 1840-50, began to rise. Suppose, then, that Stuart Mill, a writer of singular penetration and sagacity, but of all men one of the most ignorant of the facts of every- day life, had urged the state again to purchase the land, on the ground that the first experience had been made under unfavourable circumstances, and rendered abortive by accidental causes, such as the development of maritime commerce and the abolition of the corn laws, but that the natural and spontaneous increment of land had re-asserted itself, and would continue in future in conformity with economic law, and suppose that the state, persuaded by the tenacity with which Stuart Mill and his disciples proclaimed their conviction, had again purchased the whole of the land about the year 1860. For the first few years all would have gone well, leases would have expired and have been renewed at an increased rent, but during the period 1875-80, owing to a variety of causes, an agricultural crisis, both intense and of long duration, again supervened, and the state would once more have been compelled to reduce the rents in many cases by 10 per cent, more often by 20 per cent., and in some cases by as much as 30 to 40 per cent., with a resulting loss of revenue, which would have amounted to many millions sterling annu- ally. Thus the purchase of the land by the state, so far from making it possible to reduce taxation, would have made a large increase unavoidable. Although the case is merely supposititious, it cannot be denied that if, under the influence of Ricardo or Stuart Mill, the English state had purchased the land, this is what in all probability would have happened. In France it would have been the same. Suppose that the revolution of 1870, in place of having been, as it actually was, the result of a military catastrophe, had been brought about by a social movement, and that the state believing, upon 80 "UNEARNED INCREMENT" the authority of Ricardo, Stuart Mill, and other economists, that it might safely count upon the profit arising from the spontaneously increasing value of the soil, had purchased the land, and that the operation had been completed in 1875. The state would have awaited with impatience the termination of the first leases, before which time it could realise no profit from its purchase ; but the loss on vineyards, owing to the phylloxera in the south, bad seasons, low prices, and foreign competition in the north, would have made it impossible to renew the leases except at a reduction of rent, and the state would have been obliged to impose fresh taxation to supply the hundreds of millions of francs lost annually by its rash adventure. Experience shows that this would have been the course of events. It may be objected that the circumstances were accidental even so, they ought to be taken into considera- tion ; but can it be said that they were in any true sense accidental ? The dogma of " unearned increment " is not founded upon general observation : it is but a figment of the brain of certain philosophers, who have assumed that a fortuitous combination of circumstances existing at one moment of history was a normal condition. The earth is limited in extent, they said, and the human race incessantly increases : therefore the value of the produce of the earth must continually rise. Of the two terms of this proposition, the first alone is certain : the earth no doubt is limited, but nearly one-half of it is but thinly inhabited and hardly explored. Even when the whole world is peopled with an average of eighty to a hundred inhabitants per square kilometre (which is greater than the present density of the French population), there is no certainty that the rent of the land would go on increasing ; the continuous increase of population, which it is the custom to consider as being the law of nature, may well be only a transient historical fact. It is no longer possible to speak on this subject with the certainty of Malthus ; since his book was published, two phenomena have occurred the almost complete stagnation of the WILL POPULATION CONTINUE TO INCREASE? 81 French population, and that, almost equally complete, of the Anglo-Saxon inhabitants of the United States. What certitude is there that other nations will not fall into a similar condition ? Who can guarantee that when well- being has been universally developed, and democratic ideas have spread, the fecundity of all the peoples of the world will not be either naturally or artificially restricted ? The various causes which preclude a continuous rise of rent are fully described in the work to which reference has been made ; l it is sufficient here to refer to one only the improvement of agriculture. Every proprietor who improves his land is uncon- sciously assisting to lower rent. Supposing that all owners were simultaneously to effect so great an improvement as to double the produce of the soil, prices would fall, and rents would have a tendency to diminish. Who can assign any limit to improvements and fresh discoveries in the art of agriculture ? If, then, a material increase in production were to coincide with a slackening of increase of popula- tion, would not the necessary consequence be a reduction, not only of rent in the theoretical and abstract sense, but in the total revenue derived from land, including the interest on the capital invested in real estate ? In buying land, therefore, in the hope that a continuous increase of return from it would make the operation a profitable one, the state would be undertaking a very hazardous specula- tion, which, at any rate during the two periods referred to, would have proved the reverse of profitable, and which in the future, near or distant, offers no better prospect of success. What has been said of rural, is also, but in a less degree, true of urban property. It is a maxim that land in cities continually increases in value, and its truth is illustrated by reference to great cities, such as Paris, London, or New York. Whether such a statement is permanently true or not in respect of these cities must depend upon the indefinite continuance of the increase of 1 Repartition des richesses; and see also, Traite ' Morique et pratique (Pdconomie politique t P. Leroy Beaulieu, 3rd ed., vol. i.,pp. 741-75- F 82 CITIES THAT HAVE FALLEN their population and prosperity, a supposition for which history affords no support. Side by side with cities that have risen, we find those that have fallen. Florence and Venice are but moderately prosperous, and Rome has never regained the population of the palmy days of the Empire. History abounds with the names of majestic cities which have altogether disappeared, or are now represented only by little boroughs. Apart from political catastrophes, many causes may contribute to impede the increase of great towns, or to convert their progress into retrogression. Again, the economic forces which create prosperity may lose their energy or cease to be ; no doubt the continued growth of great cities during the next half-century, or even longer, is probable ; but vicissitudes must be expected : and to say that one or two hundred years hence Paris will still be growing and house rent still rising, would be a mere guess ; indeed, the continual improvement in locomo- tion makes a contrary supposition more likely to be correct. Apart from other reasons, therefore, the state would incur a serious risk, if, relying upon a hypothetical increase of value, it were to purchase house property in cities. In attempting to put the state in the place of the individual owner, and to transfer to the former the functions proper to the latter, the true economic position of a proprietor is lost sight of. A private owner is guided by one simple rule his own interest which is, to let his house to the best advantage ; but the state occupies an entirely different position : it is not like an individual, autonomous and free, and accountable only to himself; it is, on the contrary, an extremely complex being, whose actions are determined by motives which are both numerous and embarrassing. The more complete the change from an absolute to a democratic form of govern- ment, with rulers popularly elected for short periods, the more unsuited does the state become for the new function it is proposed to assign to it. The governing body in a democracy is not a permanent entity which represents the whole nation : it is merely the mouthpiece of a party DEMOCRACY A BAD LANDLORD 83 temporarily in a majority, by which it is appointed, and whose interests it furthers with but little scruple. To say that a government thus created can be impartial, is a contradiction both in word and in fact. It is swayed by many impulses, of which the most potent are not those which represent the interests of the nation as a whole, but of the majority of the electorate for the time being. Thus conditioned, the state cannot adequately perform even the limited functions of a great private owner, such as the Duke of Westminster ; it is less sure of its employees, and its administration is far more open to corruption, especially of that insidious kind which consists not in gifts of money but in favouritism. Modern democratic administration is essentially negligent and partial, and these defects are not transitory, but inherent in its nature ; concentrated and permanent authority, such as that of the Prussian monarchy, would indeed be less ill adapted for the role which collectivists desire to confer on the state. The duties performed by a good landowner are many. It is an error to imagine that all he does is to collect his rents and renew his leases, although this demands both intelligence and judgment. His proper function is that of a guardian, whose task it is to watch over and protect the permanent interests of his property, and to carry out improvements, profitable only in the future, such as the reclamation of land, afforestation, etc. It is by a proprietor only, that such work can be efficiently performed ; and his estate prospers or deteriorates, according to his zeal and intelligence, or his negligence and ignorance. In other ways a proprietor fulfils a useful rdle by making advances, when needful, to his farmers, by remission of rent, or by granting extension of time for payment ; and being, as a rule, better educated, and having wider views than his tenants, he is able to assist them by advice and suggestions. 1 [ x The following extract from a recently published book affords a striking example of the improvement of a district by an intelligent and liberal proprietor : A comparison of the condition of the estate of Holkham, in Norfolk, 84 THE DUTY OF LANDLORDS To affirm that owners everywhere perform these duties, would be to assert a condition to be universally, which is only generally, true ; it is, however, their proper business, 1 and requires close attention to small details and the keeping of complicated accounts ; it is a task which it would be impossible to perform under strict and meticulous regulations, and in working, it offers great opportunities for favouritism, corruption, and collusion. The state, therefore, with its official personnel and its pedantic and uniform rules, would be quite incapable of performing it with success. In Java, where state cultivation is carried on upon a very large scale, the sugar and coffee plantations cover 203,460 hectares, and give employment to about 2,000,000 souls. From these estates, in addition to land rents and the produce of the mines, the Dutch Government received in 1871 a net revenue of 25,688,000 florins, or 51,000,000 to 52,000,000 fr. De Laveleye quotes these figures as an instance of the advantages of collective ownership ; but the cultivation of sugar and coffee is of a very simple nature, and the labour required is consequently of a uniform and industrial character, differing widely from the in 1776 (when it was a barren and treeless waste of gravel, shingle, and sea marshes) and 1818. 1776. Rental 2200. 1818. Rental ^20,000 No meadows. Grass fields and water meadows. No wheat produced. Rich fields and large sales of wheat. No trees. Forest of 3000 acres. Annual tree felling ^2700. Population under 200, Population 1 100. Supported by poor farming, poor All earning their living. rates, and smuggling. Workhouse always full. No paupers ; workhouse pulled down. Coke of Norfolk and his Friends, A. M. W. Stirling, 1907.] 1 Proudhon says: "To occasion the failure of the agricultural industry in most places, or at least to arrest its progress, it is perhaps sufficient to convert the tenants into owners." (Contradictions economiqucS) vol. i., 4th ed., p. 185). COLLECTIVE PROPERTY IN JAVA 85 diverse methods of cultivation which are necessary in Western Europe. It must also be noted that the popula- tion in Java is, if not actually servile, destitute of indepen- dence, and, intellectually, of so low a type that the foreign overseers and native chiefs find it possible to enforce severe discipline without encountering resistance. The prosperity of Java, moreover, has not continued without breaks, and at the present time appears to be decreasing. 1 It is evident that the Javanese system of collective property, supported as it is by forced labour, is far from offering a model for introduction, still less for general adoption, in Europe. 2 Nor is the successful administration of the church funds in England, which amount to 31,000,000 fr. (1,05 3,000), an example in favour of collective as opposed to individual ownership. There is an essential difference between a system under which property, although collectively owned, is managed in the same way as private property, and a regime under which all property is owned by the state. The managers of great co-operations or joint stock companies always have greater liberty of action than the servants of the state ; they are subjected to less rigorous and less uniform regulations, and are selected with more regard to their technical competence than the officials of a democratic government ; and thus, as might be expected, experience has shown that when property has passed from collective ownership into private hands, it has in most cases increased both in capital value and in revenue. Another instance quoted by de Laveleye that of the Austrian society of state railways known as the " Staats- bahn " is no more conclusive. This society possesses in the "Bannat" an estate of 130,000 hectares, and is said to have developed agriculture, opened coal and other mines, 1 See De la Colonisation chez lespeuples Modernes, 5th ed., p. 274 et seg.y Paul Leroy Beaulieu. 2 States which possess landed property or land rents, find these sources of revenue a cause of much financial embarrassment ; thus, the fact that the land tax is the principal impost in India, causes great difficulty in framing the budget. See de Laveleye, op. '/., p. 358. 86 THE "STAATSBAHN" OF AUSTRIA regulated the use of forests, established factories, and to have increased general production considerably. This may be, but the fundamental dissimilarity between a corporation or company, however large, and the state, remains the same; the spirit which animates the one is essentially different from that which directs the other. The officials of a prosperous society, who feel secure in the permanence of their position, and who are often able to transmit their functions to their sons, insure stability of direction, in place of the instability and want of elasticity of the administration of a modern democratic state. All comparison, therefore, of private associations, however vast, with state administration, is essentially defective and misleading ; but although more efficient than the state, the best administered association is but an indifferent manager of rural property. In the instance referred to, the 130,000 hectares of rich soil possessed by the Austrian society ought to return at least 6,000,000 to 7,000,000 fr. net revenue ; but in 1 880 the total net revenue shown by the accounts of the company was only about 2,000,000 fr. ; nor was even this revenue, so far as regards the larger part of it, derived from agricultural property. The foundries which produce rails and machinery, of which the society is purchaser as well as producer, supply the larger part of the revenue, and agriculture cannot be credited with a return of more than about 10 fr. per hectare. 1 In Algeria there are many societies holding vast estates under concessions which for the most part are gratuitous, and which have been worked for twenty to thirty years. These estates give but a very small return, and it seems probable that the greater part of them will end by being sold to private owners. Sufficient evidence has now, it is believed, been adduced to prove that eulogy of the collectivist ownership of land is founded upon imperfect observation and false analogy. On the other hand, is it possible to maintain that a 1 See the Revue fcconomique etfinanctire du Zjuillet 1882, p. 484, " Report of the Imperial and Royal Austrian Society of State Railways." PRIVATE OWNERSHIP A NATIONAL BENEFIT 87 single one of the chief complaints against private owner- ship is well founded? or to uphold the assertion that it has now lost all social character, and exists only for the benefit of the owner ? It is no doubt true that the duty of acting as the pioneer and guardian of the rural population no longer falls upon the owner of land. It is also true that the spirit of democracy has diminished his sense of moral responsibility as a proprietor, and his readiness to accept it, whilst at the same time it has weakened the old habits of deference and the willingness of the peasants and labourers to accept his guidance; but it does not follow that private ownership has therefore entirely lost its social character, and exists only for personal advantage. It still continues to be of the greatest advantage to the commun- ity, because it is by means of this system alone that the best results can be obtained from accumulated capital, and acquired knowledge, for the improvement of agriculture and the productiveness of the soil. The interest of the owner is almost always identical with that of the consumer. Maximum net revenue in nearly every instance is in direct proportion to maximum gross revenue ; in fact, an estate is productive only when cultivated. Instances may no doubt be found which appear to invalidate the truth of these assertions. Marx lays much stress upon the existence of the great sporting estates in the north of England and Scotland ; 1 but these exceptions, the import- ance of which he greatly exaggerates, and of which no examples are to be found in France, are not attributable to a freely organised system of private property: they are the result of the laws of entail and of administration by trustees that is, of conditions which are quite opposed to modern doctrines of private ownership and there is nothing to hinder the government from passing measures to remedy inconveniences arising from this cause, should they be found excessive. Some so-called abuses of the rights of private owner- ship, although apparently detrimental, are in reality 1 " Verwandlung von Ackerland in Schaftriften und von Schaft- riften in Jagdrevier," Karl Marx, Das Kapital, p. 761* 88 ADVANTAGE OF PRIVATE PARKS advantageous to the community such, for instance, is the case of the enclosure of large areas for private parks which to the thoughtless appears to be an intolerable grievance ; but it is of considerable public utility that a certain number of such enclosures should exist in every district. In addition to the preservation of the picturesque aspect of the landscape, the country is by this means protected against the total destruction of the forests and consequent danger of drought; water-courses are regu- lated, birds, the destroyers of insect pests, are preserved, and each of these oases of turf and trees constitutes a centre of freshness and fertility for the surrounding area. In another way, again, private ownership, although deprived of all political influence, retains its social character. Whether intentionally or not, a large pro- prietor acts as a teacher and an initiator by whose example and experience the surrounding population profits. Hereditary succession no longer secures for spendthrifts the continued possession of great estates, which in such cases generally pass into the hands of manufacturers, merchants, or professional men, who have made their fortunes, and who represent the energy and enterprise of their country. Such people take a pride in improving the property they have acquired, and their advent has a beneficial effect upon the rural population. They compete for tenant farmers, who in their turn compete for workmen, and as a result the labourers obtain higher wages than they would be likely to obtain from a single proprietor free from all com- petition, such as the state would be, if owner of the whole of the land. Thus, an accurate observer, in place of finding that a proprietor obtains a continuously increasing revenue from his land, is led to the conclusion that of the three classes composing the rural population, the labourers have bene- fited most during the last century, then the farmers, and lastly the proprietors, who as a whole, have not, since 1821, and especially since 1851, received in the form of increased FACTS IGNORED BY COLLECTIVISTS 89 rent even a moderate interest upon the capital they have expended upon improvements during that period. All these facts, which are indubitable, are ignored by the advocates of the collectivist ownership of land. Their doctrines are, in fact, founded only upon mental conceptions, or rather hallucinations. BOOK II CHAPTER I Industrial collectivism. Marx and Lassalle. Definition of capital. " Les liens sociaux." Use of " money." Capital not the result of saving. Lassalle's explanation of origin of capital. So far our criticism has been confined to collectivism as applicable to " real " property ; it will now be considered in relation to industry. In this connection, the German writers, Lassalle, and especially Marx, call for attention. Their proposal, subject to some variations, is that all means of production should be acquired by the state, but that private ownership of objects of consumption should still be permitted, and that individuals should be allowed the free determination of their personal requirements. On the constructive, or positive side, this doctrine has many lacunae, and reveals wide differences of opinion between these authors ; SchafBe alone amongst collectivist writers has attempted to give definition and consistency to this collection of ideas and aspirations. Before examining the positive measures which are proposed by collectivists, we must refer once more to the negative aspect of their criticism, on which side their ideas are far better defined and more fully expressed. The two main points to which their researches and arguments are directed are, the nature and origin (i) of capital, and (2) of industrial gain. The first of these is the subject of Das Kapital) by Marx, and the second is dealt with by Lassalle, in his book Herr Bastiat, Schnlze de Delitzsch, der CEkonomische Julian. It is asserted that economists are altogether mistaken in their conception of the nature and origin of " capital " 93 94 FALSE CONCEPTIONS OF ECONOMISTS and of industrial gain ; they are accused of having con- structed an abstract and conventional system of political economy, expressed in formulae which have no real existence outside the minds of certain thinkers, and which are repugnant both to historical development and to the existing condition of society. Political economy, they say, treats men as if they were isolated and autonomous beings responsible for the economical results of their own acts. Thus, a man works and makes a profit ; he saves part of his income and amasses " capital " that is, he creates instruments of labour and stores up raw material or provisions ; in co-operation with others he organises industry ; he speculates ; and, being wise and far-seeing, he is rewarded by success. Such, they say, is the conception of economists ; but according to Lassalle and Marx, it is false and fantastic. Under existing conditions, they assert, individuals are not economically responsible for their own acts ; one man reaps where he has not sown, whilst another sows but obtains no return ; and this perversion of justice is not exceptional, it is the rule. The condition which really governs the economic world is, says Lassalle, "les liens sociaux," which he describes as resembling the brute forces of nature, and as being agents of destiny, who make sport of the vaunted freedom of humanity, and deprive it of liberty and moral responsi- bility. Capital, he declares, is created neither by labour nor by thrift, but by "les liens sociaux." Men are tempted to speculate, relying upon their divination of future events ; but since future events which cannot, are always more numerous than those which can, be foreseen, the more speculation is guided by calculation, the greater is the probability of failure. It is also asserted that the influence of external and uncontrollable circumstances is greater or less, in proportion to the extent to which the labour of individuals is employed in the pro- duction of " values-in-exchange " that is, commodities for the use of others or of "values-of-utility" for their own consumption. Socialists attach great importance to the fact FLUCTUATIONS OF TRADE 95 that the production of "values-in-exchange," in place of " utility-values," is continually increasing, and assert that economists are far from appreciating the significance of this evolution. Thus to the abstract theories of economists, the German socialists oppose what they term the concrete aspect of the world. All wealth, they say, is derived from "les liens sociaux " that is to say, from " luck " but wage earners are excluded from participating in the game of speculation, since they have no capital wherewith to provide the necessary stake. l Lassalle does not deny that in certain circumstances wages may increase, but he says that this increase can only be temporary and of insignificant amount. If a cycle of trade prosperity lasts but a short time, the determined opposition of employers to any increase in the cost of labour has to be encountered, whilst if it is of longer duration, the increase of population, by adding to the supply of labour, soon reduces the wage rate to the old or even to a lower level. 2 On the other hand, when there is industrial depression, the effect is an immediate reduction of wages and a diminution of work, which falls with crushing weight on the wage earners ; thus chance and the violent fluctua- tions of the market destroy all liberty of work and all personal economic responsibility. Lassalle enunciates this as if it were a principle, almost an axiom ; he then deals with the definition which Schulze de Delitzsch gives of capital, and of its formation : One man produces cloth, another clothes, another grain, and each one exchanges his surplus product with others. In this way, says Lassalle, political economy represents men as being autonomous producers ; but nothing can now be more untrue. The small and independent producer no longer exists ; no one now produces what he himself consumes. This used to be 1 Ferdinand Lassalle : Herr Bastiat^ Schulze de Delitzsch^ traduction de B. Malon, p. 51. 2 It is worthy of remark that all socialists are disciples of Malthus, or rather, avail themselves of his theories in their attacks upon political economy and modern social conditions. 96 LASSALLE AND SCHULZE DE DELITZSCH the case in the middle ages, but now there is nothing but socialised work, and no one exchanges his surplus production for the necessaries of life ; on the contrary, whilst the distinctive feature of labour in former times was that production was mainly for personal use, and only the surplus was disposed of, the distinctive feature of modern labour is that each workman produces "values-in-exchange," which he cannot use, in place of " values-in-utility " for his own consumption. It is this which is the origin of the vast wealth and the vast property of the present day ; this it is also which has created the cosmopolitan market, with its consequences, surplus population, commercial crises, stagnation of trade, and unemployment. Lassalle accuses Schulze de Delitzsch of failing to understand what it is that makes the position of the labourer so wretched and uncertain, and points out that a workman who himself produces what he needs cannot be thrown so suddenly into misery as the workman who, being without the means of resistance afforded by the possession of capital, is wholly at the mercy of the fluctuations of trade. He further charges Schulze de Delitzsch with entire ignorance of economical conditions and of the real origin of capital. He says : " I will force you to understand that it is not until production is exclusively directed to 'values-in-exchange,' and labour has assumed a form and nature of execution under which each one produces nothing but commodities which are of no use to him, it is only then, I say, that ' capital,' properly so-called, can be said to exist." 1 The definition of "capital" given by Schulze de Delitzsch, well known as the chief of German co-operators, which appears to have been the cause of this outburst, is as follows : " ' Capital ' is that part of produce which is employed for ulterior production." Political economists usually define it more briefly as being " accumulated labour," such, for instance, as machines, raw material, or stores of means of subsistence. Lassalle ingeniously asks whether (admitting capital to be accumulated labour) the person who does the work 1 Lassalle, op. cit., 87. CAPITAL NOT THE RESULT OF THRIFT 97 secures the accumulation, or whether "capital is not in reality the accumulation by one individual of the labour of others." Most economists say that " capital " is the result of thrift, or abstention from consumption. This statement is vigorously attacked by Lassalle. 1 He denies that abstinence is the parent of capital, and repeats that its real origin is " luck," and by way of illustration refers to the fluctuation of prices on the stock exchange, and in the value of real estate. He takes an imaginary case of a person who has invested in railway shares at par, and, after having received high dividends on his investments for some years, sells his shares, which in the meantime have risen in value, and secures a large addition to his capital, and points out that this addition was due to the increase of passengers and goods traffic and the diminished cost of working, and was in no way attributable to thrift, but to "luck." This is an example of "unearned increment," the doctrine so much discussed by English writers. Increase in the value of real property, Lassalle declares, may be similarly explained, and illustrates this by suppos- ing a man to have bought an estate for 100,000 thalers, from which he receives an annual income of 4,000 thalers ; being careless or extravagant, he exceeds his income, and at the end of ten years is in debt to the amount of 20,000 thalers ; he then sells his property, and owing to the increase of population and to the rise in the price of wheat during this period, the value of his estate has doubled, and he receives 200,000 thalers for the land for which he paid 100,000. Thus, after paying his debt of 20,000 thalers, his capital is increased by 80,000 thalers. This increase of capital might, says Lassalle, be attributable to a variety of causes, always excepting labour or thrift on the part of the proprietor, but the predominant cause is " luck." No doubt " luck " may increase individual wealth, but it may also diminish it. It is as easy to find landed proprietors who have suffered from bad " luck " as it is to find those who have been enriched by good " luck." It is 1 Lassalle, op. tit., p. 121. G 98 DUE TO "LUCK" the same with commerce ; here also " luck " is as often the cause of loss as of gain. There are periods when the chances are generally favourable to capitalists as a whole ; these seasons of prosperity are usually characterised by an outbreak of speculation, and are followed, almost invariably by periods of depression, when " luck " is adverse to landed proprietors as well as to merchants and capitalists : the ancient apologue of the lean and fat kine is evidence of the antiquity of this experience. The meaning given to the word " capital " is an unnatural one : " luck " cannot, in any true sense of the word, be said to create " capital," although it may add to its utility. However much the value of the railway shares referred to above might fluctuate, the social capital that is, the permanent way, the stations, and the plant would remain unchanged, except in so far as advantage might be taken of prosperous seasons to add to them, but such additions would not be due to " luck," but to labour and thrift. Lassalle's procedure is polemical rather than scientific, and he treats exceptional cases as if they were the rule and were capable of general application. His assertion that, as a consequence of the dominating influence of external social circumstances, every man is saddled with responsibility for actions in which he has had no share, is true in a certain number of cases, but is false as a general statement ; it would be equally true to assert that because some men are born, or become lame, it is the destiny of all men to be cripples ; or that because men of all conditions fall victims to an epidemic, a good constitution and temperate habits have no influence upon length of life. Intelligent, far-seeing, men know how to protect themselves from the influence of " luck " when it is adverse, and how to derive advantage from it when it is favourable. To liken laborious, thrifty, far-seeing men to the idle, the extravagant, and the obtuse, and to assert that the inequality in their position is attribut- able solely to " luck," is repugnant to common sense. The idea that " luck " is the supreme influence in social relations, is in itself a sufficient condemnation of Lassalle's theory. "LUCK" AN INCENTIVE TO ENTERPRISE 99 In contrast to the economical position of workmen who produce only for their own needs, Lassalle describes the existing system under which nearly everyone is employed in the production of commodities intended for exchange, and draws the inference that under this system men must be dominated by circumstances external to themselves ; but the instances that he adduces in support of this inference are exceptional, since the origin of private wealth is but rarely attributable to circumstances altogether unconnected with the labour and intelligence of its possessor ; he fails also to recognise that circumstances may be unfavourable as well as favourable, and although external circumstances may be disturbing, yet even so their influence is on the whole beneficial ; they may occur suddenly and unexpectedly, but they can generally be foreseen, even if dimly, and provided against by an acute and vigilant man. Far from being a source of discouragement, the indistinct but golden chances of the future act as a strong incentive to enterprising spirits, and are the cause of most of the great under- takings by which mankind has benefited. In this sense it is true that " luck " has largely influenced and assisted the progress of humanity. The German socialists assert that "capital" and "profit" are phenomena which have not always existed. Accord- ing to Lassalle, "profit" requires the present social institutions with their implicated ideas of "values-in- exchange," "capital," "circulation of money," "competition," "private enterprise," "wage-paid labour," and the universal acceptance of tokens of exchange, or money, for com- modities of every description, and asserts that to make the idea of "profit" comprehensible, all these conceptions must be taken into account. But Robinson Crusoe, alone upon his island, made a profit whenever, learning by experience, he obtained an equally successful result with a smaller expenditure of labour, or a better result with an equal expenditure : when his labour was altogether unproductive, as in the case of his first attempt at boat-building, he was then in a 100 MONEY AND PROFIT position precisely analogous to that of a manufacturer who has produced an article that no one will buy. Socialists are mistaken when they assert that without " money " there can be no profit ; or that money effects a radical change in economic conditions, and in the character of commercial transactions. Money extends and regulates the phenomena of production and exchange, but does not alter their character, and economic law is as true in the case of an isolated individual as in that of a great community. Having himself arrived at the conclusion that " profit " is a novel and merely accidental economic phenomenon, the importance attached to it by economists appears to Lassalle to be almost superstitious. But the importance of " profit " is recognised, not by economists only, but by all mankind, the reason being that for every description of human industry, commercial or agricultural, no other test of success but " profit " ever has or ever will be discovered. " Profit " alone can decide whether the work of pro- duction has been well contrived and conducted, and provides the only real test of the quality and of the sufficiency of the product. It is by the absence of " profit " that over - production (wrongly asserted by Lassalle to be an inevitable incident of modern production) is discovered and checked. " Profit," in fact, regulates and controls all socialised labour. When profit is ignored, as it often is by the state in the administration of public services, or by philanthropic associations, there is generally a great lack of efficiency. This does not imply any condemnation of the human effort that is inspired by charity and disregards all thought of profit ; but in regular and normal economic operations, "profit" must always hold the most important place. It is an error, says Lassalle, made by all " bourgeois " economists, to consider capital and the other economical categories as being logically and eternally true. They are, he declares, not logical, but historical categories : the productivity of capital is not a law of nature, but the result of certain definite conditions, and if these were THE DIVISION OF LABOUR 101 changed it might and ought to disappear. In support of this curious statement, he gives the following illustration : " In the primitive conditions of individual and isolated labour from which we started, an instrument of work, such as the bow of the Indian, was productive only in the hands of the user, and therefore it was the use of it that was productive." But the Indian might lend his bow to another and stipulate for a share of the game obtained by its use as payment for the loan ; in fact, common sense tells us that in all stages of civilisation, such an arrange- ment would be natural. " Capital " in the form of instru- ments adds to the productive power of labour, and it is a matter of small importance, so far as regards production, whether the person using " capital " is its creator, its possessor, or merely a borrower. Since " capital " did not always exist, how did it originate ? It is ingeniously suggested that the origin of " capital " was the " division of labour " : " this," says Lassalle, " is the source of all wealth. 