With Bastiat economic Liberalism, threatened by socialism, sought precarious refuge in Optimism. With Mill the older doctrines found new expression in language scientific in its precision and classical in its beauty.

It really seemed as if political economy had reached its final stage and that there could be no further excuse for prolonging our survey.

But just when Liberalism seemed most triumphant and the principles of the science appeared definitely settled there sprang up a feeling of general dissatisfaction. Criticism, which had suffered a temporary check after 1848, now reasserted its claims, and with a determination not to tolerate any further interruption of its task.

The reaction showed itself most prominently in Germany, where the new Historical school refused to recognise the boundaries of the science as laid down by the English and French economists. The atmosphere of abstractions and generalisations to which they had confined it was altogether too stifling. It demanded new contact with life—with the life of the past no less than that of the present. It was weary of the empty framework of general terms. It was athirst for facts and the exercise of the powers of observation. With all the ardour of youth it was prepared to challenge all the traditional conclusions and to reformulate the science from its very base.

So much for the doctrine. But there was one thing which was thought more objectionable than even the Classical doctrine itself, and that was the Liberal policy with which the science had foolishly become implicated, and which must certainly be removed.

In addition to such critics as the above there are also the writers who drew their inspiration from Christianity, and in the name of charity, of morality, or of religion itself, uttered their protest against optimism and laissez-faire. Intervention again, so tentatively proposed by Sismondi, makes a bold demand for wider scope in view of the pressure of social problems, and under the name of State Socialism becomes a definitely formulated doctrine.

Socialism, which Reybaud believed dead after 1848, revived in its turn. Marx’s Kapital, published in 1867, is the completest and most powerful exposition of socialism that we have. It is no longer a pious aspiration, but a new and a scientific doctrine ready to do battle with the champions of the Classical school, and to confute them out of their own mouths.

None of these currents is entirely new. Book II has shown us where they originated, and their beginnings can be traced to the earlier critical writers.

But we must not forget the striking difference between the ill-fated doctrines of the pre-1848 period and the striking success achieved by the present school. Despite the sympathy shown for the earlier critics, they remained on the whole somewhat isolated figures. Their protests were always individualistic—Sismondi’s no less than Saint-Simon’s, Fourier’s no less than Owen’s. Proudhon and List never seriously shook the public confidence in Liberalism. Now, on the contrary, Liberalism finds itself deserted, and sees the attention of public opinion turning more and more in the direction of the new school.

The triumph, of course, was not immediate. Many of the doctrines were formulated between 1850 and 1875, but victory was deferred until the last quarter of the century. But when it did come it was decisive. In Germany history monopolised the functions of economics, at least for a time. Intervention has only become universal since 1880. Since then, also, collectivism has won over the majority of the workers in all industrial countries, and has exercised very considerable influence upon politics, while Christian Socialism has discovered a way of combining all its most fervent adherents, of whatever persuasion, in one common faith.

The advance of this new school meant the decline of the Classical doctrine and the waning of Liberalism. Public interest gravitated away from the teaching of the founders. But in the absence of a new and a definite creed, what we find is a kind of general dispersion of economic thought, accompanied by a feeling of doubt as to the validity of theory in general and of theoretical political economy in particular. The old feeling of security gave place to uncertainty. Instead of the comparative unanimity of the early days we have a complete diversity of opinions, amid which the science sets out on a new career.

In the last Book we shall find that certain eminent writers have succeeded in renewing the scientific tradition of the founders. But every connection with practical politics had to be removed and a new body of closely knit doctrines had to be created before social thinkers could have this new point of view from which to co-operate.

CHAPTER I: THE HISTORICAL SCHOOL AND THE CONFLICT OF METHODS

The second half of the nineteenth century is dominated by Historical ideas, though their final triumph was not fully established until the last quarter of the century. The rise of these ideas, however, belongs to a still earlier period, and dates from 1843, when there appeared a small volume by Roscher entitled Grundriss. We shall have to return to that date if we wish to understand the ideas of the school and to appreciate their criticisms.

The successors of J. B. Say and Ricardo gave a new fillip to the abstract tendency of the science by reducing its tenets to a small number of theoretical propositions. The problems of international exchange, of the rate of profits, wages, and rent, were treated simply as a number of such propositions, expressed with almost mathematical precision. Admitting their exactness, we must also recognise that they are far from being adequate, and could not possibly afford an explanation of the different varieties of economic phenomena or help the solution of the many practical problems which the development of industry presents to the statesman. But McCulloch, Senior, Storch, Rau, Garnier,[799] and Rossi, the immediate successors of Ricardo and Say in England and France, repeated the old formulÆ without making any important additions to them. The new system of political economy thus consisted of a small number of quite obvious truths, having only the remotest connection with economic life. It is true that Mill is an exception. But the Principles dates from 1848, which is subsequent to the foundation of the Historical school. With this exception we may say, in the words of Schmoller, that after the days of Adam Smith political economy seems to have suffered from an attack of anÆmia.[800]

Toynbee gives admirable expression to this belief in his article on Ricardo and the Old Political Economy:[801] “A logical artifice became the accepted picture of the real world. Not that Ricardo himself, a benevolent and kind-hearted man, could have wished or supposed, had he asked himself the question, that the world of his treatise actually was the world he lived in; but he unconsciously fell into the habit of regarding laws which were those only of that society which he had created in his study for purposes of analysis as applicable to the complex society really existing around him. And the confusion was aggravated by some of his followers and intensified in ignorant popular versions of his doctrines.” In other words, there was a striking divergence between economic theory and concrete economic reality, a divergence that was becoming wider every day, as new problems arose and new classes were being formed. But the extent of the gap was best realised when an attempt was made to apply the principles of the science to countries where the economic conditions were entirely different from those existing either in England or in France.

This divergence between theory and reality might conceivably be narrowed in one of two ways. A more harmonious and a more comprehensive theory might be formulated, a task which Menger, Jevons, and Walras attempted about 1870. A still more radical suggestion was to get rid of all abstract theory altogether and to confine the science to a simple description of economic phenomena. This was the method of procedure that was attempted first, and it is the one followed by the Historical school.

Long before this time certain writers had pointed out the dangers of a too rigid adherence to abstraction. Sismondi—an essentially historical writer—treated political economy as a branch of moral science whose separation from the main trunk is only partial, and insisted upon studying economic phenomena in connection with their proper environment. He criticised the general conclusions of Ricardo and pleaded for a closer observation of facts.[802] List showed himself a still more violent critic, and, not content with the condemnation of Ricardian economics, he ventured to extend his strictures even to Smith. Taking nationality for the basis of his system, he applied the comparative method, upon which the Historical school has so often insisted,[803] to the commercial policy of the Classical school; but history was still employed merely for the purpose of illustration. Finally, socialists, especially the Saint-Simonians, whose entire system is simply one vast philosophy of history, had shown the impossibility of isolating economic from political and juridical phenomena, with which they are always intermingled.

But no author as yet had deliberately sought either in history or in the observation of contemporary facts a means of reconstructing the science as a whole. It is just here that the originality of the German school lies.

Its work is at once critical and constructive. On the critical side we have a profound and suggestive, though not always a just, analysis of the principles and methods of the older economists, while its constructive efforts gave new scope to the science, extended the range of its observations, and added to the complexity of its problems.

Generally speaking, it is not a difficult task to give an exposition of the critical ideas of the school, as we find them set forth in several books and articles, but it is by no means easy to delineate the conceptions underlying the positive work. Though implicit in all their writings, these conceptions are nowhere explicitly stated; whenever they have tried to define them it has always been, as their disciples willingly admit, in a vague and contradictory fashion.[804] To add further to the difficulty, each author defines them after his own fashion, but claims that his definition represents the ideas of the whole school.

In order to avoid useless repetitions and discussions without number we shall begin with a rapid survey of the outward development of the school, following with a rÉsumÉ of its critical work, attempting, finally, to seize hold of its conception of the nature and object of political economy. From our point of view the last-named object is by far the most interesting.

I: THE ORIGIN AND DEVELOPMENT OF THE HISTORICAL SCHOOL

The honour of founding the school undoubtedly belongs to Wilhelm Roscher, a GÖttingen professor, who published a book entitled Grundriss zu Vorlesungen Über die Staatswirtschaft nach geschichtlicher Methode in 1843. In the preface to that small volume he mentions some of the leading ideas which inspired him to undertake the work, which reached fruition in the celebrated System der Volkswirtschaft (1st ed., 1854). He makes no pretence to anything beyond a study of economic history. “Our aim,” says he, “is simply to describe what people have wished for and felt in matters economic, to describe the aims they have followed and the successes they achieved—as well as to give the reasons why such aims were chosen and such triumphs won. Such research can only be accomplished if we keep in close touch with the other sciences of national life, with legal and political history, as well as with the history of civilisation.”[805] Almost in the same breath he justifies an attack upon the Ricardian school. He recognises that he is far from thinking that his is the only or even the quickest way of attaining the truth, but thinks that it will lead into pleasant and fruitful quests, which once undertaken will never be abandoned.

What Roscher proposed to do was to try to complete the current theory by adding a study of contemporary facts and opinions, and, as a matter of fact, in the series of volumes which constitute the System, every instalment of which was received with growing appreciation by the German world of letters, Roscher was merely content to punctuate his exposition of the Classical doctrines with many an erudite excursus in the domain of economic facts and ideas.[806]

Roscher referred to his experiment as an attempt to apply the historical method which Savigny had been instrumental in introducing with such fruitful results into the study of jurisprudence.[807] But, as Karl Menger[808] has well pointed out, the similarity is only superficial. Savigny employed history in the hope of obtaining some light upon the organic nature and the spontaneous origin of existing institutions. His avowed object was to prove their legitimacy despite the radical pretensions of the Rationalist reformers of the eighteenth century. Roscher had no such aim in view. He was himself a Liberal, and fully shared in their reforming zeal. History with him served merely to illustrate theory, to supply rules for the guidance of the statesman or to foster the growth of what he called the political sense.

Schmoller thinks that Roscher’s work might justly be regarded as an attempt to connect the teaching of political economy with the “Cameralist” tradition of seventeenth- and eighteenth-century Germany.[809] These Cameralists were engaged in teaching the principles of administration and finance to students who were to spend their lives in administrative work of one kind or another, and they naturally took good care to keep as near actual facts as possible. Even in England and France political economy soon got involved in certain practical problems concerning taxation and commercial legislation. But in a country like Germany, which was industrially much more backward than either England or France, these problems wore a very different aspect, and some correction of the Classical doctrines was absolutely necessary if they were to bear any relation to the realities of economic life. Roscher’s innovation was the outcome of a pedagogic rather than of a purely scientific demand, and he was instrumental in reviving a university tradition rather than in creating a new scientific movement.

In 1848 another German professor, Bruno Hildebrand, put forward a much more ambitious programme, and his Die NationalÖkonomie der Gegenwart und Zukunft shows a much more fundamental opposition to the Classical school. History, he thought, would not merely vitalise and perfect the science, but might even help to recreate it altogether. Hildebrand points to the success of the method when applied to the science of language. Henceforth economics was to become the science of national development.[810]

In the prospectus of the JahrbÜcher fÜr NationalÖkonomie und Statistik, founded by him in 1863, Hildebrand goes a step farther. He challenges the teaching of the Classical economists, especially on the question of national economic laws, and he even blames Roscher because he had ventured to recognise their existence.[811] He did not seem to realise that a denial of that kind involved the undoing of all economic science and the complete overthrow of those “laws of development” which he believed were henceforth to be the basis of the science.

But Hildebrand’s absolutism had no more influence than Roscher’s eclecticism, unless we make an exception of his generalisation concerning the three phases of economic development, which he differentiates as follows: the period of natural economy, that of money economy, and finally that of credit. Beyond that he merely contented himself with publishing a number of fragmentary studies on special questions of statistics or history, without, for the most part, making any attempt to modify the Classical theory of production and distribution.

The critical study of 1848 hinted at a sequel which was to embody the principles of the new method. But the sequel never appeared, and the difficult task of carrying the subject farther was entrusted to Karl Knies, another professor, who in 1853 published a bulky treatise bearing the title of Political Economy from the Historical Point of View.[812] But there is as much divergence between his views and those of his predecessors as there is between Roscher’s and Hildebrand’s. He not only questions the existence of natural laws, but even doubts whether there are any laws of development at all—a point Hildebrand never had any doubts about—and thinks that all we can say is that there are certain analogies presented by the development of different countries. Knies cannot share in the belief of either Hildebrand or Roscher, nor does he hold with the Classical school. He thinks that political economy is simply a history of ideas concerning the economic development of a nation at different periods of its growth.

Knies’s work passed almost unnoticed, ignored by historians and economists alike, until the younger Historical school called attention to his book, of which a new edition appeared in 1883. Knies makes frequent complaints of Roscher’s neglect to consider his ideas.

Such heroic professions naturally lead us to expect that Knies would spare no effort to show the superiority of the new method. But his subsequent works dealing with money and credit, upon which his real reputation rests, bear scarcely a trace of the Historical spirit.

The three founders of the science devoted a great deal of time to a criticism of the Classical method, but failed to agree as to the aim and scope of the science and left to others the task of applying their principles.

This task was attempted by the newer Historical school, which sprang up around Schmoller towards the end of 1870. This new school possesses two distinctive characteristics.

(1) The useless controversy concerning economic laws which Hildebrand and Knies had raised is abandoned. The members of the school are careful not to deny the existence of natural social laws or uniformities, and they considered that the search for these was the chief object of the science. In reality they are economic determinists. “We know now,” says Schmoller,[813] “that psychical causation is something other than mechanical, but it bears the same stamp of necessity.” What they do deny is that these laws are discoverable by Classical methods, and on this point they agree with every criticism made by their predecessors.

As to the possibility of formulating “the laws of development” upon which Hildebrand laid such stress, they professed themselves very sceptical. “We have no knowledge of the laws of history, although we sometimes speak of economic and statistical laws,”[814] writes Schmoller. “We cannot,” he regretfully says later, “even say whether the economic life of humanity possesses any element of unity or shows any traces of uniform development, or whether it is making for progress at all.”[815] This very characteristic passage from Schmoller was written in 1904,[816] and forms the conclusion of the great synthetic treatise. All attempts at a philosophy of history are treated with the same disdain.[817]

(2) The newer Historical school, not content merely with advocating the use of the Historical method, hastened to put theory into practice. Since about 1860 German economists have shown a disposition to turn away from economic theory and to devote their entire energy to practical problems, sociological studies and historical or realistic research. The number of economic monographs has increased enormously. The institutions of the Middle Ages and of antiquity, the economic doctrines of the ancients, statistics, the economic organisation of the present day, these are some of the topics discussed. Political economy is lost in the maze of realistic studies, whether of the present day or of the past.

Although the Historical school has done an enormous amount of work we must not forget that historical monographs were printed before their time, and that certain socialistic treatises, such as Marx’s Kapital, are really attempts at historical synthesis. The special merit of the school consists in the impulse it gave to systematic study of this description. The result has been a renewed interest in history and in the development of economic institutions. We cannot attempt an account of all these works and their varied contents. We must remain satisfied if we can catch the spirit of the movement. The names of Schmoller, Brentano, Held, BÜcher, and Sombart are known to every student of economic history. Marshall, the greatest of modern theorists, has on more than one occasion paid them a glowing tribute.[818]

The movement soon left Germany, and it was speedily realised that conditions abroad were equally favourable for its work.

By the end of 1870 practical Liberalism had spent its force. But new problems were coming to the front, especially the labour question, which demanded immediate attention.[819] Classical economists had no solution to offer, and the new study of economic institutions, of social organisation, and of the life of the masses seemed to be the only hopeful method of gaining light upon the question. Comparison with the past was expected to lead to a better understanding of the present. The Historical method seemed to social reformers to be the one instrument of progress, and a strong desire for some practical result fostered belief in it. When we remember the prestige which German science has enjoyed since 1871, and the success of the Germans in combining historical research with the advocacy of State Socialism, we can understand the enthusiasm with which the method was greeted abroad.

Even in England, the stronghold of Ricardian economics, the influence of the school becomes quite plain after 1870.

Here, as elsewhere, a controversy as to the method employed manifests itself. Cairnes in his work The Character and Logical Method of Political Economy (1875[820]), writing quite in the spirit of the old Classical authors, strongly advocates the employment of the deductive method. In 1879 Cliffe Leslie, in his Essays on Political and Moral Philosophy, enters the lists against Cairnes and makes use of the new weapons to drive home his arguments. The use of induction rather than deduction, the constant necessity for keeping economics in living touch with other social sciences, the relative character of economic laws, and the employment of history as a means of interpreting economic phenomena, are among the arguments adopted and developed by Leslie. Toynbee, in his Lectures on the Industrial Revolution, gave utterance to similar views, but showed much greater moderation. While recognising the claims of deduction, he thought that history and observation would give new life and lend a practical interest to economics. The remoteness and unreality of the Ricardian school constituted its greatest weakness, and social reform would in his opinion greatly benefit by the introduction of new methods. Toynbee would undoubtedly have exercised tremendous influence; but his life, full of the brightest hopes, was cut short at thirty.

The lead had been given; the study of economic institutions and classes was henceforth to occupy a permanent position in English economic writings, and the remarkable works which have since been published, such as Cunningham’s Growth of English Industry and Commerce, Ashley’s Economic History, the Webbs’ Trade Unionism and Industrial Democracy, Booth’s Life and Labour of the People, bear witness to the profound influence exerted by the new ideas.

In France the success of the movement has not been quite so pronounced, although the need for it was as keenly felt there. Although it did not result in the founding of a French school of economic historians, the new current of ideas has influenced French economic thought in a thousand ways. In 1878 political economy became a recognised subject in the various curricula of the FacultÉs de Droit. The intimate connection between economic study and the study of law has given an entirely new significance to political economy, and the science has been entirely transformed by the infusion of the historical spirit. At the same time professional historians have become more and more interested in problems of economic history, thus bringing a spirit of healthy rivalry into the study of economic institutions. Several Liberal economists also, without breaking with the Classical tradition, have devoted their energies to the close observation of contemporary facts or to historical research.[821]

Finally, we have a new group of workers in the sociologists. Sociology is interested in the origin and growth of social institutions of all kinds and in the influence which they have exerted upon one another. After studying institutions of a religious, legal, political, or social character it is only natural that they should ask that the study of economic institutions should be carried on in the same spirit and with the help of the same method. This object has been enthusiastically pursued for some time. The mechanism and the organisation of the economic system at different periods have been closely examined by the aid of observation and history. Abstraction has been laid aside and a preference shown for minute observation, and for induction rather than deduction.[822]

II: THE CRITICAL IDEAS OF THE HISTORICAL SCHOOL

Among so many writers whose works cover such a long period of time we can hardly expect to find absolute unanimity, and we have already had occasion to note some of the more important divergencies between them, especially those separating the newer from the older writers of the Historical school. We cannot here enter into a full discussion of all these various shades of opinion, and we must be content to mention the more important features upon which they are almost entirely at one, noticing some of the principal individual doctrines by the way.

The German Historical school made its dÉbut with a criticism of Classical economics, and we cannot better begin than with a study of its critical ideas.[823]

Although these ideas had already found expression in the writings of Knies, Hildebrand, and Roscher, there was nothing like the discussion which was provoked by them when the newer Historical school, at a much later period, again brought them to public notice. The publication of Karl Menger’s work, Untersuchungen Über die Methode der Socialwissenschaften, in 1883—a classic both in style and matter—ushered in a new era of active polemics. This remarkable work, in which the author undertakes the defence of pure political economy against the attacks of the German Historical school, was received with some amount of ill-feeling by the members of that school,[824] and it caused a general searching of hearts during the next few years. We must try to bring out the essential elements in the discussion, and contrast the arguments advanced by the Historians with the replies offered by their critics.

Broadly speaking, three charges are levelled at the Classical writers. (i) It is pointed out that their belief in the universality of their doctrines is not easily justified. (ii) Their psychology is said to be too crude, based as it is simply upon egoism. (iii) Their use, or rather abuse, of the deductive method is said to be wholly unjustifiable. We will review these charges seriatim.

The Historians held that the greatest sin committed by Smith and his followers was the inordinate stress which they laid upon the universality of their doctrines. Hildebrand applies the term “universalism” to this feature of their teaching, while Knies refers to it as “absolutism” or “perpetualism.” The belief of the Anglo-French school, according to their version of it, was that the economic laws which they had formulated were operative everywhere and at all times, and that the system of political economy founded upon them was universal in its application. The Historians, on the other hand, maintained that these laws, so far from being categorically imperative, should be regarded always as being subject to change in both theory and practice.

First with regard to practice. A uniform code of economic legislation cannot be indifferently applied to all countries at all epochs of their history. An attempt must be made to adapt it to the varied conditions of time and place. The statesman’s art consists in adapting principles to meet new demands and in inventing solutions for new problems. But, as Menger points out, this obvious principle, which was by no means a new one, would have met with the approval of Smith and Say, and even of Ricardo himself;[825] although they occasionally forgot it, perhaps, especially when judging the institutions of the past or when advocating the universal adoption of laissez-faire.

The second idea, namely, that economic theory and economic laws have only a relative value, is treated with even greater emphasis, and this was another point on which the older economists had gone wrong. Economic laws, unlike the laws of physics and chemistry, with which the Classical writers were never tired of comparing them, have neither the universality nor the inevitability of the latter. Knies has laid special stress on this point. “The conditions of economic life determine the form and character of economic theory. Both the process of argument employed and the results arrived at are products of historical development. The arguments are based upon the facts of concrete economic life and the results bear all the marks of historical solutions. The generalisations of economics are simply historical explanations and progressive manifestations of truth. Each step is a generalisation of the truth as it is known at that particular stage of development. No single formula and no collection of such formulÆ can ever claim to be final.”[826]

This paragraph, though somewhat obscure and diffuse, as is often the case with Knies, expresses a sound idea which other economists have stated somewhat differently, by saying that economic laws are at once provisional and conditional. They are provisional in the sense that the progress of history continually gives rise to new facts of which existing theories do not take sufficient account. Hence the economist finds himself obliged to modify the formulÆ with which he has hitherto been quite content. They are conditional in the sense that economic laws are only true so long as other circumstances do not hinder their action. The slightest change in the conditions as ordinarily given might cancel the usual result. Those economists who thought of their theory as a kind of final revelation, or considered that their predictions were absolutely certain, needed reminding of this.

But Knies is hopelessly wrong in thinking that this relativity is enough to separate the laws of economics from the laws of other sciences. Professor Marshall justly remarks that chemical and physical laws likewise undergo transformation whenever new facts render the old formulÆ inadequate. All these laws are provisional. They are also hypothetical in the sense that they are true only in the absence of any disturbing cause. Scientists no longer consider these laws as inherent in matter. They are the product of man’s thought and they advance with the development of his intelligence.[827] They are nothing more or less than formulÆ which conveniently express the relation of dependence that exists between different phenomena; and between these various laws as they are framed by the human mind there is no difference except a greater or lesser degree of proof which supports them.

What gives to the laws of physics or chemistry that larger amount of fixity and that greater degree of certainty which render them altogether superior to economic law as at present formulated is a greater uniformity in the conditions that give rise to them, and the fact that their action is often measurable in accordance with mathematical principles.[828]

Not only has Knies exaggerated the importance of his doctrine of relativity,[829] but the imputation that his predecessors had failed to realise the need for it was hardly deserved. We shall have to refer to this matter again. Mill’s Principles was already published, and even in the Logic, which appeared for the first time in 1843, and several editions of which had been issued before 1853, the year when Knies writes, we meet with the following sentence:[830] “The motive that suggests the separation of this portion of the social phenomenon from the rest … is that they do mainly depend at least in the first resort on one class of circumstances only; and that even when other circumstances interfere, the ascertainment of the effect due to the one class of circumstances alone is a sufficiently intricate and difficult business to make it expedient to perform it once for all and then allow for the effect of the modifying circumstances.” Consequently sociology, of which political economy is simply a branch, is a science of tendencies and not of positive conclusions. No better expression of the principle of relativity could ever be given.

Notwithstanding all this, modern economists have come to the conclusion that the criticisms of the Historical school are sufficiently well founded to justify them in demanding greater precision so as to avoid those mistakes in the future. Dr. Marshall, for one, adopts Mill’s expression, and defines an economic law as “a statement of economic tendencies.”[831]

Even the founders of pure political economy, although their method is obviously very different from that of the Historians, have taken similar precautions. They expressly declare that the conclusions of the science are based upon a certain number of preliminary hypotheses deliberately chosen, and that the said conclusions are only provisionally true. “Pure economics,” says Walras, “has to borrow its notion of exchange, of demand and supply, of capital and revenue, from actual life, and out of those conceptions it has to build the ideal or abstract type upon which the economist exercises his reasoning powers.”[832] Pure economics studies the effects of competition, not under the imperfect conditions of an actual market, but as it would operate in a hypothetical market where each individual, knowing his own interests, would be able to pursue them quite freely, and in full publicity. The conception of a limited area within which competition is fully operative enables us to study as through a magnifying-glass the results of a hypothesis that really very seldom operates in the economic life of to-day.