1 The law that productivity is increased and commodities made cheaper by this cause a law which is based upon the nature of labour is the only economical law which can properly be said to be a natural law. Nevertheless, it is not a law of nature, since it does not belong to the domain of nature, but to that of mind ; at the same time, it is invested with the same character of " necessity " as are the laws of electricity, gravitation, the elasticity of steam, etc. It is a natural social law, and in all nations a few individuals have appropriated this natural social law, which owes its exist- ence to collective mentality, to their exclusive advantage, leaving for the rest of the peoples, stupefied, indigent, and strangled by invisible bonds, only such portion of the constantly increasing and accumulating product of their toil as, even before the dawn of civilisation, the Indian could, under favourable conditions, gain for himself that is to say, a bare subsistence. It is as if some individuals 1 He ought rather to say, one of the principal sources, since without "capital" that is, without the instruments of work division of labour would lose the largest part of its productivity. 102 "PLUS- VALUE" were to claim gravitation, the elasticity of steam, or the heat of the sun as their exclusive property ! Such people provide sustenance for their labourers as they do heat and oil for their engines, in order to maintain them in good working order, and look upon the maintenance of their workmen merely as a necessary part of the cost of production." l Marx propounds a similar idea when he says that the capitalists have captured science and used it for their own advantage. The world is said to be the victim of an unnatural and sinister inconsistency. The vast production of modern society is communal and co-operative ; yet the distri- bution of the products is not communal but individualistic. Co-operative labour yields a surplus in excess of what could be produced by isolated labour, and this surplus, which in justice belongs to all, is entirely appropriated by the capitalists. If this were true, all, or at any rate the majority of workmen's co-operative societies ought to prosper ; but experience shows that most of these societies, even when assisted by loans, either gratuitous, or at a low rate of interest, are unsuccessful, or remain in a condition of stagnation. Again, in most civilised countries, there are many small employers and independent workmen ; but they are no better off than the capable and industrious men who exchange their labour for wages. And lastly, there is the fact, fatal to Lassalle's theory, that large numbers of great merchants and well-established companies, not only fail to secure any profit, but suffer losses, and are compelled to go into liquidation. This is sufficient proof that the so-called " plus-value," which is asserted to be the natural and necessary result of the division of labour, and of which the employers are said to have the exclusive benefit, either has no necessary existence or is insignificant in amount, or must be of advantage to others besides the employers. To return to Lassalle's principal contention : he declares 1 Lassalle, Capital and Labour, p. 249. CAPITAL IS ACCUMULATED LABOUR 103 that capital is not the result of saving, and he brings forward many arguments and so-called facts to prove the falsity of this economic theory. As regards wage earners, he declares that the labour of the vast majority of work- men only suffices to supply their daily needs, and that it is therefore impossible for them to exercise thrift. The ten millions of depositors in French savings banks provide a sufficiently striking proof of the inaccuracy of this state- ment. 1 However low wages may be, it is clear that there is a large number of manual labourers who are able to save, and that thrift is practicable even in the lowest ranks of society. From other points of view Lassalle's state- ment is open to criticism. He admits that the definition of " capital " as being " accumulated labour " is apparently correct, but declares that the labour accumulated is not the property of the employer, and that in justice it belongs to others ; profit, he says, is labour which has not been paid for, and he asserts that there is a wide difference between the value of the work done and the wages paid for it values which the public imagine to be equivalent. Lassalle is indignant that " non-consumption " or " saving," which is a merely negative quality, should be said to be the source of capital. Savings, however, do, as a fact, exist, and if not transformed into "capital," what role do they fulfil? It has been said that to save is to create ; and under certain conditions, the truth of this is obvious, as in the case of some commodity which is being constantly pro- duced. Here any saving is, pro tanto, an addition to the quantity available for use ; thus, if a man possesses a ton of coal, and by economy in the use of it he saves half, he thereby adds this quantity to the general stock ; and the effect of his non-consumption or saving in this case may obviously be a source of capital ; or if, possessing a stock 1 The amount due to depositors in private as well as national savings banks was, on 3ist December 1900, 4,274, 000,000 fr., as against 1,802,809 fr. in 1882, whilst the number of depositors during the same period had increased from 4,645,893 to 10,680,866. (Bulletin de statistique de Mai 1902, p. 558.) 104 PROGRESS DUE TO INDIVIDUALS of provisions, a man uses them with economy, and sets aside a portion for subsistence whilst carrying out a work of some duration : in this case, again, his saving is clearly a source of capital. These are merely simple instances of a principle which, in a more complex form, is a common origin of capital. Lassalle makes the further assertion that progress has always been due to the community, and not to the individual. No educated person would deny the existence and the advantage of co-operation between the individual and the community of which he is a member ; but the part played by the individual is far more important than Lassalle admits. During the infancy of humanity it is possible that social action might have been the predominant cause of progress although we remember that the names of Prometheus and Triptolemus show that antiquity attributed to individuals the invention of the technical arts ; but in the modern world it is hardly possible to name any discovery which is not due to an individual. History abounds with the names of inventors, and from Gutenburg and Christopher Columbus down to Papin, Watt, Arkwright, Jacquart, Bessemer, and Lesseps, all the great achievements of humanity are associated with individuals. Lassalle declares that it is absurd to suppose that capital, which consists for the most part of things that are not objects of consumption, such as improvements of land, houses, bars of iron, etc., etc., can be created by abstinence from consumption. The impossibility is, however, only apparent, and through the agency of money, the capitali- sation of savings is made easy. Thus, the coal or the provisions economised as described above, might have been exchanged for money, and thus have been converted from perishable into permanent capital. This truth is of general application, and it is obvious that wealth in all its forms may originate in saving. Thrift or saving in its primitive form of " hoarding " may no doubt be considered in an economic sense as being a negative or passive element; but when capitalised, it at once becomes an active agent in modern economy ; and savings are now "THRIFT" 105 daily brought into the market and transformed into some durable form of capital, usually by investments in the shares of joint stock companies. Thrift imparts a new direction to the industry of a country; in place of the employment of labour upon immediately consumable commodities, it promotes the creation of means of pro- duction and works of permanent value. For example, suppose that two men have each an income of 4000, and that one spends the whole in luxurious living, whilst the other saves half his income and spends it on the permanent improvement of his property, or invests it in the shares of some industrial company : in this way his savings are capitalised, and assist in the creation of durable and productive utilities. Thus, the part of thrift in modern life is to discourage excessive production of articles of luxury, which are for the most part perishable, and to encourage the employment of labour on durable objects and means of ulterior production. It is evident that the wealth of a nation will increase if its inhabitants generally follow the example of the latter of these two proprietors, whereas in the contrary case its capital would quickly vanish. Lassalle, blinded by his prepossessions, failed to perceive this truth, and ignored the fact that although capitalisation, or the conversion of savings into capital, has become far more easy and rapid than formerly, the change is one of degree only, and not of kind. Having pointed out that "accumulation" or "thrift" could have no share in the creation of " capital," it became necessary for Lassalle to find some other origin for it, and this, as has been already mentioned, he found in the " division of labour ; " but, he says, this system of pro- ductionj by which alone a surplus in excess of daily necessities can be secured, requires a pre-existing accumulation of capital and an anterior system of division of labour to create it ; without the institution of slavery, he asserts, this would have been impossible. Nations, there- fore, which started with a system of complete individual liberty, such as the Indian hunting tribes, could never accumulate capital, and as a consequence could never reach any high degree of civilisation, and saving would have been impossible for the individual workman. 1 There is an obvious contradiction here : if division of labour pre- supposes the previous existence of a similar system, such a system must have been in force ever since society came into being, or its existence at any given time would be almost inconceivable. It is probable that the division of labour and co-operation were actually evolved from individual and isolated labour ; but if so, saving must always have been possible for the individual. Lassalle, however, refuses to recognise any other origin for the division and combination of labour but slavery, and roundly asserts that it must therefore have been for the benefit of nations that slavery should have been associated with their genesis. By way of illustration, he supposes that a master who possessed a hundred slaves, employed thirty of them in providing for his personal requirements of all kinds, sixty in agriculture, and the remaining ten in the manufacture of implements for the use of the other ninety. Such a division of labour would, of course, be far more advantageous than if all the work required were done by the whole hundred working together. This, according to Lassalle, was the origin both of the " division of labour " and of " capital." As time went on, the master would still further improve the system, and, at each stage of the progress, would gain by the increase of productivity. " You see, then, M. Schulze," says Lassalle, " that what this master has done is not to abstain from consumption, but to alter continually the administration of production, by introducing division of labour, and by constantly increasing the diversion of labour from the direct to the indirect pro- duction of means of luxury and subsistence that is, to the manufacture of implements and machines in a word, to the creation of fixed capital of all kinds and the more he does this, to which you give the name of ' thrift,' the more his wealth is increased." This theory is arguable both from the doctrinal or the historical point of view. Nations in which slavery never 1 Lassalle, 0^. '/., p. 113. CAPITALISM IN THE MIDDLE AGES 107 existed or which soon abandoned it the Germans, for example were not thereby retarded in arriving at the division of labour and the creation of capital. When slavery or even when serfdom was suppressed in Europe, the system of division of labour did not cease to spread, and in those colonies in which it has been longest in existence, slavery has always been considered to have been a great obstacle both to the division of labour and to the employment of machinery. Socialists, however, have made up their minds that the division and association of labour is the only source of wealth, and they will not admit that thrift or enterprise can have any share in its creation ; but it is not difficult to show that the advantage arising from the general adoption of a system of associated labour falls in reality not to the employers but to the community in general in the shape of a diminution in the cost of commodities. In pursuit of his historical demonstration, Lassalle comes across some truths upon which he lays much stress, but which in no way support his thesis. The incessant and automatically increasing productivity of capital, he points out, was impossible in ancient communities, when domestic production predominated, and when each worker or little group of workers, produced commodities for their own consumption only, and adds that this was almost equally true during the middle ages. How, he asks, could capitalisation have been possible at that time? Could a proprietor have improved his position by the cultivation of wheat in place of rye ? No, since his land was subject to tithe payable in rye. Could a merchant, by means of thrift, extend and improve his industrial position ? No, because in addition to the limitation of his market, owing to the absence of means of communication, both the method of his production and the number of his work- men and apprentices were regulated by inviolable laws. The investment of capital in another person's business was also impracticable, owing to the rarity of opportunity and the lawlessness of the times. These observations, although true, do not prove capital 108 INDUSTRIAL LIBERTY AND CAPITALISATION to be a novel and accidental element in economics ; they merely show that in ancient times and during the middle ages capitalisation was less easy than at the present time, since it was hampered by laws and regulations as well as by customs and prejudices. If now, to the great detriment of civilisation, socialistic doctrines should prevail, the process of capitalisation might again become as difficult as it was formerly, since it requires the fullest industrial and professional liberty for its successful development, and if this liberty were suppressed or harassed by regulations, capitalisation, although it would not altogether disappear, would be greatly restricted, and profitable thrift would, to a great extent, be replaced by the primitive and sterile form of saving known as hoarding. CHAPTER II Capital itself is unproductive. Definition of "profit" or "plus- value." Marx' theory of " plus - value," and his explanation of the origin of capital. "Constant" and "variable" capital. "Values-in-exchange" and "values-in-utility." Labour-force and its value. Iron law of Lassalle. Claim of capital to interest. HAVING shown that capital is created by the capitalisation of savings, the question arises whether it has any other source, and also whether this saving, the parent of capital, is, as has been asserted, the profit derived by the capitalist from the unjust appropriation of part of the product of labour ; if this were so, then, whatever its advantages, the practice of saving would forfeit all claim to respect. This profit, however, is not the only source from which saving is derived. It is often part of their wages or earnings set aside by workmen, or small peasant proprietors, or by the professional men, out of their income. The statement is therefore an exaggerated one ; it is only a part, possibly the larger part, of saving, which is derived from the profit said to be filched from the labourer's wages. The contention that a part of the recompense due to the workman for his labour is unjustly retained by his employer, is in reality the kernel of the collectivist doctrine. According to collectivists, capital is in itself unpro- ductive, and is therefore only entitled to demand for its use an amount sufficient to maintain and replace it; it may have a claim to redemption, but not to interest, still less to profit. This idea, pedantically expounded by Marx, was explained by a public speaker, Briosne, to 109 110 CAPITAL NO CLAIM TO INTEREST mean that the owner of a house, so far from receiving any rent for the use of it, ought to recompense the tenant who maintains his property in good condition. Without going quite so far as this, collectivists in general assert that the owner of a house and his tenant are quits if the latter bears the cost of upkeep. This principle, they assert, is equally applicable to machinery and to factories ; the manufacturer has no just claim to interest or profit ; the establishment of a sinking fund, and the maintenance of his property in good condition, is the utmost that he can reasonably demand. In order to form an opinion upon the justice of this view, a definition of profit is essential. In an economical sense, this word has various significations : it denotes the legitimate remuneration of the creator of capital, the salaries of men who devote themselves to the business of management ; it includes the recompense for risks under- taken, and, lastly, and perhaps most important of all, it is the reward of the discoverer of improvements in the organisation of labour, and of the inventor of new and more efficient combinations of industry and commerce. Interest has a very different signification : it is a stipulated amount paid for the use of capital ; it is more constant, and less subject to fluctuations than profit 1 These definitions are clear, and appear to be in harmony with the nature of things ; collectivists, however, dispute their correctness, or, rather, ignore them altogether. In their eyes, profit is simply that portion of the product of labour which is unjustly appropriated by capitalists, and nothing else ; and they support this assertion by arguments which they say are based upon fact as well as theory. The modern workman, they say, is subjected both to a " dime " or tax, and to the " corvee " or forced labour. The dime, according to collectivist writers, was, under the feudal system, a tax upon the labourer for the benefit of his lord, or of the church, amounting to a tenth part of the produce of his labour, and the corvee was compulsory and unpaid work 1 See Essai sur la repartition des richesses, P. Leroy Beaulieu, chap. viii. THE "CORVEE" IN MODERN INDUSTRY 111 for from one to three days a week. By the combined imposition of these exactions, it is asserted that a propor- tion varying from a fifth to a half of his actual production was extorted from the labourer. Many collectivist writers do not hesitate to affirm that these mediaeval conditions, barbarous as they seem to be, were mild in comparison with those involved by the system of social organisation now in force, in what is called civilised society. They declare that at the present day the value of the work for which a labourer receives no pay almost always exceeds that for which he is paid. An attempt to prove this statement by means of statistics was made by the journal Ufcgaliti. It is there stated that the corvee in modern French industry absorbs on the average six hours six minutes out of twelve hours' work, or more than the old dimes and corv6es together, and that some indus- tries show an even larger proportion of unpaid labour, culminating in the lighting industry, in which one hour and twenty minutes only, out of twelve hours, is paid for. If these figures are correct, it is evident that our social system is extremely oppressive, and that the rule of the modern capitalist is far more rigorous than that of the feudal proprietors. The calculations upon which these assertions are founded are, however, open to question. It is stated that they are mathematically deducible from the results of industrial enquiries ; but if they were literally true, how would it be possible to obtain workmen for industries in which conditions are so oppressive, and why is it that all employers have not engaged in those industries in which the cost of labour represents so small a portion of the value of the product ? Would not the keen competi- tion, of which socialists speak so much, have equalised, or at any rate modified, these conditions ? Apart from those industries which are monopolies, such as that of lighting, why should the corvee be from three to four times larger in one industry than in another? These questions are difficult to answer, and are met by a declaration that the facts must be as stated, since the figures quoted are not 112 INDUSTRIAL PRODUCTION IN FRANCE only official, but have been collected by order of the " bourgeoisie " itself. According to U&galiti, these enquiries show that the value of the annual industrial production in France amounts to 7 milliards 130 million francs. Of this vast sum, 4 milliards 941 millions represent raw material, 191 millions the cost of fuel, and the " plus-value " due to labour amounts to I milliard 994 millions, of which sum 980 millions is paid as wages and I milliard 14 millions is absorbed in profits and dividends. 1 It is upon these figures that the assertion as to the proportion borne by unpaid to paid labour is based. In a working day of twelve hours, it is said that the capitalist's profit is equivalent to six hours and six minutes, whilst five hours fifty-four minutes represent the time for which wages are paid : or, taking the figures quoted, this means that French employers extort from each of their workmen an annual sum equal on the average to 691 francs. As is well known, it is impossible to secure complete accuracy in the compilation of industrial statistics, but accepting the figures quoted by the editor of L&galite as being correct, examination shows that the conclusions drawn from them are altogether erroneous. From the aggregate amount of annual industrial pro- duction in France, the only deduction made in order to ascertain the sum left for profit and wages is the cost of raw material and fuel ; yet it requires but little considera- tion to show that many other deductions ought to have been made, such, for instance, as general expenses, always a heavy item, and the cost of commission, agency, insurance, postage, travelling, and deterioration ; again, the mainten- ance, repair, and renewal of buildings and machinery, are heavy expenses which must be taken into account. But all these unavoidable charges upon industrial production are ignored in these calculations, and collectivists appear to think that the total gross receipts, less the amount [' The small difference between the total given by the addition of these several amounts and that stated as the total annual production is caused by the omission of negligible fractions.] HOW TO CALCULATE PROFIT 113 chargeable for raw material and fuel, are wholly available for distribution in the form of profit or wages ! When all the additional expenses referred to are taken into account, the alleged profits, which it should be remembered must also be charged with interest on the capital employed, will be reduced by at least one-half, or even by three-quarters, and in place of the alleged profit of i milliard 14 millions of francs, there will remain but from 300 to 500 millions at the outside, a profit which is by no means excessive, especially when it is remembered that this sum is not merely a gratuitous benefaction for the idle or the incapable shareholder, but includes payment for the work of direction and management, functions the importance of which it is impossible to exaggerate. The ability required for the successful direction of industrial enterprise is of two kinds, one of which is a capacity for the skilful adjustment of the means to the end and for the economical regulation and improvement of production, whilst the other is a gift for the successful practice of the difficult art of buying and selling. All industry, whether national or local, is subject to the influence of these abilities, the very existence of which appears to be unknown to collectivists ; yet they are of vital importance to society, since it is upon them that the financial prosperity of a community must depend. They have therefore a claim to remuneration proportioned to their value, and it is only envy or unreflecting sentiment- ality that would deny its justice. If profit, as collectivists with amusing nazvett appear to imagine, could be calculated by counting the workmen employed at the rate of x francs per head, commerce would indeed be a profitable and easy profession ; but experience tells us that of two neighbouring establish- ments, alike in equipment, in situation, and in the number of workmen employed, it often happens that the one succeeds whilst the other fails. Much valuable information bearing upon this subject may be gathered from the reports issued by joint stock H 114 FRENCH COAL INDUSTRY companies. The Fives-Lille Company, one of the best- known iron foundries in France, during the years 1880 to 1883, when this branch of industry was active, paid a dividend of 30 fr. per share on 24,000 shares, representing a total net profit of 720,000 fr. Taxation diminished this amount by almost a tenth, leaving barely 648,000 fr. for the shareholders. Five thousand to six thousand workmen were employed in this business, so that the profit, including interest on capital, in place of being about 691 fr. per head of the workmen employed, was but little more than 100 fr. ; this company paid no dividends between 1898 and 1902. Another well-known foundry, the " Maison Cail," which also employed several thousand work- men, paid no dividends for eight years ; it then went into liquidation, and returned no part of their capital to the shareholders. The journal L'Echo du Nord, quoting from information officially obtained on the occasion of the strikes in the "Nord" department in 1884, showed that in the year 1 88 1 the 20,701 workmen employed in the mines of that department received in wages 20,529,406 fr., and the share- holders 2,751,914 fr., the profit in this case being equivalent to one-eighth part of the wages, or 33 fr. per workman. An engineer, M. Pernolet, commenting upon these figures, says : " The 20,701 men referred to, allowing a maximum of 300 work-days in the year for each man, worked for 6,210,300 days in the year 1881, receiving 20,529,406 fr. as wages. This amount gives an average wage for work- men of all grades of 3.306 fr. a day each. On the other hand, the 2,751,914 fr. paid to the shareholders as a return on capital, amounts to 0.443 fr- a day for each man ; in other words, the coal industry in the department of the 'Nord' employed 20,701 workmen of all grades during the year 1881 at an average daily wage of 3.306 fr., whilst 0.443 fr. only was contributed by each towards profit and interest upon the total capital required for the founda- tion, preparation, maintenance, renewals, and administra- tion of this industry, which is a kind of investment always hazardous at the outset, for long unproductive, and some- IF CAPITAL EARNED NO INTEREST 115 times ruinous, but which is necessary if the population who live by this industry are to have any assurance for the regularity and the security of their existence. On a former occasion," M. Pernolet continues, " I have pointed out that an examination of the result of coal mining in the ' Nord ' for a long series of years, not all of them prosperous, shows that the dividends received by the shareholders that is, the profits on the capital invested in this industry barely amounted to the value of a glass of beer for each working-day : this, then, is the extent of sacrifice made by the labourer working in the mines of the ' Nord ' as his share of the cost of the creation and maintenance of this industry, by which the tranquil existence of his family is assured ! Here, in exact figures, is the robbery of the fruit of toil by the idler who lives in luxury ; this is what the evangelists of the bonne parole call ' the tyranny of capital/ the ' thefts of the bourgeois.' " x Sometimes the profits do not amount to as much as a glass of beer a day ! It appears from the evidence given at the parliamentary enquiry held in March and April 1884 at the time of the Anzin strike, that the well-known company to which these coal mines have given a name, employs 14,000 workmen, and that the profit of the last year's working only amounted to 1,200,000 fr., or 85.50 fr. per head of the workmen. Collectivists ignore the ability that is necessary for success in conducting industrial enterprises, and deny the supreme importance of a talent for combination and the value of intellectual labour ; they do not take into account the risk of loss, and they contest the right of capital to any remuneration for its employment. But it is obvious that without the prospect of remuneration, the production of capital would cease ; those who had already put by sufficient to provide for their own old age, and for a moderate provision for their children, would desist from the practice of economy ; they would spend more freely, and there would be a great increase in the consumption of luxuries ; people would still build houses for their own 1 See L' conomiste fran$ais du 9 fevrier 1884. 116 THE STARTING-POINT OF CAPITAL use, but not for that of others. Hoarding would continue to some extent, but capitalisation, or the conversion of savings into productive capital, would cease. It is now desirable to look more closely into the theory of profit or " plus-value," upon which the collectivist doctrine is founded. Karl Marx has treated this subject at great length and with much subtlety in his celebrated book, Das Kapitall The first part of this work consists of a study of com- modities and of money (waare und geld), of " values-in- exchange " (tauschwerth) and of " values-in-utility " (gebrauchswerth) ; the second part treats of the trans- formation of money into capital ; the third, of the creation of " absolute plus-value " ; and the fourth of " relative plus- value." It will be seen that these terms are used in a very special sense, and that the essence of the collectivist doctrine is contained in the explanation given of the characteristics of " relative plus- value." As to capital, Marx says : " The circulation of com- modities is the starting-point of capital ; the production of commodities, their circulation, and its development, which is commerce, constitute the historic conditions under which capital came into being ; its modern history dates from the establishment of the modern system of cosmopolitan trade, and of the universal market in the sixteenth century." 2 This definition contains a. petitio principii ; it is histori- cally incorrect, and it is opposed to known facts ; from the doctrinal point of view also, it is inexact, since capital, as has been shown, includes everything reserved for ulterior production, and every instrument made for facilitating labour. Robinson Crusoe both possessed and created capital, in addition to that which he recovered from the ship. This point is of importance, since collectivists deny that capital itself can be productive. If Robinson Crusoe constructed a wheel-barrow, and with its assistance was able to work with greater efficiency and with less expendi- ture of labour, it is clear that capital in the shape of this 1 Das Kapital, Kritik der politischen JEkonomie, Karl Marx, 2nd ed. Hambourg. 2 Op. cit., p. 128. CAPITAL NO NEW PHENOMENON 117 wheel-barrow was actually productive. Thus, although on Crusoe's island there was neither trade nor exchange, and he could neither buy nor sell, yet capital came into exist- ence in the shape of implements that is, means of ulterior production. Like Lassalle, Karl Marx looked upon capital as something novel and transitory, and not as a permanent phenomenon coeval with the earliest progress made by the human race ; but our ancestors in the paleolithic age created and possessed capital, for their clumsy instruments facilitated the execution of their work, and between these barbaric implements and a sewing machine or a locomotive, the difference is one of degree only, and not of kind. The capital of to-day is no new production of civilisation ; it is the result of the continuous development and extension of a phenomenon which has existed from the remotest antiquity. Marx declares that money is the final product of exchange of commodities, and is the form in which capital makes its first appearance. This idea is incorrect, since capital exists without the intervention of money. In many communities the use of gold and silver in exchange is, at any rate as a general custom, compara- tively recent. Adam Smith mentions that in his time, or but little before it, it was the custom in the English- American colonies to exchange commodities for com- modities. The appearance of money, or some token of exchange in a metallic or in some other form, was certainly posterior to that of capital, which, as has been shown, can exist for an individual even if isolated, or for a family producing only for its own consumption ; and although at the present time capital is frequently associated with exchange, the assertion that capital is a phenomenon dependent upon the existence of money or of exchange, is both historically and doctrinally untrue. Historically, says Marx, capital, whether in the form of bullion, metallic coin, or commercial or loan capital, always appears in contrast to property in land. This statement is in contradiction to Lassalle's theory that capital originated 118 EXCHANGE in the division of labour invented by a landed proprietor who possessed slaves, and although approximately correct, it is of small importance from an economical point of view. The following remark, however, which applies to the present time, is more generally true : " Every addition to capital first appears on the scene that is, on the market for goods, for labour, or for exchange always as money which by a special process is being converted into capital." This definition may be accepted with the one reservation, that money must be here understood to mean only an inter- mediate agent or token which represents either com- modities or a claim upon commodities. Since money is a token of exchange in general and at the same time a measure of value, capital is valued and calculated in terms of money, and is represented by money, although it is itself generally something other than money ; it would not, for instance, be strictly accurate to say of a man that he had a fortune of 100,000 fr. or 1,000,000 fr., since in reality money may represent only a small part of his property, which may consist chiefly of commodities, such as land, houses, credits, or shares in various businesses. But it may be said that if he chose he might hold his property in the form of coin. This might be often, but by no means always, possible ; if, for instance, the French were suddenly seized with a desire to convert the whole wealth of the country (say, 150 or 160 milliards of francs) into coined money, all the gold and silver in the world would not supply the sum required. Admitting for what it is worth, the statement that new capital first appears in the form of money, how does Marx, starting from this point, arrive at the conclusion that " capital " is nothing but unrequited labour ? Commerce, he says, consists at the present day in the conversion of commodities into money, and then of money into other kinds of commodities ; it implies exchange, by means of an intermediary which is money, of one kind of " values-of-utility " against another kind of " values-of- utility" for example, of bread for boots. This is the primitive form of commerce, and the only one, according to THE CIRCULATION OF MONEY 119 Marx, which concerns political economy ; it is, in fact, an organised form of the barter of former times. But he says in a capitalistic society the proceeding is reversed : money is exchanged for commodities, which are then again converted into money. In place of starting from the exchange of a " value-of-utility " for a " value-in-exchange " in order to obtain another " value-of-utility " for consump- tion, the process is to convert a " value-in-exchange " into a " value-of-utility " in order to obtain another " value-in- exchange." What distinguishes a capitalistic society is that in production it disregards " values-of-utility," and pays attention only to " values-in-exchange " : money is both the point of departure and the goal of production, which is therefore organised with a view to the money profit that may be realised, and not with regard to consumption. It is necessary to dwell upon these distinctions, since it is upon them as a basis that Karl Marx and Lassalle construct their systems ; but apart from this they are of importance, and deserve the attention of economists. When commodities are exchanged for money, and with this money other commodities are purchased, the transaction is not wasted labour one kind of merchandise is exchanged for another, as, wheat for clothes, tobacco for shoes, etc. ; but to convert money into commodities and back again into money, in the absence of any definite object, would be an obviously futile operation ; but under a capitalistic system, this object is the profit obtainable by purchasing commodities and reselling them at an increased price. Thus, in the capitalistic circulation of money, it is not consumption but circulation which is the object. " The circulation of money in the shape of capital is an end in itself, since increase of value cannot be produced except by its never-ending repetition ; thus the movement of capital is endless and unlimited." 1 To the gain which capitalists secure by this process, Marx gives the name "plus-value." Capital, he says, has the faculty of laying golden eggs. 2 1 Marx, op. cit. t p. 135. 2 /&'539> 2 O 2 fr- ( 2 >495>668) ; and those at 3000 fr. (120) to 4999 fr. rental, 14,821 in number, with a total of 54,504,480 fr. (2,301,569). The sum total of these figures, which represent net rentals, amounts to 158,500,000 fr. (6,340,000). Including the industrial quarters, the total net rental value of dwelling-houses in Paris is 519,766,518 fr. (23,824,020). Thus, the whole of the wealthier popula- tion of this city of luxury, including all persons who pay a net rent of 3000 fr. (120) or more, occupy apartments the total net rental of which is considerably less than one-third of that for the whole of Paris. Assuming that on an average income is eight times the amount paid as rent, and making the necessary allowance for vacant apartments, we find that 510 persons in Paris have incomes over 160,000 fr. (6400); 2154 from 80,000 fr. (3200) to 160,000 fr. ; 8270 from 40,000 fr. (1600) to 80,000 fr. (3200); lastly, 13,874 from 24,000 fr. (960) to 40,000 fr. ; and that less than 25,000 persons possess incomes over 24,000 fr. (960). f 1 V. supra, p. 24, note.] "FASHION" 237 Another point of importance is that the whole income of these classes is far from being used in an unproductive way : a large part of it is invested that is, it is trans- formed into railways or other works of permanent value. The portion of their income saved by the upper and middle classes in France cannot be estimated at less than one-third, and of the two to three milliards of francs annually saved by the nation, two-thirds, at least, is due to the thrift of the well-to-do and wealthy classes, although together they do not possess more than a sixth or seventh of the whole national income ; not more than 4 per cent, to 5 per cent, of this is used in the purchase of objects of luxury, and even this includes those popular luxuries which no people not absolute ascetics could forego. It must also be remembered that what may be called col- lective luxury that is, public expenditure on monuments, churches, promenades, public ftes, etc. accounts for a large and continually increasing portion of the expendi- ture on luxuries; that for which the wealthier classes are directly responsible does not represent 2 per cent, upon the national income. In view of these facts, but little importance attaches to Kautsky's assertion that socialism would confer a great benefit on humanity by abolishing "fashion." " One of the chief causes of extravagance," he writes, "is 'fashion.' Changes of fashion are not the effect of a law of nature, but of certain social conditions. . . . To be always dressed in the latest fashion is a token of wealth, which is the more impressive the more frequently the fashion changes ; the desire is not only to be dressed in the latest style, but also that this should be obvious. Novelty must not only be something new, but different from that which preceded it. ... Formerly, alterations of fashion were the privilege of the elite : to-day, ladies indignantly complain that the rage for dressing in the fashion is spreading more and more amongst domestic servants and work-girls. To-day the effect of a change of fashion makes itself felt throughout the whole of society, and has a sensible effect upon production. . . . 238 FASHION IN HOUSES Amongst the lower classes of the people change of fashion affects their dress only ; amongst the well-to-do it affects also the decorations of their houses. ... It is obvious that these never-ceasing changes in furniture, carpets, etc., must involve an enormous loss of work and material." After these remarks, which have been considerably abbreviated, Kautsky turns to another, to some extent cognate, subject. "Again," he says, "we will instance a form of waste which is peculiar to capitalistic society, and is caused by the growth of large cities. . . . Farms become vacant, and their former inhabitants require new dwellings in towns. New houses must consequently be built, not on account of an increase, but of a displacement of population, caused not by the attractions of a more healthy, more agreeable, or more fertile situation, nor by a wish to make labour more productive, but by the desire to be nearer to the market, where all merchandise, even that of labour, has more chance of finding customers than in a solitary place at a distance from the market." After showing how continual are the changes in great cities, especially in their central parts, Kautsky concludes thus : " Here, as elsewhere, capitalistic production shows itself to be a revolutionary system which possesses no permanent character. It destroys to-day what it created yesterday ; it seeks to throw aside everything even before it has become useless, and declares with a light heart that yesterday's labour was in vain, and that to-morrow more labour will be wasted." l It cannot be denied that there is an element of truth in this statement. No doubt fashion is the cause of extravagance ; no doubt also transformations of cities are often unjustifiable, and are carried out too abruptly. It is right that people should be warned against a frivolous propensity to change in their dress, their furniture, or their houses; it is right also that public authorities should be put on their guard against prema- ture demolitions and unnecessary changes in towns. Yet, 1 Karl Kautsky : Le Marxism, son critique Bernstein, traduction de Martin Leray, pp. 201-208, Paris, 1900. THE LOSS INSIGNIFICANT 239 whilst acknowledging that they are to some extent justified, it is obvious that Kautsky's complaints are greatly exaggerated. It is only a very limited number of persons who are much affected by the changes of fashion, and they are concerned far more with the appearance and the make of the articles than with their material. It is the same fabrics, as a rule, to which year after year a new appearance or a different cut is given, and the amount of social work absorbed in this process is of very small importance. The vast majority of manu- factures are not affected, and the great mass of the people are uninfluenced by these changes. Unfashionable articles, also, are not wasted, as Kautsky imagines ; they find a market amongst the less fashionable or less well-off classes of society, or they are ingeniously and inexpen- sively rejuvenated. Under modern systems of production, nothing is really wasted, and the art of utilising remnants is carried to the utmost perfection. However high may be the estimate of the extravagance attributable to fashion, and however great the sacrifices it imposes upon its devotees, its cost certainly would not amount, all told, to i per cent, of the total social production. But the phenomenon of fashion deserves attention from a more lofty point of view : philosophically considered, it is seen to be allied to those faculties whose development is essential to the progress of humanity ; it is closely allied to the desire for innovation and the wish to imitate that which appears to be the best ; and no society can make much progress if these aspirations are not widely diffused and strongly felt. Desire for innovation is necessary to secure the improvement of methods of production, and the taste for fashion is but one of its forms. Primitive societies do not exhibit this phenomenon ; they show but little inclination to abandon traditional customs with respect to clothing, furniture, and housing, or to modify their habits in relation to education and com- merce. The waste caused by fashion, insignificant in comparison with the total national production, is, in fact, 240 HOPELESS TORPOR an unavoidable consequence of the aspirations referred to, which exert so powerful and beneficial an influence upon the advance of the technical arts and the well-being of society. Fashion, moreover, is intimately connected with freedom, and, except by moral suasion, its influence can neither be suppressed nor lessened without endanger- ing personal liberty. Judging from Kautsky's writing, collectivism appears to wish to re-establish compulsorily a kind of existence which by its monotony and insipidity would plunge mankind into hopeless torpor. The movement of populations into towns is chiefly caused by the profound changes effected by inventions and their scientific application to the technical arts. Collec- tivism, if improvement in production continues, could not hope to be free from this tendency, and the passage quoted above shows, as indeed does the whole of the collectivist doctrine, that it is incompatible with liberty of choice of domicile. No clear-sighted and judicious observer would deny that the modern system of production involves a certain amount of waste, or that the grandiose descriptions some- times given of economic progress require some modifica- tion ; but collectivism offers no remedy for the evil. 1 It has been shown how little importance attaches to the assertion that the length of the work-day would be reduced by suppressing the production of articles of luxury, and the caprices of fashion. All that might be gained in this way would be more than counterbalanced by the loss of energy and the evils inseparable from authoritative and despotic organisation. It has been demonstrated, also, how by the imposition of equality in social conditions, all emulation would be destroyed ; how in the proposed 1 See Traite thtforique et pratique (P Economic politique, 3rd ed., vol. i., pp. 480-509, chap, ix., by P. Leroy Beaulieu. The heading of this chapter is : " Of the progress of production, of its variable course, and of its eventual limits ; current illusions about economical progress, the deductions to be made." Special attention is also directed to the section of this chapter headed " Economic progress is always far less in reality than in appearance ; examples of illusions on this point ; causes of losses in contemporaneous production, etc." CONDEMNED BY HISTORY 241 system no room could be found for the liberty of minorities or of individuals, and how its cumbrous machinery, bureaucratic and wanting in spontaneity as it must be," would impede all material progress. It is, indeed, impossible to find in the works of the writers who preach or interpret the collectivist doctrine, a single valid reason why the human race should embark upon an adventure which already stands condemned by history and common sense. BOOK III CHAPTER I The Quintessence of Socialism as a source of information. Bernstein's criticism of Marxian doctrine. Socialisme thtorique et Sociale democratic pratique. Concentration of wealth and concentration of industry. Agricultural holdings in the German Empire. On the Evolution of Socialism since 1895. SINCE the first publication of Le Collectivisme, in 1884, much has happened. In some places, particularly in Belgium, socialism has endeavoured to make use of the co-operative movement as a lever for the promotion of collectivism, and in other places, especially in England, efforts have been made to develop the system of municipal trading, as another means of gaining the same object. Frequent reference has been made to the Quintessence of Socialism, by Schaffle. This book, which was published anonymously, was welcomed with enthusiasm, adopted as a kind of collectivist breviary by the whole body of social democrats in Germany, and introduced into France by a translation made by Malon, one of the most sincere, orthodox, and active of collectivists. In a subsequent publication, Schaffle declared that it was merely an impartial exposition of the practical working of a new society formed upon the principles of collectivism, and must not be taken as an expression of his own opinion, and in a complementary or explanatory sequel, he states his belief that the programme of democratic socialism is incapable of practical application. The fact remains, however, that the Quintessence of 245 246 "BERNSTEIN^ Socialism is not only a careful and sympathetic attempt made by a very intelligent author to explain the " positive " side of the doctrine of collectivism, but it is the only document in which such an attempt has been made, and is therefore the best available source of information, when making an enquiry into the methods proposed for the practical application of the collectivist theory. 1 The medley of obscure ideas which goes by the name of Marxian or "scientific" socialism, was, towards the close of the nineteenth century, accepted as a revelation, first by the German socialists, and afterwards by those of France and other countries. Differences of opinion appeared from time to time, but they had reference rather to questions of practical application and tactics, than to the doctrine itself ; and although, for electoral reasons and in order to make them more attractive to the peasants and the lower middle classes, some of Marx' proposals were attenuated, or their realisation relegated to the distant future, these infidelities, which appear to have been merely concessions to the political exigencies of the moment, in no way vitiated the substance of the doctrine. It was far otherwise, however, in the case of the startling publications issued by Bernstein in 1898-9; not only was he one of the most active and highly esteemed writers of the socialist party, but, as editor of Vorwdrts and the Neue Zeit and collaborator with Kautsky, the most staunch exponent of Marxism, he was, as it were, the trusted missioner of the founders of " scientific socialism." Engels received from Marx the commission to publish his MSS., and thus became his intellectual legatee ; and Bernstein, as he himself says, was in his turn the intel- lectual legatee of Engels. " I know well," he says, " that it 1 The most eminent socialists have admitted that the Quintessence of Socialism is a socialistic work. Thus, Robertus Jagetzow, who is considered by some people to be the true father of collectivism, writes : " To-day, without being quoted, I am being robbed by Schaffle and by Marx." See preface by F. Engels to Le capital by Karl Marx, Paris, 1900, voL ii. A REPLY TO BERNSTEIN 247 {i.e., his own book] differs on many important points from the theories of Marx and Engels, men whose writings have largely influenced my socialistic thought, and of whom one, Engels, not only honoured me with his personal friendship until his death, but also gave evidence of his great con- fidence in me by his testamentary dispositions." 1 Kautsky also, who published a reply to Bernstein's book, acknow- ledges the value of his services, and, before attempting to refute his arguments, testified to the pristine purity of his doctrine and to the faithfulness of his propagandism of socialism. 2 Bernstein recognises that, in his criticisms of Marxism, he is, for the most part, only repeating what has already been said by others, but refrains from giving a list of these authors, on the ground that it would contain socialists, both of the present and the preceding genera- tion, of all countries and all schools, and would therefore be too long. 3 He does not, however, refer to the impor- tant fact, that such a list would also include economists, and his adversary, Kautsky, referring on several occasions to the Essai sur la repartition des richessesf reminds him that he has merely followed the route indicated in that work. " Leroy Beaulieu himself," writes Kautsky, " is the bourgeois optimist in optima forma, and the predecessor of Bernstein on the ground we are now con- sidering. Whilst this optimist [that is, Leroy Beaulieu] who sees everything in a rosy light, only proceeds by cautiously groping his way, and with much circumspection, the socialist Bernstein light-heartedly welcomes any one, wherever he may come from, provided he speaks against the doctrine of socialism." 6 Bernstein's criticisms, there- fore, are not original, but have been before the public for more than twenty years. How is it, then, that his book, written no doubt with ability and verve, but with a 1 Bernstein's Socialisme thforique et Sociale Democratic pratique, traduction par Alexandre Cohen, 1900, p. 42. 2 Karl Kautsky, Le Marxism et son critique Bernstein, traduction par Martin Leroy, 1900, pp. 30, 31. 3 Bernstein, op. cit., p. 29. 4 P. Leroy Beaulieu, op. cit. 6 Kautsky, op. cit., p. 184. 248 THE HISTORICAL THEORY dialectic rather less convincing than that of previous writers, attained so great a celebrity ? The explanation is, that whilst very little attention was paid to criticism of Marxism so long as it emanated from economists, public attention was at once attracted when similar criticisms were uttered by a prominent socialist The interest attaching to Bernstein's book is, therefore, rather sub- jective than objective, and is owing more to his personality and antecedents than to its contents. It will, however, be of interest to trace its principal features and note the conclusions arrived at. It contains five chapters : the first deals with the fundamental basis of Marxian socialism, and is an exposition (with many reservations, but with no formal repudiation) of the principles upon which the so- called " scientific socialism " is founded. These are described as being the materialistic idea of history, which, it is said, is the most important, which gives life to the whole doctrine, and with which, indeed, the principle itself stands or falls, the doctrine of class warfare, the theory of "plus-value? and the theory of bourgeois production, with the evolutionary tendencies it involves. In speaking of the historical theory, Bernstein acknow- ledges that it is greatly exaggerated, and that it is far too negligent of the influence of factors, other than economic, upon the progress of humanity. This neglect he attributes partly to tactical and partly to doctrinal reasons, and he points out that far less importance was attached to the influence of these factors by Marx and Engels in their earlier than in their later writings ; for his own part, Bernstein declares that he feels compelled "to take into account, in addition to the evolution of productive power and of the conditions of production, juridical and moral ideas, the historic and religious traditions of each age, the geographical and other natural influences of which human nature itself, with its spiritual aptitudes, forms a part." 1 Marx' astonishing exclusiveness of mind and inferiority of intellect are conspicuous in his materialistic theory of history, in which he makes all human develop- 1 Bernstein, op. cit., pp. 13-14. MARXISM AND HEGEL 249 ment depend upon production and exchange. Thus, the advent and progress of Christianity, the Reformation, Mahommedanism, and, in another order of ideas, the Renaissance, are all ignored as factors of no importance in the development of humanity ! The second chapter of Bernstein's book, which is headed " Le Marxism et la Dialectique Hegelienne," is divided into two parts, which have no connection with each other ; one is on " The Pitfalls of Hegelian Dialectic," and the other on " Marxism and Blanquism." Hegel, whose ideas and methods were so much in the ascendant between 1820 and 1850 or 1860, has quite lost the authority he then possessed ; and Marx, when he thought that by adopting the Hegelian method of dialectic he was providing an unassailable philosophic basis for his ideas, was, in reality, building upon a foundation that was insecure and perishing. Bernstein recognises his infatuation with ideology, arid speaks of the danger of " arbitrary construction " and of " auto- suggestion" in the interpretation of history; he also reproaches Marx with " an almost incredible neglect of the most palpable facts," with " a mistaken appreciation of events," and with his ignorance of the necessities of modern life. From another point of view, Bernstein declares that Marxism has never known how to rid itself completely of the nai'f conception of the Blanquists, which attri- butes " unlimited creative power to revolutionary political action, and to its concrete form of revolutionary expro- priation." There is also in this chapter an admission which affects another collectivist, less suspect than Bernstein himself. " Engels," he writes, " at the close of his life, in his preface to Les luttes de classes, clearly recognises the error that Marx and himself had committed in estimating the duration of political and social evolution. 1 The third chapter is headed : " The Economic Evolution of Modern Society." In this chapter the author attacks 1 Bernstein, op. Y., pp. 38, 39, 44, 45, 46, 52, and 55. 250 BERNSTEIN AND LABOUR-VALUE the predictions of Marx, rather than his principles, and shows that during the fifty years that have passed since his first writings were published, and the thirty years since his doctrine was co-ordinated in the first volume of his famous book, Das Kapital, the actual evolution of society has been in a direction altogether contrary to that pre- dicted by him. It is on this point that Bernstein's criticism is absolutely destructive of the theory so assidu- ously elaborated by Marx and imposed by him, not only upon the ignorant and prejudiced populace, but also upon the shallow philosophers who crowd and encumber the world of thought. This chapter commences with a section headed : " Upon the Purport of the Marxian Theory of Value," from which it is clear that Bernstein recognises, if he does not say so in terms, that this theory has no real foundation or justification in facts. " Just so far," he says, " as a commodity or a class of commodities is considered, the Marxian value loses all concrete meaning, and is no more than a purely ideal conception. But under these conditions, what becomes of ' plus-value ' ? This consists, according to the Marxian doctrine, of the difference between the labour-value of the products and the payment of the labour-force employed for their production. It is therefore evident that from the moment that labour-value is nothing more than an ideal formula or a scientific hypothesis, ' plus-value ' becomes, a fortiori^ nothing but a mere dictum based upon a hypothesis." x This is, in effect, a formal condemnation of the Marxian theories of " value " and " plus-value." Again : " The theory of ' labour-value,' " Bernstein says, " leads to error, because it is always repre- sented as being the measure of the extent of the exploita- tion of the labourer by the capitalist a conclusion which is also encouraged, amongst other things, by the representa- tion of the quota of ' plus-value ' as being also the quota of exploitation, etc. It is already clear, from what precedes, that such a measure would be a false one, even assuming that society could be considered as an entity, and that the total amount paid as wages could be contrasted with the 1 Bernstein, op. '/., p. 66. PLUTOCRACY AND THE MIDDLE CLASSES 251 remainder of the social revenue. The Marxian theory of value is no more capable of establishing a norm by which to judge of the justice or the injustice of the distribution of the products of labour than the atomic theory is capable of establishing a standard for estimating the merits or the defects of a work of sculpture. Is it not, now, the case that the best paid workmen those who belong to the aristocracy of labour are to be found in those employ- ments in which the quota of ' plus-value ' is very large ; and on the other hand, the most infamously sweated labourers, in those in which this quota is at its lowest?" 1 This portion of Bernstein's book, however, did not attract much notice; the part which particularly arrested public attention was that in which he examined Marx' prophecy of the increasing concentration of wealth and "the inevitable destruction of capitalistic pro- duction." In this, as in other instances, Marx did not himself originate the theory : he adopted and subjected it to a minute examination, and then placed it before the public in every possible shape, and in the most impressive way. It was Sismondi, an economist with socialistic proclivities, who, at the beginning of the nineteenth century, formulated the so-called axiom of the increasing concentration of wealth and the concomitant increase of poverty of the wage-earning classes, under the new industrial regime. He says : " In this way, then, by the concentration of wealth in the hands of a small number of owners, the domestic market will become more and more contracted, and trade will be forced more and more to search for outlets in foreign markets, which are liable to revolutionary changes." In this sentence is to be found the germ of Marx' whole theory, both of industrial crises, and of a plutocracy destined to absorb and destroy the middle classes. Marx was certainly not ignorant of this passage, and it is curious that it was his friend and intellectual legatee, Engels, who reproduced it, in the preface to the 1 Bernstein, op. '/., pp. 75-76. 252 INCOMES IN PRUSSIA second volume of Das Kapital, which was published posthumously. 1 Arguing from the assumed concentration of wealth, the absorption of intermediate by large capitalists, and of the latter by financial magnates, Marx came to the conclusion that the capitalistic system would crumble to pieces under its own weight. Bernstein devotes himself to proving that this theory, generally known as the " catastrophic " theory, has been entirely falsified by events, and to the exposition of the error of the social democratic belief, that concentration of wealth proceeds part passu with that of industrial enterprise. He shows that there is a confusion of ideas between the concentration of industry and that of wealth, which are, in reality, two very different things, and points out how strongly antagonistic the influence of the joint stock company system is to the concentration of wealth an influence which is quite ignored by socialists. He then quotes figures which show that the movement towards the concentration of industry is quite independent of that towards the concentration of wealth. He also shows that in England the joint stock capital invested in the highly concentrated cotton and wool industries, is divided amongst a very large number of proprietors, whose individual holdings are small. Quoting from the income-tax returns, he says : " In Prussia, in 1854, there were, as is known to readers of Lassalle, only 44,407 individuals, in a population of 16,333,000, with an income of more than ^"150. In the year 1894-95, in a population of 33,000,000, 321,296 were reckoned as having an income of more than 150. In 1897-98, their number had increased to 347,328. Whilst the population doubled, the number of individuals enjoying a certain competence increased sevenfold. Even after making allowance for the fact that the figures for the provinces annexed in 1866 show that the number of those possessing a competence 1 See Le Capital, by Marx, vol. xi., preface by Engels, French translation, p. 20. The extract quoted above as given in this trans- lation was printed, according to Engels, in the Nouveaux Principes d } Economic Politique^ by Sismondi, Edition 1819, vol. i., p. 336. PROPERTY OWNERS INCREASING IN NUMBER 253 are generally larger than those given for old Prussia, properly so called, allowing also for the fact that the price of provisions had risen considerably in the interval, the proportion of the more well-to-do to the total population still shows an increase of two to one ; and if a further period is taken, it is found that in the fourteen years, 1876 to 1890, side by side with a total increase of 20-56 per 100 of tax-payers, the incomes between 100 and ;iooo the bourgeoisie in easy circumstances and the smaller bourgeoisie increased by 31-52 per cent. The class of proprietors properly so called that is, of those possessing incomes of ^300 and over increased during the same period by 58-47 per cent. Five-sixths of that increase is attributable to the moderate incomes between 300 and ;iooo. The proportions are similar in Saxony, the most industrial of German States. Here, the number of incomes between 80 and 160, rose from 62,140 in 1879, to 9 I > I2 4 in 1890, and that of incomes between 160 and ^480, from 24,414 to 38,841, during the same period." 1 The evidence of these figures, taken from the statistics of income-tax in Prussia and Saxony, are quite conclusive against the validity of Marx' theory that a progressive disappearance of the middle classes and increasing pauperisation are necessary consequences of a capitalistic regime. Bernstein sums up thus : " The assertion that eco- nomic evolution at the present time tends to a relative or even absolute diminution in the number of owners, is altogether erroneous. Their number increases both absolutely and relatively. If the movement and future prospects of social democracy depended upon the fact of the diminution in the number of proprietors, it might in that case resign all hope " ; 2 the idea of " the absorption of all 'plus-value' by a continually diminishing number of mammoth capitalists," he treats as a superstition. This socialistic critic of Marx also considers the idea that " shareholders constitute a new class of idlers," as of no importance ; he is prepared to admit that " all share- 1 Bernstein, op. a't., pp. 84-85. 2 Bernstein, op. '/., p. 87. 254 "SHARES" holders are not idlers," and that even if they were, Marx' theory would be in no way strengthened. In this con- nection, Bernstein gives expression to a philosophical generalisation which is in harmony with the nature of things, and deserves reproduction. " A ' share,' " he says, " is not merely capital : it is capital in its most complete it might be said its most sublimated form. It is the draft drawn by national or universal thrift upon surplus labour freed from all contact with the trivialities of professional activity. It is, so to speak, dynamic capital. And if the increasing number, or, as they may now be called, the battalions, of shareholders, live only as idle recipients of dividends, yet, by their mere existence, by the nature of their expenditure, and by the importance of their social surroundings, they constitute a very potent factor in the economic life of society. The ' share ' re-establishes in the social ladder, the intermediate steps which the concentration of enterprise has destroyed." 1 As to the idleness, with which shareholders as a body are charged, Bernstein might have added that shares and debentures provide means whereby men engaged in pro- fessional work can take part in enterprises of material importance to the life and progress of the world. Far from being idle, the great mass of shareholders and creditors of the state have, as a rule, absorbing occupations. If some of them are idlers, or even hereditary idlers, it has been shown that this is by no means an evil, provided that their number is not excessive and that they are not protected from the consequence of their own errors by an artificial system of jurisprudence. In the absence of a leisured class, the arts which embellish life could not prosper, and a number of inventions, which might be of popular utility, would never be heard of, or would be indefinitely delayed. Consideration of the actual character of production under the existing social system, also helps to destroy the assertion that an enormous and always increasing proportion of products at the present time fall to groups of " pluto- 1 Bernstein, op. tit., pp. 91, 93, 94. INCREASE OF PRODUCTION 255 crats," or " capitalist magnates ; " on this, Bernstein makes the following decisive observation : " That which chiefly characterises modern production, is the great increase of the productivity of labour. The result is a no less con- siderable increase in the whole production of objects and commodities for consumption.* What becomes of this wealth? or, to put the question more precisely, What becomes of the surplus product which industrial workmen produce in excess of their own proper consumption as limited by their wages ? The ' magnates of capital ' may well possess stomachs ten times more capacious than those with which they are credited by popular belief, and may employ ten times as many domestics as they actually have : even so, their consumption would weigh but little in comparison with the total actual national production. It must not be forgotten that the great capitalistic pro- duction is, before all things, production for the masses. What, then, becomes of the commodities which the magnates and their households cannot consume ? If in some way or other they do not reach the proletariat, they must be absorbed by the other classes. Either there must be a diminution, always becoming more and more accentuated, of the number of capitalists, with, at the same time, an increase of the well-being of the proletariat, or there must be a numerous middle class ; these are the only alternatives which the uninterrupted increase of production leaves open." 2 This is an argument to which there can be no reply. If the effect of the division of capital by means of the shares and debentures of joint stock companies, is to restore the numerous steps in the social ladder, which the concentration of enterprise had seemed to destroy, the apprehension that all industries will be concentrated, and that the smaller industries will disappear, is clearly unfounded. The assertion that this would be the case has already been refuted, and Bernstein in that part of his work entitled " Various Classes of Industries by which Social 1 These words are italicised in the original. 