We may dispute the advantages of such a method, but we cannot say that the economists ever wished to deny the relativity of a conclusion arrived at in this fashion.

While willing to admit that the Historians have managed to put this characteristic in a clear light just when some economists were in danger of forgetting it, and that it is a universally accepted doctrine to-day, we cannot accept Knies’s contention that it affords a sufficient basis for the distinction between natural and economic laws. And such is the opinion of a large number, if not of the majority, of economists.[833]

The second charge is levelled against the narrowness and insufficiency of the psychology. Adam Smith treated man as a being solely dominated by considerations of self-interest and completely absorbed in the pursuit of gain. But, as the Historians justly point out, personal interest is far from being the sole motive, even in the economic world. The motives here, as elsewhere, are extremely varied: vanity, the desire for glory, pleasure afforded by the work itself, the sense of duty, pity, benevolence, love of kin, or simply custom.[834] To say that man is always and irremediably actuated by purely selfish motives, says Knies, is to deny the existence of any better motive or to regard man as a being having a number of centres of psychical activity, each operating independently of the other.[835]

We cannot deny that the Classical writers believed that “personal interest”—not in the sense of egoism, which is the name given it by Knies, and which somewhat distorts their view—held the key to the significance and origin of economic life. But the claims of the Historians are again immoderate. Being themselves chiefly concerned with concrete reality in all its complexity of being, and with all its distinctive and special features rather than its general import, they forgot that the primary aim of political economy is to study economic phenomena en masse. The Classical economists studied the crowd, not the individual. If we neglect the differences that occasionally arise in special cases, and allow for the personal equation, do we not find that the most constant motive to action is just this personal desire for well-being and profit? This is the opinion of Wagner, who on this question of method is not quite in agreement with other members of the school. In his suggestive study of the different motives that influence economic conduct he definitely states that the only motive that is really constant and permanent in its action is this self-interest. “This consideration,” he says, “does something to explain and to justify the conduct of those writers who took this as the starting-point of their study of economics.”[836]

But having admitted this, we must also recognise, not that they denied the changes occasionally undergone by self-interest under the pressure of other motives, as Knies suggests, but that they have neglected to take sufficient account of such modifications. Sometimes it really seems as if they would “transform political economy into a mere natural history of egoism,” as Hildebrand says.

We can only repeat the remark which we have already made, namely, that when this criticism was offered it was scarcely justified. Stuart Mill had drawn attention to this point in his Logic ten years previously.[837] “An English political economist, like his countrymen in general, has seldom learned that it is possible that men in conducting the business of selling their goods over the counter should care more about their ease or their vanity than about their pecuniary gain.” For his own part he ventures to say that “there is perhaps no action of a man’s life in which he is neither under the immediate nor under the remote influence of any impulse but the mere desire of wealth.”[838]

It is evident that Mill did not think that self-interest was the one unchangeable and universal human motive. Much less “egoism,” for, as we have seen in the previous chapter, his “egoism” includes a considerable admixture of altruism.

But here again the strictures of the Historians, though somewhat exaggerated, have forced economists of other schools to be more precise in their statements. The economists of to-day, as Marshall remarks, are concerned “with man as he is; not with an abstract or ‘economic’ man, but a man of flesh and blood.”[839] And if the economist, as Marshall points out, pays special attention to the desire for gain among the other motives which influence human beings, this is not because he is anxious to reduce the science to a mere “natural history of egoism,” but because in this world of ours money is the one convenient means of measuring human motive on a large scale.[840] Even the Hedonists, whose economics rest upon a calculus of pleasure and pain, are careful to note that their hypothesis is just a useful simplification of concrete reality, and that such simplification is absolutely necessary in order to carry the analysis of economic phenomena as far as possible. It is an abstraction—imposed by necessity, which is its sole justification, but an abstraction nevertheless.

It is just here that the final reproach comes in, namely, the charge of abusing the employment of abstraction and deduction, and greater stress is laid upon this count than upon either of the other two.

Instead of deduction the new school would substitute induction based upon observation.

Their criticism of the deductive method is closely connected with their attack upon the psychology of the older school. The Classical economists thought, so the Historians tell us, that all economic laws could be deduced by a simple process of reasoning from one fundamental principle. If we consider the multiplicity of motives actually operative in the economic world, the insufficiency of this doctrine becomes immediately apparent. The result is not a faithful picture, but a caricature of reality. Only by patient observation and careful induction can we hope to build up an economic theory that shall take full account of the complexity of economic phenomena. “There is a new future before political economy,” writes Schmoller in 1883, in reply to a letter of Menger, “thanks to the use that will be made of the historical matter, both descriptive and statistical, that is slowly accumulating. It will not come by further distillation of the abstract propositions of the old dogmatism that have already been distilled a hundred times.”[841]

The younger school especially has insisted on this; and Menger has ventured to say that in the opinion of the newer Historical school “the art of abstract thinking, even when distinguished by profundity and originality of the highest order, and when based upon a foundation of wide experience—in a word, the exercise of that gift which has in other sciences resulted in winning the highest honour for the thinkers—seems to be of quite secondary importance, if not absolutely worthless, as compared with some elaborate compilation or other.”[842]

But the criticism of the Historical school confuses two things, namely, the particular use which the Classical writers have made of the abstract deductive method, and the method itself.

No one will deny that the Classical writers often started with insufficient premises. Even when the premises were correct, they were too ready to think and not careful enough to prove that their conclusions were always borne out by the facts. No one can defend their incomplete analysis, their hasty generalisations, or their ambiguous formulÆ.[843]

But this is very different from denying the legitimacy of abstraction and deduction. To isolate a whole class of motives with a view to a separate examination of their effects is not to deny either the presence or the action of other motives, any more than a study of the effect of gravitation upon a solid involves the denial of the action of other forces upon it. In a science like political economy, where experiment is practically impossible, abstraction and analysis afford the only means of escape from those other influences which complicate the problems so much. Even if the motives chosen were of secondary importance, the procedure would be quite legitimate, although the result would not be of any great moment. But it is of the greatest service and value when the motive chosen is one, like the search for gain or the desire for personal satisfaction, which exercises a preponderant influence upon economic action.[844]

So natural, we may even say so indispensable, is abstraction, if we are to help the mind steer its way amid the complexity of economic phenomena, that the criticism of the Historical school has done nothing to hinder the remarkable development which has resulted from the use of the abstract method during the last thirty years. But, although the Neo-Classical school has succeeded in replacing the old methods in their position of honour once more, it no longer employs those methods in the way the older writers did. A more solid foundation has been given them in a more exact analysis of the needs which personal interest ought to satisfy.[845] And the mechanism of deduction itself has been perfected by a more rigid use of the ordinary logical forms, and by the adoption of mathematical phraseology.

Happily the controversy as to the merits of the rival methods, which was first raised by the Historical school, has no very great interest at the present moment. Most eminent economists consider that both are equally necessary. There seems to be a general agreement among writers of different schools to consider the question of method of secondary importance, and to forget the futile controversies from which the science has gained so little. Before concluding this section it may be worth while to quote the opinion of men who represent very different tendencies, but are entirely agreed with regard to this one subject. “Discussion of method,” says Pareto, “is a pure waste of time. The aim of the science is to discover economic uniformities, and it is always right to follow any path or to pursue any method that is likely to lead to that end.”[846] “For this and other reasons,” says Marshall, “there always has been, and there probably always will be, a need for the existence side by side of workers with different aptitudes and different aims.… All the devices for the discovery of the relations between cause and effect which are described in treatises on scientific method have to be used in their turn by the economist.”[847]

These writers generally employ the abstract method. Let us now hear some of the Historians. Schmoller is the author of that oft-quoted phrase, “Induction and deduction are both necessary for the science, just as the right and left foot are needed for walking.”[848]

More remarkable still, perhaps, is the opinion of BÜcher, an author to whom the Historical school is indebted for some of its most valuable contributions. “It is therefore a matter of great satisfaction that, after a period of diligent collection of material, the economic problems of modern commerce have in recent times been zealously taken up again and that an attempt is being made to correct and develop the old system in the same way in which it arose, with the aid, however, of a much larger store of facts. For the only method of investigation which will enable us to approach the complex causes of commercial phenomena is that of abstract isolation and logical deduction. The sole inductive process that can likewise be considered—namely, the statistical—is not sufficiently exact and penetrating for most of the problems that have to be handled here, and can be employed only to supplement or control.”[849]

III: THE POSITIVE IDEAS OF THE HISTORICAL SCHOOL

What made the criticism of the Historians so penetrating was the fact that they held an entirely different view concerning the scope and aim of economics. Behind the criticism lurked the counter-theory. Nothing less than a complete transformation of the science would have satisfied the founders, but the younger school soon discovered that so ambitious a scheme could never be carried out. It is important that we should know something of the view of those older writers on this question, and the way they had intended to give effect to their plans. The positive contribution made by the Historical school to economic study is even more important than its criticisms, for it gives a clue to an entirely different point of view with which we are continually coming into contact in our study of economic doctrines.

The study of economic phenomena may be approached from two opposite standpoints, which we may designate the mechanical and the organic. The one is the vantage-ground of those thinkers who love generalisations, and who seek to reduce the complexity of the economic world to the compass of a few formulÆ; the other of those writers who are attracted by the constant change which concrete reality presents.

The earlier economists for the most part belonged to the former class. Amid all the wealth and variety of economic phenomena they confined their attention almost entirely to those aspects that could be explained on simple mechanical principles. Such were the problems of price fluctuations, the rate of interest, wages, and rent. Production adapting itself to meet variation in demand, with no guide save personal interest, looked for all the world like the intermolecular action of free human beings in competition with one another. The simplicity of the idea was not without a certain grandeur of its own.

But such a conception of economic life is an extremely limited one. A whole mass of economic phenomena of the highest importance and of the greatest interest is left entirely outside. The phenomena of the economic world, as a matter of fact, are extremely varied and changeable. There are institutions and organisations without number, banks and exchanges, associations of masters and unions of men, commercial leagues and co-operative societies. Eternal struggle between the small tradesman and the big manufacturer, between the merchant and the combine, between the peasant proprietor and the great landowner, between classes and individuals, between public and private interests, between town and country, is the common feature of economic life. A state rises to prosperity again to fall to ruin. Competition at one moment makes it superior, at another reduces its lead. A country changes its commercial policy at one period to reintroduce the old rÉgime at another. Economic life fulfils its purposes by employing different organs that are continually modified to meet changing conditions, and are gradually transformed as science progresses and manners and beliefs are revolutionised.

Of all this the mechanical conception tells us nothing. It makes no attempt to explain the economic differences which separate nations and differentiate epochs. Its theory of wages tells us nothing about the different classes of workpeople, or of their well-being during successive periods of history, or about the legal and political conditions upon which that well-being depends. Its theory of interest tells us nothing of the various forms under which interest has appeared at different times, or of the gradual evolution of money, whether metallic or paper. Its theory of profits ignores the changes which industry has undergone, its concentration and expansion, its individualistic nature at one moment, its collective trend at another. No attempt is made to distinguish between profits in industry or commerce and profits in agriculture. The Classical economists were simply in search of those universal and permanent phenomena amid which the homo oeconomicus most readily betrayed his character.

The mechanical view is evidently inadequate if we wish to delineate concrete economic life in all its manifold activity. We are simply given certain general results, which afford no clue to the concrete and special character of economic phenomena.

The weakness of the mechanical conception arises out of the fact that it isolates man’s economic activity, but neglects his environment. The economic action of man must influence his surroundings. The character of such action and the effects which follow from it differ according to the physical and social, the political and religious surroundings wherein they are operative. A country’s geographical situation, its natural resources, the scientific and artistic training of its inhabitants, their moral and intellectual character, and even their system of government, must determine the nature of its economic institutions, and the degree of well-being or prosperity enjoyed by its inhabitants. Wealth is produced, distributed, and exchanged in some fashion or other in every stage of social development, but each human society forms a separate organic unit, in which these functions are carried out in a particular way, giving, accordingly, to that society a distinctive character entirely its own. If we want to understand all the different aspects of this life we must make a study of its economic activity, not as it were in vacuo, but in connection with the medium through which it finds expression, and which alone can help us to understand its true nature.[850]

This was the first doctrine on which they laid stress: the other follows immediately. This social environment cannot be regarded as fixed. It is constantly undergoing some change. It is in process of transformation and of evolution. At no two successive moments of its existence is it quite the same. Each successive stage calls for explanation, which history alone can give. Goethe has given utterance to this thought in a memorable phrase which serves as a kind of epigraph to Schmoller’s great work, the Grundriss. “A person who has no knowledge of the three thousand years of history which have gone by must remain content to dwell in obscurity, living a hand-to-mouth existence.” We must have some knowledge of the previous stages of economic development if we are to understand the economic life of the present. Just as naturalists and geologists in their anxiety to understand the present have invented hypotheses to explain the evolution of the globe and of living matter upon it, so must the student of economics return to the distant past if he wants to get hold of the industrial life of to-day. “Man as a social being,” says Hildebrand, “is the child of civilisation and a product of history. His wants, his intellectual outlook, his relation to material objects, and his connection with other human beings have not always been the same. Geography influences them, history modifies them, while the progress of education may entirely transform them.”[851]

The Historians maintained that the earlier economists by paying exclusive attention to those broader conclusions which had something of the generality of physical laws about them had kept the science within too narrow limits. Alongside of theory as they had conceived of it—some Historians would say instead of it—there is room for another study more closely akin to biology, namely, a detailed description and a historical explanation of the constitution of the economic life of each nation. Such is the positive contribution of the school to the study of political economy, and it fairly represents the attitude of the present-day Historians towards the older economists.

Their aim was a perfectly natural and legitimate one, and at first sight, at least, seemed very attractive. But beneath its apparent simplicity there is some amount of obscurity, and its adversaries have thought that upon close analysis it is really open to serious objections.

In the first place, is it the aim of the science to present us with an exact, realistic picture of society, as the Historians loved to think? On the contrary, do we not find that a study can only aspire to the name of a science in proportion as its propositions become more general in their nature? There is no science without generalisation, according to Aristotle, and concrete description, however indispensable, is only a first step in the constitution of a science. A science must be explanatory rather than descriptive.

Of course Historians are not always content with mere description. Some Historians have attempted explanation and have employed history as their organon. Is the choice a suitable one?

“History,” says Marshall, “tells of sequences and coincidences; but reason alone can interpret and draw lessons from them.”[852]

Moreover, is there a single important historical event whose cause has ceased to be a matter of discussion? It will be a long time before people cease to dispute about the causes of the Reformation or the Revolution, and the relative importance of economic, political, and moral influences in determining the course of those movements has yet to be assigned. The causes that led to the substitution of credit for money or money for barter are equally obscure. Before narrative can become science there must be the preliminary discovery by a number of other sciences of the many diverse laws whose combination gives rise to concrete phenomena.[853] Not history but the sciences give the true explanation. The evolutionary theory has proved fruitful in natural history simply because it took the succession of animal species as an established fact and then discovered that heredity and selection afforded a means of explaining that succession. But history cannot give us any hypothesis that can rival the theory of evolution either in its scientific value or in its simplicity. In other words, history itself is in need of explanation. It gives no clue to reality and it can never take the place of economics.[854]

The earlier Historians claimed a higher mission still for the historical study of political economy. It must not only afford an explanation of concrete economic reality, but it must also formulate the laws of economic development. This idea is only held by a few of them, and even the few are not agreed as to how it should be done. Knies, for example, thinks that it ought to be sufficiently general to include the economic development of all nations. Saint-Simon held somewhat similar views. Others, and among them Roscher, hold that there exist parallelisms in the history of various nations; in other words, that every nation in the course of its economic development passes through certain similar phases or stages. These similarities constitute the laws of economics. If we were to study their movements in the civilisations of the past we might be able to estimate their place in existing societies.[855]

Neither point seems very clear. Even if we admit that there is only one general law of human development we cannot forecast the line of progress, because scientific prediction is only applicable to recurrent phenomena. They fail just when the conditions are new. Of course one can always guess at the nature of the future, but divination is not knowledge. And predictions of this kind are almost always false.[856] Historical parallelism rests on equally shaky foundations. A nation, like any other living organism, passes through the successive stages of youth, maturity, and old age, but we are not justified in thinking that the successive phases through which one nation has passed must be a kind of prototype to which all others must conform. All that we can say is that in two neighbouring countries the same effects are likely to follow from the same causes. Production on a large scale, for example, has been accompanied by similar phenomena in most countries in Western Europe. But this is by no means an inevitable law. It is simply a case of similar effects resulting from similar causes. Such analogies are hardly worthy of the name of laws. The discovery of the law, as Wagner says,[857] may be a task beyond human power; and Schmoller, as we have already seen, is of the same opinion.

One remark before concluding. There is a striking similarity between the ideas just outlined and those of a distinguished philosopher whose name deserves mention here, although his influence upon political economy was practically nil. We refer to Auguste Comte.

It is curious that the earliest representatives of the school should have ignored him altogether, but just as Mill remained unknown to them, so the Cours de Philosophie positive, though published in 1842, remained a sealed book so far as they were concerned. Comte’s ideas are so very much like those of Knies and Hildebrand that some Positivist economists, such as Ingram and Hector Denis, have attempted to connect the Historical tendency in political economy with the Positive philosophy of Comte.[858]

The three fundamental conceptions which formed the basis of the teaching of the Historical school are clearly formulated by Comte. The first is the importance of studying economic phenomena in connection with other social facts. The analysis of the industrial or economic life of society can never be carried on in the “positive” spirit by simply making an abstraction of its intellectual, political, or moral life, whether of the past or of the present.[859] The second is the employment of history as the organon of social science. “Social research,” says he, “must be based upon a sane analysis of the all-round development of the best of mankind up to the present moment, and the growing predilection for historical study in our time augurs well for the regeneration of political economy.” He was fully persuaded that the method would foster scientific prediction—a feature which is bound to fuse all those diverse conditions which will form the basis of Positive politics.

Comte wished to found sociology, of which political economy was to be simply a branch. The Historical school, and especially Knies, regarded economics in the same spirit. Hence the analogies with which Knies had to content himself, but which the younger school refused to recognise. But there was a fundamental difference between their respective points of view, and this will help us to distinguish between them.

Comte was a believer in inevitable natural laws, which, according to the earlier Historians, had wrought such havoc. The Historical method also, as he conceived of it, was something very different from what the older or the newer Historical school took it to be.

Adopting a dictum of Saint-Simon, Comte speaks of the Historical method as an attempt to establish in ascending or descending series the curve of each social institution, and to deduce from its general outlines conclusions as to its probable growth or decline in the future. This is how he himself defines the process: “The essence of this so-called historical spirit, it seems to us, consists in the rational use of what may be called the social series method, or, in other words, in the due appreciation of the successive stages of human development as reflected in a succession of historical facts. Careful study of such facts, whether physical, intellectual, moral, or political, reveals a continuous growth on the one hand and an equally continuous decline on the other. Hence there results the possibility of scientific prophecy concerning the final ascendancy of the former and the complete overthrow of the latter, provided always such conclusion is in conformity with the general laws of human development, the sociological preponderance of which must never be lost sight of.”[860] It was in virtue of this method that Saint-Simon predicted the coming of industrialism and that Comte prophesied the triumph of the positive spirit over the metaphysical and religious.

There is considerable difference between this attitude and the Historical method as we know it,[861] and the attempt at affiliation seems to us altogether unwarranted. But the coincidence between Comte’s views and those of Knies and Hildebrand is none the less remarkable, and it affords a further proof of the existence of that general feeling which prompted certain writers towards the middle of the century to attempt a regeneration of political economy by setting it free from the tyranny of those general laws which had nearly stifled its life.

It seems to us, however, that the Historical school is mistaken if it imagines that history alone can afford an explanation of the present or will ever enable us to discover those special laws which determine the evolution of nations.

On the other hand, it has a perfect right to demand a place beside economic science, and it is undoubtedly destined to occupy a position still more prominent in the study of economic institutions, in statistical investigation, and above all in economic history. Not only is a detailed description of the concrete life of the present of absorbing interest in itself, but it is the condition precedent to all speculations concerning the future. The theorist can never afford to neglect the minute observation of facts unless he wills that his structure shall hang in the void. Most abstract economists feel no hesitation in recognising this. For example, Jevons, writing in 1879,[862] gave it as his opinion that “in any case there must arise a science of the development of economic forces and relations.”

This newer historical conception came to the rescue just when the science was about to give up the ghost, and though they may have failed to give us that synthetic reconstruction which is, after all, within the ability of very few writers, its advocates have succeeded in infusing new life into the study and in stimulating new interest in political economy by bringing it again into touch with contemporary life. They have done this by throwing new light upon the past and by giving us a detailed account of the more interesting and more complex phenomena of the present time.[863] Such work must necessarily be of a fragmentary character. The school has collected a wonderful amount of first-class material, but it has not yet erected that palace of harmonious proportions to which we in our fond imagination had likened the science of the future. Nor has it discovered the clue which can help it to find its way through the chaos of economic life. This is not much to be wondered at when we remember the shortcomings of the method to which we have already had occasion to refer. Indeed, some of the writers of the school seem fully convinced of this. Professor Ashley, in an article contributed to the Economic Journal, employs the following words:[864] “As I have already observed, the criticisms of the Historical school have not led so far to the creation of a new political economy on historical lines: even in Germany it is only within very recent years that some of the larger outlines of such an economics have begun to loom up before us in the great treatise of Gustav Schmoller.”

In view of considerations like these one might have expected that the Historical school would have shown greater indulgence to the attempts made both by the Classical and by the Hedonistic schools to give by a different method expression to the same instinctive desire to simplify matters in order to understand them better.[865]

CHAPTER II: STATE SOCIALISM

The nineteenth century opened with a feeling of contempt for government of every kind, and with unbounded confidence on the part of at least every publicist in the virtue of economic liberty and individual initiative. It closed amid the clamour for State intervention in all matters affecting economic or social organisation. In every country the number of public men and of economists who favour an extension of the economic function of government is continually growing, and to-day such men are certainly in the majority. To some writers this change of opinion has seemed sufficiently important to warrant special treatment as a new doctrine, variously known as State Socialism or “the Socialism of the Chair” in Germany and Interventionism in France.

Really it is not an economic question at all, but a question of practical politics upon which writers of various shades of economic opinion may agree despite extreme differences in their theoretical preconceptions. The problem of defining the limits of governmental action in the matter of producing and distributing wealth is one of the most important in the whole realm of political economy, but it can hardly be considered a fundamental scientific question upon which economic opinion is hopelessly divided. It is clear that the solution of the problem must depend not merely upon purely economic factors, but also on social and political considerations, upon the peculiar conception of general interest which the individual has formed for himself and the amount of confidence which he can place in the character and ability of Governments.[866] The problem is always changing, and whenever a new kind of society is created or a new Government is established a fresh solution is required to meet the changed conditions.

How is it, then, that this question has assumed such extravagant proportions at certain periods of our history?

Had the issue been confined to the limits laid down by Smith it is probable that such passionate controversies would have been avoided. Smith’s arguments in favour of laissez-faire were largely economic. Gradually, however, under the growing influence of individual and political liberty, a kind of contempt for all State action took the place of the more careful reasoning of the earlier theory, and the superiority of individual action in matters non-economic became an accepted axiom with every publicist.

This method of looking at the problem is very characteristic of Bastiat. The one feature of government that interested him was not the fact that it represented the general interest of the citizens, but that whenever it took any action it had to employ force,[867] whereas individual action is always free. Every substitution of State for individual action meant victory for force and the defeat of liberty. Such substitution must consequently be condemned. Smith’s point of view is totally different. To appreciate this difference we need only compare their treatment of State action. In addition to protecting the citizens from invasion and from interference with their individual rights, Smith adds that the sovereign should undertake “the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”[868] The scope is sufficiently wide, at any rate. If we turn to Bastiat, on the other hand, we find that the Government has only two functions to perform, namely, “to guard public security and to administer the common land.”[869] Viewed in this light, the problem of governmental intervention, instead of remaining purely economic, becomes a question of determining the nature, aims, and functions of the State, and individual temperament and social traditions play a much more important part than either the operation of economic phenomena or any amount of economic reasoning. It is not surprising that some writers thought that the one aim of economics was to defend the liberty and the rights of the individual!

Such exaggerated views were bound to beget a reaction, and the defence of State action assumes equally absurd proportions with some of the writers of the opposite school. Even as far back as 1856 Dupont-White, a French writer, had uttered a protest against this persistent depreciation of the State, in a short work entitled L’Individu et l’État. His ideas are so closely akin to those of the German State Socialists that they have often been confused with them, and it is simpler to give an exposition of both at the same time. But he was a voice crying in the wilderness. Public opinion under the Second Empire was very little disposed to listen to an individual who, though a Liberal in politics, was yet anxious to strengthen the power and to add to the economic prerogative of the Crown. More favourable circumstances were necessary if there was to be a change of public opinion on the matter. The times had ripened by the last quarter of the century, and the elements proved propitious, especially in Germany, where the reaction first showed itself.

The reaction took the form not so much of the creation of a new doctrine as of a fusion of two older currents, which must first be examined.

During the course of the nineteenth century we find a number of economists who, while accepting Smith’s fundamental conception, gradually limit the application of his principle of laissez-faire. They thought that the superiority of laissez-faire could not be scientifically demonstrated and that in the great majority of cases some form of State intervention was necessary.

On the other hand, we meet with a number of socialists who prove themselves to be more opportunistic than their comrades, and though equally hostile to private property and freedom of production, yet never hesitate to address their appeals on behalf of the workers to existing Governments.

State Socialism represents the fusion of these two currents. It surpasses the one in its faith in the wisdom of Governments, and is distinguished from the other by its greater attachment to the rights of private property; but both of them contribute some items to its programme. In the first place we must try to discover the source of these separate tendencies, and in the second place watch their amalgamation.

I: THE ECONOMISTS’ CRITICISM OF LAISSEZ-FAIRE

The doctrine of absolute laissez-faire was not long allowed to go unchallenged. From the time of Smith onward there is an uninterrupted sequence of writers—all of them by no means socialists—who ventured to attack the fundamental propositions of the great Scotsman and who attempted to show that his practical conclusions were not always borne out by the facts.

Smith based his advocacy of laissez-faire upon the supposed identification of public and private interests. He showed how competition reduced prices to the level of cost of production, how supply adapted itself to meet demand in a perfectly automatic fashion, and how capital in an equally natural way flowed into the most remunerative occupations.

This principle of identity of interests was, however, rudely shaken by the teachings of Malthus and Ricardo, although both of them remained strong adherents of the doctrine of individual liberty.

Sismondi, who was the next to intervene, laid stress upon the evils of competition, and showed how social inequality necessitated the submission of the weak to the will of the strong. His whole book was simply a refutation of Smith’s providential optimism.

In Germany even, as early as 1832, that brilliant economist Hermann was already proceeding with his critical analysis of the Classical theories; and after demonstrating how frequently individual interest comes into conflict with public welfare, and how inadequate is the contribution which it can possibly make to the general well-being, he declares his inability to subscribe to the doctrine laid down by most of Smith’s followers, namely, that individual activity moved by personal interest is sufficient to meet all the demands of national economy. Within the bounds of this national economy[870] he thinks there ought to be room for what he calls the civic spirit (Gemeinsinn) as well.

The next critic, List, bases his whole case upon the opposition between immediate interests, which guide the individual, and the permanent interests of the nation, of which the Government alone can take account.

Stuart Mill, in the famous fifth book of the Principles, refuses even to discuss the doctrine of identity of interests, believing it to be quite untenable. On the question of non-intervention he admits the validity of one economic argument only, namely, the superiority of self-interest as an economic motive. But he is quick to recognise its shortcomings and the exceptions to its universal operation—in the natural incapacity of children and of the weak-minded, the ignorance of consumers, the difficulty of achieving it, even when clearly perceived, without the help of society as a whole, as in the case of the Factory Acts. Mill also points out how this motive is frequently wanting in modern industrial organisation, where, for example, we have joint stock companies acting through the medium of a paid agency, or charitable work undertaken by an individual who has to consider, not his own interests, but those of other people. Private interest is also frequently antagonistic to public interest, as in the case of the public supply of gas or water, where the individual entrepreneur is influenced by the thought of a maximum profit rather than by considerations of general interest. In matters of that kind Stuart Mill was inclined to favour State intervention.[871]

M. Chevalier, from his professorial chair in the CollÈge de France, extended his congratulations to Mill upon his successful restoration of the legitimate duties of Governments.[872] Chevalier thought that those who believed that the economic order could be set up simply by the aid of competition acting through personal interest were either illogical in their arguments or irrational in their aims. Government was simply the manager of the national organisation, and its duty was to intervene whenever the general interest was endangered. But the duties and privileges of government are not exactly those of the village policeman.[873] Applying this principle to public works, he points out that they are more or less State matters, and the guarantee for good work is quite as great when the State itself undertakes to perform it as when it is entrusted to a private individual.

In 1863 Cournot, whose reputation was unequal to either Mill’s or Chevalier’s, but whose penetrating thought, despite its small immediate influence, is quite important in the history of economic doctrines, treats of the same problem in his Principes de la ThÉorie des Richesses. Going straight to the heart of the problem, he asks whether it is possible to give a clear definition of this general interest—the economic optimum which we are anxious to realise—and whether the system of free competition is clearly superior to every other. He justly remarks that the problem is insoluble. Production is determined by demand, which depends both upon the preliminary distribution of wealth and also upon the tastes of consumers. But if this be the case, it is impossible to outline an ideal system of distribution or to fix upon the kind of tastes that will prove most favourable for the development of society. A step farther and Cournot must have hit upon the distinction so neatly made by Pareto between maximum utility, which is a variable, undefined notion, and maximum ophelimity, “the investigation of which constitutes a clearly defined problem wholly within the realm of economics.”[874]

But Cournot does not therefore conclude that we ought to abstain from passing any judgment in the realm of political economy and abandon all thought of social amelioration. Though the absolutely best cannot be defined, it does not follow that we cannot determine the relatively good. “Improvement or amelioration is possible,” says he, “by introducing a change which operates upon one part of the economic system, provided there are no indirect effects which damage the other parts of the system.”[875] Such progress is not necessarily the result of private effort. Following Sismondi, he quotes several instances in which the interests of the individual collide with those of the public and in which State intervention might prove useful.

Every one of these authors—in varying degrees, of course—admits the legitimacy of State intervention in matters economic. Liberty doubtless is still the fundamental principle. Sismondi was content with mere aspiration, so great did the difficulties of intervention appear to him. Stuart Mill thought that the onus probandi should rest with the innovator. Cournot considered liberty as being still the most natural and simple method, and should the State find it necessary to intervene it could only be in those instances in which science has clearly defined the aim in view and demonstrated the efficacy of the methods proposed. Every one of them has abandoned liberty as a scientific principle. To Cournot it was an axiom of practical wisdom;[876] Stuart Mill upheld it for political reasons as providing the best method of developing initiative and responsibility among the citizens. They all agree that the State, far from being a pis aller, has a legitimate sphere of action. The difficulty is just to define this.[877] This was the task to which Walras addressed himself with remarkable success in his lectures on the theory of the State, delivered in Paris in 1867-68.[878]

And so we find that the progress of thought since the days of Adam Smith had led to important modifications of the old doctrines concerning the economic functions of the State. The publicists, however, were not immediately converted. Even when the century was waning they still remained faithful to the optimistic individualism of the earlier period. The organon of State Socialism merely consists of these analyses incorporated into a system. The authors just mentioned must consequently be regarded, if not as the precursors of State Socialism, at any rate as unconsciously contributing to the theory.

II: THE SOCIALISTIC ORIGIN OF STATE SOCIALISM. RODBERTUS AND LASSALLE

State Socialism is not an economic doctrine merely. It has a social and moral basis, and is built upon a certain ideal of justice and a particular conception of the function of society and of the State. This ideal and this conception it received, not from the economists, but from the Socialists, especially Rodbertus and Lassalle. The aim of these two writers was to effect a kind of compromise between the society of the present and that of the future, using the powers of the modern State simply as a lever.

The idea of a compromise of this kind was not altogether new. A faint suggestion of it may be detected more than once in the course of the century, and an experiment of the kind was mooted in France towards the end of the July Monarchy. At that time we find men like Louis Blanc and Vidal—who were at least socialists in their general outlook—writing to demand State intervention not merely with a view to repairing the injustice of the present society, but also with a view to preparation for the society of the future with as little break with the past as possible. Louis Blanc was in this sense the first to anticipate the programme of the State Socialists. But its more immediate inspirers were Rodbertus and Lassalle, both of whom belonged to that country in which its effects were most clearly seen.

Their influence upon German State Socialism cannot be exactly measured by the amount of direct borrowing that took place. They were linked by ties of closest friendship to the men who were responsible for creating and popularising the new ideas, and it is important that we should appreciate the personal influence which they wielded. Rodbertus formed the centre of the group, and during the two years 1862-64 he carried on an active correspondence with Lassalle. They were brought together by the good offices of a common friend, Lothar Bucher, an old democrat of 1848 who had succeeded in becoming the confidant of Bismarck. Strangely enough, Bismarck kept up his friendship with Lassalle even when the latter was most busily engaged with his propaganda work.[879] Wagner, also, the most eminent representative of State Socialism, was in frequent communication with Rodbertus, and he never failed to recognise his great indebtedness to him. Wagner himself was on more than one occasion consulted by Bismarck.

But apart altogether from their connection with State Socialism, Rodbertus and Lassalle would deserve a place in our history. Rodbertus is a theoretical writer of considerable vigour and eloquence, and his thoughts are extraordinarily suggestive. Lassalle was an agitator and propagandist rather than an original thinker, but he has left a lasting impression upon the German labour movement. Hence our determination to give a somewhat detailed exposition of their work, especially of that of Rodbertus, and to spare no effort in trying to realise the importance of the contribution made by both of them.

1. Rodbertus

In a history of doctrines Rodbertus has a place peculiarly his own. He forms, as it were, a channel through which the ideas first preached by Sismondi and the Saint-Simonians were transmitted to the writers who belong to the last quarter of the century. His intellectual horizon—largely determined for him by his knowledge of these French sources[880]—was fixed as early as 1837, when he produced his Forderungen, which the Gazette universelle d’Augsburg refused to publish. His first work appeared in 1842,[881] and the earliest of the Soziale Briefe[882] belong to 1850 and 1851. At the time these passed almost unnoticed. It was only when Lassalle in his treatise in 1862 referred to him as the greatest of German economists, and when conservative writers like Rudolf Meyer and Wagner drew attention to his work, that his books received the notice which they deserved. The German economists of the last thirty years have been greatly influenced by him. His ideas, it is true, are largely those of the earliest French socialists, who wrote before the movement had lost its purely intellectual tone and become involved in the struggle of the July Monarchy, but his clear logic and his systematic method, coupled with his knowledge of economics, which is in every way superior to that of his predecessors, gives to these ideas a degree of permanence which they had never enjoyed before. This “Ricardo of socialism,” as Wagner[883] calls him, did for his predecessors’ doctrines what Ricardo had succeeded in doing for those of Malthus and Smith. He magnified the good results of their work and emphasised their fundamental postulates.

Rodbertus’s upbringing decreed that he should not become involved in that democratic and radical socialism which was begotten of popular agitation, and whose best-known representative is Marx. Marx considered socialism and revolution, economic theory and political action, as being indissolubly one.[884] Rodbertus, on the other hand, was a great liberal landowner who sat on the Left Centre in the Prussian National Assembly of 1848, and his political faith is summed up in the two phrases “constitutional government” and “national unity.”[885] The success won by the Bismarckian policy gradually drew him nearer the monarchy, especially towards the end of his life.[886] His ideal was a socialist party renouncing all political action and confining its attention solely to social questions. Although personally favourably inclined towards universal suffrage, he refused to join Lassalle’s Arbeiterverein because Lassalle had insisted upon placing this article of political reform on his programme.[887] The party of the future, he thought, would be at once monarchical, national, and socialistic, or at any rate conservative and socialistic.[888] At the same time we must remember that “in so far as the Social Democratic party was aiming at economic reforms he was with it heart and soul.”[889]

Despite his belief in the possibility of reconciling the monarchical policy with his socialistic programme, he carefully avoided the economic teachings of the socialists. His too logical mind could never appreciate their position, and he had the greatest contempt for the Socialists of the Chair. He would be the first to admit that in practice socialism must content itself with temporary expedients, although he cannot bring himself to believe that such compromise constitutes the whole of the socialistic doctrine. He refers to the Socialists of the Chair as the “sweetened water thinkers,”[890] and he refused to join them at the Eisenach Congress of 1872—the “bog of Eisenach,” as he calls it somewhere. He regarded the whole thing as a first-class comedy. Even labour legislation, he thought, was merely a caprice of the humanitarians and socialists.[891] So that whenever we find him summing up his programme in some such sonorous phrase as Staat gegen Staatslosigkeit[892] (“the State as against the No-State”) we must be careful to distinguish it from the hazy doctrines of the State Socialists.[893] Despite himself, however, he proved one of the most influential precursors of the school, and therein lies his real significance.

Rodbertus’s whole theory rests upon the conception of society as an organism created by division of labour. Adam Smith, as he points out, had caught a faint glimmer of the significant fact that all men are linked together by an inevitable law of solidarity which takes them out of their isolation and transforms an aggregate of individuals into a real community having no frontiers and no limits save such as division of labour imposes, and sufficiently wide in scope to include the whole universe.[894] As soon as an individual becomes a part of economic society his well-being no longer depends upon himself and the use which he makes of the natural medium to which he applies himself, but upon the activity of his fellow-producers. The execution of certain social functions, which Rodbertus enumerates as follows, and which he borrows partly from Saint-Simon, henceforth become the determining factors: (1) The adaptation of production to meet demand; (2) the maintenance of production at least up to the standard of the existing resources; (3) the just distribution of the common produce among the producers.

Should society be allowed to work out these projects spontaneously, or should it endeavour to carry out a preconceived plan? To Rodbertus this was the great problem which society had to consider. The economists of Smith’s school treated the social organism as a living thing. The free play of natural laws must have the same beneficial effects upon it as the free circulation of the blood has upon the human body. Every social function would be regularly discharged provided “liberty” only was secured. Rodbertus thought this was a mistake. “No State,” says he, “is sufficiently lucky or perhaps unfortunate enough to have the natural needs of the community satisfied by natural law without any conscious effort on the part of anyone. The State is an historical organism, and the particular kind of organisation which it possesses must be determined for it by the members of the State itself. Each State must pass its own laws and develop its own organisation. The organs of the State do not grow up spontaneously. They must be fostered, strengthened, and controlled by the State.”[895] Hence, after 1837 we find Rodbertus proposing the substitution of a system of State direction[896] for the system of natural liberty, and his whole work is an attempt to justify the introduction of such a system. Let us examine his thesis and review the various economic functions which we defined above. Let us also watch their operation at the present day and see how differently these functions would be discharged in a better organised community.

1. It is hardly correct to speak of production adapting itself to social need under existing conditions, because production only adapts itself to the effective demand, i.e. to the demand when expressed in terms of money. This fact had been hinted at by Smith, and Sismondi had laid considerable stress upon it; but Rodbertus was the earliest to point out that this really meant that only those people who already possess something can have their wants satisfied.[897] Those who have nothing to offer except their labour, and find that there is no demand for that labour, have no share in the social product. On the other hand, the individual who draws an income, even though he never did any work for it, is able to make effective his demand for the objects of his desire. The result is that many of the more necessitous persons must needs go unsatisfied, while others wallow in luxury.

Truer word was never spoken. Rodbertus had a perfect right to insist on the fundamental fallacy lurking within a system which could treat unemployment—that modern form of famine—as simply an over-production of goods, and which found itself unable to modify it except through public or private charity. His remedy consisted of a proposal to set up production for social need as a substitute for production for demand. The first thing to be done was to find out the time which each individual would be willing to give to productive work, making a note of the character and quantity of goods required at the same time.[898] He thought that “the wants of men in general form an even series, and that the kind and number of objects required can easily be calculated.”[899] Knowing the time which society could afford to give to production, there would be no great difficulty in distributing the products among the various producers.

This is to go to work a little too precipitately and to shun the greatest difficulty of all. The uniform series of wants of which Rodbertus speaks exist only in the imagination. What we really find is a small number of collective needs combined with a great variety of individual needs. Social need is merely a vague term used to designate both kinds of wants at once. The slightest reflection shows that every individual possesses quite a unique series of needs and tastes. To base production upon social need is to suppress liberty of demand and consumption. It implies the establishment of an arbitrary scale of needs which must be satisfied and which is to be imposed upon every individual. The remedy would be worse than the evil.

But the opposition between social need and effective demand by no means disposes of his argument. The opposition needs some proving, and some explanation of the producers’ preference for demand rather than need ought to be offered. The explanation must be sought in the fact that the capitalistic producer of to-day manages his business in accordance with the dictates of personal interest, and personal interest compels him to apply his instruments to produce whatever will yield him the largest net product. He is more concerned about the amount of profit made than about the amount of produce raised. He produces, not with a view to satisfying any social need, but simply because it yields him rent or profit.[900]

This contrast between profit-making and productivity deserves some attention. Sismondi had already called attention to it by distinguishing between the net and the gross product. A number of writers have treated of it since, and it holds a by no means insignificant place in the history of economic doctrines.[901]

The opposition is dwelt upon in no equivocal fashion by Rodbertus. This pursuit of the maximum net product is clearly the producer’s only guide, but the conclusions which he proceeds to draw from it are somewhat more questionable. If we accept his opinion that the satisfaction of social need and not of individual demand is the determining factor in production, we are driven to the conclusion that modern society, actuated as it is by this one motive, cannot possibly satisfy every individual demand. But we have already shown that the phrase “social need” has no precise connotation; neither has the term “productivity,” which is so intimately connected with it. Further, if society has no desire to impose upon its members an arbitrary scale of wants that must be satisfied—in other words, if demand and consumption are to remain free—it can only be by adopting that system which recognises a difference between the present and the future “rentability” of the product. This difference between the sale price and the real cost of production of any commodity must, it seems to us, be recognised even by a collectivist society as the only method of knowing whether the satisfaction which a commodity gives is in any way commensurate with the labour involved in its production.[902] Pareto has given an excellent demonstration of this by showing how collectivist society will have to take account of price indications if social demand is to be at all adequately supplied.

2. Turning to the other desideratum, namely, a fuller utilisation of the means of production, Rodbertus contents himself with quoting the criticisms of the Saint-Simonians concerning the absence of conscious direction which characterises the present rÉgime and the hereditary element which is such a common feature of economic administration. He is in full agreement with Sismondi when the latter declares that production is entirely at the option of the capitalist proprietor.[903] In this matter he is content merely to follow his leaders, without making any contribution of his own to the subject.

3. There still remains a third economic function which society ought to perform, and which Rodbertus considered the most important of all, namely, the distribution of the social product. An analysis of the present system of distribution was one of the tasks he had set himself to accomplish, believing with Sismondi and other socialists that a solution of the problem of distribution and the explanation of such phenomena as economic crises and pauperism constitute the most vital problems which face the science at the present moment.

A just distribution, in Rodbertus’s opinion, should secure to everyone the product of his labour.[904] But does not the present rÉgime of free competition and private property accomplish this?

Let us watch the mechanism of distribution as we find it operating at the present time. Rodbertus’s description of it is not very different from J. B. Say’s, and it tallies pretty closely with the Classical scheme. On the one hand we have the entrepreneur who purchases the services of labour, land, and capital, and sells the product which results from this collaboration. The prices which he pays for these services and the price he himself receives from the consumer are determined by the interaction of demand and supply. What remains after paying wages, interest, and rent constitutes his profits.[905]

The distribution of the product is effected through the mechanism of exchange, and the result of its operation is to secure to the owner of every productive service the approximate market value of that service. Could anything be juster? Apparently not. But if we examine the social and economic hinterland behind this mechanism what we do find is the callous exploitation of the worker by every capitalist and landlord. The various commodities which are distributed among the different beneficiaries are really the products of labour. They are begotten of effort and toil—largely mechanical. Rodbertus did not under-value intellectual work or under-estimate the importance of directive energy. But intelligent effort seemed to him an almost inexhaustible force, and its employment should cost nothing, just as the forces of nature may be got for nothing. Only manual labour implies loss of time and energy—the sacrifice of something that cannot be replaced.[906] Consequently he does not recognise the intellectual or moral effort (the name is immaterial) involved in the postponement of consumption, whereby a present good is withheld with a view to contributing to the sum total of future good.[907] And he proceeds to define and to develop the opening paragraph of Smith’s Wealth of Nations: “The annual labour of every nation is the fund which originally supplies it with all the necessaries and conveniences of life which it annually consumes, and which consist always either in the immediate produce of that labour or in what is purchased with that produce from other nations.”

The difference between his attitude and Marx’s is also interesting. Marx was thoroughly well versed in political economy, and had made a special study of the English socialists. His one object was to set up a new theory of exchange, with labour as the source of all value. Rodbertus, who drew his inspiration from the Saint-Simonians, focused attention upon production, and treated labour as the real source of every product—a simpler, a truer, but a still incomplete proposition. Rodbertus never definitely commits himself to saying that labour by itself creates value, but, on the other hand, he never denies it.[908] Social progress, he always maintained, must consist in the greater degree of coincidence[909] between the value of a product and the quantity of labour contained in it. But this is a task which the future must take in hand.[910] Again, if it be true that the worker creates the product, but that the proprietors of the soil and the capitalists who have had no share in its production are able to manipulate exchange in such a way as to retain a portion of it for themselves, it is clear that our judgment concerning the equity of the present system needs some revision. This secret embezzlement for the profit of the non-worker and to the injury of the diligent proceeds without any outward display of violence through the free play of exchange operating within a system of private property. Its sole cause lies in the present social system, “which recognises the claim of private landowners and capitalists to a share of the wealth distributed, although they have contributed nothing towards its production.”[911]

Hence his exposition of the twofold aspect of distribution. Economically exchange attributes to each of the factors land, capital, and labour a portion of the produce corresponding to the value of their respective services as estimated in the market. Socially it often means taking away from the real producers—from the workers—a part of the goods which their toil has created. This portion Rodbertus refers to under the simple name “rent,” which includes both the revenue of capitalists and the income of landlords.

No economist ever put the twofold aspect of the problem in a clearer light. Laying hold of the eternal opposition between the respective standpoints, he emphasises the difficulties which they present to so many minds. Justice would relate distribution to merit, but society is indifferent provided its own needs are satisfied. Society simply takes account of the market value of these products and services without ever showing the least concern for their origin or the efforts which they may originally have involved—the weary day of the industrious labourer and the effortless lounge of the lazy capitalist being similarly rewarded. Rodbertus’s great merit was to separate this truth from the other issues so frequently confused with it in the writings of the earlier economists and to bring it clearly before the notice of his fellow economists.

Rodbertus’s criticism did not end there, although the demonstration which we have just given of the distinction between the social and the purely economic point of approach to distribution constitutes its essential merit. We must not omit the practical conclusions which he draws from it.

What concerned Rodbertus most—at least, so we imagine from the standpoint which he adopted—was not the particular way in which the rate of wages or interest, high or low rents, are determined, but the proportion of the revenue that goes to the workers and non-workers respectively. The former question is a purely economic one of quite secondary importance compared with this other social problem. Believing that he had already shown the possibility of the workers being robbed, the problem now was to determine whether this spoliation was likely to continue. Does economic progress give any ground for hoping that rent or unearned income will gradually disappear? Bastiat and Carey had replied in the affirmative. The proportion that goes to capital, so they affirmed, is gradually becoming less, to the great advantage of the labourer. Ricardo, faced with the same dilemma, had come to the conclusion that with the inevitable increase in the cost of producing food the landowner’s share must be constantly growing. Say had asked himself the same question in the earliest edition of his treatise, but had found no reply. Rodbertus adopts none of their solutions, but independently arrives at the conclusion that the worker’s share gradually dwindles, to the advantage of the other participants.[912]

Theorist as he was, a simple deduction was all that was needed to convince him of the truth of this view. The rate of wages, we have already seen, is determined by the interaction of demand and supply in the labour market. The market price of labour, however, like that of any other product, is always gravitating towards a normal value—this normal value being none other than Ricardo’s necessary wage. “The share of the product that falls to the lot of the producer both in an individual instance and as a general rule is not measured by the amount which he himself has produced, but by that quantity which is sufficient for the upkeep of his strength and the upbringing of his children.”[913] This celebrated “brazen law” became the pivot of Lassalle’s propaganda, although it was never definitely recognised by Marx.