2 Bernstein, op. cit. t pp. 88-89. 256 CONCENTRATION OF INDUSTRY Wealth Is Produced and Distributed," brings forward further evidence in opposition to this prediction. He shows, by analysing the reports of the factory inspectors, that in England, where enterprise is more concentrated than any other European country, the average number of workers employed per factory is by no means large, and that if in the cotton industry .this average continued to increase at the same rate as it did between 1868, when Marx con- structed his tables, and 1899, it would take nearly a century before the number of workers per factory would be doubled, whilst the total number of factories would in the same time have diminished only by the negligible proportion of 1-5 per cent. The facts, with regard to the wool industry, point even more decisively to the same conclusion, and taking the report of the factory inspectors upon all the textile factories throughout Great Britain, Bernstein shows that, supposing the same rate of increase to be maintained, it would require about seventy - five years for the number of operatives per factory to double itself. These facts reduce the phenomenon of the concentra- tion of industry to its true proportions ; they show that it is of far less importance than is generally supposed, and that it is in no way disquieting. The illustrations which Bernstein gives are valuable, both on account of the minute accuracy of German statistics, and also because Germany is, of all European countries, that in which industrial progress has been most striking during the years 1880 to 1900; yet even here the great majority of German operatives are still em- ployed in small or medium establishments. It is true that between 1882 and 1895 the proportion of industrial workers in Prussia employed in the large industries increased from 28-4 per cent, to 38 per cent. ; but besides the fact that this 'period was altogether exceptional, and that the development of large industries was far less in the rest of the empire, it by no means follows that the smaller industries were in process of disappearing during this period. The tendency of the larger industries has been LANDED PROPERTY IN GERMANY 257 rather to absorb the increase of population, than to attract workers from smaller establishments ; indeed, it is very frequently, if not generally the case, that the larger industries, in place of superseding the smaller, actually add to their number ; and Bernstein shows that notwith- standing the great development of large industries in Germany between 1882 and 1895, the number of operatives employed in the smaller industries, not only showed no diminution during that period, but actually increased. He also gives tables which show the size and the number of the holdings of agricultural land throughout the German Empire, from which it appears that 45 per cent, of the cultivated land is in holdings of 20 hectares or less, and that if the moderate sized holdings those of from 20 to 100 hectares are included, these two classes account for nearly two-thirds (65-78 per cent.) of the whole culti- vated area ; so that only one-third of the land is in large estates. In Germany, Bernstein remarks, the holdings which show the largest increase, whether in number or size, are the " medium-sized " holdings of from 5 to 20 hectares ; although the term " medium " appears somewhat exag- gerated when applied to such small areas. The next largest increase is in holdings of from 2 to 5 hectares ; the smallest holdings of less than 2 hectares increase in number, but not in extent of total area ; the other classes of holdings remain stationary in number and in total area, if indeed they do not decrease. If, in place of the whole of Germany, Prussia alone is considered, the result would be similar, but the proportion of small holdings is larger. Nearly three-quarters of the whole area under cultivation in that country is in small (peasants') holdings. The conclusion arrived at by Bernstein, with respect to the assertion that the concentration of all industries is rapidly increasing, was as follows : " If the downfall of modern society depends upon the disappearance of the intermediate grades between the apex and the base of the social pyramid, if this downfall assumes as a necessary condition the absorption of these grades by the extremities R 258 FALSITY OF MARX' PROPHECY above and beneath them, then its realisation in England, in Germany, and in France, is no nearer now than at any period anterior to the nineteenth century." l This, then, is the opinion of this socialist author, who, although nourished upon the doctrines of Marx and Engels, thought it advisable to check them by a careful study of facts. 1 Bernstein, op. '/., p. 114. CHAPTER II Concentration of industry. Census of 1896. Survival of small industries. Marx' theory of industrial and commercial crises. Bernstein and his critics. Chaotic period of industrial organisa- tions. Sources from which Marx obtained information. Social- isme et Science. Criticism of "scientific socialism." Jaures and Etudes Socialistes. Millerand and the Socialisme Rtformiste. Destruction of theoretical socialism. IN addition to the information furnished by Bernstein and to that given earlier in this book, some more recent facts relating to the evolution of industrial enterprise in France may be given here. From the data provided by the census of 1896, the detailed statistical abstract of which, together with the official commentaries upon it, did not appear until 1901, it appears that, of the present population of France, 18,712,689, out of a total of 38,269,011, are classified as professional or active. 1 The difference between these totals is made up of the aged women and children and those who follow no profession or trade. From the 18,712,689 classed as professional or active, the following deductions should be made : $50,000 persons, comprising " the army and the religious bodies, population separately enumerated ; " 2 967,900 persons in the liberal professions and the general service of the state ; and 899,772 domestics, employees of proprietors and " rentiers ; " after making 1 Resultats statistiques du recensement des industries et des professions, vol. iv., p. 15. 2 This simple grouping of the army and the religious bodies is the official classification as noted in the text. 259 260 CENSUS OF 1896 these deductions there will remain 16,295,017 individuals actively employed in agriculture, forestry, fishing, industry, and commerce. We come now to that part of the official statement which relates to the size of establishments. The statement is as follows: 1 "In this analysis," says the official docu- ment, "we take account only of establishments with at least one employee or workman." " We will first consider three great classes : the first, agriculture and forestry (section 2) ; the second, industry, properly so - called (sections 3 and 4 and group 9 B) ; the third, commerce, including bathing establishments, hair - dressing, etc. (section 6 and group 8 A)." In these three classes, the average number of wage earners in the establishments referred to, are as follows : Employees and Workmen. Establishments with at least one Employee or Workman. Mean Number of Wage Earners Agriculture . Industry Commerce . . 3,259,625 3,786,475 657,475 1,489,575 582,592 249,580 2-1 6'5 2-6 7,703,575 ... " These numbers furnish a first indication of the size of establishments, which is greater in industry than in commerce and agriculture." The fact that appears most clearly from these official figures, is the immense extent of subdivision, not only in agricultural and commercial, but also in industrial undertakings in France, at the close of the nineteenth century ; they show also how widely the reality differs from the predictions indulged in, not only by Marx and the collectivists generally, but also by economists who neglect to obtain accurate information. At first sight it is difficult to understand how it is that labour should be so much subdivided at a time when 1 Resultats statistiques, etc., vol. iv., " Resultats generaux," p. 70. SMALL TRADES 261 economy of effort, good organisation, and the efficient use of powerful machinery, would appear to require the collec- tion of labour in vast factories, and it will be of interest to consider how this situation, which seems contradictory and illogical, has been created and is maintained. In the first place, the benefit arising from production upon a great scale is not sufficient to counterbalance, still less to surpass, the social advantages possessed by the smaller traders in all that concerns receipt of orders and the maintenance of a good understanding between pro- ducers and consumers. Proximity and friendly relations often cause a preference to be shown to small traders, even if the net cost of their goods is somewhat higher. In the second place, many operations for instance, baking and laundry work, etc. are no longer carried on in private houses, as they were during the eighteenth century ; these requirements are now supplied by small industries and special trades. This evolution, which has converted so many domestic operations into small independent trades, is a fact of great importance, although it has received but little notice. From the commercial point of view, every small or medium producer is anxious to dispose of his produce himself; and whereas formerly he lost much time in correspondence and travelling to fairs and markets, he now sells his produce to travellers, who themselves form a new class of traders, and who scour the country, and buy commodities where they are produced. This change has greatly encouraged the increase in number of certain kinds of small industries. Thirdly, the inventions of the latter half of the nineteenth century have been favourable to the establishment of small or medium industries, and quite a crop of new industries have sprung up. Again, some of the new industries have in their turn given rise to others ; thus, the bicycle and the automobile, and the consequent increase of tourists, have re-established the country inns. In Le Travail des Femmes au XIX Siecle^- a number of facts are given which tend to show that these new means of locomotion, so far from being 1 By P. Leroy Beaulieu, pp. 444 et seq. 262 MORE ELABORATE COMMODITIES antagonistic to family life, as might be imagined, may even assist in restoring it. Without supposing that there will be a cessation of the tendency to concentration of industry in those manufactures which necessitate a large plant and a highly organised and minute division of work, there is abundant evidence to show that a vast field of operation remains open to the smaller industries. 1 Fourthly, as people grow richer and more refined, they demand novel and more elaborate commodities, the pro- duction of which is well suited to small traders, such as florists, carriage builders, art metal workers, etc. There are also some wants common to all and which can most conveniently be supplied locally ; all small towns now possess printing works, libraries, and paper mills. Fifthly, large factories are often themselves the creators of small auxiliary industries. Thus engines require keeping in order and repair work which cannot be undertaken by the great engine manufacturers themselves and conse- quently small establishments spring up locally to supply the want ; they are, as it were, satellites of the great manufacturers, but remain independent of them. We see, then, that it is not all, but only some, industries which tend to become concentrated ; it is upon the latter that the attention of socialists is fixed, and they remain blind to the fact of the continuous multiplication of new industries which require only small or moderate establish- ments. Although it would be rash to prophesy as to the future, there is, at any rate, no present indication of the disap- pearance of the smaller industries. The scale upon which any special manufacture is organised, must depend upon the nature of the technique necessary, which is subject to constant change and modification. It is not likely that certain branches of production such, for instance, as rails, locomotives, iron bridges, or cotton spinning will ever cease to be organised upon a great scale ; but on the other 1 See La petite Industrie contemporaine, by Brants, Professeur k 1'Universite de Louvain : Lecoffre, 1901. THEORETICAL ERRORS 263 hand, some branches of industry which seemed to belong definitely to the class of large undertakings, are now found to be largely carried on by small or moderate establish- ments, as in the case of the transport industry, owing to the development of cycling and automobilism. Sugar refineries also, for the establishment of which, a very large capital used to be considered necessary, and which were in consequence few in number, are now established upon a moderate scale, and whilst the number of the great refineries has remained the same, that of the smaller ones has increased. 1 When dealing with matters so complex as those relating to economics and social questions, it is wise to beware of generalisations. It is from neglect to observe this precaution, that Malthus, at any rate so far as his theory applies to highly civilised nations, fell into error, as also did Ricardo, with his "law of rent," and the consequences he or his disciples attributed to it ; it is this also that explains how it is that economists with socialistic proclivities, and socialists from Sismondi down to Marx and his pupils, have deceived themselves into believing that production would be wholly or almost wholly monopolised by huge industrial establishments. Another important point of Marx' doctrine, is his theory of industrial and commercial crises, which he connects with the concentration of production. " The final cause," he writes in the third volume of Das Kapital^ "of all economic crises, is always poverty and the restricted consumption of the masses, in presence of the tendency of capitalistic production to develop productive power as if the capacity of social consumption were unlimited." Bernstein remarks that this theory hardly differs at all from that of Robertus, and asks himself " if the enormous territorial extension of international markets, taken in conjunction with the extraordinary reduction of time necessary for communication and transport, has not increased the possibility of compensating for economical disturbances to so great an extent, and if the immense 1 See L'conomiste, i2th October 1901. 264 "TRUSTS" AND ECONOMICAL CONDITIONS increase of the wealth of the industrial nations of Europe, together with the elasticity of modern credit, and the institution of industrial trusts, has not at the same time so materially diminished the retroactive force of local and special disturbances, that for a considerable period general commercial crises, on the same scale as formerly, have become improbable." He adds that, "speculation is conditioned by the relation between knowable and unknowable circumstances. The more the latter prevail, the more speculation will flourish ; the more the contrary is the case, the less scope will there be for it. This is the reason why excessive extravagance of commercial specula- tion coincides with the commencement of a capitalistic era, and why speculation usually indulges in its barbarous orgies in those countries in which capitalistic development is of recent origin. In the domain of industry, speculation flourishes, specially in those branches of production which are new. The longer any branch of production with the exception of the making of articles of fashion properly so called has been established in modern industry, the more completely speculation ceases to take the leading rdle. The conditions and movements of the market are more easily controlled and more accurately noted." Bernstein, after referring with approval to the effect of "cartels," trusts, and syndicates, or associations of adventurers entrepreneurs which in his opinion tend rather to regulate than to disturb economical conditions, concludes thus : " Periodical and partial depression in trade is unavoidable, but the general arrest of commerce in view of the organisation and extension of international markets, and especially of the enormous increase of pro- duction of the necessities of life, is not. This last is a factor of the greatest importance in our problem. Nothing, perhaps, has so greatly contributed to modify economic crises or to hinder their development as the lowering of rent, and of the price of necessary provisions." x Bernstein's forecast, therefore, of the future of civilised 1 Bernstein, op. '/., pp. 123, 128, 133, 136, 143, and 144. The words italicised are so in the text SCIENTIFIC SOCIALISM " 265 nations under the much-abused economic system which socialists term "capitalistic" is reassuring, and Marx' theory, that economic crises would entail the castastrophic destruction of capitalistic society, stands condemned. It is to be noted that the most serious and intense economic crises occur in primitive countries, or in societies in which, to use the socialists' jargon, " industry is non-capitalistic " for example, the periodic famines in India or Russia, or the crisis which now (end of 1902) so grievously afflicts the coast population of Finisterre, in consequence of the disappearance of the sardine, which provides their chief industry, from its usual haunts. Bernstein, the disciple of Marx and Engels, and the intellectual legatee of the latter, having demolished the frail scaffolding of sophisms which constituted their pretentious doctrine, was attacked by the more violent collectivists as an apostate. " It is because I do not represent the position of the workman as being hopeless, because I recognise the possibility of ameliorating it, as well as many other facts already affirmed by ' bourgeois ' economists, that M. Plekhanow includes me in the ranks of the opponents of ' scientific socialism.' ' Scientific ! ' if ever the word ' science ' is pure ' cant,' it is when thus used. The phrase describing the condition of the working man as being hopeless, was written more than fifty years since. One meets it in all the radical socialist literature from 1830 to 1850, and many of the statements made appear to justify it. Thus, it is comprehensible that Marx, in La Misere de la Philosophic, should assert that the workman's minimum cost of living constituted his natural salary ; that the authors of the Communist Manifesto should declare categorically that the ' condition of the modern workman, in place of rising with the progress of industry, falls continually lower ; [that] the workman be- comes a pauper, and pauperism develops even more rapidly than population and wealth ; ' and that one should read in the Luttes de Classes that the smallest improve- ment in the condition of the workmen 'will always appear to be a " Utopia " in the eyes of a bourgeois 266 CHAOTIC PERIOD OF INDUSTRY republic.' The hopelessness of the workman's position is, therefore, an unalterable axiom of scientific socialism. Whilst to recognise facts which contradict these assertions, is, according to M. Plekhanow, to follow the track of the ' bourgeois ' economists who have affirmed these facts." x Admitting that complaints of the evil effects of the concentration of industry at the beginning of the nine- teenth century were well founded, it has been shown in the Essai sur la repartition des richesses, that the trouble was caused by the abrupt way in which the change was introduced and the rapidity with which it spread, and that many of the unfavourable conditions thus brought about soon improved and disappeared. A phrase made use of in that book, which has been accepted as correctly describing this epoch, is " the chaotic period of industry organised upon a large scale." 2 By slow degrees this chaos has become organised, but the era of organisation is not yet, and never will be, quite completed, because a free industrial system possesses an inherent and inexhaustible capacity for improvement. It was under a vivid impression of the evils caused by the industrial chaos referred to that Marx wrote : indeed, the sources from which he obtained his information for his works, especially for Das Kapital, were chiefly enquiries bearing upon the events of this period. Engels, in his preface to the third volume (posthumous) of Das Kapital^ gives a list of the documents which provided Marx with materials. " He has not," says Engels, " made use, to any considerable extent, of other than the four following parliamentary reports : " I. Reports from Committee (House of Commons), vol. viii. Com- mercial Distress, vol. ii., part i., 1847-48. " Minutes of evidence," referred to under the title, Commercial Distress^ 1847-48. "2. Secret Committee of the House of Lords on Commercial Distress^ 1847. Report printed 1848, evidence printed 1857 (the 1 Bernstein, op. at., pp. 280-81. 2 Essai sur la repartition des richesses, P. Leroy Beaulieu, chaps, xiv., xv., xvi., and xvii. MARX 1 SOURCES OF INFORMATION 267 evidence printed was considered too compromising for pro- duction in 1848), C.D., 1848-57. "3. Report: Bank Acts, 1857, and Report: Bank Acts, 1858. These two publications are the Reports of the Committee of the House of Commons upon the working of the Bank Acts of 1844 and 1845, together with the evidence given at the enquiry. They are designated C.B. (sometimes C.A.) 1857 or 1858." We see that all these documents relate to the chaotic period of great industries, and that the two first and most important reports belong to a year memorable for the effects of severe famine and for a revolution. A narrower field for observation would be difficult to find, and the restricted and abnormal character of his information is alone sufficient to deprive Marx' criticisms of existing society of the greater part of their value. Kautsky, the true exponent of pure Marxism, is obliged to admit that during the first part of the nineteenth century, the British wage-earning classes were in an abnormally distressed condition, and by this admission, he unwittingly destroyed the value of Marx' observations upon the facts relating to that epoch. He writes : " The period from 1812-47 has been the worst for the wage- earning population of England. This is the era from which Engels has borrowed his description of the ' condition of the wage-earning classes ' the time when the proletariat fell into pauperism and crime, and when its physical and moral degeneration was arrested neither by laws favour- able to wage earners, nor by energetic trades-union agitation." 1 But these evils were not attributable only to the want of protective legislation for the wage earners, or to the non-existence of trades-union agitation ; they were chiefly due to the concentration of industry, conse- quent upon the introduction of machinery, and especially to the abruptness with which the new conditions were intro- duced. The immediate effect was to increase the wealth of the wealthy classes, to diminish the cost of commodities, and, at the same time, to cause a profound disturbance of 1 Le Marxisms et son critique^ Bernstein, p. 184. 268 BERNSTEIN ACCUSED OF APOSTASY the labour market. The uprooting of entire populations, and the consequent radical alteration of habits, could not fail to cause great troubles ; happily, however, they were only transitory. We see, therefore, that descriptions of this epoch, not only those given by Marx and Proudhon, but also by Le"on Faucher or the elder Blanqui, as well as, to some extent, by Stuart Mill, relate to a state of things which has now disappeared, leaving hardly a trace, and thus have little or no bearing upon existing industrial conditions. Whilst the more violent collectivists accuse Bernstein of apostasy, the chiefs of the party deal more gently with him, and, although they oppose him, they appear to consider that he has not repudiated his connection with their party, in which he still retains many adherents. It is no less true, however, that he has given the coup de grace to Marxism. Kautsky himself, referring to his well-established assertion, "that the number of owners has for a long time been increasing in place of decreasing," sadly remarked to him at the Stuttgard congress, that " if this is true, the hour of our victory will not only be very far distant, but we shall never attain our end. If it is the number of ' the haves ' that is increasing, and not the number of the ' have nots,' we shall always be travelling further from our object in proportion to the rate of social improvement, and it would be socialism, and not capitalism, which would be abolishing itself." 1 Except that capitalism is not, any more than individualism, the antithesis of socialism, this apos- trophe of Kautsky's verges on the truth ; impartial and accurate observers see that, in spite of arbitrary laws, imposed by passion or ignorance, and of the fact that the happiness and prosperity of the human race is not con- sciously its object, it is liberalism and not socialism that is establishing itself. The doctrine which is the true antithesis to socialism, is neither individualism nor capitalism, but liberalism. The first portion of Bernstein's book deserves attention, 1 Bernstein, op. cit., p. 289. MUNICIPAL SOCIALISM 269 not so much on account of its originality, but because of the sensation it produced, and the consequences which followed upon its appearance. The second part, which is more commonplace, and which has been almost entirely neglected by his adversaries e.g., Kautsky refers to " the mission of social democracy, and its means for fulfilling it." Renouncing any attempt to overthrow the existing social system, Bernstein bases his hopes upon the develop- ment of working men's associations, co-operative societies, and similar organisations, for the formation of which compulsion is not necessary ; he also strongly recommends what is known as municipal socialism proposals which are opportunist, and which differ essentially from the collectiv- ism of Marx. In 1903 Bernstein published a small book, 1 in which he openly denied the scientific character claimed for Marx' doctrine. The assertion that the theory of plus-value has made a science of socialism, he declares, has been over- thrown. 2 He also finds fault with Engels and Marx for founding their appeal on behalf of communism "upon the certain bankruptcy of the capitalistic system of production, which every day becomes more visible," 3 and shows that, on the contrary, it is the various formulas successively adopted by socialists, that are really in a state of bankruptcy. He says : " The point now is to discover whether the end (of the method of capitalistic production) will be catastrophic, whether this catastrophe is to be expected in the near future, and whether it would neces- sarily lead to socialism. To this question, or rather, these questions, the socialists have given very divergent answers. I will confine myself to recalling the fate of the ' iron law of wages,' the formula made use of by Lassalle to rouse the masses. Rarely has any economic doctrine been accepted with such firm and deep conviction. For a long time it was the mot d'ordre in working-class movements, a symbol which would renew the strength of the most devoted and valiant combatants. Never- 1 Socialisme et Science, Bernstein : Giard et Brire, Paris, 1903, 2 Ibid.) p. 21. 3 Ibid.) p. 23. 270 THE COMMUNIST MANIFESTO theless, the time came when, with almost brutal pre- cision, it was established that this ' law ' was not a ' law,' that it had no scientific basis, and that it must dis- appear from our programme ; then, if I am correctly informed, it was not without grievous internal dissensions that many of the combatants resigned themselves to accept the new doctrine ; it was nevertheless unavoidable. At the present day this ' law ' no longer counts ; no one speaks of it, which to my mind is going too far. Allow me to recall to you this other idea, according to which the economic condition of wage earners would necessarily grow worse, and would become more and more intolerable, in proportion to the development of capitalism a theory known as 'the theory of pauperisation' (verelendungs- theorie). For a time it had much notoriety : it appeared to rest upon a solid scientific basis, it inspired many passages of the Communist Manifesto ; it is still to be found in the numerous publications of the last generation of socialists ; but to-day that theory is abandoned. I might also refer to the idea of the parallelism between industrial and agricultural evolution, the theory of the progressive diminution in the number of capitalists, the idea that under the influence of machinery, work of all kinds would be equalised a whole series of theories which passed as having been scientifically established, and that have now been recognised as being false, or rather, to avoid all exaggeration, as being only partly true." l Once more Bernstein asks himself whether " any real connection between socialism and science exists, if scientific socialism is possible and, as a socialist, I add, or necessary" After a searching analysis, he concludes that it is not. "When socialism is spoken of as scientific, it is merely an attempt to justify the aspirations and claims of socialism, and the theory on which they are founded. The socialistic movement, as a collectivist manifestation, is thus, in truth, the object of study of this theory, which seeks to understand and to explain it (i.e., the socialist movement), to furnish it with weapons, and reveal it to 1 Socialisme et Science, pp. 24-26. AN ERROR OF REASONING 271 itself ; but this agitation is clearly no more ' scientific ' than the insurrection of the German peasants, the French Revolution, or any other historic conflict. Socialism as a science appeals to our desire to know: socialism as a moving force appeals to interest. . . . Between science which represents our desire for knowledge, and a political or economic interest of any kind, there may always be antagonism." 1 Again, "it is obvious that, thus defined, socialism is not only a purely scientific movement. Class warfare is a war of interests ; . . . the question here is always of a contest, the essential aim of which is to advance the interests of a class or of a party ; there is no scientific question, except in so far as science is in accordance with those interests." The whole of this argument, of which only the principal features can be given here, should be read. " As a doctrine, socialism is the theory of this strife (class warfare). As a movement, it has a definite aim : the transformation of a society organised upon a capital- istic system, into a society regulated upon collectivist principles. This end, nevertheless, is not a theoretical prophecy the more or less certain accomplishment of which may be awaited. It is, to a certain extent, a fin voulue a desired end, the realisation of which must be fought for." 2 To confuse movement towards an end desired in the interest of a class with science, is surely as great an error of reasoning as it is possible to imagine ; Bernstein returns again and again to this most important point. " The only question which demands a reply, is to know whether and to what extent the fact that socialism as a political question will allow of that freedom to theorize which is a primary condition of true science." Whether he regards socialism as being a movement towards a definite goal or as a theory, two quite different points of view, he cannot find anything scientific about it. Its doctrines are "sub- ordinated to determinate aims, which do not implicate 1 Bernstein, in making use of the word " interest," remarks that it may include moral or ideal, as well as material or personal interests, but that this in no way affects the argument. 2 Socialisme et Science^ pp. 31-32. 272 SCHISMS AMONGST SOCIALISTS knowledge, but desire ; " and as to the theory itself, it is permeated with the idea of a hypothetical realisation of future society, and is responsive to aspirations rather than to observation of facts. " Socialism is not, and cannot be, exclusively a science, a pure science. Its very name is evidence of this : sciences do not have names which end in ' ism ' ; names which end thus denote aspirations, systems of thought and of deductive reasoning, but never science. The foundation of true science is experience ; for basis it has accumulated knowledge. Socialism is the theory of a future social system, and this is why its characteristics elude all scientific demonstration." 1 Thus, Bernstein completes his destructive criticism of the Marxian doctrine. " Scientific Socialism " is finally destroyed, and the idol before which two generations have prostrated themselves vanishes and leaves no trace. A movement somewhat analogous to that in Germany took place in France. There also a schism arose amongst socialists, but it was of a different character, and was caused far more by questions of tactics than of doctrines ; it is strange that the collectivist doctrine has not been repudiated by the self-styled "moderate" members of the socialist party. Between Jules Guesde, the faithful follower of Marx, and Jaures and Millerand and socialists who are considered as being opportunists that is, who are prepared to compromise (socialistes transigeants) there has been no doctrinal rupture similar to that between Bernstein and the German adherents of the so-called scientific socialism. Jaures and Millerand, as politicians, are satisfied to follow an opportunist policy, to take part in public functions, and to endeavour to secure the control of them by degrees. When necessary, however, they con- tinue, especially the former, to declare themselves as being collectivists. Jaures, indeed, went further, and, as if "col- lectivism" was not sufficient, often substituted the term "communism." In the introduction to his book, Etudes socialistes? under the sub-title "The question of 1 Socialisme et Science, pp. 42, 45, and 47. 2 Etudes Socialists \ Jaures : Paul Ollendorf, published 1902. JAUR&S 273 method," Jaures, referring to the proletariat, writes : " For individual and capitalistic property, which assures the domination of one set of men by another, they desire to substitute the communism of production, a system of universal social co-operation in which every man as of right is a partner. They have thus separated their ideas from the ' bourgeois ' ideas ; they have also separated their action from ' bourgeois ' action. At the service of their communistic ideal, they place an organisation of their own, a class organisation, the growing power of trade-unions, workmen's co-operative societies, and the increasing share of political power they have conquered or secured from the state. On this general and primary idea all socialists are agreed." x Thus, according to Jaures, there is complete agreement upon the general idea of communism of production, the communist ideal, the only difference arising upon ques- tions of method. Some socialists, like Guesde, refuse to allow of delay, and incline to revolution ; others, like Jaures, would allow of temporary arrangements, and would proceed by the method of progressive absorp- tion of the powers of the state. Unlike Bernstein, Jaures in no way renounces collectivism pure and simple ; he goes even further, since he adopts communism, being apparently ignorant of the distinction which according to German theorists exists between these doctrines. Throughout the doctrinal dissertations in his book, the word " communism " is used and emphasised by Jaures. He thoroughly recognises that the revolutionary method advocated by Marx, in whatever sense it is understood, is superannuated. " The two hypotheses one historic, the other economic which, according to the opinion expressed in the Communistic Manifesto, ought to produce an immediate proletariat revolution, the revolution of the dictatorship of labour, are equally destroyed." 2 But these reflections are in reality applicable only to methods and procedure similar to those advocated 1 Jaur&s, op. '/., p. 9. 