Granting the existence of such a law, and admitting also that the amount produced by labour is always increasing, so that the mass of commodities produced always keeps growing, a very simple arithmetical calculation suffices to show that the total quantity obtained by the workers always remains the same, representing a diminished fraction of the growing totality.

A similar demonstration affords a clue to the prevalence of crises. The entrepreneur keeps adding to the mass of commodities produced until he touches the full capacity of social demand.[914] But while production grows and expands the worker’s share dwindles, and thus his demand for some products remains permanently below production level. The structure is giving way under the very feet of the unsuspecting producer.[915] This theory of crises is simply a re-echo of Sismondi,[916] and gives an explanation of a chronic evil rather than of a crisis pure and simple. Its scientific value is just about equal to Sismondi’s other theory concerning proportional distribution.

This theory upon which Rodbertus laid such emphasis had already been outlined in his Forderungen, and a fuller development is given in his Soziale Briefe, where he expressly states it to be the fundamental point of his whole system, all else being mere scaffolding. His one ambition all his life long was to be able to give a statistical proof of it, but its importance is not nearly as great as he imagined it to be.

In the first place, doubt as to the validity of the “brazen” or “iron law of wages”—upon which the theory is based—is entertained not merely by economists, but also by socialists. And even if it were true, Rodbertus’s proof would still be inconclusive, for the workers’ share of the total product depends not upon one fact alone, but upon two—the rate of wages and the number of workers. Rodbertus’s error and Bastiat’s are very similar. Bastiat had tried to determine the capitalists’ share of the total product by taking account of one fact only, namely, the rate of interest, whereas he ought to have taken the amount of existing capital into consideration as well.

But we must admit that although the arguments used by Rodbertus are scarcely more reliable than Bastiat’s, his theory itself is nearer the facts as judged by statistics. No amount of a priori reasoning without some recourse to statistics can ever solve the problem. Statistics themselves seem to prove that labour’s portion, in some countries at least, has shown signs of diminishing since the beginning of the present century.

This does not necessarily mean that the worker must be worse off, for it may well happen that a diminution in the general share obtained by labour is accompanied by a growth of individual wages. All that we can conclude is that wages have not increased as rapidly as has capital’s share,[917] but this has not prevented the workers sharing in the general growth of prosperity.

Logically enough, Rodbertus proceeds to draw certain practical conclusions, including the necessity for the suppression of private property and of individual production. The community should be the sole owner of the means of production. Unearned income must go. Everyone should contribute something to the national dividend, and each should share in the total produce in proportion to his labour. The value of all commodities will depend upon the amount of time spent on them and effort put into them; and since the supply will always adapt itself to the needs of society the measure will be constant and exact, and equal distribution will be assured.

But Rodbertus recoils from his own solution, and the ardent socialist becomes a simple State Socialist. What frightens him is not the terrible tyranny of a system under which production and even consumption would be strictly regulated. “There would be as much personal freedom under a system of this kind as in any other form of society,” he remarks,[918] “society” evidently always implying some measure of restraint. His apprehension was of a different kind. He had a perfect horror of any revolutionary change, and stood aghast at the lack of education displayed by the masses. He realised how unwilling they were to sacrifice even a part of their wages in order to enable other men to have the necessary leisure to pursue the study of the arts and sciences—the noblest fruits of civilisation. Finally it seemed to him that illegal appropriation and the rightful ownership which results from vigorous toil are too often confused by being indiscriminately spoken of as private property. “There is,” says he, “so much that is right mixed up with what is wrong that one goads the lawful owner into revolt in trying to lay hold of the unlawful possessor.”[919]

Some kind of compromise should at all costs be effected. If private property—one of the great evils of the present day—cannot be got rid of without some inconvenience, cannot we possibly dispense with freedom of contract, the other source of inequality? Let us assume, then, that we have got rid of free contract while retaining the institution of private property. By doing this, although we are not immediately able to clear away unearned income, we shall have removed some of the greatest inconveniences that result from it. We shall arrest the downward trend of labour’s remuneration, and poverty and crises will disappear together.[920]

Such an attempt might be made even now. Let the State estimate the total value of the social product in terms of labour and determine the fraction that should go to the workers. Let it give to each entrepreneur in accordance with the number of workers he employs a number of wage coupons, in return for which the entrepreneur shall be obliged to put on the market a quantity of commodities equal in value. Lastly, let the said workers, paid in wage coupons, supply themselves with whatever they want from the public stores in return for these coupons. The national estimate would from time to time be subject to revision; and in order that the proportions should always be the same, the number of coupons given to labour would have to be increased if the number of commodities produced ever happened to increase. Rodbertus’s aim was to give the workers a share in the general progress made, and such was the plan which he laid down.[921]

There is no need to emphasise its theoretical, let alone its practical difficulties. We were led to mention it for a double reason. In the first place, it is interesting as an attempt to effect a compromise between the society of the present and the collectivism of the future. Marx regards the growing servility of the worker with a certain measure of equanimity as a necessary preliminary to his final emancipation. Rodbertus would speed the process of amelioration and would better his lot here and now.[922] It also throws an interesting light upon his extraordinary confidence in the all-powerful sovereignty of the State, and the ability of government to bend every individual will, even the most recalcitrant, to the general will. At the same time it reveals his utter indifference to individual liberty as an economic motive.

This indifference gradually merges into extreme hostility, while his confidence in the centralised executive becomes all the more thoroughly established. His later historical works contain an exposition of an organic theory of the State which is meant to justify such confidence. Just as in the animal world the higher animals are found to possess the most highly differentiated organs as well as the most closely co-ordinated, so in history as we pass from the lower social strata to the higher ones “the State advances both in magnitude and efficiency; and its action, while increasing in scope, grows in intensity as well. The State in its passage from one evolutionary stage to another presents us not merely with a greater degree of complexity, each function being to a greater and greater extent discharged by some special organ, but also with an increasing degree of harmony. The social organisms, despite their ever-increasing variation, are placed in growing dependence upon one another by being linked to some central organ. In other words, the particular grade that a social organism occupies in the organic hierarchy depends upon the degree to which division of labour and centralisation have been carried.”[923]

We are thus driven back upon the fundamental question set by Rodbertus at the outset of his inquiry: Can the various social functions, acting spontaneously, efficiently further the good of the social body, or should these functions be discharged by the mediation of a special organ, the State or Government? There is also the further question as to whether the reply which he gives is entirely satisfactory.

We are immediately struck by a preliminary contradiction: the economic boundaries of the community do not coincide with its political boundaries. The one is the result of division of labour and is coextensive with the limits set by division of labour, while the second is the product of the changing conditions of history. It is only logical that the economic functions of the State should be performed by other organs than those of the political Government, since its sphere of action is necessarily different. But it is to the State, as evolved in the course of a long historical process, that Rodbertus would entrust this directing power. Between Rodbertus’s description of the State’s economic activity and his final recourse to a national monarchical State is an element of contradiction which strikes us rather forcibly, especially when he comes to speak of “national” socialism.

In order to demonstrate how inadequately the present social organisation performs its duties, Rodbertus appeals to an ideal method of discharging them which he himself has created, and he has not the slightest difficulty in showing that hardly any of his ideal functions are being performed at the present time. Production is not based upon social need, nor is the wealth produced distributed in accordance with the labour spent. But we must never forget that Rodbertus’s conception of the social need was extremely hazy. His distribution formula, “to everyone according as he produces,” if applied logically is impossible, and satisfies neither the demands of humanity nor the needs of production. Had his definition of social function been less ambitious, his argument, perhaps, would have been more convincing.

Let us admit, however, that the existence of an economic society implies the successful accomplishment of certain functions which we need not trouble to define just now. The question then arises—a question that implies the severest criticism of the present organisation: Can the control and oversight which men ought to exercise over these functions be performed otherwise than through the instrumentality of the State? There was only one alternative for Rodbertus—extreme individualism or State control. But nature and history both escape the dilemma. The biological analogy has been carried too far, and most writers would be content to abandon it altogether. Like most of his contemporaries, Rodbertus imagined that economic individualism and personal liberty were indissolubly bound together, and that it was impossible to check individualism without endangering liberty. It is now realised, however, that this association of ideas, like many another, is temporary and not eternal, and the growth of voluntary associations intermediate between the State and the individual is every day showing it to be false.

We are now in a better position to appreciate the kind of appeal which this doctrine would make to State Socialists—people who are essentially conservative, but nevertheless genuinely desirous of seeing a larger element of justice introduced into our industrial rÉgime. The distinction drawn between politics and economic socialism makes a first claim upon their respect. Then would follow the organic conception of society, which is a feature of all Rodbertus’s writings. It was his belief that production and distribution could only be regarded as social functions, and that the breakdown of individualism implied a need for greater centralisation or a greater degree of State control. On the other hand, the State Socialists refuse to associate themselves with the radical condemnation of private property and unearned income, both of which are features of Rodbertus’s teaching. The State Socialists set out to transform the Rodbertian compromise into a self-sufficing system, and instead of regarding their doctrine as a diluted form of socialism they are rather inclined to treat socialism as an exaggerated development of their theory.[924]

2. Lassalle

Rodbertus’s efforts to establish a doctrine of State Socialism upon the firm foundation of a new social theory had already met with a certain measure of success, but it was reserved for Lassalle to infuse vitality into these new ideas.

Lassalle’s brief but brilliant political career, ever memorable for the natural vigour of his eloquence, at once popular and refined, and its indelible impression of a strikingly original nature aflame with a passion both for thought and action, together with the romantic, dramatic character of his checkered existence, lent wonderful force to his utterances. In 1848, at the early age of twenty-three, he was a Marxian revolutionist. The revolutionary period was followed by a time of enforced inactivity, when he devoted himself almost exclusively to philosophical, legal, and literary pursuits. In 1862 the silence was at last broken by his re-entry into the political arena. The whole political life of Germany was at that moment convulsed by the half-hearted opposition which the Prussian Liberal party was offering to Bismarck’s constitutional changes. Lassalle declared war both upon the Government and upon the bourgeois Opposition—upon the latter more than the former, perhaps. Turning to the working classes, he urged them to form a new party which would avoid all purely political questions and to concentrate upon their own economic emancipation. For two eventful years the whole of Germany resounded with his speeches and his declamations before various tribunals, while the country was flooded with his pamphlets advocating the complete establishment of the Allgemeiner deutscher Arbeiterverein (General Association of German Workers), which he had already founded at Leipzig in 1863. The workers of the Rhineland received with open arms the agitator who thus took up in their midst the tangled skein of a broken career, and welcomed him with songs and decked him with garlands. The Liberal press, on the other hand, thoroughly taken aback by his unexpected onslaughts, mercilessly attacked him, even accusing him of having secret dealings with the Government. Suddenly the clamour ceased: Lassalle died on August 31, 1864, as the result of a wound which he had received in a duel,[925] and only the Deutscher Arbeiterverein, the earliest embryo of the great German Social Democratic party, remained as a memento of those violent attacks upon individualist Liberalism.

As far as theory goes, Lassalle’s socialism is hardly distinguishable from Marx’s. Social evolution is summed up in a stricter limitation of the rights of private property,[926] which in the course of a century or two must result in its total disappearance.[927] But Lassalle was pre-eminently a man of action, bent upon practical results. At that particular moment the German working class was only just waking up to the possibility of political existence. The path that it should follow was still undecided. In the year 1863 a number of workmen had tried to persuade their comrades to meet together in a kind of general congress. They further appealed to Lassalle and to other well-known democrats for their advice concerning the labour question. This gave Lassalle the opportunity he required for forming a political party of his own, with himself as chief. The next question was to fix upon a programme. “Working men,” says Lassalle, “must have something definite,”[928] and, on the other hand, “it is almost impossible to get the public to understand the final object which we must keep in view.”[929] So, without burdening his propaganda with too remote an ideal, he concentrates all his efforts upon two demands, the one political, the other economic—universal suffrage on the one hand and the establishment of producers’ associations supported by the State on the other. In order to win over the masses, he invoked, not the doctrine of the exploitation of the workers by the proprietors—which would have alienated the middle classes from him[930]—but the “brazen law of wages,” which is the happy title by which he chose to designate the Ricardian law of wages.

Rodbertus realised the necessity for distinguishing between an esoteric and an exoteric Lassalle[931]—between the logical theorist of the study and the opportunist politician of the public platform. Only to his contemporaries was the latter Lassalle really known. But his letters, which have been published since his death, go to show that there is at least no need to attach any greater importance to his proposed reforms than he was prepared to give them himself. It is not necessary to emphasise the fact that his plan was really borrowed from Louis Blanc or to call attention to the letter written to Rodbertus in which he declares himself quite prepared to change his plan provided a better one can be found. This idea of association was one that was by no means unknown to the German Liberal party; nor was it the first time that it had been preached to the working classes. Lassalle’s rival, Schulze-Delitzsch, had begun an active campaign even as far back as 1849, and had succeeded in establishing a great number of co-operative credit societies, composed largely of artisans, and aiming at supplying them with cheap raw materials. But such associations were to receive no support from the Government.

What was new in Lassalle’s scheme was just this appeal for State intervention. It was his energetic protest against eternal laissez-faire that impressed public opinion, and he himself was anxious that it should be presented in this light. Speaking to the workers of Frankfort on May 19, 1863, he declared that “State intervention is the one question of principle involved in this campaign. That is the consideration that has weighed with me, and there lies the whole issue of the battle which I am about to wage.”[932]

He harks back to this fundamental idea in all his principal writings. It was the theme of his first address delivered to the workers in Berlin in 1862. It is there presented with all his customary force. The bourgeois conception of the State is contrasted with the true conception, which is identical with the workers’. The bourgeoisie seem to think that the State has nothing to do except to protect the property and defend the liberties of the individual—a conception of State action that would be quite sufficient were everybody equally strong and intelligent, equally cultured and equally rich.[933] But where such equality does not exist the State is reduced to the position of a “night watchman,” and the weak is left at the mercy of the strong. In reality the State exists for quite other purposes. The history of mankind is the story of one long struggle to establish liberty in the face of natural forces, to overcome oppression of every kind, and to triumph over the misery, ignorance, want, and weakness with which human nature has always had to reckon. In that struggle the individual, in his isolation, is hopeless and union becomes indispensable. This union is a creation of the State, and its object is to realise the destiny of mankind, namely, the attainment of the highest degree of culture of which humanity is capable. It is a means of educating and of furthering the development of humanity along the path of liberty.

The formula savours of metaphysics rather than of economics. There is a striking similarity between it and the formula employed by Hegel, the philosopher.[934] Lassalle was really a disciple of Hegel and Fichte.[935] Through the influence of Lassalle the theories of the German idealists came into conflict with the economists’, and his incomparable eloquence contributed not a little to the rising tide of indignation with which the Manchester ideas came to be regarded.

III: STATE SOCIALISM—PROPERLY SO CALLED

The years that elapsed between the death of Lassalle and the Congress of Eisenach (1872) proved to be the decisive period in the formation of German State Socialism.

Bismarck’s remarkable coups d’État in 1866 and 1870 had done much to discredit the political reputation of the leaders of the Liberal party, who had shown themselves less than a match for the Chancellor’s political insight. This reacted somewhat upon economic Liberalism, because it so happened that the leaders of both parties were the same.[936] On the other hand, the idea of a rejuvenated empire incarnate in the Iron Chancellor seemed to add fresh lustre to the whole conception of the State. The JahrbÜcher fÜr NationalÖkonomie, first issued by the Historical school in 1863, had by this time become the recognised organ of the University Economists, and had done a great deal to accustom men’s minds to the relative character of the principles of political economy and to prepare their thoughts for an entirely new point of view.

Labour questions had also suddenly assumed an importance quite undreamt of before this. The German revolution of 1848 was presumably political in character: the great capitalistic industry had not reached that stage of development which characterised it both in England and in France; and it is a significant fact that the two great German socialists, Rodbertus and Marx, had to go abroad to either of those two countries to get their illustrations. But since 1848 German industry had made great strides. A new working-class community had come into being, and Lassalle had further emphasised this transformation by seeking to found a party exclusively upon this new social stratum. The association which was thus founded still survives. Another agitation, largely inspired by Marxian ideas, was begun about the same time by Liebknecht and Bebel. In 1867 both of them were elected to the Reichstag, and two years later they founded the Socialdemokratische Arbeiterpartei (Social Democratic party), which was destined to play such an important part in the history of the next thirty years.

In this way labour questions suddenly attracted attention, just as they had previously done in France during the July Monarchy; and just as in France a new current of opinion—unceremoniously set aside by the coup d’État, it is true—had urged upon the educated classes the importance of abandoning the doctrine of absolute laissez-faire and of claiming the support of Government in the struggle with poverty, so in Germany an increasing number of authors had persuaded themselves that a purely passive attitude in face of the serious nature of the social problem which confronted them was impossible, and that the establishment of some sort of compact between the warring forces of capital and labour should not prove too much of an undertaking for the rejuvenated vitality of a new empire.

The new tendencies revealed themselves in unmistakable fashion at Eisenach in 1872. A conference, which was largely composed of professors and economists, of administrators and jurists, decided upon the publication of a striking manifesto in which they declared war upon the Manchester school. The manifesto spoke of the State as “a great moral institution for the education of humanity,” and claimed that it should be “animated by a high moral ideal,” which would “enable an increasing number of people to participate in the highest benefits of civilisation.”[937] At the same time the members of the congress determined upon the establishment of the Verein fÜr Sozialpolitik, an association charged with the task of procuring the necessary scientific material for this new political development. This was the beginning of the “Socialism of the Chair,” as it was derisively named by the Liberals on account of the great number of professors who took part in this conference. The same doctrine, with a somewhat more radical bias, became known as State Socialism. The imparting of such a bias was the task undertaken by Wagner,[938] in his Grundlegung, which appeared in 1876.[939]

Difficult though the task may prove, we must try to distinguish between the work of the earlier economists and the special contributions made by the State Socialists. Like all doctrines that purport to sum up the aspirations of a group or an epoch and to supply a working agreement between principles in themselves irreconcilable, it lacks the definiteness of a purely individualistic or theoretical system. Its ideas are borrowed from various sources, but it is not always scrupulous in recognising this.

It is first and foremost a reaction, not against the fundamental ideas of the English Classical school, as is generally believed, but against the exaggerations of their second-grade disciples, the admirers of Bastiat and Cobden—known to us as the “Optimists” and styled the “Manchestrians” in Germany. The manifesto, drawn up by Professor Schmoller at the Eisenach Congress, speaks of the “Manchester school,” but makes no mention of the Classical writers.[940] It is true that a great many German writers regard the expressions “Smithianismus” and “Manchesterthum” as synonymous, but these are perhaps polemical exaggerations upon which we ought not to lay too much stress. On the other hand, Liberalism had nowhere assumed such extravagant proportions as it had in Germany. Prince Smith, who is the best-known representative of Liberalism after Dunoyer, was convinced that the State had nothing to do beyond guaranteeing security, and denied that there was any element of solidarity between economic agents save such as results from the existence of a common market. “The economic community, as such, is a community built upon the existence of a market, and it has no facility to offer other than free access to a market.”[941]

The State Socialists, on the contrary, are of opinion that there exists a moral solidarity which is much more fundamental than any economic tie between the various individuals and classes of the same nation—such solidarity as results from the possession of a common language, similar manners, and a uniform political constitution. The State is the organ of this moral solidarity, and because of this title it has no right to remain indifferent to the material poverty of a part of the nation. It has something to do besides protecting people against internal or external violence. It has a real work of “civilisation and well-being”[942] which it ought to perform. In this way State Socialism becomes reconciled to the philosophic standpoint which Lassalle had chosen for it. Lassalle’s insistence upon the mission of Governments and the importance of their historic rÔle has been incorporated into its system, and the attention that is paid to national considerations reminds one of the teaching of Friedrich List.

It is impossible not to ask whether the State is capable of carrying out the duties that have been entrusted to it. There is little use in emphasising duty where there is no capacity for discharging it. The State’s incapacity as an economic agent has long been a notorious fact. Wagner and his friends were particularly anxious to correct this false impression, and as far as their doctrine contains anything original it may most conveniently be described as an attempt to rehabilitate the State. Optimists of Bastiat’s genre looked upon the State as the very incarnation of incapacity. The State Socialists, on the other hand, regard government as an economic agent very similar to other agents which the community employs, only a little more sympathetic perhaps. Much of their argument consists of an attempt to create a presumption in favour of government as against the ordinarily accepted opinion which individualism had begotten. Such was the nature of the task which they undertook.

Their first action was to insist upon the weaknesses of individuals. Following in the wake of Sismondi and other socialists, they emphasised the social inconveniences of competition, which is, however, generally confused with individual liberty.[943] They also insisted upon the social inequality of masters and workers when it comes to a question of wage-bargaining—a fact that had already been noted by Adam Smith—as well as upon the universal opposition that exists between the weak and the strong. The inadequacy of merely individual effort to satisfy certain collective wants is another fact that was considerably emphasised.

As far back as the year 1856 Dupont-White, a Frenchman, had complained bitterly that all the paths of civilisation remained closed merely because of the existence of one obstacle—the infirmity and malignity of the individual.[944] He also attempted to show how the collective interests of modern society are becoming increasingly complex in character and of such magnitude as to be utterly beyond the compass of individual thought.[945] “There are,” says he in that excellent formula in which he summarises the instances in which State intervention may be necessary, “certain vital things which the individual can never do, either because he has not the necessary strength to perform them or because they would not pay him; or, again, because they require the co-operation of everybody, which can never be got merely by common consent. The State is the one person—the entrepreneur—who can undertake such tasks.”[946] But his words went unheeded.

Writing in a similar vein, Wagner invokes the testimony of history in support of his State doctrine, showing us how the State’s functions vary from one period to another, so that one never feels certain about prescribing limits to its action. Individual interest, private charity, and the State have always had to divide the field of activity between them. Never has the first of these, taken by itself, proved sufficient, and in all the great modern states its place is taken by State action. To conclude that this solution was useful and necessary and in accordance with the true law of historical development only involved one further step.[947] One almost unconsciously proceeds from the mere statement of a fact to the definite formulation of a law. “Anyone,” says Wagner, “who has appreciated the immanent tendencies of evolution (i.e. the essential features of economic, social, or political evolution) may very properly proceed from such a historical conception of social evolution to the formulation of postulates relative to what ought to be.”[948] In virtue of this conception there is a demand for the extension of the State’s functions, which may easily be justified on the ground of its capacity for furthering the well-being and civilisation of the community. The influence of Rodbertus’s thought, especially his theory concerning the development of governmental organs to meet the needs of a higher social development,[949] is quite unmistakable in this connection.

The similarity between his views and those of Dupont-White, though entirely fortuitous, perhaps, is sufficiently remarkable to justify our calling attention to it. White is equally emphatic in his demand that the State should exercise charity and act beneficently.[950] He shows how the modern State has extended its dominion, substituting local government for class dominion and parental despotism, taking women, children, and slaves successively under its care, and adding to its duties and responsibilities in proportion as civilisation grows and liberty broadens downward. Fresh life requires more organs, new forces demand new regulations. But the ruler and the organ of society is the State.[951] In a moment of enthusiasm he even goes so far as to declare that “the State is simply man minus his passions; man at such a stage of development that he can commune even with truth itself, fearing neither God nor his own conscience. However imperfect it may be, the State is still vastly superior to the individual.”[952] Such writing is not without a touch of mysticism.

Without going the extent of admitting, as M. Wagner would have us do, that the simple demonstration of the truth of historical evolution is enough to justify his policy, we must commend State Socialism for the service it has performed in combating the Liberal contempt for government. If we admit the right of a central power to regulate social relations, it is difficult to understand why certain economic relations only should be subjected to such supervision.

But the real difficulty, even when the principle is fully recognised, is to define the spheres that should respectively belong to the State and to the individual. How far, within what limits, and according to what rules should the State intervene? We must at any rate, as Wagner says, begin with a rough distribution of attributes. It is impossible to proceed by any other method unless we are to assume, as the collectivists seem to do, a radical change in human psychology resulting in the complete substitution of a solicitude for the public welfare for private interest.

Dupont-White thought the problem insoluble,[953] and Wagner is equally emphatic about the impossibility of formulating an absolute rule. The statesman must decide each case on its merits. He does, however, lay down a few general rules. As a first general principle it is clear that the State can never completely usurp the place of the individual.[954] It can only concern itself with the general conditions of his development. The personal activity of the individual must for ever remain the essential spring of economic progress. The principle is apparently the same as Stuart Mill’s, but there is quite a marked difference between them. Mill wished to curtail individual effort as little as possible, Wagner to extend Government action as much as he could. Mill insists throughout upon the negative rÔle of Government; Wagner emphasises the positive side, and claims that it should help an ever-increasing proportion of the population to share in the benefits of civilisation. No inconvenience, Wagner thinks, would result from a little more communism in our social life. “National economy should be transferred from the control of the individual to the control of the community in general,” he writes, in a sentence that might have been borrowed directly from Rodbertus.[955] Both he and Mill are agreed that the limit of Government action must be placed just at that point where it threatens to cramp individual development.[956]

The practical application of these ideas would affect both the production and the distribution of wealth. But on this question State Socialism has done little more than seize hold of ideas that were current long before its day.

In the matter of distribution it takes exactly the same standpoint as Sismondi. There is no condemnation either of profits or interest as a matter of principle, such as is the case with the Socialists, nor is there any suggestion of doing away with private property as the fundamental institution of society; but there is the expression of a desire for a more exact correspondence between income and effort[957] and for such a limitation of profits as the economic conjuncture will allow of, and, on the other hand, for such an increase of wages as will permit of a more humane existence. It is impossible to disguise the fact that all this sounds very vague.[958]

The State would thus undertake to see that distribution conformed to the moral sentiment of each period. Taxation was to be employed as the instrument of such reforms. Dupont-White, in his Capital et Travail,[959] which was written as early as the year 1847, had hit upon the precise formula in which to describe these projects: “To levy a tax such as will strike the higher classes and to apply the yield to help and reward labour.” Wagner says just the same thing. “Logically State Socialism must undertake two tasks which are closely connected with one another. In the first place it must raise the lower strata of the working classes at the expense of the higher classes, and in the second place it must put a check upon the excessive accumulation of wealth among certain strata of society or by certain members of the propertied classes.”[960]

In the matter of production State Socialism has simply been content to reproduce the list given by Mill, Chevalier, and Cournot of the cases in which there is no economic principle against the direct control or management of an industrial enterprise by the State. Speaking generally, Wagner is of the opinion that the State should take upon itself the control of such industries as are of a particularly permanent or universal character, or such as require either uniform or specialised methods of control or are likely to become monopolies in the hands of private individuals. The same argument would apply to industries satisfying some general want, but in which it is almost impossible to determine the exact advantage which the consumer derives from them. The State administration of rivers, forests, roads, and canals, the nationalisation of railways and banks, and the municipalisation of water and gas, are justified on the same grounds.

Such are the essential features of State Socialism, which bases its appeal, not on any precise criticism of property or of unearned income, such as we are accustomed to get from the socialists, but entirely upon moral and national considerations. A juster distribution of wealth and a higher well-being for the working classes appear to be the only methods of maintaining that national unity of which the State is the representative. But it neither specifies the rules of justice nor indicates the limits of the ameliorative process. The fostering of collective effort affords another means of developing moral solidarity and of limiting purely selfish action; but the maintenance of private property and individual initiative seemed indispensable to the growth of production—a consideration which renders it inimical to collectivism. Its moral character explains the contrast between the precise nature of some of its positive demands and the somewhat vague character of its general principles, which may be applied to a greater or lesser extent according to individual preferences. It is impossible to deny the essentially subjective character of its criteria, and this affords some indication of the vigorous criticism offered by the economists, who are above all anxious for scientific exactitude, and the measure of enthusiasm with which it has been welcomed by all practical reformers. It forms a kind of cross-roads where social Christianity, enlightened conservatism, progressive democracy, and opportunistic socialism all come together.

But its success was due not so much to the value of its principles as to the peculiar nature of the political and economic evolution toward the end of the century. Its most conspicuous representative in Germany was Prince Bismarck, who was totally indifferent to any theory of State Socialism, and who preferred to justify his policy by an appeal to the principles of Christianity or the Prussian Landrecht.[961] One of his great ambitions was to consolidate and cement the national unity which he had succeeded in creating. A system of national insurance financed and controlled by the State appealed to him as the best way of weaning the working classes from revolutionary socialism by giving them some positive proof of the sympathy of the Government in the shape of pecuniary interest in the welfare of the empire. In a somewhat similar fashion the French peasant became attached to the Revolution through the sale of national property. “I consider,” says Bismarck, speaking of invalidity insurance, “that it is a tremendous gain for us to have 700,000 annuitants among the very people who think they have nothing to lose, but who sometimes wrongly imagine that they might gain something by a change. These individuals would lose anything from 115 to 200 marks, which just keeps them above water. It is not much, perhaps, but it answers the purpose admirably.”[962] Such was the origin of those important laws dealing with sickness, accidents, invalidity, and old age which received the imperial seal between 1881 and 1889. But just because the Chancellor did not consider that there was the same pecuniary advantage to be derived from labour laws in the narrow sense of the term—that is, in laws regulating the duration of labour, Sunday rest, the inspection of factories, etc.—he was less favourably inclined towards their extension. The personal predilection of the Emperor William II, as expressed in the famous decrees of February 4, 1890, was needed to give the Empire a new impetus in this direction.

Accordingly it was the intelligent conservatism of a Government almost absolute in its power, but possessed of no definitely social creed, that set about realising a part of the programme of the State Socialists. In England and France and the other countries where political liberty is an established fact similar measures have been carried out at the express wish of an awakening democracy. The working classes are beginning to find out how to utilise for their own profit the larger share of government which they have recently secured. Progressive taxation, insurance, protective measures for workmen, more frequent intervention of Government with a view to determining the conditions of labour, are just the expressions of a tendency that operates independently of any preconceived plan.

The regulation of the relationship between masters and workmen gave to State Socialism a legislative bias. Governments and municipalities have long since extended their intervention to the domain of production, the new character of social life rather than any social theory being again the determining motive. Public works, such as canals, roads, and railways, have multiplied enormously in the course of the nineteenth century, thanks to the existence of new productive forces. The demand for public services has increased because of the increasing concentration of population. Communal life keeps encroaching upon what was formerly an isolated, dispersive existence, and community of interest is extending its sway in village and borough as well as in the great city and the nation at large. Industry also is being gradually linked together, and the area of free competition is perforce becoming narrower. In the labour market, as well as in the produce and the money markets, concentration has taken the place of dispersion. Monopoly is everywhere. Collective enterprise, instead of being the exception, tends to be the rule, and public opinion is gradually being reconciled to the idea of seeing the State—the “collective being” par excellence—becoming in its turn industrial.

Under conditions such as these it was impossible that the doctrine of State Socialism should not influence public opinion.

State Socialism has the peculiar merit of being able to translate the confused aspirations of a new epoch in the history of politics and economics into practical maxims without arousing the suspicions of the public to the extent that socialism generally does. Legislators and public men generally have been supplied with the necessary arguments with which to defend the inauguration of that new policy upon which they had secretly set their hearts. A common ground of action is found for parties that are generally opposed to one another and for temperaments that are usually incompatible. That is the outstanding merit of a doctrine that seems eminently suitable for the attainment of tangible results.

And so by a curious inversion of functions by no means exceptional in the history of thought, State Socialism at the end of the century finds itself playing the part of its great adversary, the Liberal Optimism of the early century. One of the outstanding merits of that earlier Liberalism was the preparation it afforded for a policy of enfranchisement or liberty, which was absolutely necessary for the development of the industrial rÉgime. And so it became the interpreter of the great economic currents of the time. In pursuance of this exclusive task all traces of its scientific origin disappeared, the elaboration of economic theory was neglected, and the habit of close reasoning so essential to systematic thinking was abandoned. In a somewhat similar manner State Socialism has become the creed of all those who desire to put an end to the abuses of economic liberty in its extremer aspects, or such as are generally concerned about the miserable condition of an increasing number of the working classes. Absorbed in immediate matters of this kind, the promoters of State Socialism have managed to influence practical politics without shedding much light upon economic theory. And now they in their turn find their system threatened by the fate which awaits all political doctrines. Even at the present moment one is tempted to ask whether this growing multiplicity of State function is not in danger of arousing on the part of consumers, entrepreneurs, and workmen a general feeling of contempt for the economic capacity of the State.

In conclusion, we must note another characteristic fact. Whereas during the greater part of the nineteenth century the attacks of Socialism were directed against Liberalism and economic orthodoxy, Neo-Marxian syndicalism is concentrating its attention almost exclusively upon State Socialism. Sorel emphasises the similarity that exists between Marxism and Manchesterism, and on more then one point he finds himself in agreement with a “Liberal” like Pareto. On the other hand, no words are sufficiently vigorous to express his condemnation of the partisans of social peace and interventionism, which appear to him to corrupt the working classes. Syndicalist working men have on more than one occasion shown their contempt for the State by refusing to avail themselves of measures passed on their behalf—old-age pensions, for example. This attitude is perhaps due to the influence of the anarchists upon the leaders of French syndicalism.

The fusion of these two currents of ideas—the Neo-Marxian and the anarchist—and their effect in turning the attention of the French working classes away from State Socialism, is an interesting fact whose political results will by no means prove negligible.[963]

CHAPTER III: MARXISM

I: KARL MARX[964]

Everyone knows of the spell cast over the socialism of the last forty years by the doctrines of Karl Marx and the contempt with which this newer so-called scientific socialism refers to the earlier or Utopian kind. But what is even more striking than the success of Marxian socialism is its want of sympathy with the heretical doctrines of its predecessors the Communists and Fourierists, and the pride it takes in regarding itself as a mere development or rehabilitation of the great Classical tradition.

To give within the limits of a single chapter a rÉsumÉ of a doctrine that claims to review and to reconstruct the whole of economic theory is clearly impossible, and we shall merely attempt an examination of two of Marx’s more essential doctrines, namely, his theory of surplus labour and value and his law of automatic appropriation, more familiarly but less accurately known as the law of concentration of capital. The first is based upon a particular conception of exchange value and the second upon a special theory of economic evolution. To employ Comtean phraseology, the one belongs to the realm of economic statics, the other to the domain of economic dynamics.

1. Surplus Labour and Surplus Value

The laborious demonstration which follows will become clearer if we remind ourselves of the objects Marx had in view. Marx’s aim was to show how the propertied class had always lived upon the labour of the non-propertied classes—the possessors upon the non-possessing. This was by no means a new idea, as we have already made its acquaintance in the writings of Sismondi, Saint-Simon, Proudhon, and Rodbertus. But the essence of the criticism of these writers was always social rather than economic, the institution of private property and its injustice being the chief object of attack. Karl Marx, on the other hand, deliberately directed the gravamen of the charge against economic science itself, especially against the conception of exchange. He endeavours to prove that what we call exploitation must always exist, that it is an inevitable outcome of exchange—an economic necessity to which both master and man must submit.

It is convenient to begin with an examination of economic value. Marx lays down the doctrine that labour is not merely the measure and cause of value, but that it is also its substance. We have already had occasion to note how Ricardo was somewhat favourably inclined to the same view, though hardly willing to adopt it. There is no such hesitation on the part of Marx: it is all accepted in a characteristically thorough fashion. Of course, he does not deny that utility is a necessary condition of value and that it is really the only consideration in the case of “value in use.” But utility alone is not enough to explain value in exchange, since every act of exchange implies some common element, some degree of identity between the exchanged commodities. This identity is certainly not the result of utility, because the degree of utility is different in every commodity, and it is this difference that constitutes the raison d’Être of exchange. The common or homogeneous element which is contained in commodities themselves heterogeneous in character is the quantity of labour, great or small, which is contained in them. The value of every commodity is simply the amount of crystallized human labour which it contains, and commodities differ in value according to the different quantities of labour which are “socially necessary to produce them.”[965]

Let us take the case of a working man, an employee in any kind of industry, working ten hours a day.

What will be the exchange value of the produce of his labour? It will be the equivalent of ten hours’ labour, whether the commodity produced be cloth or coal or what not. And since the master or the capitalist, as Marx always calls him, in accordance with the terms of the wage bargain, reserves for himself the right of disposing of that commodity, he sells it at its real value, which is the equivalent of ten hours’ labour.

The worker himself is cut off with a wage which simply represents the price which the capitalist pays for his labour force (Arbeitskraft), and the capitalist reserves to himself the right of disposing of the commodity at his own good pleasure. Its value is determined in the same way as that of every other exchangeable commodity. Labour-force or manual labour is just a commodity, and its value is determined by the number of hours of labour necessary for its production.[966]

“The quantity of labour necessary to produce the labour-force” is a somewhat formidable expression, and it is very difficult for any one who is beginning a study of Marx to appreciate its significance, but it is very essential that we should try, since everything turns upon a clear understanding of this phrase. But it is really not so mysterious after all. Suppose that instead of the labour of an artisan we take the work of a machine. No engineer would be surprised if we asked him the running expenses of that machine, and he might reply that it was costing one or two tons of coal per hour or eight or twelve per diem; and since the value of the coal merely represents a certain amount of human labour on the part of the coal-miner, there would be no difficulty in expressing it in terms of labour. Under the wage system the labourer is simply a machine, differing from the latter merely in the smaller quantity of wealth which he produces. The value of an hour’s labour or a day’s toil can be measured by the quantity of necessaries required to keep the worker in full productive efficiency during that period. Every employer who pays wages in kind—which is still the case in agriculture—always makes that kind of calculation, and even when the worker is paid a money wage things are much the same, for the money simply represents the cost of those necessaries.

Let us proceed a step farther. The value of the commodities necessary for the upkeep of labour is never equal to the value of the produce of that labour. In the instance given it would not equal the value of ten hours’ labour—perhaps not even five. Human labour under normal conditions always produces more than the mere value of the goods consumed.[967]

This is the crux of the problem. The mystery surrounding capitalist production is at last solved. The value produced by the labourer passes into the hands of the capitalist, who disposes of it and gives back to the labourer enough to pay for the food consumed by him during the time he was producing the commodity. The difference goes into the capitalist’s pocket. The product is sold as the equivalent of ten hours’ labour, but the labourer receives the equivalent of five hours only. Marx speaks of this as surplus value (Mehrwerth), a term that has become exceedingly popular since.[968]

Thus the capitalist gets ten hours’ labour out of the workman and only pays him for five,[969] the other five hours costing him nothing at all. During the first five hours the workman produces the equivalent of his wages, but after the end of the fifth hour he is working for nothing. The labour of this extra number of hours during which the surplus value is being produced and for which the worker receives nothing Marx calls surplus labour. By that he means the supererogatory labour which yields nothing to the worker, but merely involves an extra tax upon his energies and simply increases the capitalist’s fortune.

Naturally the capitalist’s interest is to augment this surplus value which goes to swell his profits. This can be effected in a number of ways, and an analysis of some of these processes is one of the most characteristic features of the Marxian doctrine. This analysis may be summed up under two main divisions.

1. The first method is to prolong the working day as much as possible in order to increase the number of hours of surplus labour. If the number of working hours can be increased from ten to twelve the surplus will automatically grow from five to seven. This is exactly what manufacturers have always tried to do. Factory legislation, however, has forced some of them to limit the number of hours, and this has resulted in checking the growth of surplus value somewhat. But this check applies only to a limited number of industries.

2. A second method is to diminish the number of hours necessary to produce the worker’s sustenance. Were this to fall from five to three it is clear that the surplus would again rise from five to seven. Such reduction is possible through the perfection of industrial organisation or through a reduction in the cost of living, a result which is usually effected by means of co-operation.[970] The capitalist also often manages to bring this about by setting up philanthropic institutions or by employing women and children, who require less for their upkeep than adults. Women and children have been taken from the house and the task of housekeeping and cookery has been left in the hands of the men. But laws regulating the employment of women and children have again defeated these tactics.[971]

Such is a very brief summary of Marx’s demonstration. Its real originality lies in the fact that it does not consist of commonplace recriminations concerning the exploitation of workers and the greed of exploiters, but shows how the worker is robbed even when he gets all that he is entitled to.[972] It cannot be said that the capitalist has robbed him. He has paid him a fair price for his labour; that is, he has given it its full exchange value. The conditions of the wage bargain have been observed in every particular: equal value has been given in exchange for equal value. Given the capitalistic rÉgime and the free competition of labour, the result could not be otherwise. The worker, perhaps, may be surprised at this unexpected result, which only secures him half the value of his labour, but he can only look on like a bewildered spectator. Everything has passed off quite correctly. The capitalist, no doubt, is a shrewd person, and knows that when he buys labour power he has got hold of a good thing, because it is the only merchandise which possesses the mysterious capacity of producing more value than it itself contains.[973] He knows this beforehand, and, as Marx says, it is “the source of considerable pleasure to him.” “It is a particularly happy condition of things when the buyer is also allowed to sell it wherever and whenever he likes without having to part with any of his privileges as a vendor.” The result is that the worker has no means of defence either legal or economic, and is as helpless as a peasant who has sold a cow in calf without knowing it.

Hitherto we have spoken only of labour. But the outstanding personage in the book—the hero of the volume—is capital, whose name appears on the title-page. Our exposition of the Marxian doctrine of production would accordingly be very incomplete if we omitted to make reference to his treatment of capital.

Taken by itself capital is, of course, sterile, for it is understood that labour is the sole source of value. But labour cannot produce unless it consumes a certain proportion of capital, and it is important that we should understand something of the combination of capital and labour.

Marx distinguishes between two kinds of capital. The first serves for the upkeep of the working-class population, either in the way of wages or direct subsistence. The older economists referred to it as the Wages Fund, and Marx calls it “variable capital.” If this kind of capital does not directly take part in production, it is this fund, after all, when consumed by labour that begets value and the surplus which is attached to it.

That other kind of capital which directly assists the productive activity of labour by supplying it with machinery, tools, etc., Marx calls “constant capital.” This latter kind of capital, which is not absorbed or vitalized by labour, does not result in the production of surplus value. It simply produces the equivalent of its value, which is the sum total of all the values absorbed during the time when it was being produced. This constant capital is evidently the crystallized product of labour, and its value, like that of any other product, is determined solely by the number of hours of labour it has taken to produce. This value, whether it include the cost of producing the raw material or merely the cost of labour employed in elaborating it, should be rediscoverable in the finished product. But there is nothing more—no surplus. The economists refer to this as depreciation, and everyone knows that depreciation implies no profits at any rate.[974]

It seems quite obvious that it is to the interest of the capitalist to employ only variable capital, or at least that it will pay him to reduce the amount of constant capital used to the irreducible minimum.[975] But we are here met with an anomaly which is the despair of all Marxian commentators, and which must have caused Marx himself some amount of embarrassment, if we may judge by the laborious demonstration which he gives.[976]

If fixed capital is really unproductive, how is it that modern production is always increasing the quantity of fixed capital which it employs, until this has now become one of its most familiar features? Is it because it yields less profit than that yielded by the smaller handicrafts or agriculture? Again, how are we to account for the variation in the rates of profit in different industries according to the different quantities of capital employed, seeing that it is an axiom of political economy that under a rÉgime of free competition with equal security for everybody the returns on different capitals should everywhere be the same?

Marx replies by saying that the rate of profit is the same for all capitalists within the country, but that this rate is the average of the different rates in all the different industries. In other words, it is the rate that would obtain if every industry in the country employing varying amounts of fixed and circulating capital formed a part of one whole. It must not be thought of as a kind of statistical average, but simply as a kind of average which competition brings about. The result is other than might have been expected.[977] Those industries which have a large amount of variable capital—agriculture, for example—find themselves with just the average rate of return, but draw much less in the way of surplus value than they had expected, and so Marx refers to them as undertakings of an inferior character. On the contrary, those industries which possess a large amount of constant capital draw more than their capital had led them to hope for, and Marx refers to them as industries of a superior character.[978] Hence those industries which employ a considerable amount of machinery expand at the expense of the others. It is because the latter kind find themselves in a more favourable position, or, in other words, realize greater profits, that they do employ surplus labour, from which surplus value is naturally derived.[979]

While admiring the ingenuity of the dialectics, we must not blind ourselves to the simple fact which Marx was so anxious to hide, but which is nevertheless implicit in all this, namely, that the rate of profit, which means also the value of the goods, is regulated by competition—that is, by demand and supply—but bears no relation to the quantity of labour employed. We must also remember that the entrepreneur, far from seeing his profits diminish as he employs less human labour, finds them increasing. This contradiction is just one of those flaws that finally cause the downfall of the majestic edifice so laboriously raised by Marx.

2. The Law of Concentration or Appropriation

The law of concentration of capital,[980] which can only be interpreted in the light of economic history, is an attempt to show that the rÉgime of private property and personal gain under which we live is about to give place to an era of social enterprise and collective property.[981] Let us try to follow the argument as given by Marx.

Again must we cast back our thoughts to a period before the earliest beginnings of capital in the sixteenth century—a period when, according to the socialists, there existed neither capital nor capitalist. Capital in the economic sense of a mere instrument of production must have existed even before this time, but the socialists are of opinion that it had quite a different significance then, and it is important that we should appreciate their point of view. Their employment of the term is closely akin to the vulgar use of the word as anything that yields a rent, and yields the said rent as the result, not of the capitalist’s labour, but of the toil of others. But under the guild system which preceded this condition of things the majority of the workers possessed most of the instruments of production themselves.

Then follows a description of a series of changes which we cannot attempt to study in detail, but which forms a singularly dramatic chapter in the writings of Marx. New means of communication are established and new markets opened as the result of important mechanical discoveries coupled with the consolidation of the great modern States. The rise of banks and of trading companies, together with the formation of public debts, all this resulted in the concentration of capital in the hands of a few and the expropriation of the small proprietor.

But all this was only a beginning. If capital in this newer sense of an instrument for making profit out of the labour of others was ever to come into its own and develop, if the surplus labour and surplus value of which we have given an analysis were really to contribute to the growth and upkeep of this capital, it was necessary that the capitalist should be able to buy that unique merchandise which possesses such wonderful qualities in the open market. But labour-force can never be bought unless it has been previously detached from the instruments of production and removed from its surroundings. Every connexion with property must be severed, every trace of feudalism and of the guild system must be removed. Labour must be free—that is, saleable; or, in other words, it “must be forced to sell itself because the labourer has nothing else to sell.” For a long time the artisan was in the habit of selling his goods to the public without the intervention of any intermediary, but a day dawned when, no longer able to sell his products, he was reduced to selling himself.[982]

The creation of this new kind of property based upon the labour of others meant the extinction of that earlier form of property founded upon personal labour and the substitution for it of the modern proletariat. This was the task to which the bourgeoisie resolutely set itself for about three centuries, and its proclamation of the liberty of the labourer and the rights of man is just its pÆan of victory. Its task was accomplished. The expropriated artisan who was already swelling the ranks of the proletariat seemed an established fact.

In reality this end was only partially accomplished even in the more capitalistic countries, but that there is a general movement in that direction seems clear in view of the following considerations.

(a) The most suggestive fact in this connexion is the growth of production on a large scale, resulting in the employment of machinery and in the rise of new forms of organisation such as trusts and cartels, new systems that were unknown in Marx’s day, but which have helped to confirm his suspicions. These trusts and cartels are especially important from a social point of view because they not only absorb the capital of the small independent proprietor, but swallow the medium-sized industry as well. This wonderful expansion of production on a large scale means a corresponding growth in the numbers of the proletariat, and capitalism, by increasing the number of wage-earners, helps to swell the ranks of its own enemies. “What the bourgeoisie produces, above all, therefore, are its own gravediggers.”[983]

(b) Over-production is another fruitful method. A contraction of the market results in a superabundance of workmen whose services are always available. They form a kind of industrial reserve army upon which the capitalist may draw at his pleasure—at one moment indiscriminately taking on a number of them, and throwing them back on to the streets again as soon as the demand shows signs of slackening.[984]

(c) The concentration of the rural population in towns is another contributing factor. This movement itself is the result of the disappearance of the small holder and the substitution of pastoral for arable farming, the outcome of it all being an addition to the ranks of the expropriated proletariat of an increasing number of hitherto independent proprietors and producers.

Such is the advent and growth of capitalism. It comes into the world “with bloody putrescence oozing out of every pore.” How different is the real history of capital from the idyllic presentation to which we are treated by the economists! They love to picture it as the slowly accumulated fruit of labour and abstinence, and the coexistence of the two classes, the capitalists and the workers, is supposed to date from an adventure that befell them both a few days after creation, when the good and the wise decided to follow the high road of capitalism and the idle and vicious the stony path of toil.

In reality capitalism is the outcome of class struggle—a struggle that will some day spell the ruin of the whole rÉgime, when the expropriators will themselves be the expropriated. We are given no details as to how this is to be accomplished, and this abstention from prophecy distinguishes Marx from the Utopian socialists of the last two thousand years. His one object was to show how those very laws that led to the establishment of the rÉgime would some day encompass its ruin.[985] The force of circumstance seemed to make self-destruction inevitable. “The capital rÉgime,” writes one Marxian socialist, “begets its own negation, and the process is marked by that inevitability which is such a feature of all natural laws.”[986] The following facts are deduced as proofs that this process of self-destruction is already in course of being accomplished.