2 Ibid.) p. 49, 50. S 274 JAUR&S AND BERNSTEIN by Marx, and it appears evident from all his explanations, although they are sometimes very confused, that Jaures' ideal is, in fact, communism. " I am convinced that, in the revolutionary evolution which will lead us to com- munism, collectivist property and individual property (communism and capitalism) will for long continue to exist side by side. This is, indeed, the law of great changes." 1 We see here some concession as to time, but none as to the aim, and the words communism (complete communism) and communist (communistic system, communistic ideal) are here used by Jaures as if they were the positive formulas of a programme, or the articles of faith of a religion. 2 He declares that it would be a serious mistake to lose sight of the final aim of socialism in the mists of the future: "communism ought to be the manifest and directing idea of the whole movement ; " 3 and he accuses Bernstein of a tendency in this direction. In reply to this charge, Bernstein writes, after remarking that Jaures could not, in making this accusation, have had before him the preface to Socialisme the"orique et Sociale Dtmocratie pratique, " or he would have seen that I do not in any way deny the necessity of a guiding aim ; but the point upon which I freely admit that I differ from Jaures, is this : for me, communism is rather a means than an end. To my mind, it is for the future to decide as to the form which communism will assume, and as to the extent of its development necessary, in order to secure the greatest possible amount of material and moral well-being at each period of history." 4 Thus, the German, a far more profound philosopher than the Frenchman, sees quite clearly that his convictions differ from those of Jaures, although Jaures himself has aban- doned, on more than one point, the theories of Marx, and has recognised the falsity of his prophecies. Kautsky, in Germany, and still more, Guesde in France, are, exclusive of the aged Bebel, almost the only avowed upholders of unadulterated Marxism at the present time. 1 Jaures, op. cit., p. 24. 2 Ibid., pp. 25, 51, 52, 53, and 54. 3 Ibid., p. 53. * Socialisme et Science, p. 7. SUPPORTERS OF PURE MARXISM 275 In France, in the early part of 1903, Millerand took a further step outside the collectivist fold. In a book published under the title of Socialisms Rtformiste, which is a reproduction of some of his lectures, he separates himself from the doctrines of Marx and his disciples. As a practical man, he treats the doctrinaire ideals of the future with contempt. "These Utopias," he says, "are not disadvantageous ; they may even be useful, if it is remembered to accept them for what they really are works of the imagination, constantly changing under the influence of reality ; but they would be perilous and would expose the future to fatal danger, if they came to be considered as embodying socialist thought and action." Millerand's description of his programme is vague and wanting in definition, and upon the subject of property, he makes use of a phraseology calculated to make a solution of the problem impossible. According to him, "socialism" "desires that in the new humanity, not that individual property should be suppressed, which would be an incomprehensible proposal, but that it should be transformed and enlarged, so that it should offer to every man a natural and necessary extension of his command of commodities, a right which is indispensable for life and development." This confused statement, although not of a kind to enlighten the mind of the reader or to assist in the con- struction of a definite social system, nevertheless departs widely from the ideas of Marx and of collectivists in general. After this introduction, Millerand explains the positive side of his so-called Socialisme Rtformiste, which, though far less systematic and positive, is quite as dis- quieting as, if not more so than, the scientific socialism of Marx and Engels. A man less widely known than Millerand Sorel who has given much attention to social questions, and who is counted amongst the most thoughtful and learned members of the contemporaneous school of French socialists, concludes a series of articles on Socialistic ideas and economic facts in the iqth century, published in the 276 THE REVUE SOCIALISTE review lately founded by Benoit Malon, with the following words : " We must ask ourselves, what is the law of the degeneration and renaissance of socialism, and what are the conditions under which revolutionaries can preserve their ideas intact, whilst continuing to participate in the national life. We must ask ourselves whether the idea of revolution is really indispensable to Marxism, in what lies its true signification, and compare it with what is known as evolution. Finally, we must ask ourselves whether Marxism is destined to be merged in the ideas of the early socialists, in a vast synthesis, or whether it is but a passing phase of development ; or again, whether socialism itself is not merely one aspect of democracy. It is always dangerous to attempt the role of prophet ; to deal with these questions, it would be frequently necessary to anticipate the future. The experience which is now being gained in almost all European countries will soon furnish ample elements for an objective study of the development of socialism." * This is well and wisely said, and supports the profound observation made by Bernstein : " Whilst in the field of action socialism has made considerable progress, whilst in almost every country socialists advance from one success to another, whilst the labour movement daily conquers fresh positions and approaches with greater certainty the end it desires, and socialism formulates its claims with greater clearness, it appears that, in the realms of science, on the contrary, theoretical socialism is tending, not to unity, but to dissolution, and that, in the minds of socialist theorists, certainty has been replaced by doubt and incoherence." 2 Formidable as the socialist party may appear to be, and important as may be the positions it is by way of securing, it is useful to have established the fact, that by the admission of those who were formerly their chief evangelists, these pretentious theories have been com- pletely destroyed ; instead of a compact doctrine, nothing now remains but vague, although dangerously attractive 1 Revue Socialiste, Ed. by Benoit Malon, May 1902, p. 544. 8 Socialism* et Science, p. 26. THE "SIREN" 277 aspirations ; but the more smiling and placid the counten- ance of the siren, and the more alluring her gestures, the greater is the danger that ingenuous souls and vacillating minds will be seduced by her charms and dragged down into the abyss. CHAPTER III The " Parti Socialiste frangais," the " Parti Ouvrier," and the " Parti Socialiste de France." Enquiry into political differences amongst socialists by George Renard. The five points of the new pro- gramme. Co-operative associations : (i) for production ; (2) for consumption. Administration of industries by the state and by municipalities. As has been demonstrated in the preceding chapter, the opening years of the twentieth century have seen the complete destruction of scientific socialism or Marxism ; but the downfall of these theories has by no means discouraged the socialist party. New forms of socialism have arisen, but socialistic aspirations remain unaltered, the number of disciples, adherents, and admirers, united by a common ideal, has become larger and more enthusi- astic ; tactics and the plan of attack have been modified, but the menace to society is as great now as it was when Marxian collectivism was the dominating influence it is, indeed, even greater and more pressing. Bernstein in Germany, and Millerand (formerly Minister of Commerce) in France, have introduced the policy of a slow and gradual approach to collectivism, and are contented with small successive steps towards the goal, but they have by no means abjured collectivism itself. At a meeting at Vierzon, in March 1903, Millerand recommended political action of the kind known as opportunist, and pointed out that socialist tactics in a democratic system necessarily differ from those to be adopted under a monarchial government. The socialist party, he declared, must take its share of responsibility 278 THE "PARTI SOCIALISTS FRANgAIS" 279 for external as well as for domestic politics ; and he asserted that experience has proved the advantage of participation in the work of government. 1 The day after Millerand advocated these tactics at Vierzon in Berry, Jaures expounded his views at a great public meeting at Denain, in the " Departement du Nord." " Socialism," he said, " proposes to create a new society : it desires the disappearance of antagonism between the two classes. We do not demand (it is impossible) that capitalistic society should be divided in pieces so that each one should have his share. We demand that the huge capitalist property should belong to the nation in common, who would entrust the use of it to workers of all kinds those who work with their brains equally with those who work with their hands. In this conception, socialists of all schools and of all classes ought to find common ground." Jaures states the three great categories of reforms in the socialist programme as being 1. Those relating to the safe-guarding of labour. 2. Those relating to the organisation of the vast system of wage earners' insurance against accident, sick- ness, old age, and unemployment The workman cannot by his own effort accomplish the double task of creating wealth for another and of insuring his own future. 3. Those which have for object the transformation of great capitalist undertakings into public services. 2 Except that Jaures lays special stress upon the substi- tution of public for private authority in the conduct of " large capitalist enterprises," and upon the suppression of the " great capitalist wealth," his speech at Denain hardly differs in any way from that of Millerand at Vierzon. At this moment (the spring of 1903), it appears that the majority of French socialists are in agreement with this programme, and oscillate between Jaures, the leader of the left wing of parliamentary socialism, and Millerand, who represents the right wing. The " Parti Socialiste francais," the principal section of 1 Le Matin, I5th March 1903. a Idid. y 1 6th March 1903. 280 RENARD'S ENQUIRY the least revolutionary party of French socialists, which is distinct from the " Parti Ouvrier " of Guesde and Vaillant, held a congress at Bordeaux, in April 1903, at which the re- tention of Millerand, who was present and explained his views, in the socialist party was secured by a small majority. This decision, which maintained the cohesion of the princi- pal socialist forces, was strongly opposed by the radical or orthodox socialists known as the " Parti Socialiste de France." This party, which represents the doctrine of Marx in its primitive purity, under the direction of Guesde, although they could not enforce the acceptance of their extreme views, were able to restrain the socialist leaders from diverging too widely from the collectivist ideal, to compel them to make some sacrifices both in words and action, and to prevent their relapse into simple radicalism. A similar evolution of socialism is going on throughout the world, although no doubt there are degrees in the extent to which the renunciation of the expectation of an immediate realisation of the Marxian ideal is carried. Guesde in France, Kautsky in Germany, and Hyndman in England, represent the most faithful adherents of the old doctrine ; but no one amongst those who desire that it should be modified dares to renounce or disavow it ; the differences amongst socialists are, in fact, but of very little practical importance ; even the most opportunist of socialists hesitates to repudiate pure collectivism, which is, as it were, a religion whose followers, although in their own consciences they modify the meaning of its precepts and refuse to submit to their application, do not venture upon a public repudiation of its dogmas. The result of a recent enquiry into the political differences existing amongst socialists was published in 1903 under the title of Enquete sur les divergences politiques du Socialisme actuel: Documents recueiUis et commente's par le Professeur George Renardl Renard, by whom the enquiry was undertaken, is not only a socialist, but a declared collectivist ; he is a professor at the School of Arts and Crafts, a post created for him by 1 Revue (formerly Revue des Revues) for March 1903, pp. 660-80. THE QUESTIONS ASKED 281 Millerand when Minister of Commerce. Renard's object is to show that, notwithstanding some political disagreement, there is no real difference of opinion amongst socialists, as to the basis and the economic aims of their doctrine. He asks whether the serious divisions of opinion in the socialist ranks which have attracted public attention in France, Germany, and Italy, have arisen upon essential points of doctrine, or merely upon questions of tactics, upon the end to be aimed at or upon the best method of obtaining it ; is it a question of a general change of direc- tion, or of a more .or less provisonal, more or less exclusive choice between different roads which all lead in the same direction ? Having thus clearly defined the points to be elucidated, Renard addressed twenty persons, of importance from the socialistic point of view, in the following countries, four in Germany, one in Austria, one in Belgium, two in the United States, five in France, two in Great Britain, three in Italy, one in the Low Countries, and one in Switzerland. No reply came from Germany. Ten replies were received in all, from the following well-known socialists : Emile Vandervelde, for Belgium ; Eugene V. Debbs, for the United States ; Aristide Briant, Edouard Vaillant, and Renard himself, for France ; H. M. Hyndman and Sidney Webb, director of the Fabian Society, for Great Britain ; Napoleone Colajanni and Enrico Ferri, for Italy ; Domela Nieuwenhuis, for Holland ; and Jean Sigg, for Switzerland. These ten, or, including Renard, eleven, deponents are fully entitled to speak in the name of socialism, since they are representative of all its sections, from the most politic and moderate, represented by Sidney Webb, to the most ardent and impetuous, of which Nieuwenhuis is the expositor. The silence of Germany is of small importance, since the books of Bernstein and Kautsky have fully enlightened us as to the aspirations and proposals of the various socialist groups in that country. Three very clearly stated questions were asked one with reference to a purely doctrinal question, the others relating to methods of 282 THE FIRST QUESTION practical application. The first question was as follows : " Do you acknowledge that the economic aim of socialism is the conversion of capitalistic society into a system in which property, collective in respect of the means of production, will be individual only as regards articles for personal use ? " To this question, all the deponents may be said to have replied in the affirmative. Vandervelde writes : " On this point, all instructed socialists are, and must be, in agreement." Sidney Webb, with equal clear- ness as regards the main principle, but with some modifications, replied thus : " Individual possession of the land, and the means of production, appear to us to be the cause of unnecessary evils, and we therefore seek to modify the opinions, customs, and laws which allow of this individual appropriation, wherever it can be shown that an arrangement of the opposite kind is practicable and would probably be successful. It is for this reason that we are constantly labouring to secure the substitution of collective property, organisation, and administration in such or such a form of capital, or in such or such a locality, for the individual property, organisation, and administra- tion of the present system. The ground that must be traversed before this substitution can be effected, appears to us to be enormous and for the moment to have no assignable limits. It is clear that for many things and for many services, individual is preferable to collective administration ; it is, therefore, impossible to imagine a time when the substitution can be made complete ; besides this, it is not a panacea it cannot cure all evils, and it is not the only remedy for certain of these evils." The modifications contained in these last lines relate to questions of method of procedure and the duration of the transitional period : they do not contest the principle of the condemnation of " individual property of the land and of the means of production." The second English deponent, Hyndman, does not reply directly to the question, but as he professes a contempt for Sydney Webb and his school, and violently attacks Bernstein and Millerand, he may safely be classed amongst the thorough- MEANING OF THE REPLIES 283 going collectivists. He writes, premising that without consultation with his colleagues he can only speak for himself: " I think you attach too much importance to the change that has recently occurred in the socialist camp. There is always a minority of temporisers among socialists of all countries, and, so far as I can judge from an experience of twenty-two years, I do not think that, in proportion to the general strength acquired by the movement, they are as numerous or as powerful as formerly. Here at any rate, the Fabian Society, which has done all in its power to retard socialism in England, has practically no influence whatever at the present moment. The ' Independent Labour Party ' has been literally compelled to accept socialistic principles, although it was established with the object of avoiding this necessity. It is true that the leaders of to-day intrigue and temporise abundantly. But this will not continue, and it is not a matter which in my opinion need be taken seriously." Renard characterises this reply as a fine sample of the intransigeance which intensifies personal discord. After giving a summary of the replies, Renard says : "From all these replies, in which, notwithstanding some differences easy to explain, the conclusions are almost identical, there appears a pronouncement which may be accepted as indisputable namely, that the object aimed at by socialism is the transformation of private propertyi not in its entirety, 1 but as to the greater part (land, means of production, and transport) into social or collective property. The acceptance of this essential principle is, as it were, the touchstone by which a socialist can be recog- nised. This is sufficient to reduce to its real value the socialism of the salon or of election times, which professes to set up a fashionable system, whilst proclaiming the organisation of property to be intangible." Renard may be congratulated upon the clearness with which he 1 This reservation of Renard' s applies only to the property in articles of personal use, clothes, comestibles, etc., always subject to the condition that no commercial use is made of them. 284 THE SECOND QUESTION stigmatises the drawing-room, election, or church socialism, or, as it is called by many persons, the "good" socialism, as being humbug or childishness, or a combination of both- The economic aim of socialism, according to those reputed moderate, as well as to the most ardent and fierce of its disciples, is undoubtedly collectivism. The second question put by Renard is thus formulated : " Do you believe that the desired end is unattainable, except by means of a violent revolution? Or, while admitting that exceptional circumstances may render revolution unavoidable, do you consider that it would be possible, and if possible, that it would be advisable to endeavour to reach the desired end by means of a series of legal and progressive reforms ? " The replies to this question as a rule implicate the simultaneous approval of both methods, some giving the preference to revolutionary, others to legal procedure. Vandervelde declares that the interest of socialist parties compels them to make use of any weapon that is available " to realise gradually all the fragments of revolution, the sum total of which will constitute the social revolution ; " Debbs does not believe that a violent revolution is inevit- able ; he thinks that modern political conditions are such that a complete social revolution may be accomplished without recourse to force. Sidney Webb, who with Bernstein and Millerand forms the right wing of the socialist party, replies thus : " It is evident that the supersession of private property and administration can only be accomplished little by little. The possibility of a complete simultaneous transformation of a complicated social organisation is nothing but a mental delusion. The impediment to transformation is the innate opposition of each citizen to change. Before ten or twenty millions of men can be inspired by persuasion with a desire to change the whole arrangement of their social life, you must have persuaded them to desire the alteration of one or two of these arrangements. Then they will not wait to be persuaded to alter all the others. They will begin by making the changes they wish for. Thus, all democratic A RESUME 285 reforms will come little by little, one by one. It is of no importance to ascertain whether this evolutionary move- ment is or is not satisfactory to us : all that is necessary to know is, whether it is the truth, and whether we are thoroughly convinced of this." Thus, the gradual realisation of collectivism, in spite of the delay which this method involves, is the conception and the aim of Sidney Webb, and of the Fabian Society, which he directs. In summing up, Renard expresses himself thus : " In fine, with some few exceptions on the extreme left or the extreme right, the sentiment which predominates in the replies of our correspondents appears to be a desire for partial and progressive reforms, without any abandonment of a belief in the possibility, or even the necessity, of a revolution to complete the half-accomplished evolution of collectivism. A policy of reform at ordinary times : a policy of revolution if necessary. Some incline towards the former, others to the latter of these policies ; there are distinct shades of difference of opinion, which correspond to preferences for more or less rapid, or more or less certain methods for creating the desired future." This resume appears to be inaccurate, since it is clear that Nieuwenhuis, Vaillant, and Briant are in favour of revolution, of which Sigg also approves, although he relegates it to a more distant epoch ; whilst on the other hand, Debbs and Sidney Webb repudiate this idea, and Colajanni agrees with them. The intermediate opinion is that of Ferri and Vandervelde. It appears, therefore, from this unwittingly misleading re'sume', that the enquirer Renard goes further than Debbs and Sidney Webb, and it is clearly his own opinion to which he gives expression when speaking of the generality of the "belief in the possibility or even the necessity of a revolution, to complete the half-accomplished evolution of collectivism." It is clear that the professor, detaching himself from the right wing of the socialist party and taking up a position in the centre, approves of the idea of a final revolution, the way being prepared for it by a policy of reform. The third question asked in this enquiry was : " What, 286 THE THIRD QUESTION in your opinion, should be the attitude of socialists, with reference to the bourgeois parties in electoral contests or in parliament, in relation to ministerial proposals for democratic reform ? " Nieuwenhuis and Vaillant are violently opposed to any alliance with the bourgeois party, and Ferri is opposed to any sacrifice of the future by the acceptance of temporary benefits, and attacks English trades-unionism. Sigg strongly approves of alliances with the bourgeois party. Vandervelde admits that occasional co-operation for definite ends with other parties may be desirable, but "considers that for a socialist to participate in a bourgeois government would be a dangerous, not to say fatal, expedient" and reminds socialist representatives that they must never for a moment lose sight of the essential difference between them and the representatives of other parties. The bourgeoisie introduces reforms with the hope (although chimerical) of strengthening the capitalist regime by improving it ; socialists, on the con- trary, advocate the same reforms, with the hope, which is justified, of making the wage earners stronger and more energetic in their struggle for complete emancipation, which can only be secured by the intervention of a collectivist regime. Briant merely refers to the advan- tages derived from the mutual help given by advanced republicans and the socialist proletariat to each other. Debbs's reply is a reserved one ; he wishes to have nothing to do with the middle-class party, to preserve the political independence of the socialist party, and to make it the only party of the wage-earning classes, and the one destined to achieve their emancipation. Colajanni is more disposed to compromise, and thinks that both in electoral contests and in parliament, the socialist party should ally itself with those of the bourgeois who, for moral reasons or from interested motives, are pre- pared to make political and economic concessions. The reply of Sidney Webb is to the same effect ; the head of the Fabian school is pre-eminently a tactician. " I am of opinion," he says, " that we should work in collaboration A PRE-EMINENT TACTICIAN 287 with persons of all opinions for reforms in respect of which we are in accordance with them. In England, persons who hold the most diverse opinions upon religious, political, or economical questions, unite in order to secure a common object, which for various reasons they may think a desirable one, and this in no way prevents their taking part simultaneously in other combinations to obtain some different object. Thus, we are all of us at the same time allies in one field of action and adversaries in another." Such an arrangement may be either very clever or very naif ; in this case the ability is with the socialist leader, the naivett is shown by the bourgeois electorate. Hyndman's opinion is not more explicitly expressed in reply to this, than to the two preceding questions, but the same resolute refusal to compromise, which characterises his general response, appears here also. The general feeling of socialists is shown very clearly by this enquiry ; the divisions amongst them are more apparent than real. The complete transformation of modern society, and the substitution of collective for private ownership of all the means of production of every kind, continues to be their avowed object ; the tactics to be adopted in seeking to obtain it are the only reasons for diversity of opinion. R6nard concludes : "We confine ourselves to summarising the results at which we have arrived, in the following way : Unanimity as to the economic end aimed at : difference as to the general method to be followed in order to attain it ; active dissension as to the plan of action, and upon the part to be taken by groups and by politicians who have a preference for one or other of these methods." Even these last-mentioned dissensions are, however, of small importance. When battle is joined, either at election time or in parliament, these dissensions dis- appear, and a solid front is presented. Hyndman sums up the position accurately in these words : " All these dis- cussions here and elsewhere, have not, as far as I can judge, caused the slightest vacillation in the socialist ranks." 288 "SOCIALISMS REFORMISTS" Since what is known as the catastrophic theory that is, the proximate spontaneous destruction of capitalistic society foretold by Marx has been abandoned by the majority of socialists, 1 and a system of gradual conquest has been generally adopted, it is advisable to examine the system advocated by the " Socialiste ReTormistes," by means of which the way for collectivism is to be prepared. The three principal representatives of the " Socialisme ReTormiste " are : Millerand, who, it is believed, was the first to use this designation in France ; 2 Bernstein, who, follow- ing the method of Kant, prefers the name "Socialisme Critique," in Germany ; and Sidney Webb in England. Of these three, the first named has been the most active in the field of politics, whilst from the point of view of the practical application of the system, the third, Sidney Webb, has given the most precise directions for procedure, and has secured the greatest measure of success ; between these two, and in agreement with them, Bernstein is the most remarkable temporiser amongst socialist theorists. Jaures in France and Vandervelde in Belgium approxi- mate to these men in opinion ; but although ready to avail themselves of opportunist action, they consider that the collectivist ideal will be more quickly realised than is supposed. In point of fact, modern society is no longer confronted with a revolutionary change, but with a reforming socialism which is content to proceed by steps, as to the number and length of which each one has his own opinion. The genuine Marxists deplore this policy, which they regard as pusillanimous, although in reality it is evidence of the ability of their successors. Engels, in his preface to the third volume of Das Kapital, speaks disdainfully, both of political economy of a certain theory, as to which he says : " It is possible 1 It should be remembered, however, that the catastrophic theory has still many adherents besides Guesde in France and Kautsky in Germany. 2 The title of his last book is Le Socialisme Rcformiste fran$ ais, Bibliotheque Socialiste, Paris, 1903. ADOPTION OF NEW SYSTEM 289 to construct a popular system of socialism as plausible as that which has been established in England," 1 but the Fabian school, although excommunicated by Engels, is to-day triumphant, not indeed without incurring the wrath of the purists, but without creating any permanent schism or fissure in the socialist ranks. The new system, which has been widely adopted in England, Belgium, and France, and is advocated by Bernstein in Germany, comprises the following five points: I. The development of co-operative associations, especially for articles of consumption, and the employment of their personnel and financial resources, in aid of socialistic propaganda, and for the realisation of socialistic aims. II. The creation of the greatest possible number of municipal or state industries, and of municipal or national monopolies. III. The energetic formation of trades-unions, favoured and invested with privileges by the state, which would supply weapons available for political war- fare, as well as means of domination in the industrial domain. IV. The institution of new laws for working men, in order to secure increased legal advantages for the pro- letariat. V. Lastly, the crushing of the wealthy and middle classes by progressive taxation, which would check the formation or durability of large private fortunes. Co-operative associations, industrial or agricultural, are of various types ; but it is understood that those here referred to, are those which are directed, not by an employer, or by associated capitalists, but by managers directly representative of the personnel employed, or of the whole of the customers, and for the exclusive benefit of this personnel, or of these customers. 2 1 Le Capital, critique de FEconomie, vol. iii. (French translation), 1901, preface by Engels, p. n. 2 See Traiti thtorique et pratique d 1 Economic politiquc, 3rd ed., T 290 VALUE OF CO-OPERATIVE ASSOCIATIONS For a long time these associations were scoffed at by socialists, but during the last fifteen years the school of " Socialistes Reformistes " perceived that they might be of great use by concentrating wage earners, and thus aiding the diffusion of socialistic education, and by facilitating the collection of funds in aid of socialistic propaganda, and of electoral contests. For these reasons, Sidney Webb in England, Jaures in France, and Bernstein in Germany, are enthusiastic advocates of co-operative associations of consumers, which they always endeavour to guide in a direction foreign both to their proper principles and to their natural economical aims. Co-operative associations for production were at first received with favour by socialists. In France in 1831, and later in 1848, many of these associations received the support of the government ; and in Germany, Lassalle, in the flirtations with Bismarck, which he entered upon before his death in 1864, demanded a hundred million thalers from the government as a subvention, in support of the workmen's associations, which he thought would effect a transformation of the system of production ; but his aspirations were not gratified. Marx was always sceptical as to the future of co-operation, and his appre- hension that these associations might degenerate into mere bourgeois joint stock companies, as has usually been the case, does honour to his perspicacity. Co- operative production has now been in existence for seventy-two years since its inception by Buchez in 1831, who established the company of joiners in that year ; this was followed in 1834 by the better known company of gilders. Experience, therefore, has been sufficiently pro- longed to make it possible to form an opinion, and it is clear that although under specially favourable circum- stances these associations may be successful, there is nothing to show that the system is capable of general application. Bernstein's condemnation of these associa- tions for production is almost unqualified ; he points out 1900, vol. ii., pp. 556-643, and La Question Ouvrttre au XIX by P. Leroy Beaulieu. CO-OPERATIVE ASSOCIATIONS IN FRANCE 291 that the history of those which have become economically successful, supplies an even more emphatic warning, from the socialistic point of view, than that given by those which have failed, since it proves that success implies privilege and exclusiveness. " Far from sapping the foundations of the existing economic system, they [i.e., these associations] rather furnish evidence of its relative solidity." 1 This conclusion is incontrovertibly correct ; it has been shown, especially with respect to associations for production, that, as they expand, they depart from the pure co-operative type, and in the long run develop into " societ^s anonymes " or joint stock companies ; as a rule, they treat their employees in the same way as do individual employers, neither recognising their rights nor giving them any special advantages. In France, notwithstanding the active support of the government and the municipalities, we find that whilst in 1868 there existed 57 co-operative productive associations in Paris, in 1903 the number had only risen to 84, and that nearly all those which had existed in 1868 had disappeared; just as, by 1868, most of those founded between 1831 and 1850 were no longer in existence. Many associations which are not actuated by the true co-operative spirit take advantage of the very considerable privileges offered by government and municipal regulations ; with this object, they become affiliated to the " Chambre Consulta- tive des Associations ouvrieres de production," and this is probably true of quite one-half of the 84 associations referred to. In the provinces 89 associations are affiliated, but many are pseudo-co-operative ; nearly all of them carry on small industries, requiring but little capital. The causes of the failure of these purely productive associations, from the moral as well as from the economic point of view, have, says Bernstein, been admirably shown by Miss Beatrice Potter (Mrs Sidney Webb), who, in common with most English co-operators, holds that a wage earners' association for production is neither social- istic nor democratic, but individualistic. If the wage 1 Bernstein, op. a/., pp. 168, 169. 292 INCOMPATIBLE WITH EQUALITY earners are the exclusive owners, complete equality in the workshops is assumed ; but as soon as the industry attains more than the most modest dimensions, subordina- tion to direction becomes unavoidable. The consequent disappearance of equality removes the corner-stone of the edifice, and its destruction will soon follow. This is how these associations become transformed into ordinary commercial enterprises. If, however, equality is main- tained, expansion is impossible, and the business must always remain of insignificant proportions. These are the alternatives which confront all purely productive associations. 