(a) Industrial crises, whether of over-production or under-consumption, have already become a chronic evil. The fact that to some extent they are to be regarded as the direct outcome of the capitalist system of production cannot prevent their damaging that system. The continual growth of fixed at the expense of circulating capital, involving as it does the substitution of machinery for hand labour, must also involve a continual reduction of the surplus value. In order to counteract this tendency the capitalists find themselves forced to keep ahead with production; they are driven to rely upon quantity, as they put it. The workers, on the other hand, find that it is gradually becoming impossible for them to buy the products of their labour with the wages which they get, because they never get a wage which is equal to the value of the product of their labour. Moreover, they periodically find themselves out of employment altogether and almost on the verge of starvation. Proudhon, as we have already seen, laid considerable stress upon this, and it is one of the instances in which Marx is obviously influenced by Proudhon.

The idea which underlies the Marxian theory is that every crisis involves a readjustment of the equilibrium between fixed and circulating capital. The growth of the former, though continuous, is not always uniform, and whole sections of it may occasionally be found to be without solid foundation which would warrant such expansion. But the crises which result in the destruction of these speculative accretions give a new spirit to the creation of further surplus value, which results in the creation of further fixed capital and more crises, and so the process goes on.[987]

(b) The growth of pauperism, which is the direct outcome of crises and want, is another factor. “The bourgeoisie is unfit any longer to be the ruling class in society, and to impose its conditions of existence upon society as an overriding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state that it has to feed him instead of being fed by him.”[988]

(c) The rapid multiplication of joint stock companies is the final buttress with which the Marxians have strengthened their contention. Under the joint stock principle the right of property is simply reduced to the possession of a few strips of paper giving the anonymous owner the right to draw dividends in some commercial concern or other. Profit is seen in all its nakedness as a dividend which is wholly independent of all personal effort and produced entirely as the result of the workers’ drudgery. The duty of personally supervising the methods of production and of opening up new and better ways of manufacturing, which served to disguise the real character of the individual employer and to justify his existence, is no longer performed by the owner, but falls to the lot of two new functionaries, the parasitic company director on the one hand and the salaried official on the other.

Once the whole industry of a country becomes organized on a joint stock basis—or, better still, once it passes over into the hands of a trust, which is simply a manifestation of the joint-stock principle at its highest—expropriation will be a comparatively simple matter. By a mere stroke of the pen property hitherto held by private shareholders will be transferred into the custody of the State with hardly a change in the economic mechanism itself.

Thus the expropriation of the bourgeoisie will be a much easier task than was the expropriation of the artisan by the bourgeois a few centuries ago. In the past it was a case of the few subjugating the many, but in the future the many will overwhelm the few—thanks to the law of concentration.

But what is to be the outcome of the Marxian programme (we cannot speak of its aim or ideals, for Marx scorned such terms)? The general opinion seems to be that it involves the abolition of private property, and that the opinion is not altogether without foundation may be seen from a perusal of the Manifesto, where we read that “the theory of the Communists may be summed up in the single sentence: Abolition of private property.”[989]

The Manifesto also explains in what sense we are to understand this. The private property which so much needs suppressing is not the right of the worker to the produce of his own toil, but the right of others to appropriate for themselves the produce of that labour. This is private property as they understand it. They think, however, it would be better to call it bourgeois property, and they feel quite confident that it is destined to disappear under a collectivistic rÉgime. As to a man’s right to the product of his own labour, that surely existed formerly, before the peasant and the craftsman were overwhelmed by capitalism and replaced by the proletariat. Collectivism, far from destroying this kind of property, will rather revive it, not in the antiquated individualistic form of letting each man retain his own, which is obviously impossible under division of labour and production on a large scale, but of giving to every man a claim upon the equivalent of what he has produced.[990]

This twofold task can only be accomplished by undoing all that capitalism has done; by taking from the capitalists the instruments of production which they now possess and restoring them to the workmen, not individually—that would be impossible under modern conditions—but collectively. To adopt the formula which figures at the head of the party’s programme, this means the socialisation of the means of production—land, including surface and subsoil, factories and capital. The produce of everyone’s labour, after allowing for certain expenses which must be borne by the community as a whole, will be distributed according to each one’s labour. Surplus labour and surplus value will thus disappear simultaneously.

This expropriation of the capitalists will be the final stage, for, unlike the preceding movements, it will not be undertaken for the benefit of a single class—not even for the benefit of the workers. It will be for the interest of everybody alike, for the benefit of the nation as a whole. It will also be adequate to cope with the change which industry has recently undergone; in other words, both production and distribution will be on a collective basis.

II: THE MARXIAN SCHOOL

After this summary exposition of the principal theories of Karl Marx, we must now try to fix the general character of the school that bears his name[991] and to distinguish it from the other socialist schools that we have already studied.

(a) In the first place, it proudly claims for its teaching the title of scientific socialism, but much care must be exercised in interpreting the formula. No economist has ever shown such contempt or betrayed such passion in denouncing PhalanstÈres, Utopias, and communistic schemes of every kind. To think that the Marxians should add to the number of such fantastic dreams! What they claim to do, as M. Labriola points out (may the shades of Fourier forgive their presumption!), is to give a thoroughly scientific demonstration of the line of progress which has actually been followed by civilised societies.[992] Their one ambition is to gauge the significance of the unconscious evolution through which society has progressed and to point the goal towards which this cosmic process seems to be tending.

The result is that the Marxian school has a conception of natural laws which is much nearer the Classical standpoint than that of its predecessors. Of this there can be no doubt. The Marxian theories are derived directly from the theories of the leading economists of the early nineteenth century, especially from Ricardo’s. Marx is in the line of direct succession. Not only is this true of the labour-value theory and of his treatment of the conflict between profits and wages, but it also applies to his theory of rent and to a whole host of Ricardian doctrines that have been absorbed wholesale into the Marxian philosophy. And, paradoxical as it may sound, his abstract dogmatic method, his obscure style, which encourages disciples to retort that the critics have misunderstood his meaning and to give to many a passage quite an esoteric significance, is of the very essence of Ricardo.[993] Marx’s theories are, of course, supported by a wealth of illuminating facts, which unfortunately have been unduly simplified and drawn upon for purely imaginary conclusions. We have already had occasion to remark that Ricardo also owes a good deal more to the observation of facts than is generally believed, and his practice of postulating imaginary conditions is of course notorious. The impenitent Marxian who still wishes to defend some of the more untenable theories of Marx, such as his doctrine of labour-value, generally finds himself forced to admit that Marx had supposed (the use of suppositions is an unfailing proof of Ricardian influence) the existence of society wherein labour would be always uniform in quality.[994]

Marxism is simply a branch grafted on the Classical trunk. Astonished and indignant as the latter may well seem at the sight of the strange fruit which its teaching has borne, it cannot deny the fact that it has nourished it with its own life-blood. “Das Kapital,” as Labriola notes, “instead of being the prologue to the communal critique, is simply the epilogue of bourgeois economics.”[995]

Not only has Marxism always shown unfailing respect for political economy even when attacking individual economists, who are generally accused of inability to grasp the full significance of their own teaching, but, strangely enough, it betrays an equal affection for capitalism.[996] It has the greatest respect for the task which it has already accomplished, and feels infinitely grateful for the revolutionary part (such are the words used) which it has played in preparing the way for collectivism, which is almost imperceptibly usurping its place.[997]

But the Marxians have one serious quarrel with the older economists. It seemed to them that the earliest writers on political economy never realized the relatively transient nature of the social organism which they were studying. This was possibly because they were conservative by instinct and had the interest of the bourgeois at heart. They always taught, and they fully believed it, that private property and proletarianism were permanent features of the modern world, and that social organisation was for ever destined to remain upon a middle-class foundation. They were at least unwilling to recognize that this also, like the rest, was simply a historical category, and, like them, also was destined to vanish.[998]

(b) The Marxian school also differs from every previous socialist school in the comparative ease with which it has eschewed every consideration of justice and fraternity, which always played such an important rÔle in French socialism. It is interested, not in the ideal, but in the actual, not in what ought to be, but in what is likely to be. “The theoretical conclusions of the communists are in no way based on ideas or principles that have been invented, or discovered by this or that would-be universal reformer. They merely express, in general terms, actual relations springing from an existing class struggle, from a historical movement going on under our very eyes.”[999]

To economic facts they attributed an importance altogether transcending their influence in the economic sphere. Their belief was that the several links which unify the many-sided activities of society, whether in politics, literature, art, morality, or religion, are ultimately referable to some economic fact or other. None of them but is based upon a purely economic consideration. Most important of all are the facts relating to production, especially to the mechanical instruments of production and their operation. If we take, for example, the production of bread and the successive stages through which the mechanical operation of grinding has passed from the hand-mill of antiquity to the water-mill of the Middle Ages and the steam-mill of to-day, we have a clue to the parallel development of society from the family to the capitalistic system and from the capitalistic to the trust, with their concomitants slavery, serfdom, and proletarianism. This affords a far better explanation of the facts than any bourgeois cant about “the growth of freedom” or humbug of that nature. These are the real foundations upon which every theory has to be reared. This materialistic conception of history,[1000] implying as it does a complete philosophy of history, is no longer confined to the purely economic domain.

Taken in the vulgar sense, it seems to involve the exclusion of every moral and every humanitarian consideration. As SchÄffle put it in that oft-quoted phrase of his, it means reducing the social question to a “mere question of the belly.” The French socialists find the doctrine somewhat difficult to swallow, and they hardly display the same reverence for Marx as is shown in some other countries.[1001]

The orthodox Marxians immediately proceed to point out that such criticism is useless and shows a complete misunderstanding of Marx’s position. Materialism in the Marxian sense (and all his terms have a Marxian as well as the ordinary significance) does not exclude idealism, but it does exclude ideology, which is a different thing. No Marxian has ever advocated leaving mankind at the mercy of its economic environment; on the contrary, the Marxian builds his faith upon evolution, which implies man’s conscious, but not very successful, effort to improve his economic surroundings.[1002] The materialistic conception of history apparently is simply an attempt at a philosophy of human effort.[1003] Criticism of such elusive doctrines is not a very easy task.

(c) The socialism of Karl Marx is exclusively a working-class gospel. This is its distinctive trait and the source of the power it wields. To some extent it also explains its persistence. Other socialist systems have been discredited and are gone, but the Marxian gospel—no longer, of course, the sublime masterpiece it was when its author first expounded it—has lost none of its ancient vigour, despite the many transformations which it has undergone.

The socialists of the first half of the nineteenth century embraced all men without distinction, worker and bourgeois alike, within their broad humanitarian schemes. Owen, Fourier, and Saint-Simon reckoned upon the co-operation of the wealthy governing classes to found the society of the future. Marxism implies a totally different standpoint. There is to be no attempt at an understanding with the bourgeoisie, there must be no dallying with the unclean thing, and the prohibition is to apply not only to the capitalists, but also to the intellectuals[1004] and to the whole hierarchical superstructure that usually goes by the name of officialdom. Real socialism aims at nothing but the welfare of the working classes, which will only become possible when they attain to power.

It may, of course, be pointed out that socialism has always involved some such struggle between rich and poor, but it is equally correct to say that the battle has hitherto been waged over the question of just distribution. Beyond that there was no issue. But in the Marxian doctrine the antagonism is dignified with the name of a new scientific law, the “class war”—the worker against the capitalist, the poor versus the rich. The individuals are the same, but the casus belli is quite different. “Class war” is a phrase that has contributed not a little to the success of Marxism, and those who understand not a single word of the theory—and this applies to the vast majority of working men—will never forget the formula. It will always serve to keep the powder dry, at any rate.

“Class war” was not a new fact. “The history of all hitherto existing society is the history of class struggles.”[1005] But although it has always existed, it cannot continue for ever. And the great struggle that is now drawing nigh and which gives us such a tragic interest in the whole campaign will be the last. The collectivist rÉgime will destroy the conditions that breed antagonism, and so will get rid of the classes themselves. Let us note in passing that this prophecy is not without a strong tinge of that Utopian optimism which the Marxians considered such a weakness in the earlier French socialism.

(d) A final distinction of Marxism is its purely revolutionary or catastrophic character, which is again unmistakably indicated by its adoption of “class war” as its watchword. But we have only to remind ourselves that the adjective “revolutionary” is applied by the Marxians to ordinary middle-class action to realize that the term is employed in a somewhat unusual fashion.

The revolution will result in the subjection of the wealthier classes by the working men, but all this will be accomplished, not by having recourse to the guillotine or by resorting to street rioting, but in a perfectly peaceful fashion. The means may be political and the method even within the four corners of the law, for the working classes may easily acquire a majority in Parliament, seeing that they already form the majority of the electors, especially in those countries that have adopted universal suffrage. The method may be simply that of economic associations of working men taking all economic services into their own hands.[1006]

The final catastrophe may come in yet another guise, and most Marxians seem to centre their hopes upon this last possibility. This would take the form of an economic crisis resulting in the complete overthrow of the whole capitalist rÉgime—a kind of economic felo de se. We have already noted the important place which crises hold in the Marxian doctrines.

But if Marxism does not necessarily involve resort to violence, violent methods are not excluded. Indeed, it considers that some measure of struggle is inevitable before the old social forms can be delivered of the new—before the butterfly can issue from the chrysalis. “Force is the birth-pangs of society.”[1007]

This is not the place for false sentimentalism. Evil and suffering seem to be the indispensable agents of evolution. Had anyone been able to suppress slavery or serfdom or to prevent the expropriation of the worker by the capitalist, it would have merely meant drying up the springs of progress and more evil than good would probably have resulted.[1008] Every step forward involves certain unpleasant conditions, which must be faced if the higher forms of existence are ever to become a reality. And for this reason the reform of the bourgeois philanthropist and the preaching of social peace would be found to be harmful if they ever proved at all successful. There is no progress where there is no struggle. This disdainful indifference to the unavoidable suffering involved in transition is inherited from the Classical economists, and provides one more point of resemblance between the two doctrines. Almost identical terms were employed by the Classical economists when speaking of competition, of machinery, or of the absorption of the small industry by a greater one. In the opinion of the Marxians no attempt at improving matters is worthy the name of reform unless it also speeds the coming revolution. “But it can shorten and lessen the birth-pangs.”[1009]

III: THE MARXIAN CRISIS AND THE NEO-MARXIANS

To speak of Neo-Marxism, which is of quite recent growth, is to anticipate the chronological order somewhat, but some such procedure seems imperative in the interests of logical sequence. It has the further merit of dispensing with any attempt at criticism, a task which the Neo-Marxians[1010] have exclusively taken upon their own shoulders.

The two phases of the crisis must needs be kept distinct. The one, which is predominantly critical—or reformative, if that phrase be preferred—is best represented by M. Bernstein and his school. The other, which is more or less of an attempt to revive Marxism, has become current under the name of Syndicalism.

1. The Neo-Marxian Reformists

If we take Marx’s economic theories one by one as we have done, we shall find that there is nothing very striking in any of them, and that even the most important of them will not stand critical scrutiny. We might even go farther and say that this work of demolition is partly due to the posthumous labours of Marx himself. It was the publication of his later volumes that served to call attention to the serious contradiction between the later and the earlier sections of his work. Marxism itself, it seems, fell a prey to that law of self-destruction which threatened the overthrow of the whole capitalistic rÉgime. Some of Marx’s disciples have, of course, tried to justify him by claiming that the work is not self-contradictory, but that the mere enumeration of the many conflicting aspects of capitalistic production strikes the mind as being contradictory.[1011] If this be so, then Kapital is just a new edition of Proudhon’s Contradictions Économiques, which Marx had treated with such biting ridicule. And if the capitalist rÉgime is really so full of contradictions that are inherent in its very nature, how difficult it must be to tell whether it will eventuate in collectivism or not and how very rash is scientific prophecy about annihilation and a final catastrophe![1012]

The fundamental theory of Marxism, that of labour-value, appears to be abandoned by the majority of modern Marxians, who are gradually veering round and adopting either the “final utility” or the “economic equilibrium” theory.[1013] Even Marx himself, despite his formal acceptance of the labour-value theory, is constantly obliged to admit—not explicitly, of course—that value depends upon demand and supply.[1014] Especially is this the case with profits, as we have already had occasion to remark. What appears as an indisputable axiom in the first volume is treated as a mere working hypothesis in the later ones.

But seeing that the other Marxian doctrines—the theories of surplus value and surplus labour, for example—are mere deductions from the principle of labour-value, it follows that the overthrow of the first principle must involve the ruin of the other two. If labour does not necessarily create value, or if value can be created without labour, then there is no proof that labour always begets a surplus value and that the capitalist’s profit must largely consist of unremunerated labour. The Neo-Marxians in reply point to the fact that surplus labour and surplus value do exist, else how could some individuals live without working? They must obviously be dependent upon the labour of others.[1015] All this is very true, but the fact had been announced by Sismondi long before, and the evil had been denounced both by him and the English critics. It is the old problem of unearned increment which formed the basis of Saint-Simon’s doctrine and Rodbertus’s theory, and which has been taken up quite recently by the English Fabians.

It is difficult to see what definite contribution Marx has made to the question, and the old problem as to whether workers are really exploited or not and whether the revenues obtained by the so-called idle classes correspond to any real additional value contributed by themselves still remains unsettled. We can only say that his historical exposition contains several very striking instances which seem to prove this exploitation, and that this is really the most solid part of his work.

Passing on to the law of concentration—the vertebral column of the Marxian doctrine—we shall find upon examination that it is in an equally piteous condition. The most unsparing critic in this case has been a socialist of the name of Bernstein, who has adduced a great number of facts[1016]—many of them already advanced by the older economists—which go to disprove the Marxian theory. It may be impossible to deny that the number of great industries is increasing rapidly and that their power is growing even more rapidly than their numbers, but it certainly does not seem as if the small proprietors and manufacturers were being ousted. Statistics, on the contrary, show that the number of small independent manufacturers (the artisans who, according to Marxian theory, had begun to disappear as far back as the fourteenth century) is actually increasing. Some new invention, such as photography, cycling, or the application of electricity to domestic work, or the revival of an industry such as horticulture, gives rise to a crowd of small industries and new manufactures.

But concentration as yet has scarcely made an appearance even in agriculture, and all the efforts of the Marxians to make this industry fit in with their theory have proved utterly useless. America as well as Europe has been laid under tribute with a view to supplying figures that would prove their contention. The statistics, however, are so confusing that directly opposite conclusions may be drawn from the same set of figures. The amount of support which they lend to the Marxian contention seems very slight indeed. On the whole they may be said to lend colour to the opposite view that the number of businesses is at least keeping pace with the growth of population. Were this to be definitely verified it would set a twofold check upon the Marxian theory. Not only would it be proved that petite culture is on the increase, but it would also be found that it is on the increase simply because it is more productive than “the great industry.”

But suppose for the sake of hypothesis that we accept the law of concentration as proved. That in itself is not enough to justify the Marxian doctrine. To do this statistics proving an increasing concentration of property in the hands of fewer individuals are also necessary; but in this case the testimony of the figures is all in the opposite direction. We must not be deceived by the appearance of that new species, the American millionaire. There are men who are richer than the richest who ever lived before, but there are also more men who are fairly rich than ever was the case before. The number of men who make a fortune—not a very great one, perhaps, but a moderate-sized or even a small one—is constantly growing. Joint stock companies, which according to the Marxian view afforded striking evidence of the correctness of his thesis, have, on the contrary, resulted in the distribution of property between a greater number of people, which proves that the concentration of industry and the centralisation of property are two different things. Or take the wonderful development of the co-operative movement and reflect upon the number of proletarians who have been transformed into small capitalists entirely through its instrumentality. To think that expropriation in the future will be easier because the number of expropriated will be few seems quite contrary to facts. It looks as if it were the masses, whose numbers are daily increasing, who will have to be expropriated, after all. More than half the French people at the present day possess property of one kind or another—movable property, land, or houses. And yet the collectivists never speak except with the greatest contempt of these rag-ends and tatters of property, fondly imagining that when the day of expropriation comes the expropriated will joyfully throw their rags aside in return for the blessings of social co-proprietorship. Apparently, however, the Marxians themselves no longer believe all this. Their language has changed completely, and just now they are very anxious to keep these rags and tatters in the hands of their rightful owners.

The changes introduced into the programme as a result of this have transformed its character almost completely. When it was first drawn up and issued as a part of the Communist Manifesto nearly fifty years ago everybody expected that the final disappearance of the small proprietor was a matter of only a few years, and that at the end of that time property of every description would be concentrated in the hands of a powerful few. This continuous expropriation would, of course, swell the ranks of the proletariat, so that compared with their numbers the proprietors would be a mere handful. This would make the final expropriation all the easier. With such disparity in numbers the issue was a foregone conclusion, no matter what method was employed, were it a revolution or merely a parliamentary vote.

Unfortunately for the execution of this programme, not only do we find the great capitalist still waxing strong, which is quite in accordance with the orthodox Marxian view, but there is no evidence that the small proprietor or manufacturer is on the wane. The Marxian can scarcely console himself with the thought that the revolution is gradually being accomplished without opposition when he sees hundreds of peasant proprietors, master craftsmen, and small shopkeepers on every side of him. Nor is there much chance of forcing this growing mass of people, which possibly includes the majority of the community even now, to change its views. We can hardly expect them to be very enthusiastic about a programme that involves their own extinction.

A distinction has obviously been drawn between two classes of proprietors. The socialisation of the means of production is only to apply to the case of wealthy landowners and manufacturers on a large scale—to those who employ salaried persons. But the property of the man who is supporting himself with the labour of his own hands will always be respected. The Marxians defend themselves from the reproach of self-contradiction and opportunism by stating that their action is strictly in accordance with the process of evolution. You begin by expropriating those industries that have arrived at the capitalistic and wage-earning stage. The criterion must be the presence or otherwise of a surplus value.

The conclusion is logical enough, but one would like to know what is going to become of the small independent proprietor. Will he be allowed to grow and develop alongside of the one great proprietor—the State? We can hardly imagine the two systems coexisting and hopelessly intermingled, as they would have to be, but still with freedom for the individual to choose between them. The collectivists have at any rate made no attempt to disguise the fact. They look upon it merely as a temporary concession to the cowardice of the small proprietor, who will presently willingly abandon his own miserable bit of property in order to share in the benefits of the new rÉgime, or who will at any rate be put out of the running by its economic superiority. But since the prospects do not seem very attractive to those immediately concerned, it may be as well to dispense with any further consideration of the subject.

But there is another question. What has become of the class struggle in Neo-Marxism? The doctrine, though not altogether denied, is no longer presented as a deadly duel between two classes and only two, but as a kind of confused mÊlÉe involving a great number of classes, which makes the issue of the conflict very uncertain. The picture of society as consisting merely of two superimposed layers is dismissed as being altogether too elementary. On the contrary, what we find is increasing differentiation even within the capitalist class itself. There is a perpetual conflict going on between borrower and lender, between manufacturer and merchant, between trader and landlord, the last of which struggles is especially prominent in the annals of politics. It has a long history, but in modern times it takes the form of a political battle between the Conservative and Liberal parties, between Whigs and Tories. These undercurrents complicate matters a great deal, and on occasion they have a way of dramatically merging with the main current, when both parties seek the help of the proletariat. In England, for example, the manufacturers succeeded in repealing the Corn Laws, which dealt a hard blow at the landed proprietors, who in turn passed laws regulating the conditions of labour in mines and factories. In both cases the working classes gained something—tertius gaudens! Then there are the struggles among the working classes themselves. Not to speak of the bitter animosity between the syndicats rouges and the syndicats jaunes, there is the rivalry between syndicalists and non-syndicalists, between skilled workmen and the unskilled. As Leroy-Beaulieu remarks, not only have we a fourth estate, but there are already signs of a fifth.

And what of the great catastrophe? The Neo-Marxians no longer believe in it. The economic crises which furnished the principal argument in support of the catastrophic theory are by no means as terrible as they were when Marx wrote. They are no longer regarded as of the nature of financial earthquakes, but much more nearly resemble the movements of the sea, whose ebb and flow may to some extent be calculated.

And the materialistic conception of history? “Every unbiased person must subscribe to that formula of Bernstein: The influence of technico-economic evolution upon the evolution of other social institutions is becoming less and less.”[1017] What a number of proofs of this we have! Marxism itself furnishes us with some. The principle of class war and the appeal to class prejudice owe much of the hold which they have to a feeling of antagonism against economic fatalism. In other words, they draw much of their strength from an appeal to a certain ideal. It is, of course, true that facts of very different character, economic, political, and moral, react upon one another, but can anyone say that some one of them determines all the others? Economists have been forced to recognise this, and the futile attempt to discover cause or effect has recently given place to a much more promising search for purely reciprocal relations.