1 Bernstein points out that the idea that modern production develops an adaptability for co-operative labour is a quite mistaken one ; the history of all these associations shows that the maintenance of equality is an insoluble problem, and that even when all else goes well, they are wrecked by the absence of discipline. When the manager is the nominee of the workmen and his position depends upon their goodwill, efficient direction of their labour is impossible : such a position has hitherto proved untenable, and the result has always been that the form of co-operation has been altered. The larger and more complicated the industry, the more the inherent defects of these associations are felt. " What is generally known as co-operative labour, is merely collective in the sense that the work is so simple that it can be performed by groups of workmen without differentiation of function." 2 These reflections are both forcible and true, and, although they are not novel, are interesting as coming from a socialist writer, thoroughly imbued with collectivist principles. This condemnation of co-operative association for production, as a system capable of general, if not of universal application, amounts, in fact, to a condemnation of the whole theory of collectivism, which assumes the 1 Bernstein, op. cit., pp. 169-70. In 1870, long before Bernstein wrote, these conclusions were stated in the Question ouvrtire au XIX Siccle, by P. Leroy Beaulieu. 2 Bernstein, op. cit., pp. 171-76. TENDENCY TOWARDS OLIGARCHY 293 general subjection of the leaders of industry to their subordinates. It is obvious that ordinary joint stock companies could by no possibility carry on their business successfully if the shareholders chose to assume the direction of the business or attempted to exercise a close control over it. The infrequency of general meetings one, or at the most two, yearly the meagre information given on these occasions, the practically absolute authority of the directors authority which is again further concentrated in the hands of two or three, if not in those of one person are all of them necessary condi- tions for the successful working of most industrial or commercial companies, and this is even more true of such associations for production as those referred to, in which the interest of members would not be merely that of shareholders, but would include their personal work and professional remuneration. Even if such associations could be successfully developed, they would in nowise assist socialism, and on this point all the more clear- sighted socialists are agreed. A German writer, of socialistic tendencies, Dr Frank Oppenheimer, in a book on agricultural associations, has indicated with clearness a distinction between associa- tions of buyers and associations of sellers. Associations of buyers are essentially democratic in character; their objects are identical, and are in harmony with the interests of the whole community. But those of associations of sellers are of a very different character : they are far more complex ; and the interests of different associations soon ceases to be the same each one seeks for the best market for its own products, and they are thus quite as antagonistic to the interest of their social environment as is an individual trader. According to Sidney Webb and Gide, their tendency is towards oligarchy, and Bernstein also calls attention to the exclusive character of " industrial associations for production." l He points out that society would have the same grounds for disagreement with them as with capitalistic undertakings, and adds : " It remains to 1 Bernstein, op. '/., p. 197. 294 " EQUITABLE PIONEERS OF ROCHDALE " be seen whether agreement with them would be always more easy to arrive at." 1 Gide points out that the tendency of such associations must be to place their own interests before those of the community, and says that the egoism of a collectivist association is even more fully developed and more stubborn than that of an individual ; in this respect, he asserts, wage earners are no better than employers, and he goes on to say : " Not only will these associations for production be in antagonism with con- sumers, but they will be at war with each other, as are the traders of to-day, and will thus bring about the industrial anarchy which we are so rightly endeavouring to suppress." 2 It is evident, therefore, that notwithstanding the enthu- siasm which the idea of co-operation aroused between 1831 and 1851, and again between 1860 and 1870, it has been relegated by the more thoughtful " Socialistes reTormistes" and socialistic economists, to the company of those systems for the regeneration of society which they consider inefficacious ; it is condemned, not only on the ground of the difficulty of its application, but also because of the defects and antagonisms which are inherent in it. As has already been stated, " Socialistes reform istes " rely largely upon co-operation as a preparation for collectivism, and as a means of obtaining the resources for war and for propagandism ; but it is to co-operative associations of consumers, not to those of producers, that they look for assistance. There is no doubt that these associations have been very successful. Their triumphs are noted by Bernstein with much satisfaction, and he takes an optimistic view of their future development. The first notable example of this kind of association appeared in 1844, under the name of the "Equitable Pioneers of 1 Bernstein, op. cit. t pp. 173-74. 2 De la co-operation et des transformation qu'elle est appeU a realiser, by Charles Gide, pp. 18-20; see also, Traiti theorique et Pratique (pconomie politique, P. Leroy Beaulieu, vol. ii., p. 623 et seq. BOURGEOIS ELEMENT IN CO-OPERATION 295 Rochdale," the successful development of which, during the sixty years that have elapsed since its establishment, is a splendid testimony to the superiority of associations of buyers over those of sellers. The plant of co-operation found a favourable soil in the domain of " consumption," and flourished amazingly, not, of course, without check or relapse, but its successes have been numerous and some- times startling. Bernstein, whilst noting that the continual growth of public services, both state and municipal, must limit the expansion of co-operation, and that for this reason it could never embrace the whole system of production and distribution, asserts that a great field of action remains open for its operation, and adds that, " in view of the fact that the movement initiated by the weavers of Rochdale, with a capital of twenty-eight pounds, has, within fifty years, secured the command of a capital of twenty millions sterling, it would be rash to attempt to define the distance still to be traversed before the limits of this expansion will be reached, or the forms the movement may still assume." The prophecies, however, of the more ardent advocates of co-operation, are obviously extravagant. Bernstein himself recognises that suppression or reduction of dividends would greatly restrict the progress of the movement. He refers also to the complaints made by the co-operative journals, of the difficulty experienced by the British societies in finding a profitable use for their disposable capital, and admits that " a slackening of the rate of increase of these associations for consumption must at some given moment become an almost mathematical certainty." 1 It must also be remembered that the bourgeois class has taken a large share, both in the initiation and the direction of the movement. In England, the " Army and Navy " and the " Civil Service " co- operative societies were founded by this class, and in all countries the bourgeois element plays an important part in a great number of small local co-operative societies. It is therefore an error to regard co-operation as being exclusively a workman's movement. 1 Bernstein, op. fit., p. 178. 296 AN INGENIOUS SUGGESTION It appears probable, also, that as time goes on, many of these associations will either disappear or will change their character and tend to become joint stock companies ; their mission appears to have been the mitigation of the abuse of retail trade, but not the suppression of the small trader, and, as Bernstein points out, "opportunities constantly happen which offer the individual trader a chance of adapting himself to the altered conditions ; " l but the reformation of abuses is too restricted a role for the enthusiastic partisans of the movement ; thus limited, co-operation could not effect the transformation of society. With much ingenuity, socialists of all kinds Bernstein, Vandervelde, and. socialistic economists, such as Gide suggest that a practice often successfully adopted by certain great British or Belgian co-operative societies, might be utilised in the attempt to make these societies the pivot of a great social transformation. The practice referred to is the establishment of small societies for the manufacture of various articles, affiliated to a parent society but working independently of it : these societies, assisted by the capital and administrative experience of the parent society, and having it as their customer, meet with far fewer difficulties, or surmount them with far greater ease than ordinary autonomous associations for production. " We see," says Bernstein, " that those associations for production are the most successful which, whether estab- lished by trade-union capital or by that of associations of consumers, do not manufacture principally for the profit of their employees, but for that of a much larger body, of which, if the spirit prompts them, the employees may form part ; these associations therefore assume a form which approaches the socialistic ideal." He adds that, in spite of the advantages they enjoy, both for production and sale, the manufacturing establishments affiliated to the great English societies, often require a considerable time before their products can compete with those of private industry. Although the success of these affiliated societies is far from being assured, Bernstein has some justification for saying 1 Bernstein, op. '/., p. 178. THE IDEAL OF CO-OPERATION 297 that they give an " indication " of the direction to take " if it is desired to extend and efficiently develop, in the shortest time possible, the organisation of the wage earners." 1 Gide, in the pamphlet already referred to, which was an address given at the opening of the inter- national congress of co-operative societies of consumers, held at Paris on the 8th of September 1889, describes with the greatest clearness and precision, both the aims and the method of contemporaneous co-operation. This address becomes still clearer if read in connection with other writings of the same author. Although he is not classed with socialists, but with socialistic economists, Gide's exposition shows far better than that made by any socialist, the kind of evolution which enthusiasts expect from co-operation, which ought to approach that of collectivism. " Co-operation," he says, " is for us not merely an institution intended to improve the condition of wage earners by enabling them to spend a little less or to gain a little more ; it is destined gradually to abolish wage earning, by giving workmen the instruments of produc- tion and by suppressing middle men, including adventurers (entrepreneurs]. Co-operation does not contemplate the suppression of capital, but only the suppression of its right to claim profit or dividends, by reducing it to a reasonable amount ; above all, the object is to give co-operation an ideal, and to elevate minds by pointing out an object which at any rate is worth the trouble of winning." 2 Gide goes further than Bernstein in asserting the approximation of the co-operative to the collective ideal. " It is certain," he says, " that, carried to its further limits, co-operatism, if I may be allowed this neologism, would end in an organisation very analogous to the collectivist ideal. . . ." He honestly admits that " it is open to some of the same dangers as collectivism," 3 but is reassured, however, by the reflection that the co-operative movement would be a free one. 1 Bernstein, op. '/., p. 201. 2 Revue d? Economie politique, January 1893, p. 17. 3 Gide, op. '/., p. 17 et seq. 298 A PLAN OF CAMPAIGN Dwelling upon the true objects of co-operation, Gide expresses himself thus : " It should modify peacefully but radically the present economic system, by causing the means of production, and with them economic supremacy, to pass from the hands of the manufacturers, who now hold them, into the hands of the consumers. . . . It goes without saying, that those who, like ourselves, cherish this ideal of co-operation, cannot approve of the diversion of its forces from this object to scatter them in other directions, as, for example, in the establishment of pensions or insurance, which would have the effect of transforming co-operative into provident associations. I hold that it is degrading to co-operation to make it serve individualist ends, and that its true function is to assist the aims of collectivism. The function of co-operation is not the protection of the individual, but social improvement." 1 Gide greatly underestimates the difficulties of the exten- sion of co-operation, and neglects to take note of those experienced by the great English societies in attempting to employ their capital for the extension of the system. He lays down a plan of campaign with great clearness ; according to him, the first step towards the conquest of the world, is to arouse the spirit of co-operation, " the co- operative faith," which in England makes a religion of the idea of co-operation ; 2 when this has been accomplished, the next stage is that co-operative associations should combine and make purchases upon a grand scale; then, that they should secure, always by refraining from the payment of dividends, the command of a large capital, and use it in the direct production of all articles required ; the last stage is that at some future time, more or less distant, these associations should acquire land and farms, for the direct production of corn, wine, and oil, etc., all such commodities, in fact, as form the basis of consumption. To sum up, the first stage is the conquest of commercial industry, and the second, that of manufacturing industry ; 1 Gide, op, tit,, pp. 21, 23. 2 Revue cPfcconomie politique, January 1893, p. 16. CO-OPERATION IN BELGIUM 299 such ought to be the progress of co-operation in every country. It is one of heroic simplicity." l Heroism and simplicity, however, are not characteristics of the normal types of industry, or of society, and notwith- standing the success obtained by numerous associations of consumers, neither experience nor reason would assign to this kind of association the all-conquering destiny its apostles claim for it Co-operation, immense as is its field of action, so long as it asks only for free association and abjures all state favours and subventions, is not strictly a socialistic enterprise, except in so far as, like collectivism, it desires the elimination of individual enter- prise, and the control of capital. It is nevertheless looked upon at the present time as an auxiliary to socialism, and Gide's recommendations have been largely adopted by the Belgian socialists. 2 In Belgium it is not a question of co-operative associations instituted merely for economical or commercial ends, and open to all : the associations in that country are close institutions, their object being to form a recruiting agency for socialism, and for the provision of funds for socialistic propaganda. The terms for admission into these societies and the employment of their profits are described by Vandervelde. Their regula- tions are : A. That the society is, before all things, a socialistic political party, and that membership implies adherence to the labour party. B. An entrance fee, varying from 50 c. at Jolimont and 40 c. at Brussels, to 25 c. at Antwerp, has to be paid, and a share must be subscribed for, these shares are 10 fr. each, except at Jolimont, where they are 2 fr., and at Louvain 75 c. : the payment for them may be made a charge upon profits, so that no cash need be forthcoming, and thus the poorest can become co-operators. C. Profits are divided into three portions: I. Sinking fund and reserve; 2. Socialistic propaganda ; 3. Dividends for the personnel and the 1 Gide, op.cit., pp. 10, n. 2 Le Socialisme en Belgique^ Jules Destrde et Emile Vander- velde, 2nd ed., Paris, 1813, p. 32. 300 AUXILIARIES OF SOCIALISM members. 1 The proportions in which the profits are divided differs in the different societies, but in all cases a large part is devoted to socialistic propaganda. As an example, " a small society, that of Hautfays, made a net profit of 5171 fr. in 1899-1900, which was thus divided: IOO fr. for the socialistic press, 200 fr. for anti-militarist propaganda ; 5 per cent, to the propaganda in the province of Luxembourg, and the balance to a reserve for build- ing." 2 Consumers' co-operative associations thus form one of the principal instruments of Belgian socialism. Affiliated associations are founded, directed, and supported by subventions throughout the country, even in the smallest towns and in rural districts. Co-operative associations for production, other than "bakeries," are regarded with indifference, if not with contempt, by the Belgian socialists. " These associations, moreover," says Vandervelde, " play an altogether secondary part in the organisation of the labour party. The decisive part belongs incontestably to the co-operative association of consumers. These are the associations which supply the labour party ' with the larger part of its resources in the form of club assessments, subsidies in case of strikes,' subscriptions in support of the socialistic press, and other propagandist work." 3 These socialistic co-operative associations are covering the whole of Belgium with a network of affiliated societies, and the organisation is so important and so little known outside Belgium, that it well deserves attention. Co- operation here is but the means, the avowed object is collectivism ; but whilst in other countries co-operation is not so deliberately acknowledged as the auxiliary of socialism, yet the idea that it may give moral or even material aid to the labour party is gaining ground generally. Holland shows the nearest approach to the Belgian view, and the English, although with circumspection, have taken some steps in the same direction. In France also, under 1 Destine et Vandervelde, op. cit., pp. 36-37. 2 Ibid.) p. 58. 3 Ibid., pp. 50-51. A CAUSE OF DISCORD 301 the guidance of Jaures, an attempt has been made to utilise co-operation in this way. It is a question whether the enthusiasm necessary to preserve the devotion of co-operative societies to collectivist ideals will continue indefinitely. The difficulties of co- operation, even if it is for consumption only, must be enhanced by regulations restricting the selection of members and of the directing personnel, and levies made upon profits for propagandist purposes may, after a time, be found wearisome by the less zealous members : in short, it appears probable that co-operative associations cannot, without grave risk, continue to place themselves at the service of socialistic propaganda and socialistic ambitions. In Belgium, socialistic co-operation has brought about the formation of the huge antagonistic societies, the " Associations Co-operatives Catholiques." 1 It seems a pity that the interesting economical system of co-operation, which ought to be a means of promoting union and agreement between individuals and classes, should thus be converted into a cause of discord and a weapon of war. " Socialisme reTormiste," whilst seeking to avail itself of the aid of co-operative associations, has recourse at the same time to other means of preparation for the advent of collectivism, and for securing in the meantime such a partial realisation of that system as may be found practicable. The second part of this party's programme, according to Bernstein and Millerand as well as Jaures, is to bring about the transfer to the state or to municipalities of as many industries as possible. The nationalisation of railways and of petroleum and sugar refineries is un- ceasingly demanded ; sometimes also of the wholesale trade in grain and flour. The " Socialisme reformiste," as well as " Socialisme collectiviste," is prepared to proceed by degrees, and by the gradual transference of branches of free industries to the state. It has already been demon- 1 See "Associations Co-operatives Catholiques en Belgique," by Hubert Valleroux, in JJ flconomiste franqais^ vol. i., 1892, pp. 425-29. 302 OBJECTIONS TO STATE ADMINISTRATION strated that even if, in a country in which political power is concentrated and administration is highly disciplined and independent of the electorate, as in Prussia, some industries may be successfully carried on by the state, it by no means follows that the result would be the same in ultra-democratic countries, such as France, where the parliament, which is generally incoherent, unstable, extra- vagant, tyrannical, subject to private interests, and liable to be carried away by enthusiasm and infatuation, is the omnipotent power, intoxicated with its own omnipotence. These unstable democracies cannot, without immense peril, take upon themselves tasks more vast than those which in the course of the nineteenth century have already been imposed upon them, and of which they acquit them- selves so poorly. The great services which are naturally and traditionally administered by the state, such as the army and navy and the postal service, to which may now be added that of public instruction afford striking object- lessons on the defects of modern state management. 1 An administration placed in office by popular suffrage, with a personnel which is constantly changing, has a natural tendency to sacrifice the future to the present. It is tempted, for electoral reasons, either to suppress sinking funds altogether or reduce them to a minimum, and to be guided by similar influences rather than by technical con- siderations in the selection of its staff. Another serious objection to the state administration of industries is the difficulty always experienced by the public in obtaining redress for injuries caused by the default of its officials. From the moral and social, as well as from the technical and financial point of view, it would be a gigantic mistake to entrust the state with new monopolies, and this is equally true of the municipalisation of industries. 1 See l}tat moderne et sesfonctions, P. Leroy Beaulieu, 3rd ed., 1900. CHAPTER IV Municipal socialism. Trades-unions. Progressive taxation. " Solidarism." The " intellectuals." The barriers of education. The two divisions of the new middle class. The position of officials under a democratic government. The essential simi- larity of the aims of the different schools of socialism. MUNICIPAL socialism is one of the gravest and most insidious maladies which now threatens modern civilisa- tion. During the last twenty-five years, it has secured a certain number of supporters amongst unreflecting philanthropists, and in England it has made considerable progress. In appearance it is more benign than pure collectivism, of which, nevertheless, it is but one of the forms. It is a fortunate circumstance, that in the country where it most developed, an energetic reaction has set in ; the English have become alive to the dangers and crush- ing financial burdens caused by the recent continuous increase of municipal services. The Times initiated a determined campaign against municipal socialism in the autumn of 1902, and published a long series of articles upon the subject. In some directions the activity shown by British, exceeds that of French municipalities, but in others it is considerably less. Thus, it would be inaccurate to say that the development of French municipalities, when compared with that of British, is merely embryonic; it is very unusual for the latter to own hospitals, theatres, pawn- shops, or even slaughter-houses or laundries, whilst all the towns in France of a certain importance own such establishments ; they also more frequently possess 304 MUNICIPAL HOSPITALS AND SAVINGS BANKS public parks, gardens, libraries, and museums. Again, a large proportion of French savings banks are municipal. The unwritten rule, frequently neglected, which in France has hitherto governed the class of enterprises undertaken by municipalities, seems to have been to transfer only those services of local utility which either for special reasons or for reasons of general convenience are not capable of returning a revenue, and which in consequence are not industrial in the full sense of the word. Even when thus restricted, municipal service is open to serious objection. Hospitals under municipal control, as has been seen during the last ten years, have afforded opportunities for the exercise of partisan influence, greatly to the detriment of their organisation and to the welfare of the sick ; their management also shows great wastefulness and absence of proper control, and, especially in towns in which, owing to ancient foundations, the hospitals are richly endowed, the staff is unnecessarily increased and too highly paid, in order to create sinecures for political purposes. Again, the fact that savings banks are municipal institutions is a great impediment to their reform ; their administration being under political direction, their funds are occasionally used to assist the friends of the munici- pality when in difficulty, either by loan on mortgage or by the purchase of their property, on terms which are often disadvantageous to the banks. It would be far preferable that both hospitals and banks should be free private institutions, unconnected with the municipalities. The best known and most remarkable hospitals in France, those of Lyons, are entirely under private ownership and administration. On the other hand, many of the English municipalities, under the pretext that they are dealing with matters affecting the public interest, have undertaken a number of industries, such as the supply of water or gas and the construction of workmen's dwellings or lodging-houses; sometimes they go so far as to trade in certain commodities, such as milk for infants, or even for adults, ice, and also fish, as at Cardiff. This constant extension of municipal service MUNICIPAL DEBT 305 has continued for a long time, and has been accepted by the public, if not with approval, at any rate in silence and with apparent indifference. In 1902, the Times, in the series of articles above referred to, dealt with the question of municipal socialism, both in theory and practice, with great clearness. By reference to the manifestoes and programme of the chief British socialist associations, such as the Social Democratic Labour Party and the Fabian Society, it showed that the capture of the municipalities and the indefinite extension of municipal services, form the basis of a complete plan of campaign, and that the municipalisation of industries is the forerunner of col- lectivism. The programme is being quietly carried out, and the public pay but little attention to it ; yet it is clear that if municipalities are permitted to undertake all these services, such a network of municipal organisation will be created, and so great a hold upon daily life will be secured by the municipal authorities, that not only freedom of trade and industry, but personal liberty, in the widest sense of the word, will be in the utmost peril. In thus attacking the system of municipal socialism, the Times is the defender of modern society; there can be no doubt that the capture of the municipalities by the socialists would greatly facilitate their capture of the whole system of modern social organisation. With regard to the practical application of the system, the Times refers to the enormous increase of municipal debt and of the rates. Whilst between 1874 and 1899, the year of the South African war, the national debt was reduced by 137 millions sterling, municipal indebtedness increased by 183 millions, and by 1902 had risen to more than 300 millions. In the last twenty-five years, whilst the rateable value has increased by 30 per cent., the local debt has tripled itself. The central government has been compelled to give assistance to municipalities out of national funds, and this contribution, which in 1869 was ; 17,000,000, had risen by 1899 to ^38,000,000; on the other side, it is said that against this enormous increase of debt and rates U 306 FINANCIAL DEFECTS AND POLITICAL VICES must be set the profits derived by municipalities from all their various undertakings ; but if these profits were con- siderable, the rates ought, in place of a large increase, to have shown a reduction : it has also been demonstrated that the alleged profits in many, if not in all cases, are apparent rather than real. The amounts deducted from gross profits for sinking fund are insufficient, and a strik- ing example of this is given ; the municipality of Sheffield claimed a profit on the working of their tramways of 32,000 on the last year's working, but no provision had been made for sinking fund or depreciation, and it was proved that 35,000 ought properly to have been charged to this account ; thus what was claimed as a profit of 32,000 was in reality a loss of 3000. Many instances of waste and squandering are cited, and the leaning towards extravagance, which seems natural to municipal- ities with socialistic proclivities, is made abundantly clear. In addition to its liability to financial defects, municipal socialism is equally subject to political vices ; just as in the case of the state, the administrative body of a munici- pality is in most cases merely a party in power, anxious to favour its supporters and to weaken and discourage, if not to oppress, its opponents ; the risk of corruption is even greater in a municipality than in a central government Tammany in New York, and more recently Naples, in 1901-2, afford striking examples of the truth of this state- ment. In France, the secret accounts and fictitious orders for payments which, according to the " Procureur-General" of the Exchequer (speaking on the 3rd November 1877), had almost disappeared from the bureaus of the state still flourish in the administration of communes of all degrees of importance. From the technical point of view, municipalities are not only wanting in initiative, but are also very slow in adopting new methods. In 1903 Deville, reporter of the budget for the town of Paris, made a remark in his report, which is equally applicable to the state as to the municipalities; in that year (1903) typewriting machines had not yet been introduced into public offices, SOCIALISTS AND ECONOMISTS 307 although they were in use in many private offices, and in all American administrations. There were, he said, 350 clerks in the central town bureau, although, if typewriters were used, only 175 would be necessary. It is well known, however, that no public administration, either state or local, has the courage to make reductions in a staff which is unnecessarily large. In the same report, Deville pro- nounced himself in favour of the substitution of private enterprise for municipal control, upon the ground of economy. " Socialisme reTormiste " never desists from the agitation by which it seeks to justify its existence, and has recourse to many devices. Whilst it relies much upon co-operative associations, and upon the gradual extension of national and municipal monopolies, it also strives to group and discipline the wage-earning classes, and endeavours to absorb the trades-unions, which it is anxious should obtain the widest possible privileges. Bernstein derives " socialism " from the word " socius," and defines it as being a movement towards association. 1 If this were so, socialism would differ but little from " economic liberalism," which, without holding that associa- tion could ever constitute the only method of action, assigns to it a considerable rdle and expects much from it. But association, as interpreted by socialists, is very different from that referred to and recommended by economists. The former admits only of association under restrictions, the manner of grouping of members being fixed by rule, whilst the latter only recognises and approves of free association in which the grouping is voluntary. Bernstein admits, in a restatement or correc- tion of his definition, that he is " by no means a supporter of the mere decomposition of society into free associa- tions." 2 This radical divergence of opinion between socialists and economists appears very clearly in the mission they respectively attribute to trades-unions. To the economists they are spontaneous organisations freely 1 Socialisme et Science^ Bernstein, p. 29, Paris, 1903. * Ibid., p. 54. 308 THE TYRANNY OF TRADES-UNIONS developed, upon which no special privileges ought to be conferred ; every man should be free to join or leave them at will, and those who desire to remain outside their ranks should have precisely the same rights, legal and industrial, as those who are members ; according to them, different and antagonistic unions might exist in the same trade, and both would, in the eye of the law, stand upon an equal footing. To the socialists, trades-unions mean workmen's legal organisations ; those who belong to them are privileged ; there can be no such thing as dissentient trades-unions ; one union ought to include all the workmen of one trade, all those, at least, who desire that their wishes and interest should receive consideration, and, as was pro- posed by Millerand in the bill he prepared at the time of the strike in 1901, but did not venture to present to parliament, the majority of votes alone should count, the minority must submit. Thus, socialists endeavour to exalt the trade-union into a tyrant endowed with privileges and armed with power to crush all resistance and triumph over all dissent. The legislation sought after by the " Socialistes relormistes," and which is the fourth point in their programme, is equally the object of the revolutionary socialists, and is directed to the same end namely, to bring about the industrial supremacy of the wage-earning class, and the complete suppression of the representatives of capital. Their object is to create new rights which would make workmen, if not the masters of the workshop, at least the masters in the workshop, and in cases of disagreement would ensure that the employers should be compelled to yield. By making arbitration compulsory for all industry without exception, by insisting upon a minimum wage, upon pensions, and upon limitation of the hours of work in all those industries which have to obtain a concession from the state, such as mines, railways, etc., a crowd of little industrial republics would be created, in which the master would be merely a president deprived of effective control, although remaining fully responsible. SOLID ARISM " 309 The fifth object of the " Socialistes reTormistes," in seeking which they have the assistance of the radicals and are also in agreement with the revolutionary socialists, is to deprive capitalists, by the agency of taxation, of a continually increasing proportion of the profits they owe to their ability and to fortunate circumstances. The aspirations of socialists have always been for less unequal conditions, or even for the complete suppression of inequality, and pending the realisation of this they would endeavour to secure an approach to it by progressive taxation. Such is the programme of the " Socialistes reformistes," which they are attempting to realise by successive stages ; their efforts are assisted by the indifference and inertia of the public, by the want of energy, the timidity, and the stupidity of their victims, and by the co-operation, whether conscious or not, of the radical party. The new form of socialism, which is termed " Solidar- ism," is even more insidious than the " Socialisme reformiste " ; it differs from pure socialism only in being more benignant in tone and in possessing a more com- plicated phraseology ; but in fundamental character it is the same ; both doctrines advocate an artificial system, the effect of which would be to restrict individual enter- prise and to deprive it of the larger part of the reward which is the incentive of its action. The originator of this doctrine is L6on Bourgeois, a past-president of the Council of Ministers and president of the Chamber of Deputies in France. He described it in a work entitled Solidariste, which reached a third edition in 1902, and certain publicists and politicians in search of some means of reconciliation between modern society and socialism came to his assistance. On all sides " solidarity " was applauded, and an attempt was made to construct a social system founded upon its doctrines. Quite a number of theorists formed themselves into a body called " L'6cole des hautes Etudes sociales," and a book, in which a series of conferences and discussions upon the subject were summarised, appeared in 1902, under the 310 PRE-NATAL TIES title of an Essai (tune philosophic de la Solidarity. Widely different meanings are attributed to this word. " The solidarist doctrine," according to the article upon it in the new Grande Encycloptdie, " is already certain as to its object, its methods of enquiry, and its ratiocination. It has constructed a scientific system, and laid the foundation of a system of justice and morality in harmony with modern ideas and with the aspirations of existing society." What is this system of justice ? The founder of the sect, Lon Bourgeois, describes it in very indefinite terms. " When we ask ourselves," he says, " what are the con- ditions which are necessary for the maintenance of equilibrium in human society, we are led to recognise that there is only one word by which they can be expressed justice." Few people would contest this proposition, but what is here meant \syjustice? Bourgeois repudiates the idea that justice connotes liberty, and declares that sociology no longer accepts the old idea of personal freedom. " Men," he says, " are necessarily bound together by ties which are pre-natal, and from which they cannot lawfully free themselves ; if they were to do so they would no longer have any lawful right to exist" Thus, a man is not a free agent; he has contracted an obligation by being born, and, continues the founder of solidarism, "the true social position of an individual differs as completely from that of a man entirely free, as from a legal point of view does the position of one who has entered into no engagements with any one, and who acts in the plentitude of his liberty, from that of a man who has entered into contracts and formed associations with others ! " In this medley of postulates and truisms, the most flagrant contradictions are to be found. 1 First it is stated that men are bound by pre-natal ties, and then a totally different idea is introduced that of men who have entered into contractual obligations with others ; this is merely a return to the hackneyed hypothesis of the 1 See La Solidarity sociale et ses nouvelles formules^ by Eugene d'Eichthal : Paris, Alphonse Picard, 1903. DEBTORS TO THE PAST 311 Contrat Social of Rousseau. According to Bourgeois, all men are born debtors to past humanity ; " but all existing society has an equal right to benefit by the wealth accumulated by the labour of past generations. If some amongst us, as is actually the case, are prevented from enjoying our share, whilst others benefit to an exces- sive extent, am I not justified in declaring that there is a rectification of accounts to be made, that each one is a debtor or a creditor from his birth, that his social account must be balanced, . . . that some have to surrender, to pay up, and that others would have to receive ? " It would be impossible to find more defective ratiocination than that shown in this quotation. If every one is born a debtor to past generations, how can that endow any living person with a claim against any other ? Then, on what is this supposed common right founded ? Society owes infinitely more to individuals than they owe to society. The progress made by humanity has been due to excep- tional individuals who have had to struggle, at all events at first, against the want of intelligence, the mechanical routine, and the jealousy of their social environment ; how can this inert social mass, always antagonistic to progress, be regarded as a " creditor " ? Without the bold initiative and perseverance of that great company of men, who since the dawn of humanity have in all ages successfully struggled against the imbecility and perversity of their social surroundings, the human race would still be sunk in the torpid ignorance and misery of the stone age. All the sages have given utterance to similar reflections upon the public of their time. Is it such a public as this that is to be endowed with a claim upon the men who are the only source of human progress? What is this "social account," and what is meant by its rectification ? All those who for one reason or other, whether by their own fault or not, find themselves in a disagreeable position, would be armed with a claim against the more energetic and fortunate. This supposed claim, declared to be a positive and legal one, and to be founded on a quasi- contract, or upon contractual obligations, is quite indefinite, 312 A RECTIFICATION OF ACCOUNTS and the amount of it is to be fixed in accordance with the desires of the great mass of the so-called disinherited ! It would be an unlimited obligation which could never be fully discharged. It is not here a question of a simple moral or social duty, which would appeal to the conscience of the fortunate, but of a legal debt, the payment of which society that is, the majority of mankind may exact, under conditions which have no rational basis. It is not merely the " right to work " and the " right to assistance " which are claimed by this doctrine ; the " rectification of accounts " would involve progressive and excessive taxation, and in practice it would legalise confiscation. This fantastic doctrine is not only the equivalent of socialism, but it almost surpasses it, and recalls the pretended "right of recapture " invoked by anarchists. The solidarists, however, endeavour to establish a distinction between their doctrine and socialism. Socialism, they say, has clearly enunciated the duty that society owes towards its weaker members, and the claims they have upon society, but it maintains the right to property in its present form, and all that it asks of society is to cure the evils caused by its own organisation. Justice, as inter- preted by Lon Bourgeois, is a justice which atones and restores, whilst the justice of socialism is the reorganisa- tion of social relations. Socialism is prophylactic, solidarism is therapeutic. 1 This last phrase exactly describes the position, and shows that notwithstanding all attempts to establish a distinction, there is a complete affinity between solidarism and socialism, since it is only natural that after expiation, organisation should follow, just as, when a cure has been effected, hygienic precautions are taken to prevent a relapse. Thus, we see that solidarism leads necessarily to collectivism. For the moment, solidarism is satisfied with a restricted programme, and the only legislative project brought forward at the " Congr6s d'e"ducation sociale " of the solidarists was couched in terms so vague as to include everything. " The law ought to exclude all inequality of 1 D'Eichthal, op '/., p. 191. THE INTELLECTUALS 313 social value between contracting parties. It ought also, as far as possible, to give to the labour of each one the support of the strength of the community, and guarantee everyone against the risks of common life." In order to give some practical meaning to so vague a proposition, it is added that : " The method of assuring the equity of social contracts by the satisfaction of the social debt may be summed up in three principal conclusions : I. Assurance against defects of intellectual culture. 2. Assurance against natural incapacity. 3. Assurance against social dangers." l This is a programme which, although extremely vague, has immense possibilities for practical application. A certain number of those who of late years have been called the " intellectuals " persons of scientific or literary attainments, who, from their manner of life, have but little positive knowledge or practical experience of social questions have been attracted by the doctrine of soli- darism, and have grouped themselves under its banner. Collectivism also makes a pressing appeal to intel- lectuals, but to those of a different class, the " intellectual proletaires " that is, to those men who possess ability but no capital. Kautsky implores these men to become supporters and propagandists of socialism, and declares "that one of the most important problems before the socialist party, is to discover some means of gaining their adherence." He asserts that the functions of the privileged classes, the nobility, and the clergy, of which they have been deprived, have become " of more and more importance, and the number of those who now perform them has increased year by year, with the growth of the duties imposed by social evolution upon the state, upon 1 At the close of a lecture by d'Eichthal in 1903, at the Academy of Moral and Political Science, an ardent solidarist, M. Bruno, an inspector in the ministry of the interior, submitted a treatise in praise of this doctrine, and claimed it as a great sociological discovery. A dozen of the members of the Academy philosophers, historians, moralists, jurisconsults, as well as economists spoke upon the subject, and for various reasons were all agreed that this doctrine possessed no scientific or experimental basis whatever, and that it was no more than a variety of socialism with a decorative name. 314 SUPPORTERS OF SOCIALISM the communes, and upon science." The persons here referred to are public officials of all grades, of whom a large number in modern democracies possess either no capital, or very little. On the other hand, he goes on, "the capitalist class has begun to relieve itself of its administrative functions in commerce and in industry, and to entrust them to employees. At the outset, these latter were only concerned with surveillance and organisation, with the purchase of the means of production, and with the sale of the produce, duties which the capitalist could not perform for himself without special education ; but a consequence of the establishment of the system of joint stock companies has been that the capitalist is altogether superfluous. " It cannot be doubted," Kautsky continues, " that this system [the company system] helps to increase the number of well-paid employees, and of itself encourages the formation of this new middle class. When Bernstein describes those who have a moderate income as "pro- prietors," he can certainly claim that the system of joint stock companies contributes to the increase of their number, but not by the division of capital. The intel- lectuals form that class of the population which increases the most rapidly." l Kautsky, although his conception of the respective roles of capitalists and joint stock companies is inexact and puerile, is correct in what he says as to the formation of a new middle class, which is constantly increasing, by the addition of the employees of capitalists and of joint stock companies. If the term " proletaires " is intended to include all those who, having very little or no capital, live by their personal work, the class of superior proletaires, which would include officials, artists, scientists, engineers, etc., would no doubt be enormous, and Kautsky imagines that, since they possess no capital, it would be a matter of indifference to them whether the means of production belonged to individuals, to joint stock companies, to 1 Le Marxisms et son critique Bernstein^ Karl Kautsky, Paris, 1900, pp. 242-44. REACTIONARIES " 315 municipalities, or to the state. He thinks, therefore, that the socialisation of the means of production would be well received by them, and that they ought to range themselves under the standard of socialism. In reality, however, things would be very different. Kautsky himself recog- nises that the majority of the intellectual middle class joins forces with the " bourgeoisie," and adopts and some- times even exaggerates its prejudices. Is this merely a snobbish desire to get rid of all traces of their proletariat origin? This may, indeed, be a frequent cause of the aversion from socialism shown by these new accessions to the middle class, but Kautsky suggests another and far more hypothetical explanation : " The principal barrier," he says, " which separates the new class from the proletariat is education, and they fear lest, owing to its diffusion, they should lose this advantage." In the Essai sur la rtparti- tion des richesses, it has been shown that the tendency of universal education must be to diminish the importance of the middle classes ; but it is not suggested that they would be influenced by the barbaric instincts Kautsky attributes to them, when he writes that in countries where popular education is sufficiently developed to threaten to deprive these classes of their privileged position, the extension of education will be bitterly opposed by them, and goes on to declare that the intellectuals would be more hostile to the educational progress necessary for the improvement of modern production than even the capital- ists ; that they are the most reactionary of reactionaries ; that modern university professors and students of science are amongst those who are opposed to the education of women and to the admission of Jews to equal competition, and that they endeavour to make higher education as expensive as possible, in order to exclude all those who are penniless from its advantages. 1 Kautsky's ideas upon the subject appear, however, to be very undecided, and to some extent he modifies this grossly exaggerated state- ment by the addition that, when liberal economists infer the formation of a new middle class from the rapid 1 Kautsky, op. cit., p. 248. 316 THE NEW CLASS increase in the number of intellectuals, they forget that as this number increases, so also does the share the proletariat takes in it ; but between the two sections of intellectuals those who are supporters of capitalism and frankly hostile to the proletariat, and those who are as frankly proletariat there is a large body, neither pro- letariat nor capitalist, who consider themselves to be superior to this class antagonism. 1 It is to this inter- mediate class that Kautsky appeals for sympathy. Strum and Eugene Richter, he says, with their theory of "the patriarchal employer" and the "doctrine of the Manchester school," have no longer any disciples of weight amongst the intellectuals. The arraignment of capital and sympathy with the proletariat are the fashion, and Sir William Harcourt's dictum, " We are all socialists now," is becoming true of these people; but it is to socialism, analogous to that defined by the communist manifesto of 1847, and not to "revolutionary" socialism, that the intellectuals render their homage. In conclusion, he says that though it is but a half-hearted encouragement of militant socialism that can be looked for from the intel- lectuals, yet they will not be found amongst its most determined opponents. 2 This last statement is strangely at variance with the passage referred to above, in which he points to a certain class of intellectuals as being far more hostile to the proletariat than the capitalists themselves. It is worth while to refer to these passages, both because of the importance of Kautsky's position in the socialist party, and because he has been the first to describe this new class ; but there is a regrettable con- fusion in his presentation of the subject ; he appears to take no notice of the fact that the class he describes is divided into sharply distinguished sections which are not in any way correlated. First, there are the pure intel- lectuals that is, the litterateurs, the scientists, and the artists and towards the close of his remarks Kautsky appears to refer to this class only. It is this class which 1 Kautsky, op. '/., p. 250. 2 lbid. t pp. 252-53. " OFFICIALS " 317 is most attracted by the recent varieties of socialism, such, for instance, as solidarism. Experts of all kinds, notably the pupils of the higher and normal schools, who are neither possessors nor managers of capital, who are conscious of a feeling of contempt, if not of jealousy, for the wealthy classes, who are engrossed in abstract thought, who live apart from contact with industry and commerce, who are strangers to business, and who find themselves sheltered from social disturbances, are frequently led by senti- ment as well as thought, often also by ambition and aspirations, if not to actual collectivism, at any rate to socialism and solidarism. Many men in this class may be found who, whether influenced by interested or dis- interested motives, hold these opinions, and carry on an active and effective propagandism in their support. The second division of the new class is composed of the officials of public or private administrations. The temperament of these people is, as a rule, more stable, and they have somewhat more practical experience than the pure intel- lectuals. This is especially true of the higher employees in private or joint stock administrations, such as engineers or the managers of great shops ; these men, although often radical in politics, have far less inclination towards socialism than the former class. No doubt some advocates of socialism are to be found amongst them, but they are few in number, and their ranks, except when they are politicians who adopt socialism as a career, are recruited from those who have failed in their own profession. The appeal of socialism to this section of the new middle class is unsuccessful for many reasons. In the first place, the dream of most of these highly salaried officials is to become capitalists themselves, and to bring up their children to a similar position ; next, these men have raised themselves by the energy of their character, by their habits of order and foresight, and by their sense of discipline, with the concomitant gift of exercising authority, whilst their constant intercourse with labourers makes them acquainted with the defects of wage earners in these respects. Thus, a social revolution which would place the direction of 318 THE DRAWBACKS TO PUBLIC SERVICE industry in the hands of the workmen, strikes them as being not only antagonistic to their own interest and to that of the community, but as being contrary to nature. It is suggested that such men as these would become officials of the state, but such a prospect does not attract them. In our democracies of conflicting opinions and violent passions, the official is the slave of the public, or rather of the party in power, and in France especially this servitude is extremely harsh, and grows more humiliating every day. The theoretical impartiality ascribed to government is a fiction opposed to nature. In reality government is a party in power, always menaced, always restless, and always suspicious and defiant. Everyone placed in office by public election, however wanting in ability or character he may be, is in a position to treat the officials under him with haughty tyranny, and the central government pitilessly dismisses employees, however meritorious they may be, who refuse to bow to the caprice of these ignorant tyrants. The fact that as a rule hard work is not required from public servants, is no doubt an attraction, but the compensating disadvantage of de- pendence upon the temporary possessors of authority is a terrible one ; and when in addition to this, it is remem- bered that promotion in public service is not governed by merit, but by electoral considerations, it is easy to under- stand why really energetic and capable employees in industry and commerce should prefer private to state employment. Socialism, therefore, is not likely to gain many recruits from this section of the intellectuals. Kautsky has written another small book, published in 1903, under the title Le lendemain de la Revolution sociale, which deserves notice. A translation of this work has appeared in Le Mouvement socialistc? a publication which is of special interest, since it supplies evidence of the identity of the actual programme of the orthodox Marxists with that of " Socialistes reTormistes " and the opportunists. Kautsky's treatment of present and future social problems in this book, which should rather be called the eve than 1 ist and 1 5th February and 1st March 1903. EXTENSION OF EDUCATION 319 the morrow of the social revolution, differs in no way from that of the " Socialiste reTormistes," or from that adopted by the radicals. His programme includes universal suffrage in all public bodies, complete liberty of the press and of public meetings, the separation of church and state, the abolition of all hereditary privileges, communes to be assisted to become autonomous, and the abolition of militarism, either by arming the whole nation, or by general disarmament ; " politics demand an army, financial considerations require disarmament. A national army may, in certain cases, be quite as expensive as a standing army ; it may be necessary for the consolidation of the democracy to deprive the government of the chief force it can use against the nation." With regard to the cost of the army, it should be noticed that socialism does not promise the financial relief expected by the populace, whilst as to the unfettered right of public meetings, in view of recent events in France and of the opinions of socialist leaders, it would seem probable that this privilege might be subjected to con- siderable restrictions. From the financial point of view also, the Marxian programme is the same as that of the pure radicals, except that it is more frankly stated, and makes no attempt to disguise the use it would make of taxation, which, says Kautsky, the victorious proletariat will at once reform ; it will immediately replace indirect taxation, especially on food, by a progressive tax on incomes or even on capital, and will demand the means required for carrying on the state from the possessors of great incomes or large capital. The way in which Kautsky dwells upon this point is instructive, and it is evident that his views differ from those of the radicals in France, and in almost every other country, only in the greater precision, firmness, and honesty with which they are stated. Before dealing thoroughly with the question of taxation, Kautsky refers briefly to certain expenses which will have to be borne by the victorious proletariat. The chief of these will be an enormous extension of public education. Class 320 THE COST OF SOCIALISM distinctions, with all their consequences, he says, cannot be made to disappear all at once, but the schools, by providing similar instruction, feeding and clothing for all, and by affording equal opportunities for the development of physical and intellectual aptitudes, will prepare the way for the levelling of classes. Bourgeois radicalism, he writes, has already entertained the same ideas, but could never put them in execution, because to do so it would be necessary to pay no regard to wealth, which would be an impossibility for the " bourgeoisie." Schools such as those described by Kautsky, if established throughout the German empire, would, according to him, cost possibly from 60,000,000 to ,80,000,000 sterling, or double the amount of the war budget. " Such sums could only be spent on the schools when public affairs are in the hands of a proletariat that is not paralysed by respect for large incomes." 1 Bearing in mind that Kautsky is not able to promise any reduction in the war budget, and that he proposes to abolish indirect taxation, it is obvious that to meet these demands adequately, the rich would have to be far richer than they actually are, and that it would be necessary to denude them of the whole of their property to provide the necessary millions. According to the Bulletin de Statistique et de Legislation comparte of April 1903, pp. 624-25, persons living in Prussia and liable to taxation, who possessed a capital of more than I million marks (nearly 50,000), numbered 6601 in 1902; of these, 791 possessed over 4 millions of marks (approximately 200,000), 235 more than 8 millions (approximately 400,000), and finally, 7 persons only, in this country so industrially active and so enormously enriched since 1870, possessed over 40 millions of marks (approximately 2,000,000), the richest of all not reaching 200 million marks (8,000,000). It would not be possible, therefore, to extort from these 6000 millionaires the millions which would be required annually by the victorious proletariat, and it would be necessary to despoil the entire middle class, 1 Le Mouvement socialiste^ February 1903, pp. 208-9. the new as well as the old, and even to combine with it a large section of the wage-earning class for purposes of spoliation. Besides education, another problem will confront the victorious proletariat namely, by what method private industry can be made impracticable, and even forced to request the state to take it over ? The ingenious descrip- tion given by Kautsky of the way in which this task might be accomplished, is the most interesting part of the curious picture he draws ; the system he describes differs only from that proposed by the " Socialistes reformistes," or the radical socialists, or even by a large number of radicals pure and simple, in being more strongly accentu- ated ! " There is a problem which, before all others, claims the attention of every proletariat regime. At all costs, a remedy must be found for the evil of unemployment. We do not here seek to show in what way the problem of want of work can be solved. There are many different methods, and a number of theorists have put forward the most diversified proposals. The 'bourgeoisie' itself has attempted to ward off the evils resulting from the want of work, and has established schemes for insurance against unemployment, which have been partly realised. But a bourgeois society can do nothing effectual in this direction, because it would be cutting off the branch by which it is itself supported. A victorious proletariat alone would be in a position to take the necessary steps and it would take them to cause the evils of unemployment, whether induced by sickness or by any other cause, to disappear. In order that men out of work should be effectually succoured, it is necessary that the existing distribution of power between the proletariat and the ' bourgeoisie,' and between the proletariat and capital, should be transposed ; it is in this way that the proletariat will become master in the workshop." These last words are significant ; they show that the object is the same as that arrived at by the " Socialistes reformistes," and also, consciously or unconsciously, by a large number of pure radicals namely, that the proletariat should become the x 322 PURCHASE OR CONFISCATION master in the workshop ; but such an arrangement would be the starting-point for a rapid evolution which would inevitably lead to collectivism. " If," continues Kautsky imperturbably, " the existence of the workman is assured, even in case of want of work, nothing will be more easy for him than to checkmate capitalism. Then he would have no further need of the capitalist, who could not continue business without him. When once this point is reached, the employer will always be the loser in all conflicts with his men, and will be forced to yield. The capitalists, although they might continue to be directors, would cease to be masters or exploiters of manufactories ; but when they recognised the fact that only the risks and the expenses were to be left to them, they would be the first to relinquish capitalistic production, and to insist upon the purchase of their works, from which they could no longer derive any profit." The first step being granted, this result would indeed be inevitable ! Proprietors being reduced to this condition, Kautsky asks himself whether the state ought to proceed by confiscation or by purchase. He hesitates for a moment, but on reflection he grasps the fact that this question is one which affects the coming, rather than the existing generation, and soon arrives at the conclusion that, for many reasons, a proletariat regime would prefer to proceed by the method of purchase, and by indemnifying the expropriated capitalists and landed proprietors. But they must not rejoice too soon. In the first place, since nothing but the risks and expenses would be left to manufacturers, their work might be bought out at a very low price ; next, it is proposed, by means of a progressive tax, to get back the greater part, or the whole of the purchase price ; this is explained by Kautsky with commendable frankness. " As soon as capitalistic property has taken the form of an inscribed debt, due by the state, by a commune, or by a corporation, it will become possible to impose a progressive tax on income, on capital, and on successions at a higher rate than has hitherto been feasible. This would at once secure one of our demands of to-day namely, the PROGRESSIVE TAXATION 323 substitution of a tax of this nature for all other, and especially for indirect taxation." As society is at present constituted, there are, as Kautsky remarks, difficulties in the way of progressive taxa- tion. " The higher the rate, the greater the temptation to defraud the treasury ; and even if evasion could be effectu- ally stopped, it would not be possible to go on raising the rate indefinitely, because the over-taxed capitalists would leave the country ; so that even if political power were in the hands of the proletariat, taxation could not be increased beyond a certain limit ; but when all property is in the national funds, the situation is altogether altered ; property which to-day cannot be exactly estimated, would then be easily ascertainable ; it would be sufficient to enact that the names of all fund-holders must be inscribed, to make it possible to ascertain the capital and the income belonging to each ; then the tax could be increased at will ; fraud would be impossible, and the tax could no longer be evaded by emigration, since, as the interest is paid by the public institutions of the country that is, by the state itself it would be easy to deduct the tax before payment ; under these circumstances, the tax could be raised to any desired degree. In case of necessity," Kautsky concludes, "this increase of the tax will bear a strong resemblance to the confiscation of large fortunes." Here he foresees a possible objection, and asks : " Is it not a mere farce to attempt to disguise the appearance of confiscation by a purchase of property at the actual value, and the recovery of the cost by means of taxation ? The difference between this procedure and direct confiscation is only one of form." Nevertheless, whilst fully conscious of the end he is aiming at, and of the means at his disposal for securing it, Kautsky rejects the idea of direct confiscation, for ingenious reasons, which he explains, with candour and with his habitual precision, in the following passage : " There is a difference: direct confiscation hits every one equally those suffering from industrial disability as well as the active workers, the small as well as the great ; with this 324 "PRODUCTION" THE DIFFICULTY method it is difficult, often impossible, to distinguish between large and small incomes, both the former and the latter being frequently derived from the same financial undertakings. Direct confiscation would act suddenly, at a blow, whilst confiscation by taxation would allow of the abolition of capitalistic property by a slow process, the rate of which might be accelerated in proportion to the consolidation and success of the new organisation. It would be possible to spread this confiscation over tens of years, so that it would only reach its full efficiency when another generation had grown up under the new system, which would have learnt no longer to rely upon capital and interest. Confiscation would thus lose all its painful character ; people would become habituated to it, and it would seem to be less grievous. The more pacifically the conquest of political power by the proletariat is effected, the more solidly this power would be organised, the more en- lightened it would be, and the more allowable it would be to hope that the refined method of progressive taxa- tion would be preferred to the more primitive plan of confiscation." Thus writes the chief of the orthodox Marxists. He is certain of the efficacy of his method, and, in truth, no defect can be found in it ; the weapon it pro- vides progressive taxation is of sovereign efficacy, and, in the course of some decades of years, would undoubtedly accomplish its task namely, the dispossession of capitalists great and small. Kautsky ends this chapter with these words : " The expropriation of the means of production is, relatively speaking, the simplest of the great changes involved by social revolution. To effect it, it is enough to possess the necessary power, and the possession of this power is the hypothesis upon which this system is entirely based. The difficulties of the proletarian regime do not lie in the domain of property, but in that of production." 1 In this Kautsky is obviously right ; the difficulties of production under a collectivist or proletarian regime have been pointed out in this book, and need not be repeated. 1 Le Mouvement socialiste, ist February 1903, pp. 215-20. IF NOT TOO LATE ! 