It is by no means easy to determine how much Marxism there is in Neo-Marxism. “Is there anything beyond the formulÆ which we have quoted, and which are becoming more disputable every day? Is it anything more than a philosophical theory which purports to explain the conflicts of society?”[1018] Bernstein tells us somewhere that socialism is just a movement, and that “the movement is everything, the end is nothing.”[1019]

2. The Neo-Marxian Syndicalists

Doctrinaire Marxism seemed languishing when a number of professed disciples found a fresh opportunity of reviving its ideals and of justifying its aims in a new movement of a pre-eminently working-class character known as Syndicalism.

Our concern is not with the reformist movement, occasionally spoken of as Trade Unionism, which constitutes the special province of M. Bernstein and the Neo-Marxians of his school,[1020] but rather with militant syndicalism, which as yet scarcely exists anywhere except in France and Italy, and which in France is represented by the ConfÉdÉration gÉnÉrale du Travail.

What connection is there between Marxism and syndicalism? Of conscious, deliberate relationship there is scarcely any. The men who direct the ConfÉdÉration have never read Marx, possibly, and would hardly concern themselves with the application of his doctrines. On the other hand, we have recently been told that the programme of the ConfÉdÉration gÉnÉrale du Travail (C.G.T.) is in strict conformity with the Marxian doctrine; that since the reforming passion has so seized hold of the Neo-Marxians as to drive them to undermine the older doctrine altogether, it is necessary to turn to the new school to find the pure doctrine. They make the further claim of having aroused new enthusiasm for the Marxian doctrines.

(a) In the first place they have re-emphasised the essentially proletarian character of socialism. Not only is there to be no dealing with capitalist or entrepreneur, but no quarter is to be given to the intellectuals or the politicians. The professional labour syndicate is to exclude everyone who is not a workman, and it has no interest at heart other than that of the working class.[1021] Contempt for intellectualism is a feature of Marxism, and so is the emphasis laid upon the beauty and worth of labour, not of every kind of labour, but merely of that labour which moulds or transforms matter—that is, of purely manual labour.

No institution seems better fitted to develop class feeling—that is, the sense of community of interests binding all the proletarians together against the owners—than the syndicat. Organisation is necessary if social consciousness is to develop. This is as true in the economic as it is in the biological sphere, and this is why the syndicat is just what was needed to transform the old socialistic conception into real socialism. Marx could not possibly have foreseen the vast potentialities of the syndicat. If he had only known it how his heart would have rejoiced! The Neo-Marxians can never speak of syndicalism without going into raptures. No other new source of energy seems left in this tottering middle-class system. But syndicalism has within it the promise of a new society, of a new philosophy, even of a new code of morality which we may call producers’ ethics, which will have its roots in professional honour, in the joy that comes from the accomplishment of some piece of work, and in their faith in progress.[1022]

(b) New stress has been laid upon the philosophy of class war, and a fresh appeal has been made for putting it into practice. The only real, sensible kind of revolution is that which must sooner or later take place between capitalists on the one hand and wage-earners on the other, and this kind of revolution can only be effected by appealing to class feeling and by resorting to every instrument of conflict, strikes, open violence, etc. All attempts at establishing an understanding with the bourgeois class, every appeal for State intervention or for concessions, must be abandoned. Explicit trust must be placed in the method of direct action.[1023]

Strife is to be the keynote of the future, and in the pending struggle every trace of bourgeois legalism will be ruthlessly swept aside. The fighting spirit must be kept up, not with a view to the intensification of class hatred, but simply in order to hand on the torch.

The struggle has hitherto been the one concern of the revolutionary syndicalists. Unlike the socialists, they have never paid any attention either to labour or to social organisation. All this has, fortunately, been done by the capitalist, and all that is required now is simply to remove him.[1024]

(c) Nor has the catastrophic thesis been forgotten. This time it has been revived, not in the form of a financial crisis, but in the guise of a general strike. What will all the bourgeois generalship, all the artillery of the middle class, avail in a struggle of that kind? What is to be done when the worker just folds his arms and instantly brings all social life to a standstill, thus proving that labour is really the creator of all wealth? And although one may be very sceptical as to the possibility of a general strike—the scepticism is one that is fully shared in by the syndicalists themselves—still this “myth,” as Sorel calls it, must give a very powerful stimulus to action, just as the Christians of the early centuries displayed wonderful activity in view of their expectation of the second coming of Christ.

The word “myth” has been a great success, not so much among working men, to whom it means nothing at all, but among the intellectuals. It is very amusing to think that this exclusively working-class socialism, which is not merely anti-capitalist, but also violently anti-intellectual, and which is to “treat the advances of the bourgeoisie with undisguised brutality,” is the work of a small group of “intellectuals” possessed of remarkable subtlety, and even claiming kinship with Bergsonian philosophy.[1025] A myth perhaps! But what difference is there between being under the dominion of a myth and following in the wake of a star such as guided the wise men of the East, or being led by a pillar of flame or a cloud such as went before the Israelites on their pilgrimage towards the Promised Land?[1026] Such faith and hope borrowed from the armoury of the triumphant Church of the first century, such a conception of progress which swells its followers with a generous, almost heroic passion, puts us out of touch with the historic materialism so dear to the heart of Marx and brings us into line with the earlier Utopian socialists whom he so genuinely despised. Sorel recognises this. “You rarely meet with a pure myth,” says he, “without some admixture of Utopianism.”

CHAPTER IV: DOCTRINES THAT OWE THEIR INSPIRATION TO CHRISTIANITY

Everyone who knows the Bible at all or has the slightest acquaintance with the writings of the early Fathers must have been struck by the number of texts which they contain bearing upon social and economic questions. And one has only to recall the imprecations of the prophets as they contemplate the misdeeds of merchants and the greed of land-grabbers, or strive to catch the spirit of the parables of Jesus or the epistles of the Fathers concerning the duty of the rich towards the poor—a point emphasised by Bossuet in his sermon on The Eminent Dignity of the Poor—or dip into the folios of the Canonists or the Summa of Aquinas, to realise how imperative were the demands of religion and with what revolutionary vehemence its claims were upheld.[1027]

But not until the middle of the nineteenth century do we meet with social doctrines of a definitely Christian type, and not till then do we witness the formation of schools of social thinkers who place the teaching of the Gospel in the forefront of their programme, hoping that it may supply them with a solution of current economic problems and with a plan of social reconstruction.[1028] It is not difficult to account for their appearance at this juncture. Their primary object was to bear witness to the heresy of socialism, and the nature of the object became more and more evident as socialism tended to become more materialistic and anti-Christian. It became the Church’s one desire to win back souls from the pursuit of this new cult. It was the fear of seeing the people—her own people—enrol themselves under the red flag of the Anti-Christ that roused her ardour.[1029] But to regard it as a mere question of worldly rivalry would be childish and misleading. Rather must we see in it a reawakening of Christian conscience and a searching of heart as to whether the Church herself had not betrayed her Christ, and in contemplation of her heavenly had not forgotten her earthly mission, which was equally a part of her message; whether in repeating the Lord’s Prayer for the coming of the Kingdom and the giving of daily bread she had forgotten that the Kingdom was to be established on earth and that the daily bread meant, not charity, but the wages of labour.

Both doctrines and schools are of a most heterogeneous character, ranging from authoritative conservatism to almost revolutionary anarchism, and it will not be without some effort that we shall include them all within the limits of a single chapter. But it is not impossible to point to certain common characteristics, both positive and negative, which entitle us to regard them all as members of one family.

As a negative trait we have their unanimous repudiation of Classical Liberalism. This does not necessarily imply a disposition to invoke State aid, for some of them, as we shall see, are opposed even to the idea of a State. Neither does it imply a denial of a “natural order,” for under the name of Providence and as a manifestation of the will of God the “order” was a source of perennial delight to them. But man was to them an outcast without lot or portion in the “order.” Fallen and sinful, bereft of his freedom, it was impossible that of himself he should return to his former state of bliss. To leave the natural man alone, to deliver him over to the pursuit of personal interest in the hope that it might lead him to the good or result in the rediscovery of the lost way of Paradise, was clearly absurd. It was as futile in the economic as it was in the religious sphere. On the contrary, the Christian schools maintained that the “natural” man, the old man, the first Adam of the New Testament, must somehow be got rid of before room could be found for the new man within us. Every available force, whether religious, moral, or merely social, must be utilised to keep people from the dangerous slope down which egoism would inevitably lead them.[1030]

The new doctrines are also distinct from socialism, despite the fact that their followers frequently outbid the socialists in the bitterness of their attacks upon capital and the present organisation of society. They refuse to believe that the creation of a new society in the sense of a change in economic conditions or environment is enough. The individual must also be changed. To those who questioned Christ as to when the Kingdom of God should come, He replied, “The kingdom of God cometh not with observation … for, behold, the kingdom of God is within you,” and His answer is witness to the fact that social justice will only reign when it has achieved victory over human hearts. Social Christianity must never be compared with the socialism of the Liberals or the Associationists, for the latter believed man to be naturally good apart from the deteriorating effects of civilisation. Nor must it ever be classed with the collectivism of Marx, which has its basis in a materialistic conception of history and class war. Some of these Christian authors, it is true, regard State Socialism with a certain degree of favour and would possibly welcome co-operation, but to most of them legal coercion does not seem very attractive and they prefer to put their faith in associations such as the family, the corporation, or the co-operative society. We could hardly expect otherwise, seeing that every church is an organisation of some kind or other. The Catholic Church especially, whatever opinion we may have of it, is at once the greatest and the noblest association that ever existed. Its bonds are even stronger than death. The Church militant below joins hands with the Church triumphant above, the living praying for the dead and the dead interceding for the living.

From a constructive standpoint they defy classification. They have a common aspiration in their hope of a society where all men will be brothers, children of the one Heavenly Father,[1031] but many are the ways of attaining this fraternal ideal. In the same spirit they speak of a just price and a fair wage much as the Canonists of the Middle Ages did. In other words, they refuse to regard human labour as a mere commodity whose value varies according to the laws of supply and demand. The labour of men is sacred, and Roman law even refused to recognise bartering in res sacrÆ. But when it becomes a question of formulating means of doing this, the ways divide. Numerous as are the Biblical texts which bear upon social and economic questions, they are extraordinarily vague. At least they seem capable of affording support to the most divergent doctrines.

Some might consider it a mistake to devote a whole chapter to these doctrines, seeing that they are moral rather than economic, and that, with perhaps the exception of Le Play, who is only indirectly connected with this school, we have no names that can be compared with those already mentioned. But not a few intellectual movements are of an anonymous character. The importance of a doctrine ought not to be measured by the illustrious character of its sponsor so much as by the effect which it has had upon the minds of men. No one will be prepared to deny the influence which these doctrines have exercised upon religious people, an influence greater than either Fourier’s, Saint-Simon’s, or Proudhon’s. Moreover, they are connected with the development of important economic institutions, such as the attempt to revive the system of corporations in Austria, the establishment of rural banks in Germany and France, the development of co-operative societies in England, the growth of temperance societies, the agitation for Sunday rest, etc. Nor must we forget that the pioneers of factory legislation, the founders of workmen’s institutes, men like Lord Shaftesbury in England, Pastor Oberlin, and Daniel Legrand the manufacturer, were really Christian Socialists.

I: LE PLAY’S SCHOOL

Le Play’s[1032] school is very closely related to the Classical Liberal, some of its best known representatives actually belonging to both. There is the same antipathy to socialism and the same dread of State intervention.

But it is not difficult to differentiate from the more extreme Liberal school which finds its most optimistic expression in the works of certain French writers. The cardinal doctrine of that school, namely, that individual effort is alone sufficient for all things, finds no place in Le Play’s philosophy. Man, it seemed to him, was ignorant of what his own well-being involved. In the realm of social science no fact seemed more persistent or more patent than error. Every individual appeared to be born with a natural tendency to evil, and he picturesquely remarks that “every new generation is just an invasion of young barbarians that must be educated and trained. Whenever such training is by any chance neglected, decadence becomes imminent.”[1033]

Among the errors more particularly denounced by Le Play were the special idols of the French bourgeois—the “false dogmas of ’89” as he calls them.[1034] It seemed to him that no society could ever hope to exist for any length of time and still be content with the rule of natural laws, which merely meant being ruled by the untamed instincts of the brute. It must set to and reform itself. Hence his book is entitled Social Reform, and the school which he founded adopted the same title.

Some kind of authority is clearly indispensable; the question is what it should be. The old paterfamilias relation immediately suggests itself as being more efficacious than any other, seeing that it is founded in nature and not on contract or decree, and springs from love rather than coercion. The family group under the authority of its chief, which was the sole social unit under the patriarchal system, must again be revived in the midst of our complex social relations. But parental control cannot always be relied upon, for the parent is frequently engrossed with the other demands of life, and there is positive need for some social authority. This new social authority will not be the State—that is, if Le Play can possibly avoid it. The first chance will be given to “natural” authorities—those authorities which rise up spontaneously. The nobility is well fitted for the task where it exists. In the absence of nobility, or where, as was unfortunately the case in France, they were impervious to a sense of duty, society must fall back upon the landed proprietors, the employers, and persons of ripe judgment—men who hardly deserve the title of savants, but nevertheless with considerable experience of life. Failing these it could still appeal to the local authorities, to those living nearest the persons concerned, to the parish rather than the county, the county rather than the State. State intervention is indispensable only when all other authorities have failed—in the enforcement of Sunday observance, for example, where the ruling classes have shown a disposition to despise it. The necessity for State intervention is evidence of disease within the State, and the degree of intervention affords some index of the extent of the malady.[1035]

Seeing that he attaches such importance to the constitution of the family, Le Play is also bound to give equal prominence to the question of entail, which determines the permanence of the family. Herein lies the kernel of Le Play’s system. He distinguishes three types of families:

1. The patriarchal family. The father is the sole proprietor, or, more correctly, he is the chief administrator of all family affairs. At his death all goods pass by full title to the eldest son. Such is the most ancient form of government of which we have any record. It is the political counterpart of the pastoral rÉgime, and both may still be seen in full operation on the Russian steppes.

2. The family group. Children and grandchildren no longer remain under paternal authority throughout life. With a single exception they leave the family hearth and proceed to found new homes. Whoever remains at home becomes the heir, after first becoming his father’s associate during the latter’s lifetime. He becomes the new head of the family by paternal wish, and not of legal right or necessity. The property thus passes to the worthiest, to him who is thought best able to preserve it. It is this rÉgime, Le Play thinks, that explains the extraordinary stability of China; and the same system, though somewhat shaken, is the source of England’s strength and vitality. There were some parts of France where, in spite of the Civil Code, a similar system was still in vogue. There was one such family in particular, that of the Pyrenean peasant Melouga, whose history showed a wonderful continuity, and the story of that family recurs as a kind of leitmotiv through the whole of the writings of Le Play and his immediate disciples. The Melouga family has since become extinct.

3. The unstable family, where all the children, as soon as they arrive at maturity, quit the home and set up for themselves. At the father’s death the family, already scattered, is completely dissolved. The patrimony is divided equally between all its members, and any business which the father may have possessed, whether agricultural or industrial, goes into immediate liquidation. This is the rÉgime born of individualism which is characteristic of all modern societies, especially France.

Le Play’s sympathy is entirely with the second, for the family group seems to hold the balance evenly between the two antagonistic forces which are both indispensable for the welfare of society, namely, the spirit of conservatism and the spirit of innovation. Under the patriarchal system the former preponderates,[1036] while under the rÉgime of the unstable family it is utterly wanting. The latter reminds us of Penelope’s web—each generation making a fresh beginning. But this periodical division of wealth fails to give the desired degree of equality, for the removal of every trace of solidarity between the members means that the one may become rich and the other sink into poverty. Everyone fights for his own hand. Moreover, when children only remain with their parents for just a short period of tutelage there is a powerful incentive given to race suicide, as is clearly shown in the case of France. As soon as the offspring find themselves in a position of self-sufficiency they leave the old home, just as the young animal does. Under such circumstances it is clearly to the interest of parents to have as few children as possible.[1037]

The family group, on the other hand, entrusts its traditions and their preservation to the keeping of the child who remains at home. Those who leave have their way to make, and become heirs of that industrial spirit which has made England the mistress of the world. True fraternal equality is also preserved, for the old home always remains open—a harbour of refuge to those who fail in the industrial struggle. To mention but one instance, the “old maid,” whose lot is often exceedingly hard, need never be without a home.

Apart from moral reform, there seemed only one way of establishing the family group in France, namely, by greater freedom of bequest, or at the very least by increasing the amount of goods that may be given to any one child, so that a father might be able to transmit the whole of his land or his business to any one of his children on condition that the heir fairly indemnified each of his brothers should their respective shares be insufficient.[1038]

A father’s authority over his children is an indispensable element in the stability of society, and a master’s authority over his men, though derivative in character, is scarcely less so. The continuance of social peace largely depends upon the latter, and the preservation of social peace should be the essential aim of social science.[1039] We are continually meeting with the expression “social peace” in the writings of Le Play and his school, and the associations which they founded became known as “Unions of Social Peace.”

Play’s first essay, an admirably planned Exposition of Social Economics, was published in 1867. The sole object of its author was to further the establishment of such institutions as were likely to promote understanding among all persons employed in the production of the same goods. We might even be tempted to say that the whole co-partnership movement started by Dollfus at Mulhouse in 1850 with the utterance of the famous phrase, “The master owes something to the worker beyond his mere wages,” was inspired by Le Play.[1040] Le Play pinned his faith to the benevolent master. It was quite natural that the apostle of the family group should regard the factory as possessing a great deal of the stability and many of the other characteristics of the family, such as its quasi-permanent engagements[1041] and its various grades of working men all grouped together under the authority of a well-respected chief.

Le Play’s thesis that the salvation of the working classes can only come from above seems to have even less foundation than the opposite doctrine of syndicalism, which claims that their deliverance is in their own hands, and it was once for all refuted in a brilliant passage of Stuart Mill’s:[1042] “No times can be pointed out in which the higher classes of this or any other country performed a part even distantly resembling the one assigned them in this theory. All privileged and powerful classes as such have used their power in the interest of their own selfishness.… I do not affirm that what has always been must always be. This at least seems to be undeniable, that long before the superior classes could be sufficiently inspired to govern in the tutelary manner supposed, the inferior classes would be too much improved to be so governed.”

Besides the master and the State there was still another factor of social progress which is of prime importance at the present time, namely, working men’s unions. One might reasonably have expected a more sympathetic treatment for them at Le Play’s hands, especially when we remember that they were proscribed by the “false dogmas of ’89.” But he had little faith in union, whether a corporation or a co-operative society.[1043] Trade unionism especially seemed rather useless, because it tended to destroy the more natural and more efficient organisation which appeared to him to be merely an extension of the family group. It is true that Le Play never saw unionism in operation, but it is hardly probable that he would have modified his opinion. At any rate, the attitude of his disciples is not much more favourable.

One feels tempted to say that there is nothing very new in all this. The remark would have been particularly gratifying to Le Play, who considered that invention was impossible in social science and that what he himself had done was merely to make a discovery.

The discovery of “the essential constitution of humanity,” as he called it, was, he thought, the outcome of his methods of observation. His method was really always more important than his doctrine. It has always enjoyed a considerable measure of success, and it seems to-day as if it would survive the doctrine. Le Play was brought up as a mining engineer and had travelled extensively.[1044] Twenty years of his life had been spent in this way, and during that period he had travelled over almost the whole of Europe, even as far as the Urals. It was while staying in the neighbourhood of those mountains that he conceived the idea of writing monographs dealing with individual families belonging to the working classes, a method of investigation which he is never weary of contrasting with that other “disdainful method of invention.”[1045]

To write a family monograph[1046] À la Le Play is not merely to relate its history, to describe its mode of life, and to analyse its means of subsistence, but also to sum up its daily life in a kind of double-entry book-keeping where every item of expenditure is carefully compared and balanced with the receipts. But there is much that is artificial and a great deal that is childish in this seemingly mathematical precision, where not merely economic wants but such needs as those of education, of recreation, and of intemperance, virtues as well as vices, are catalogued and reckoned in terms of £ s. d. Its advantage lies in its holding the attention of the observer, even when he is a mere novice at the work, by obliging him to put something in every column and allowing nothing to escape his notice.[1047]

But when Le Play proceeds to declare that this method has revealed the truth to him and helped him to formulate the doctrines of which we have just given a rÉsumÉ it really seems as if he were making a great mistake. Actually it has only revealed what Le Play expected to find; in other hands it might have yielded quite different results. He declares that it has proved to him that only those families which are grouped under paternal authority and which obey the Ten Commandments are really happy.[1048] That may be, but how would he define a happy family? “A happy family is one that dwells in unity and abides in the love of God.” He has thus armed himself with a definite a priori criterion of happiness;[1049] but there is nothing to prove that the unstable disorganised family of the Parisian factory hand may not be infinitely more happy than the family group of Melouga or the patriarchal family of the Bashkirs of Turkestan.

A comparison has often been drawn between Le Play’s school and the German Historical school. It is pointed out that both schools lay great emphasis upon the method of observation and focus attention upon the institutions of the past, and that to some extent they both represent a reaction against Liberalism and Classical optimism. But the resemblance is wholly superficial. At bottom the two schools are not merely different, but even divergent. The German school seeks the explanation of the present in the past, while Le Play’s school is merely out to learn a few lessons. The one studies the germ which is to develop and to bear fruit, while the other admires the type and the model to which it thinks it necessary to conform. The one is evolutionary, the other traditional, and the conclusions of the former are radical in the extreme, and even socialistic, while those of the latter are usually conservative.

And so Play’s true position is in the chapter dealing with Social Christianity, and not among the writers of the Historical school.

His unshaken belief in the natural propensity of man to evil and error is sufficient to give him his place. But we must beware of confusing his doctrine with that of the Social Catholics, for, unlike them, he is rather prone to invoke the authority of the Mosaic law, especially the Decalogue, and to take his illustrations from England, which is a Protestant country, or from China or Mohammedan lands. His importance among authorities on social questions is not very great, but his attitude towards Church and clergy was on the whole defiant,[1050] and the plan of reform of which we have just given an outline is very different from that of the Social Catholics.

There was a schism in the school in 1885. The “Unions of Social Peace,” with their organ, La RÉforme sociale, have on the whole remained faithful to the programme as outlined in this chapter. The dissenting branch, on the other hand, with M. Demolins and the AbbÉ de Tourville as leaders, has developed the doctrine on its ultra-individualistic or Spencerian side, so that only in origin can it be regarded as at all connected with the school of Le Play.

The “School of Social Science,” as it is called—at least, that is the name it has given to its review—claims that it is still faithful to the method of the master. It even goes so far as to say that Le Play was ignorant of the full possibilities of this method, and condemns his failure to establish a positive science by means of it. In reality, however, the master’s method has quite a subordinate rÔle in the activities of this new school, for the simple reason that it is practically useless except for the production of monographs. The new school arranges its facts according to their natural relations, and attempts to link the study of social science to the study of geographical environment.[1051] The study of environment receives some attention in the works of Le Play himself, but it has assumed much greater importance since then. To give but a single instance, the new school attempts to show how the configuration of the Norwegian fiord, the almost complete absence of arable land, and the consequent recourse to fishing as a means of livelihood, even the very dimensions of their sea-craft, have helped to fix the type of family and even the political and economic constitutions prevalent among the Anglo-Saxon race. In a similar fashion, the vast steppes of central and southern Asia have begotten a civilisation of their own. It is the Historical materialism of the Marxian school reappearing in the more picturesque and more suggestive guise of geographical determinism.[1052]

The new school, however, is not very favourably inclined to Le Play’s programme of social reform, especially its teaching concerning the family. Their aim is not the preservation of the family, but the placing of each child in a position to found a family of his own as soon as possible. Their object is neither family nor communal solidarity, but self-help, not the family group, but the single individual family, not the English, but the American home. Demolins is an ardent believer in the struggle for existence, and no one has ever professed greater contempt for the solidarist doctrine. “Social salvation, like eternal life,” says he, “is essentially a personal affair”—a singularly heterodox declaration, by the way, for if salvation is a purely personal matter of what use is the Church?[1053]

II: SOCIAL CATHOLICISM

The term “Catholic Socialism,” which is occasionally employed as an alternative to the above title, is objected to by the majority of Catholics as being excessively restrictive. The generic term “Christian Socialism” was first employed by a Frenchman, Francis Huet, in a book entitled Le RÈgne social du Christianisme, published in 1853.[1054]

But at least two other authors, namely, Buchez in his Essai d’un TraitÉ complet de Philosophie au point de vue du Catholicisme et du ProgrÈs (1838-40), and the fugitive AbbÉ de Lamennais in La Question du Travail (1848), can lay considerable claims to priority in the matter. Buchez was the founder of the Co-operative Association of Producers (1832), and Lamennais outlined a scheme of co-operative banks almost exactly like those afterwards established in Germany by Raiffeisen.[1055]

Present-day Catholicism, however, shows no great desire to honour any of them. The one ambition of these three republicans was to effect a union between the Church and the Revolution.[1056] The most advanced of the Social Catholics of to-day, on the other hand, would be well satisfied could they establish some kind of understanding between the Church and democracy. Such at least is the programme recently laid down by M. Marc Sangnier, the founder of the Sillon.