325 The difficulty, however, which confronts collectivism in this direction is insuperable. The methods proposed for accomplishing the social revolution by the orthodox Marxists, as described by their leader, have been shown to be identical with those of the " Socialistes reformistes," the " Socialist Radicals," and even the pure " Radicals " ; the instruments by means of which the transformation is to be effected are first, working-class legislation, with a system of subventions and arbitrations between master and man, which would have the effect, in Kautsky's words, of making " the proletariat the master in the workshops ; " and secondly, progressive taxation. If there are any persons who still think it might be possible in practice to place a limit upon the amount of taxation, or even upon working-class legislation, they ought to be dis- illusioned by the clear and logical statements of Kautsky Consciously or unconsciously, all these parties with different names are working in alliance for the advent of col- lectivism : there is no substantial difference between them ; the doctrines advocated by the "Socialistes reformistes," the " Social Radicals," or the pure "Radicals," are as great a menace to society as those of the most resolute disciples of Marx. The old Marxian doctrine of the sudden de- struction of capitalistic society, is a danger to humanity far less threatening than class legislation for the benefit of the proletariat, coupled with a system of progressive taxation initiated with deceptive moderation. If once these steps are taken, the only chance that will remain of escaping from the collectivism which is the certain end of the evolution thus commenced, is that the social disasters, the wide-spread affliction, and general dis- content which would inevitably ensue, would produce a salutary reaction. If only it is not too late ! CONCLUSION IT seems hardly necessary to define the conclusion to which we are led by the foregoing account of the develop- ment, more apparent than real, of the doctrine of col- lectivism since 1895 J DU t it may be worth while to describe shortly the position of humanity under the proposed regime. It has been shown that there is no real difference between the various sects of socialists, whether they call themselves " Socialistes reTormistes," " Solidaristes," or " Collectivists. " Complete collectivism is the ideal which, consciously or unconsciously, they all pursue. Some would advance rapidly and directly, others would follow a less direct course, which, however, would affect but little the distance to be traversed or the real rate of approach. Under the proposed regime, individual liberty and dignity must disappear, either abruptly, as proposed by the Marx- ists, or gradually, as proposed by the " Socialistes reTorm- istes" and the "Solidaristes." It is astonishing to see the number of socialist publications which actually claim that their regime would secure the development of individual liberty and dignity ! How could liberty exist in a society in which everyone would be an employee of the state brigaded in squadrons from which there would be no escape, dependent upon a system of official classifica- tion for promotion, and for all the amenities of life ! Even now, the commands issued by ministers, especially at election time, and the arbitrary dismissals of employees, constitute an eloquent commentary upon the liberty and 326 CHARITY WOULD VANISH 327 dignity of state employees ; and this subjection of the individual to those in authority would be greatly increased if the competition of private administration were abolished. The employee (and all will be employees) would be the slave, not of the state, which is merely an abstraction, but of the politicians who possessed themselves of power. A heavy yoke would be imposed upon all, and since no free printing presses would exist, it would be impossible to obtain publicity for criticism or for grievances without the consent of the government. The press censure exercised in Russia would be liberty itself compared to that which would be the inevitable accompaniment of collectivism. However numerous the dissentients, they would be con- demned to silence and subjected to injustice under this regime; and a tyranny such as has never been hitherto experienced, would close all mouths and bend all necks. Again, what dignity could exist in a society when state obligations would be substituted for all moral duties? Parents would no longer direct the bringing up of their children, for whom they would not be responsible, and for whom they would no longer be called upon to make sacrifices, and in their turn children would no longer assist their aged parents. The honour and happi- ness of family ties, braced by common effort, by dangers encountered with mutual devotion, and by successes and misfortunes, would cease to exist. Despised and exposed to state competition, then persecuted by contemptuous and arrogant public doles, personal charity would shrink, fade, and finally vanish. No one would any longer have responsibilities or duties towards his fellows ; savage egotism would reign, and the effect of socialism, para- doxical as it seems, would be to establish the most ferocious individualism. The phrase which Lassalle so falsely applied to existing society, " the ties of humanity no longer exist between human beings," would be actually true of this new society, and enforced " solidarity " would eliminate all spontaneous sympathy. How could human progress continue in a society subject to universal constraint and authority ? Authority, what- 328 THE FUTURE OF HUMANITY ever its source, is always slow, pedantic, and a slave to routine ; when derived from a democracy, these defects would be exaggerated ; an immense bureaucracy would be established, and individuals who are exceptional in any way would be shouldered on one side and crushed by its complicated machinery. If the circumstances under which humanity has progressed are examined, it will be found that advance has depended upon the coexistence of three conditions : the provision of facilities for individuals of exceptional ability ; liberty of association, which would allow of the co-operation of energetic men and the free development of their projects ; and finally, abundant pro- duction and the free and rapid circulation of the capital which supplies the means for the practical application of discoveries and scientific inventions. It is the incessant improvement of methods of pro- duction which has made it possible to shorten the hours of labour and to minimise the unpleasantness of repugnant or dangerous work. It is by this means also, that produc- tion will in the future increase so largely, that the least fortunate of men will share advantages now enjoyed by the wealthy only, as well as many additional amenities as yet unknown. This brilliant future for humanity now appears to be a certainty, provided only that conditions favourable to the rapid development and economic application of scientific discoveries are maintained. But for their con- tinued existence, these conditions demand a free and elastic social system, unfettered by official regulations and the paralysing control of bureaucracy. These conditions have been present throughout in the social organisation which since the close of the eighteenth century has been estab- lished by the principal civilised races, but collectivism would be altogether hostile to their continuance ; under its regime exceptional individuals would be crushed, and no one would any longer have a personal interest in progress. Again, with regard to the capitalisation of savings, which is so indispensable for the realisation of improvements : at the- present time it is abundant, but it is due to a minority of individuals only ; under a collectivist regime it would be THE EFFECT OF COLLECTIVISM 329 the majority who would determine how much of the national produce should be set aside from the amount used for immediate or prospective gratification, and devoted to saving or capitalisation ; there can be little doubt that this portion will always be infinitely less than that now created by the efforts of free men urged by personal or family interest. To a far greater extent, therefore, than now, the capital required for improvements will be wanting, and at the same time the energy that makes for progress would itself be withering away. Thus, collectivism implies a prodigious loss, both to the individual man and to civilisa- tion in general. At first a slackening of economic enterprise, then its complete cessation, soon to be followed by retrogression ; these would be the inevitable conse- quences for humanity, or for any section of humanity that adopted this regime. In the course of two or three genera- tions only, the material impoverishment and moral weakening of humanity would be considerable ; in a century the face of the world would be entirely changed ; not only would all improvement in production have ceased, but even the technical arts already acquired would have deteriorated, owing to the want of personal interest in the practice of them, and humanity would soon revert to the ignorance, indolence, and poverty of primitive ages. All these social evils, but slightly delayed, would be engendered with equal certainty by the "Socialisme reTormiste" 1 or " Solidarisme," since logically and of necessity they are but the precursors of collectivism. 1 [Represented in England by the Fabian Society.] MERCANTILE LIBRARY NEW YORK. INDEX Analogy between the functions of the social and those of the human body, 156 Arbitration, compulsory industrial, 308 Art under a collectivist regime^ 167 Assington, agricultural association at, 67 Associations, agrarian, 67-68 industrial, for production, I r Australia, 21 Austria, the " Staatsbahn " of, 86 B Baltzer, the vegetarian, 167 Barter, international, 210 Bebel, Kautsky, and Guesde almost the only avowed supporters of pure Marxism, 275 Belgium, co-operative societies in, 299 socialism in, 245 Bernstein intellectual legatee of Engels, 246 a critic of Marxism, 246 et seq. description of his book, Social- isme thtorique, etc., 248 et seq. the economic evolution of modern society, 249, 253 the Marxian theory of value, 250 "plus-value," 250 "shares" as "dynamic capital," 254 conclusion upon Marx' theory, 258 381 Bernstein the evolution of modern commerce, and increased production tends to diminish the effect of economic crises, 264 the use of the term "scientific" as applied to socialism, 265 bases his hopes on co-operation, and recommends municipal socialism, 269 Socialisme et Science^ 269 iron law of wages, 269 meaning of scientific socialism, 270 theory of pauperisation, 270 can find nothing " scientific " about socialism, 271 why socialism is not and cannot be a pure science, 272 theoretical socialism is tending to disappear, 276 policy of a slow approach to collectivism, 278 co-operative association, 292 derivation of the word "social- ism," 307 Blanc, Louis the law of distribu- tion, 189 tailors' association in 1848, 181 Blanqui, the elder introduction of machinery, 268 Blanquists, the conception of the, 249 Bordeaux, congress at, 280 Bourgeois, alliance with, party, 286 the, element in co-operative societies, 295 Bourgeois, Le*on,and" Solidarism," 39 332 INDEX " Bourgeoisie," the, and unemploy- ment, 321 Briant, Aristide, 281 Briosne on the relations of land- lords and tenants, 109-10, 125 Bruno, treatise in praise of "solidar- ism," 313 Buckle on individual action, 158 Bureaucracy, immense size of, re- quired under a collectivist regime, 162 no, however large, could organise national production and dis- tribution successfully, 164 Business, proportion of persons suc- cessful in, in France, 120 means the exploitation of the workman, 130 Canada, allocations of land in, 22 Capital not the object of attack, 14 origin and evolution of, 16 is the plus-value of labour, 19 the, sunk in the land, 5, 20 concentration of, 15, 252 is the result of thrift, 97 has not always existed, 99 has existed from the remotest antiquity, 117 additions to, appear first in the form of money, 118 "variable," 125 "constant" or "fixed," 125 " constant," cannot produce "plus-value" or profit, 126 alone profits by improvements in machinery, 132 the guardian and protector of wage earners, 145 increased diffusion of, a cause of the over-stocking in distribu- tive and professional occupa- tions, 219 "magnates" of, 255 effect of the division of, by the agency of joint stock com- panies, 255 statistics of owners of, in Prussia, 320 Capitalisation of savings, 105 Capitalism, definition of, 14 " liberalism not, is the antithesis of socialism," 268 Capitalist, the initiator of work, 124 is the personification of " capi- tal," 130 function of the, in modern indus- try, 131 ready to incur risks, 183 the, class has begun to relieve itself of administrative func- tions, 314 Capitalistic society, distinguishing characteristic of, 119 Census of 1881 and the production of luxuries, 226, 228, 229, 230, 231, 232 German, of 1895, 233 French, of 1896, and the size of establishments, 259 et seq. " Chance " is an important element in human affairs, 27 et seq. Cheques, labour-, 200-1 labour-, a safeguard against a reversion to social in- equalities, 204 labour- and usury, 204 Christianity ignored by Marx as a factor in human development, 248 Cities, continued prosperity of, 82 Coke of Norfolk, 83-84 Colajanni, Napoleone, 281 Collectivism, the negative and positive side of, 10 and joint stock companies, 16 two theories of, 33 agrarian, 60 expedients hostile to spirit of, 182 unable to provide a satisfactory system of production, 185 an agency for distribution, 185 et seq. less efficient in securing increase of national wealth than the existing system, 189 the aged under, 203 would offer many openings for the re-establishment of social inequality, 204 similar to a military regime, 208 would justify the spoliation of the wealthy, 212 INDEX 333 Collectivism condemned by history and common sense, 241 makes an appeal to the intel- lectual proletariat, 313 Collectivists, plagiarisms by, from existing social system, 182 Commerce, definition of, by Marx, 118 has taken the place of barter, 121 private, alone can guarantee continuance of liberty of choice of requirements, 165 reappearance of private, 205 Commodities, circulation of, the starting-point of capital, 116 exchange of, 119 more elaborate, demanded, 262 Communism, definition of, 4 collectivism would necessarily end in, 201 Companies, joint stock, differ in kind, and not only in degree, from state administration, 178 joint stock, encourage the forma- tion of a new middle class, 3M Competition, can collectivism pro- vide a substitute for ? 30 the cause of reduction of prices, 133 substitution of harmonious co- operation for the inhuman action of unrestrained, 156 between employers a safeguard against various abuses, 208 anarchic, 217 ultimate effect of, 217 " Congress d'Education Sociale," 312 Control, committees of, of national production, 160 Co-operation co-operativeassocia- tions and the " Socialisme reformiste," 290 "equality" incompatible with, for production, 292 condemnation of, for produc- tion, is tantamount to the condemnation of the whole theory of collectivism, 293 first notable example of, of consumers, 294 Co-operation Army and Navy and Civil Service Societies, 295 Co-operative societies, agricultural, 67 et seq. have rendered invaluable services to society, 217 for production at first approved by socialists, 290 affiliation of small, for produc- tion, to a parent society, 296 in Belgium, 299 " Corvee," the, 1 10 et seq. Cost, reduction of net, 133 Cremieux an advocate of restricted succession, 76 Crises, economic, are most severe in countries in which industry is "non-capitalistic," 265 Crusoe, Robinson, 99 and "capital," 116 and the claim for interest on capital, 125 Currency, in the shape of coin, 198 D Darwin, Charles, 157 Debbs, Eugene V., 281 Debtors, men are, to past genera- tions, 311 Delitzsch, Schulze de, and co- operation, 181 Democracy a democratic organ- isation of society the most favourable condition for ac- cumulation of wealth by pro- fessional men, 204 effect of the novelty of a demo- cratic regime, 219 Denain, meeting at, 279 Deville and municipal trading in Paris, 306 "Dime," no et seq. Distribution, excessive numbers engaged in, and the remedy, 218 directors of, 161 law for the regulation of, 189 the weakest point in the proposed system of, 189 no law of, discoverable, 190 334 INDEX Division of labour, the only source of wealth, 106-7 Domicile, freedom of choice of, 207, 240 E Economic, the existing, organisa- tion, 8 the, organisation of the middle ages, 15 can equal, productivity be main- tained under collectivism ? 158 Economy, in production secured by collectivism, 214 effected by socialised labour ap- propriated by capitalists, 132 Education, present commercial value of elementary, 218 extension of, bitterly opposed by the intellectuals, 315 extension of, under socialism, 319 cost of, under socialism, 320 Eichthal, d', lecture by, 313 Engels relations with Bernstein, 246 recognition of errors committed by Marx and himself with respect to prophecies of social revolution, 249 on Marx' sources of information, 266 and the " Socialisme reformiste," 288 Enterprise, result of suppression of private, 166 Environment, the social, 311 Equality, material and moral, 219 Exchange has become a profession, 121 Expropriation of landed pro- prietors, 66 Fabian Society, 281 aims of the, 285 Factories, large, the creators of small auxiliary industries, 262 Factory inspectors, reports of, and the concentration of capital, 256 Family work and collective earn- ings, 137 Fashion, Kautsky upon the aboli- tion of, 237 effect of, on protection, 237 changes in, affect only a small number of people, 239 a taste for, allied to faculties which are essential to the progress of humanity, 239 extravagance induced by, in- significant, 239-40 intimate connection of, with per- sonal freedom, 240 Faucher, Le"on introduction of machinery, 268 Fawcett, Henry, on the state pur- chase of land, 71 Fengueray, 181 Ferri, Enrico, 281 Feudal rights, abolition of, in France, 20 Finisterre economic crisis owing to disappearance of sardines, 265 Flanders, production of wheat in, 1 92 Foreign, relations of a collectivist country, 209 exchanges, the value of, 21 1 stock markets at times of crisis, 211 Fourier, 183 Franco-Belgian school of socialists, 6 Freedom, individual, 13 substitution of official regulation for, 1 68 disappearance of professional, 183 Galiani, 157 George, Henry, and "unearned increment," 26, 27 admits right of private owners to indemnity, 71 Germany and the production of luxuries, 233 Gide, Charles scheme for state purchase of land, 72-74 tendency of associations of pro- ducers is towards oligarchy, 293 INDEX 335 Gide, Charles associations of producers would bring about industrial anarchy, 294 exposition of the evolution of co-operative societies, 297-98 Giffen, Sir Robert distribution of income, 24, note Guesde, Jules, a faithful follower of Marx, 272, 280 Gurdon, J. co-operative land asso- ciation, 67 H Harcourt, Sir William, 316 Hegel, period of ascendency of his ideas, 249 Holkham, estate of, 83-84 note Holland and co-operative societies, 300 Hyndman, H. M., 281 summary of results of enquiry made by Renard, 280, 287 I Immigration, attitude of a collec- tivist government towards, 212 Income, distribution of national, 23-24 in Prussia and Saxony, 252-53 Increment, "unearned," 80 Indemnity for owners of land, 70- 76 Individual initiative, the import- ance of, 159-62 Individuality, destruction of, 208 Individuals, progress of humanity due to exceptional, 311 Industrial improvements, socialisa- tion of, 128 Industries, home, 138 upon a large scale a defence against the evils of un- employment, 151 small, and the concentration of capital, 261 no present indication of the dis- appearance of the smaller, 262 Industry, chaotic period of, 266 Inequality. See Social Inheritance, under a collectivist regime, 203 as restricted by collectivism would be a source of cor- ruption, 204 Inheritors, idle, spendthrift, or vicious, 203 Intellectuals are divided into sharply defined classes, 316 International relations, collectivism would be unable to establish satisfactory, 213 Inventors and the red-tapism of bureaucracy, 184 Iron law, the, of Lassalle, and the organisation of industry, 123, 124 J Jagetzow, Robertus, the true father of collectivism, 246 et seq. Jaures a socialiste transigeant, 272 Etudes socialistes, 272 et seq. and the method of progressive absorption of power, 273 ideal is communism, 274 views on socialism, 279 Java, state cultivation in, 84-85 Justice, as interpreted by Leon Bourgeois, 310 K Kapital, Das, "the critical evangel of the European workman," 10 description of contents of, 116 Kautsky, on fashion, 237 on the waste caused by the growth of large cities, 238 on capitalistic production, 238 collaborator with Bernstein, 246 P. Leroy Beaulieu the " bourgeois optimist," 247 testifies to the purity of Bern- stein's doctrine, 247 on the position of British work- men, 267 is it " socialism " or " capitalism " that is abolishing itself? 268 336 INDEX Kautsky, appeal to the intellectual proletariat, 313 Le lendemain de la Revolution sociale, 318 and taxation, 319 and education, 319-20 and unemployment, 321 and the suppression of private industry, 321 confiscation or purchase ? 322 objections to confiscation, 323 the real difficulty of a proletarian regime is production, 324 Labour, division of, 1 1 superiority of collective over individual, 132 substitution of women and children's, for that of men's, 137-39 intensity of " speeding up," 140 effect upon, of the development of steam navigation, 144-45 nomadic, 147 method of fixing recompense for, 189 socially necessary, 191 waste of, under existing system, 214 manual, will cease to be despised, 220 Labour-cheques, dangers of, 200 Labour-force, cost of the produc- tion of, 122 as a marketable article, 122 the origin of " plus-value," 122 includes a moral element, 124 value of, in exchange, 127 Labour-time the corner-stone of Marx' system, 190 method of estimating, 191 Land, ownership of, in France, 69 agricultural, size of holdings in the German empire, 257 Landowners, the duties of, 83 Lassalle, F. wages are not the full remuneration of labour, 8 " luck " as a leveller of social conditions, 29 industrial profit, 93 origin of capital, 96 et sey. Lassalle, F. profit an accidental economic phenomenon, 100 on the use and reward of capital, IOO-I "saving," a negative quality, 103-4 thrift has no share in creation of capital, 105 productivity of capital impos- sible in ancient communi- ties, 107 capital, a novel and transitory phenomenon, 117 basis of his system, 119 idea of subsidised workmen's associations not worked out, 154 Laveleye, E. de criticism of private property illustrated, 68 right of private landowners to indemnity, 71 restriction of rights of succession, 76 Austrian railways, 85-86 Legislation, factory, 136 "Les liens sociaux," agents of destiny, 94 creators of capital, 94 equivalent to "luck" or "chance," ?5 Liberalism conflict with socialism, 13 not capitalism, is the antithesis of socialism, 268 Liberty, industrial, under a collec- tivist system, 9 individual, 13 of domicile, 13 of choice of occupation, 13 intellectual, under collectivist r/gt'me, 166 of minorities, 241 Locomotion, increased facilities for, not antagonistic to family life, 262 London, the daily provisioning of, 157 " Luck " an incentive to enterprise, 99 Luxury, effect of the production of, 215 what constitutes ? 221-22 an incentive to invention, 223 INDEX 537 Luxury effect of conversion of producers of luxuries into pro- ducers of necessaries, 226 production of luxuries an in- direct provision of neces- saries, 227 gain from suppression of, insig- nificant, 232 and the progress of civilisation, 235 Lyons, hospitals of, under private administration, 304 M MacCulloch, and the " wage-fund," 143 Machinery, and the displacement of labour, 143-45 evils caused by introduction of, 143 Machines, a protection to wage earners at times of crisis, 147 Mahommedanism, ignored by Marx as a factor in human develop- ment, 249 Malon, quotes Stuart Mill in support of collectivism, 168 translator of the Quintessence of Socialism into French, 245 "What is the law of degenera- tion and renaissance of socialism ? " 276 Malthus, new phenomena since publication of his book, 80 socialists are usually disciples of, 95, note the " law " of, not an " economi- cal" law, 123 error arising from rash general- isation, 263 Manifesto, the Communist, and the condition of the modern work- man, 265 Market, effect of fluctuations of the, 95 cosmopolitan, 96 universal and "capital," 116 Marx, Karl, 3 capital not created by saving, 8 " values-in-use " and " values-in- exchange," 14 Marx, Karl origin of commercial capital, 22 et seq. "protection" as a source of private wealth, 23 " luck " as a distributor of wealth, 29 sporting estates in Scotland, 87 origin of capital, 93 capital only entitled to main- tenance and replacement, 109 profit or "plus-value," 116 circulation of commodities the starting-point of capital, 116 "absolute" and "relative plus- value," 116 definition of commerce, 118 basis of his system, 119 thesis that money increases by circulation is un proven, 120 claim that the theory of "plus- value" is true for "indus- trial" as well as for "com- mercial" capital, 1 20 conception of a "capitalist," 121 "profit" cannot arise from the exchange of equivalents, 121 the market for labour, 122 division of capital into "con- stant'' and "variable," 125 the just claims of "capital," 125 the " value - in - use " of labour- force double that of its "value-in-exchange," 128 capital alone profits by improve- ments in machinery, 132 economy effected by socialised labour is appropriated by capitalists, 132 capitalistic system creates unem- ployment, 141 et seq. the necessity of the "unem- ployed " as an industrial reserve, 146 pauperism increases part passu with wealth, 148 accumulation of wealth the effect and the cause of a surplus of labour, 149 on the use of the national pro- duct, 1 88 338 INDEX Marx, Karl labour, as the sub- stance and standard of value, the corner-stone of the Marxian system, 190 formula for value loses all mean- ing when applied to a multi- tude of objects, 193 restricted definition of value by, the cause of collectivist errors, 193 altogether ignores difficulties of determining the value of work- time, 194 doctrine useless as a means of providing for the distribu- tion of wealth, 197 makes all human development depend upon " production and exchange," 248 and the Hegelian dialectic, 249 final cause of economic crises, 263 La Mistre de la Philosophic, 265 sources of information, 266 adherents of doctrines in France, Germany, and England, 280 Master, the, of former days is not the prototype of the capitalist of to-day, 131 Mill, J. Stuart agricultural co- operative societies, 67 restriction of rights of succes- sion, 76 hypothetical purchase of land by the state, 79 the dangers of state administra- tion, 1 68 machinery has not diminished labour, 216 introduction of machinery, 268 Millerand, a socialiste transigeant, 272 Socialisms Rtformiste^ 275 meeting at Vierzon, 278 policy of a slow approach to collectivism, 278 Bordeaux congress, 280 Millionaires in Prussia, 320 Money, functions of, 100 a token of exchange, 118 the point of departure and goal of production, 119 circulation of, an end in itself, 1 19 N Naples, and municipal trading, 306 National, risks under a collectivist regime ; 164 provision for, expenditure, 198 property rests upon the same principles as private pro- perty, 212 Nationalities, collectivism involves destruction of, 213 New Zealand, 21 Niewenhuis, Domela, 281 " Nord," department of the, 192 Obligations, contractual, and pre- natal ties, 310, 311 Officials, and their assumption of functions formerly discharged by the privileged classes, 313 why socialistic appeals to highly salaried, are unsuccessful, 317 " Ommiarques," 183 Oppenheimer, Dr Frank, on agri- cultural associations, 293 Organisation, existing economic, 8 of middle ages, 15 Owners, the interest of private, 82 Paris, distribution of incomes in, 236 the daily provisioning of, 157 Parks, value of private, 88 " Parti Socialiste frangais," 279 " Parti Ouvrier," 280 " Parti Socialiste de France," 280 Party, Independent Labour, com- pelled to accept socialistic principles, 283 Patents, socialisation of, 128 retard the introduction of new machinery, 146 Pauperism, conditions of, less de- grading than formerly, 130 statistics of, quoted in disproof of Marx' assertions, 149-50 in Paris, 151-52 INDEX 339 Pauperisation, the theory of, com- ments by Bernstein, 270 Plutocracy, and the middle classes, 251 " Plus-value," absolute, 1 16 relative, 116, 129 theory of, true of " industrial " as well as of "commercial" capital, 1 20 exchange cannot be the origin of, 121 derived from labour-force, 122 variation of, due to two causes, 129 Bernstein on, 251 Political economy, an abstract and conventional system, 94 Population, cause of the movement of, into towns, 240 Potter, Miss Beatrice (Mrs Sidney Webb), on co-operation for production, 291 Prescriptive right, 28 " Price," the automatic regulator of production, 162-64 Prizes for meritorious collective work, 1 8 1, 1 86 Produce, distribution of, in ex- change for labour - cheques, 198 Product, surplus, 255 Production, industrial, in France, 112 et seq. scientific organisation of national, 160 problem of adjustment of supply and demand unsolved, 174 under individual and under col- lective effort contrasted, 174 modern system of, necessarily involves some waste, 240 capitalistic, 251 characteristic of modern, an in- crease of productivity, 255 Profit, conceptions necessary to make the idea of, intelligible, 99 an accidental economic pheno- menon, 100 definition of, no per head of workmen employed, H3-I5 or "plus-value," 116 industrial, upon what it depends, 130 Profit, the only possible safeguard of production, 180 Progress, is due to individuals, 104, 183 how could, be maintained, 182 Proletariat, definition of, 7 the rural, would derive no advan- tage from state ownership of the land, 70 the, and the increase of produc- tion, 255 the intellectual, 313 Property, private, contrary to jus- tice, 6-7 derived from labour of others, 15 distribution of landed, in France, 20 increase in value of landed, 20 et seq. landed private, and collectivist ownership, 68 et seq. national, rests upon the same principles as private, 212 Proprietors, expropriation of landed, 66 Protection, not antagonistic to socialism, 23 Proudhon, on the introduction of machinery, 144-46 remark about Louis Blanc, 1 54 on luxury, 222 Prussia, distribution of incomes in, 235, 252 proportion of workers in, in large and small industries, 256 R Radicals, no substantial difference between methods proposed by, by the Marxists, by " Social- istes reformistes," and by "Socialist Radicals," 325 Renaissance, ignored by Marx as a factor in human development, 249 Rations, collectivist regime would be compelled to adopt a system of, 201 a system of, necessary to main- tain equality, 206 340 INDEX Renard, George enquiry into the political differences of social- ism, 280 summary of results of enquiry, 287 Rent, in Paris, 236 Revolution, the French, abolished feudal rights, 20 Revue Socialists, the views of Malon, 276 Ricardo spontaneous and con- tinuous increase of rent, 77-78 error arising from rashgeneralisa- tion by, 263 Richter, Eugene theory of the patriarchal employer, 316 Rochdale, the equitable pioneers of, 294 Rousseau, the Contrat Social, 311 Saving by the upper and middle classes in France, 237 Savings-banks, French, 103 Saxony, incomes in, 253 Schaffle, Dr A. only exponent of a method for the establishment of socialism, 3 lethargic administration, 17, note influence of "chance" an argu- ment in favour of col- lectivism, 29 can the incentive of competition be adequately replaced ? 30 admits right of private owners to indemnity, 71-72 Quintessence of Socialism the only book which attempts to explain the constructive side of collectivism, 154 description of the " New Social- ism," 155 socialism has no clear scheme for the organisation of com- peting labour, 159 on administration and book- keeping, 163 objects of commercial enterprise, 163 every one would retain right to decide upon his personal requirements under a col- lectivist regime, 164 Schaffle, Dr A. admits that collec- tivism would be a constant menace to freedom of personal demands, 167 if the wants of individuals were to be limited by its officials, collectivism would be the enemy of freedom, 167 unable to discover any substitute for " price " as the regulator of production, 169 wages cannot be estimated only on the basis of cost in "labour-time," 170 repetition of phrases indicating doubt as to the practicability of collectivism, 170 his suggestions violate the funda- mental principles of social- ism, 173 condition of state administration under existing system alto- gether different from that under a collectivist govern- ment, 175 mutual surveillance, 176 official regulation an inadequate inducement to work, 178 confesses that Marx' theory is incapable of supplying a satisfactory law for distribu- tion, 180-95 equality of wages, 182 collectivism would find a place for inequality, 186 the guarantees collectivism would offer to thrift, 187 collective thrift, 188 illustration which contradicts Marx' theory, 192 in attempting to enlarge Marx' narrow formula, is unfaithful to his doctrine, 193 recognises the difficulties of determining the value of work-time, 194 destroys the illusion of those who believe that scientific social- ism offers a clearly defined solution of social questions, 195 asserts that exchange-value must be determined not only by "cost" but also by "use- value," 195 INDEX 341 Schaffle, Dr A. admits that Marx' theory is incapable of supply- ing a satisfactory law for dis- tribution, 195 system for distribution of pro- duce, 198-9 on the employment of private wealth under a collectivist regime ', 201 anxious to accentuate difference between communism and collectivism, 202 thrift under a collectivist regime, 202 the "aged" and "inheritance" under a collectivist regime, 203 doubtful as to the form of recom- pense for professional ser- vices, 204 collectivism does not require a periodic division of property, 206 maintenance of freedom of choice of domicile, 207 shows no appreciation of the importance of the foreign relations of collectivist states, 211 costly advertisements, 216 Schramm, explanation of probable meaning of Marx' theory of "value," 196 Schulze de Delitzsch, 93, 106 definition of capital, 96 Senior, on the manufacturer's profit, 131 Shareholders, idle, 254 Shares, in joint stock companies, 254 Sheffield, and municipal trading, 306 Sigg, Jean, 281 Sismondi, the originator of the Marxian theory of the con- centration of wealth, etc., 25 1 Slavery, and the division of labour, 106-7 Social labour-time, 169 the idea of, the basis of social- ism, 190 recompense for, now determined by law of supply and de- mand, 190 Social conditions external to indi- vidual, 29 payment for personal services, 197 development of inequality in conditions, 202 inequality, fundamental causes of, 206 the, account and its rectification, 3" the effect of, environment, 311 " Socialism, New," 3 definition, 3, 4 spread of infection, 5 industrial improvements, 128 the "New," explained, 155 scientific, a mockery, 196 evolution of, since 1895, 245 Marxian, a medley of obscure ideas, 246 is the antithesis of liberalism, not of capitalism, 268 municipal, and Bernstein, 269 meaning of scientific, 270 theoretical, tending to disappear, 276 the vague aspirations of, are dangerously attractive, 276 of the salon, 283 election, church, or " good," 284 the five points of the new system of, adopted in England, Belgium, France, and Germany, 289 municipal, 303 et seq. identity of the programme of "Socialisme reformiste" with that of the orthodox Marxists, the opportunists, and the radicals, 318-19 and the cost of the army, 319 " Socialisme critique," 288 " Socialisme reformiste," 288 "Socialisme reformiste" and the municipalisation of industries, 301 Socialists, recognise difficulties of national production, 169 divergencies of opinion amongst, (see Enquiry by G. Renard), 280 et seq, " Socialistes reformistes " rely upon co-operation as a propaganda for collectivism, 294 INDEX Socialisation, would the, of means of production be well received by the superior classes of the proletariat? 315 Socialistic aspirations remain un- altered, although new forms of socialism have arisen, 278 Society, elastic organisation of, facilitates the development of inventions, 183 primitive, disinclined to abandon traditional customs, 239 " Solidarism," description of, 309 programme of, 312 leads necessarily to collectivism, 312 a fantastic doctrine, 312 Sorel "Socialistic Ideas and Economic Facts in the igth Century," 276 Spencer, Herbert, 157 State, assumption of landed pro- perty by, 66 defence of, administration, 175 thej and its difficulty in supplying an army or even a brigade when mobilised, 186 the, and waste in distribution, 1 86 objections to state administration, 302 Statistics, use of, 161 Strikes, colliery, in the "Nord" department, 114 colliery, at Angiers, 1 1 5 number of, no indication of extreme distress, 136 general effect of, 136 Strum, theory of the patriarchal employer, 316 Suffrage, attitude of socialists towards universal, 13 Tammany, and municipal trading, 306 Taxation, for the common benefit, 188 of luxury a prescriptive of art, 223 the " Socialistes reformistes " and, 309 Taxation, progressive, 319 progressive, on income derived from public funds, 322 Tellow agricultural co-operation, 67 Thrift, imparts a new direction to industry, 105 would be replaced by " hoarding " under a socialistic regime, 108 incentives to, 186 national, 187 annual amount of, in France, 187 due to the minority of the citizens of a country, 188 under a collectivist regime, 202 Thunen, von co-operative land association, 67 Ties, men bound by pre-natal, 310 Times, the, and municipal social- ism, 303-5 Trade, the uses of cosmopolitan, 2 10 Trades-unionism, genesis of, 135 Trades - unions, meaning of, to socialists, 308 Traders, superfluous, 217 Typewriters, use of, by municipali- ties, 306 U Unemployed, the, created by capitalistic system, 141 et seq. the, form the necessary reserve of the industrial army, 146 Unemployment, small industries and home work suffer most from, 146 a victorious proletariat alone able to deal with, 321 " Unearned increment," 77, 97 United States, 21 Usury and labour-cheques, 204 Utopia, a bourgeois conception of, 265 Millerand's opinion of, 275 Vaillant, 280 Values, "in use" and "in ex- change," 14 " in exchange," 94 of "utility," 95 INDEX 343 Values, of "utility" and "ex- change," 119 of "utility," as an element in fixing wages, 171-72 socialistic theory of, 178, 180 the substance of, of products lies in the labour socially neces- sary for their production, 191 common standard of, 191 if regard is paid to " utility," in estimating the value of labour, workmen must be classified, 194 Vandervelde, description of Belgian co-operative societies, 299-300 Vegetarians, lean towards social- ism, 167 Vierzon, meeting at, 278 Vorwarts, criticism on the Quint- essence of Socialism, 196 Bernstein, editor of, 246 W Wage earners, under a collectivist regime, 12-13 improvement in condition of, and Marx' theory, 123 Wage-fund, repetition of fallacy of the, by Marx, 142-43 Wages, increase of, in France, 142 variation of, 173 necessary inequality of, 182 method of determining, 189 Wages, equality of, if work-time taken as the measure of value, 194 iron law of, comments by Bern- stein, 269 Wealth, agricultural, derived from confiscation, 19 private, created by causes inde- pendent of owner, 26 use for private, under a collec- tivist regime, 201 Webb, Sidney, 281 tendency of associations of pro- ducers is towards oligarchy, 293 Wilson, on the manufacturer's profit, 131 Work-day, reduction in length of, 130 length of, and the "corvee," 134 Workmen, separation of, from their tools, 14 Parisian, demand a tax on machines, 183 the hopelessness of their posi- tion an axiom of " scientific socialism," 266 Workshop, the proletariat the master in the, 321 Work-time, socially organised can never be a satisfactory basis for a law of distribution, 193 as a measure of value, 194 PHINTBD BY OI.IVtIK AND BOYI> BIUNBl'HUH DATE DUE GAYLORD PRINTED IN U.S.A. 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