About the same time we find Monseigneur von Ketteler, Bishop of Mayence, preaching a doctrine which drew its inspiration, not from “the false dogmas of ’89,” but from the institutional life of the Middle Ages, from the guilds and the other corporative associations, which are minutely described by him and his disciples, especially Canon Moufang and the AbbÉ Hitze. Some such institutional activity was again to form the corner-stone of Social Catholicism.[1057]

During the period of the Second Empire most of the Social Catholics seem to have fallen asleep, but they were aroused from their slumbers by the disaster of 1870. The Comte Albert de Mun proved the inspirer this time, and his noble eloquence, which led to the formation of unions of Catholic working men, was instrumental in giving the movement a vigorous start. The same period witnessed the appearance of L’Association catholique, a review which took as its programme the study of economic facts in a Catholic spirit—an object that has always been kept steadily in view.

Organisation in the form of corporations was given first place in the Social Catholic programme.[1058] Le Play’s corner-stone—the family organisation—was not rejected, but they considered that though the family was to remain the basis for moral reform a wider association of an economic character must serve as a basis for economic reform.

At first sight this may seem somewhat surprising. The connection between these professional associations and the teaching of the Gospel is not very evident, nor is it very clear how such organisations could ever hope to Christianise society. But although the Gospels know nothing of a corporative or any other rÉgime we must not forget their prominence during the Middle Ages—when the authority of the Church was in the ascendant. As long as this rÉgime lasted what we understand as the social question—the vexed problem as to whether we possess sufficient moral strength to keep the peace between capital and labour—never presented itself. The problem is, of course, somewhat different to-day, but its solution may possibly require the exercise of similar virtues, namely, obedience to a detailed system of organisation coupled with a feeling of brotherhood—the chastening of the whole complexity of social relations by the spirit of Christianity.

Some of their opponents have not hesitated to charge these Catholics with a desire to return to the feudalism of the Middle Ages, which is of course utterly false. What the Social Catholics wished to do was to build up the new social structure upon the basis of the modern trade union, or upon syndicalism; and the proof that the foundation is not at any rate too narrow lies in the fact that the new schools of socialists can conceive of none better. With this as the foundation they looked forward not merely to the development of a new society, but also to the rise of a new ethic. The fact that they forestalled the socialists in this respect shows that the Social Catholics were at least not hopelessly antiquated.

Early in the history of the movement they tried to organise a kind of mixed syndicat consisting both of masters and men, because this seemed to them to offer the best guarantee for social peace. But the results proved disappointing, and they were soon forced to relinquish that idea and to content themselves with a separate organisation of masters and men co-operating only in matters relating to the regulation of work or the settling of differences.[1059] Such collateral unions, it was at first thought, would gradually become the organs of labour legislation, and the State would entrust them with the discharge of that function because of their greater freedom in the making of experiments. All questions affecting the interests of a trade, the hours of labour, Sunday observance, apprenticeship, the sanitary condition of the workshops, the labour of women and children, and even the rate of wages paid, instead of being regulated as they are at present by brutal, inflexible laws which are seldom suited to meet every individual case, would henceforth be settled by the union, and the rules of the union would be incumbent upon all the members of the trade or profession, both masters and men. Everyone would be free to enter the union or to decline membership just as he chose, but no member would be allowed to violate the rules of the union or to lower the conditions of labour in any way. “Free association within an organised profession,” such is the formula.[1060]

To those Liberals who feign indignation at seeing purely private institutions thus invested with legislative authority it may be answered that the “labour union” so constituted forms an association which is as natural and as necessary—understanding by this that it is independent of the voluntary conventions of the parties interested—as one based upon community of residence. Everybody admits that the inhabitants of the commune ought to submit to the rule of the organised majority. What difference would it make if the majority thus organised constituted a corporation rather than a commune?[1061]

Some go so far as to regard these professional associations as possessed of an important political rÔle, and would even go the length of making this new corporative unit the basis of a new franchise for the election of at least one of the two Chambers.

It is not very easy, perhaps, to get a clear idea of what a society built upon a plan of this kind would really be like, but the difficulty is no greater in this case than in some others.

In the first place it would have to be a society professing the Catholic faith.[1062] Should the enemies of religion or even the indifferent by any chance ever gain the upper hand in the social unit the whole structure would immediately fall to the ground. Its realisation, accordingly, is quite hypothetical.

It would also be a society founded upon brotherhood in the full sense of the term. The only real brotherhood is that founded upon the fatherhood of God, and not upon any socialistic conception of equality. But even brotherhood and a common parentage may not be sufficient to prevent irregularities, and the family relation in addition to this almost inevitably implies the rights of the youngest and the duties of the oldest. Within the corporative unit already outlined true equality would always reign, for the humblest, meanest task would be of equal dignity with the most exalted office in the State, and everyone would be content and even proud to live where God had placed him.[1063]

Such a society would be a pure hierarchy. All the authority and responsibility, all the duties involved, would be on the master’s side. On the worker’s side would be rights respected, life assured on the minimum level, and a re-establishment of family life.[1064]

Social Catholicism further undertook to disprove the first article in the socialist creed, namely, that “the emancipation of the workers can only be accomplished by the workers themselves.” It maintained that, on the contrary, this object could only be accomplished by the help of the masters and of all the other classes in society, not excluding even the non-professional classes, landed proprietors, rent-receivers, and consumers generally,[1065] all of whom ought to be informed of the responsibilities which their different positions impose upon them and of the special duty which is incumbent upon all men of making the most of the talents with which the Master has entrusted them.

The German Christliche Gewerkvereine, which gets most of its recruits among the Catholics, is already taking an important part in German political life and is doing something to counterbalance the “Reds,” or the revolutionary socialists. They advocate the union of masters and men, but are extremely anxious not to be confused with the “Yellows,” or those who advocate mixed unions. In other words, they are independent both of the masters and the socialists.

State intervention might be necessary at first in order to establish the corporative rÉgime, but once founded it would naturally monopolise all the legislative and police power which affects labour in any way, especially in the matter of fixing wages,[1066] arranging pensions, etc. The legislature would still find ample material to exercise its powers upon outside these merely professional interests, especially in regulating the rights of property, prohibiting usury, protecting agriculture, etc.[1067]

“The State,” says the Immortale Dei, an Encyclical of Pope Leo XIII—repeating a text of St. Paul—“is the minister of God for good.” Elsewhere St. Paul declares that the Law is the schoolmaster to bring us unto Christ, and if we paraphrase this to mean that the function of law is to lead men to a higher conception of brotherhood we have a fairly exact idea of what Social Catholicism considered to be the function of the State. Occasionally the party has betrayed signs of more advanced tendencies which would bring it more into line with modern socialism. But for the most part such indications have been of the nature of individual utterances, which have generally resulted in the formal disapproval of Rome and the submission of the rebel.

It was M. Loesewitz in 1888 who made the first violent attack upon the so-called productivity theory of capital in L’Association catholique.[1068] It caused quite a sensation at the time, and provoked a disapproving reply from the Comte de Mun. Afterwards, however, the article became the programme of a party known as “Les jeunes AbbÉs.” Nor must we omit to mention the growth of the Sillon, founded in 1890, the political ambition of whose members is the reconciliation of the Church and democracy and even republicanism, and whose economic aim is the abolition of the wage-earner and his master.[1069] This is also the aim of the syndicalists, and Article 2 of the ConfÉdÉration gÉnÉrale du Travail (C.G.T.) declares that one of the avowed objects of the federation is the disappearance of the wage-earner and the removal of his master. Instead of seeking a solution of the problem in the parallel action of syndicats of men on the one hand and of masters on the other, it would suppress the latter altogether, leaving the men the right of possessing their own instruments of production and of keeping intact the produce of their labour. It is true that the Sillon is under the ban of the Pope, but this essentially syndicalist movement is still in existence.

If the Catholic school has experienced some difficulty in throwing out a left wing it has never been without a right wing which has always shown a predilection for the masters. “The problem is not how to save the worker through his own efforts, but how to save him with the master’s co-operation”—the benevolent master of Le Play’s school over again.[1070] The right wing, moreover, thinks that the existing institutions would prove quite equal to a solution of the so-called social question if they were once thoroughly permeated with the Christian spirit or if the leaders really knew how to deal with the people.

III: SOCIAL PROTESTANTISM

Belief in the essentially individualistic nature of Protestantism is fairly widespread.[1071] For confirmation there is the emphasis it has always laid upon the personal nature of salvation and its denial of the necessity for any mediator between God and man, save only the Man Christ Jesus, whereas Roman Catholicism teaches that only through the Church—that great community of the faithful—is salvation ever possible. Protestantism is the religion of self-help, and naturally enough its social teaching is somewhat coloured by its theological preconceptions. Nor must we lose sight of its connection with middle-class Liberalism; and thus while in politics it is generally regarded as belonging to the left, in matters economic it is generally on the extreme right.[1072]

Whatever truth there may be in this attempt to sum up its doctrine and history, we shall find as a matter of actual fact that on economic grounds it is much more advanced than the Social Catholic school; and its extreme left, far from being content with the extinction of the proletariat, also demands the abolition of private property and the establishment of complete communal life.

Social Protestantism, or Christian Socialism as it is known in England, has a birthday which may be determined with some degree of accuracy. It was in the year 1850 that there was founded in England a society for promoting working men’s associations, having for its organ a paper entitled The Christian Socialist.[1073] Its best known representatives were Kingsley and Maurice, who subsequently became respectively professors of history and philosophy at Cambridge. A small number of lawyers also joined the society, among whom Ludlow, Hughes, and Vansittart Neale are the most familiar names. Kingsley was much in the public eye just then, not only because of his impassioned eloquence, but also on account of the success of his novel Alton Locke, which is perhaps the earliest piece of socialistic fiction that we possess. It is the story of a journeyman tailor and his sufferings under the sweating system—the horrors of which were thus revealed to the public for the first time.[1074]

The object which the Christian Socialists[1075] had in view, as we have already seen, was the establishment of working men’s associations. What type they should adopt as their model was not very easily determined. The trade unions, little known as yet, were just then struggling through the convulsions of their early infancy. Moreover, they were exclusively concerned with professional matters, with the struggle for employment and the question of wages, and altogether did not seem very well fitted to develop the spirit of sacrifice and love which was indispensable for the realisation of their ideal. Neither did the co-operative associations of consumers seem very attractive. True they had attained to some degree of success at Rochdale, but they were inspired by the teaching of Owen, which was definitely anti-Christian. The fact also that they merely proposed to make life somewhat less costly and a little more comfortable implied a certain measure of stoicism which hardly fitted them to be the chosen vessels of the new dispensation. And so the Christian Socialists naturally turned their attention to producers’ associations, just as the earliest Social Catholics had done before them. But it would be a mistake to imagine that they owed anything to Buchez, whom they appear to have ignored altogether. The reawakened interest in the possibilities of association which exercised such a fascination over John Stuart Mill in 1848 had touched their imagination, and Ludlow, one of their number, had the good fortune to be resident in Paris, and so witnessed this glorious revival. Such associations seemed to be just the economic instruments needed if a transformation was ever to be effected, and the very process of establishing them, it was hoped, would supply a useful means of discipline in the subordination of individual to collective interests. But the process of disillusion proved as rapid as it was complete. Contrary to what was the case in France, it cannot be said that they were ever really attempted in England.

But the work of the “Association” had not been altogether in vain. Defeated in its attempts to arouse the worker from his lethargy, and thwarted in its efforts by legal restrictions of various kinds, it began a campaign in favour of a more liberal legislation in matters affecting the welfare of the working classes. The result was the passing of the Industrial and Provident Societies Acts of 1852-62, which conferred legal personality for the first time upon co-operative associations, with consequent benefit to themselves and to other working men’s associations.

The Christian Socialists thought that the methods by which their ideals might be attained were of quite secondary importance. Experience had taught them that voluntary association or legislation even by itself could never be of much avail until the whole mental calibre of the worker was changed.[1076] What they strove for above all else was moral reform, and whenever they use the word “co-operation” they conceive of it not merely as a particular system of industry, but rather as the antithesis of the competitive rÉgime or as the negation of the struggle for existence. Their thoughts are admirably summed up in a letter of Ludlow’s to Maurice written from Paris in March 1848, in which he speaks of the necessity for “Christianising socialism.”

Christian Socialism in England, though it has survived its founders, has been obliged to change its programme. It has abandoned the idea of a producers’ association, but still advocates other forms of co-operation. Just now its chief demand is for a reorganisation of private property, which is a particularly serious question in England, where the land is in the hands of a comparatively few people. In the words of the Psalmist, the Christian Socialists often cry out, “The earth is the Lord’s,” and they are never weary of pointing out how under the Mosaic law the land was redistributed every forty-nine years with a view to bringing it back to its original owners. And so it finds itself supporting the doctrines of Henry George, who may himself be classed as one of the Christian Socialists.[1077] There is also the Institutional Church, with its network of organisations for the satisfaction of the material, intellectual, and moral needs of the worker, which is becoming a prominent feature of modern English Church life. Moreover, several of the Labour leaders—Keir Hardie, for example—are earnest Christians. The Federation of Brotherhoods, which to-day includes over 2000 societies, with a membership of over a million working men, combines an ardent evangelical faith with a strong advocacy of socialism.[1078]

In the United States of America Christian Socialism is still more aggressive and outspoken in its attacks upon capitalism. The earliest society of Christian Socialists was founded at Boston in 1889. Since then these associations have multiplied rapidly. The latest of them defines its objects in the following terms: “To help the message of Jesus to permeate the Christian Churches and to show that socialism is necessarily the economic expression of the Christian life.” A little farther on it declares itself persuaded “that the ideal of socialism is identical with that of the Church, and that the gospel of the co-operative commonwealth is the Gospel of the Kingdom of God translated into economic terms.”[1079]

For the other extreme—the extreme right—we must look to Germany. In 1878 Pastors StÖcker and Todt founded the Christian Social Working Men’s Party, which, despite its title, drew most of its recruits from the middle classes. Later on StÖcker became Court preacher, and during his occupation of that post this kind of socialism found such favour in official quarters that he was able to say that it was his personal conviction that a social revolution was within the bounds of practical politics.[1080] But in 1890 the Emperor William II dismissed his pastor, and Christian Socialism immediately lost its official status.[1081]

At the Congress of Erfurt in 1896 two young pastors of Frankfort named Naumann and Goehre[1082] tried to win the adherence of the working classes by endeavouring to give the Protestant churches a more distinctively socialist bias. But the suggestion was condemned by the official Lutheran Church, the masters opposed it, and it received but very slight support from the Social Democrats. Altogether the movement proved abortive, and the pastors have long since turned aside to other interests.

In Switzerland also the movement is making considerable headway, and in Professor Ragaz and Pastors Kutter[1083] and PflÜger, the latter of whom has recently been made a deputy, it has found advocates whose views are at any rate sufficiently advanced.

In France there is at least one—there may possibly be more—Social Protestant school. But as it only includes a small fraction of Protestantism, which is itself in a hopeless minority, its influence is not very great. There are several important social movements, however, such as the crusades against alcoholism and pornography, the revival of co-operation and the demand for the erection of “People’s Palaces”—known as SolidaritÉs—which are entirely due to the activities of this school. An association for the inductive study of social questions was founded in 1887 by Pastor Gouth, another pastor named Tomy Fallot being its president and inspirer.[1084] At first the demands of this group were extremely moderate, co-operation being their only mode of action and solidarity their social doctrine.[1085] This new doctrine of solidarity, although rather belonging to the Radical wing, being the very antithesis of Christian charity, as we shall see by and by, has been enthusiastically welcomed by the Social Protestants. The Protestants even claim that it was originally their own peculiar doctrine, and that other schools merely borrowed it; for where can be found a fuller expression of the law of solidarity than the two Christian doctrines of the fall and redemption of man? “For as in Adam all die, even so in Christ shall all be made alive.”

Curiously enough there is another group of young pastors who closely resemble what is known in Catholic circles as the Abbots’ Party. They are dissatisfied with the moderate claims of the Catholics as a whole, and like their American colleagues they demand the establishment of a form of collectivism.[1086] They think, at any rate, that the question of property ought to come up for consideration almost immediately.

In short, it seems true to say that in almost every country Social Christianity is gradually evolving into Christian Socialism, and the change of title is an index to the difference of attitude. In other words, Social Protestantism accepts the essential principles of international socialism, such as the socialisation of the means of production, class war, and internationalism, and endeavours to show that they are in complete accordance with the teaching of the Gospels.

But the stress which it lays upon the necessity for moral reform saves Social Protestantism from being hopelessly confused with collectivism, and the fact that it believes that individual salvation is impossible without social transformation helps to distinguish it from individual Protestantism.[1087] Conversion implies a change of environment. What is the use of preaching chastity when people have to sleep together in the same room without distinction of age or of sex? “Society,” says Fallot, “ought to be organised in such a fashion that salvation is at least possible for everyone.” “The rÉgime of the great industry,” says M. Gounelle, “is the greatest obstacle to the salvation of sinners that the religion of Christ has yet met.” Protestant Socialism remains individualistic in the sense that while seeking to suppress individualism in the form of egoism as a centripetal force, it wishes to uphold it and to strengthen it as a principle of disinterested activity—as a centrifugal force. It takes for its motto those words of Vinet which may be found carved on the pedestal of his statue at Lausanne: “I want man to be his own master in order that he may give better service to everybody else.”[1088]

IV: THE MYSTICS

No review of Christian Social doctrines, however summary, can afford to omit the names of certain eminent writers who, though belonging to none of the above-mentioned schools, and having no definite standing either as socialists or economists, being for the most part littÉrateurs, historians, and novelists, have nevertheless lent the powerful support of their eloquence to the upholding of somewhat similar doctrines.[1089]

Tolstoy and Ruskin are the best known representatives of this movement on the borderland of Social Christianity, although they are by no means the only ones.[1090] These two grand old men, who both died at an advanced age, appeared to their contemporaries in much the same light as the prophets of old did to Israel. True descendants of Isaiah and Jeremiah, they exultantly prophesied the downfall of capitalism—the modern Tyre and Sidon—and announced the coming of the New Jerusalem—the habitation of justice. Their language even is modelled on Holy Writ, and Ruskin, we know, was from his youth upwards a diligent reader of the Bible.[1091] Both of them condemn the Hedonistic principle and denounce money as an instrument of tyranny which has resulted in setting up something like a new system of slavery,[1092] and they both advocate a return to manual labour as the only power that can free the individual and regenerate social life. They differ, however, in their conception of future society, which to Ruskin must be aristocratic, chivalrous, and heroic, while Tolstoy lays stress upon its being equalitarian, communal, and above all ethical. The one looks at society from the standpoint of an Æsthete, the other from that of a muzhik: the one would breed heroes, the other saints.

Thomas Carlyle also deserves mention. Among the numerous books which he wrote we may mention, among others, his French Revolution (1837) and his Heroes and Hero-worship. Chronologically he precedes both Tolstoy and Ruskin, and his influence upon economic thought was greater than either of theirs. But we could hardly put him among the Christian Socialists because of his extreme individualism, and if he were to be given a place at all it would be with such writers as Ibsen and Nietzsche. His economic ideas, however, run parallel to Ruskin’s; and nowhere except perhaps in the choruses of the old Greek tragedies do we get anything approaching the passion which is displayed in their declamations against the present economic order.[1093]

Carlyle is possibly the strongest adversary that the old Classical school ever encountered. It was he who spoke of political economy as “the dismal science.” That abstract creation of the Classicists, the economic man, afforded him endless amusement, and he very aptly described their ideal State as “anarchy plus the policeman.” He is no less fierce in his denunciation of laissez-faire as a social philosophy.[1094] But he left us no plan of social reconstruction, being himself content to wait upon individual reform—a trait which brings him into intimate connection with the Christian Socialists.[1095]

Ruskin, on the other hand, has given us a programme of social regeneration which might be summarised as follows:[1096]

1. Manual labour should be compulsory for everybody. His readers were reminded of those words of St. Paul, “If any would not work, neither should he eat.” He thought it both absurd and immoral that a man should live in idleness merely by using money inherited from his ancestors to pay for the services of his fellow-men. Life is the only real form of payment; in other words, labour ought to be given in return for labour. To live upon the fruits of dead labour is surely absurd and contradictory. And it must be real human labour. Machinery of all kinds must be renounced except that which may be driven by wind or water—natural forces which, unlike coal, do not defile, but rather purify.

Ruskin wanted labour to be artistic, and he longed to see the artisan again become an artist as he was in the Middle Ages (which is a somewhat hasty generalisation perhaps). In practice this is not very easy. Some of his immediate disciples have set up as artistic bookbinders, but the number of people who can find employment at such trades must be exceedingly few.

Tolstoy, on the other hand, does not strive for artistic effect. His heart is set upon rural work, which he magnificently describes as “bread work,” and which seemed to him sufficiently noble without embellishment of any kind.

2. Work for everyone is the natural complement and the necessary corrective of the preceding rule of no idleness and no unemployment. In society as at present organised everybody is not obliged to work, while some individuals are obliged to be idle.[1097] This monstrous inequality must be remedied. There would be no difficulty about finding plenty of work for everyone if everyone did something. Under such a system there would be no unemployment, although there would be more leisure for some.

3. Labour would no longer be paid for according to the exigencies of demand and supply, which tend to reduce manual work to the level of a mere commodity. It would be remunerated according to the eternal principles of justice, which would not of necessity imply an appeal to any written law, but solely to custom, which even now fixes the salaries of doctors, lawyers, and professors. In these professions there are no doubt some individual inequalities, but there is also the norm, and it is a breach of professional etiquette to take less than this. The norm does occasionally find expression in the rules of the association, and in some such way Ruskin would fix not merely a minimum but also a maximum wage. Whatever profession a person follows, whether he be workman, soldier, or merchant, he should always work not merely for profit but for the social good. He must, of course, be suitably rewarded if his position as a worker is to be maintained and the work itself efficiently performed, but it can never be done if gain becomes the end and labour merely the means.

4. The natural sources of wealth—land, mines, and waterfalls—and the means of communication should be nationalised.

5. A social hierarchy graded according to the character of the services rendered should be established. The gradation must be accepted in no intolerant spirit, and must be respected by everybody. Chivalry is as necessary in an industrial as in a military society, and a new crusade against Mammonism[1098] should be preached both far and wide.

6. Above all else must come education—not mere instruction. What needs developing above everything is a sense of greatness, a love of beauty, respect for authority, and a passion for self-sacrifice. What especially need acquiring are the faculties of admiration, of hope, and of love.[1099]

Only the last item on the programme seems anywhere near realisation, but that by itself would justify our reference to Ruskin’s scheme. Not only has the suggestion resulted in the creation of working men’s colleges at Oxford and of Ruskin Colleges elsewhere, but it has also given rise to the garden city movement. These new cities are built with the express purpose of relieving the worst features of industrial life, and are so planned as not to interfere in any way either with the beauties of nature or with the health of the citizens.[1100]

Ruskin speaks of himself somewhere as an out-and-out communist, but his communism had also a touch of the aristocrat and the Æsthete about it which possibly proved a recommendation in English society. Tolstoy is a much more thoroughgoing communist, and is violently opposed to “that low, bestial instinct which men call the right of private property.”[1101] His cry was “Back to the land,” and the practice of coaration; his ideal the mir. He was not anxious to know that everyone was working at some trade or other, but he thought everyone ought to produce his own food, which is the one inevitable law of human existence. Division of labour, which has been so extravagantly praised by economists, he thought of as a mere machination of the devil enabling men to evade the Divine commandment. At any rate it should only be adopted when the need for it arises, and after consultation with all the parties interested, and not indiscriminately, as is at present the case, with competition, over-production, and crises as the result.[1102]

If we are to take Tolstoy’s words literally, as he suggested we should take Christ’s words, then the society that he dreamt of is very far beyond even the communist ideal. More towns, more commerce, more subdivision of trades, more money, more art for art’s sake—such was to be the economic Nirvana of the communists.

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