Chapter VII. The Risks of State Socialism

CHAPTER VII THE RISKS OF STATE SOCIALISM ONE of· the strongest points .. in the case for . Capitalism' is the do.ubt that all candid and unprejudiced. inquirers must feel concerning the .practical results of adopting any of the proposed alternatives. And on this subject doubt is enough. Unless we· can be 'definitely assured that we are ·going to secure improve mentit would be ma.dnes$ to upset our whole economic system, especially at a time when the whole world is lacerated and impoverished and has to work hard for its economic recovery. If and' when general prosperity has been secured, we maybe justified in trying fancy experiments. But there never was a time in which leaps in .the dark were more untimely. Let us begin with Socialism, now commonly called State Socialism to distinguish it from the Guild Socialism whicb is the latest. fashion. Some of us can remember· the time when 138 RISI{S OF STATE SOCIALISM 139 Soci,alists were looked upon almost as outcasts by ,( respectable H folk, partly because SOUle of them had a habit of applying the acid of their criticisms to many things besides the economic structure of society, such as the marriage laws and established forms of religion. So stuffy respectability jumped hastily to-the conclusion that all .Socialists were atheists and advocates of free love. After passing through this phase Socialism becan1e quite fashionable for a time, and then having been laughed at asa dis credited back-number by the Guildsmen, has come back into the limelight owing to the.

craving· for nationalization which is cherished by many of the Labour leaders. If we find that the form· of society atw hich Socialists aim is somewhat hazy and not worked out in .full detail, it would be very unfair therefore to criticise Socialism as mere rainbow chasing. Th~y propose to rebuild society, and we cannot expect them to prepare for us a plan of the whole .building worked out:in every detail. The details will obviously have to be filled in as the building - goes on. All that we can expect from them is a clear· state ment .of the main principles which they aim at establishing) and the advantages which they 140 THE CASE FOR CAPITALISM expect to be derived from their establishment. Luckily one of the clearest thinkers on the Socialist side published just before the war a conlpact handbook showing the aims of Socialisln, the reasons why in his opinion it ought to be introduced, and the benefits which he expected to accrue from it. Mr. Philip Snowden's book on Socialism and Syndicalism, though there is no date upon the title-page, seems to have appeared in 1913 or later, since it contains a reference to the election of the German Reichstagin 1912. This ,authority tells us. (page 107) that "so far as it is possible to express the aim of present-day Socialism. in a formula, that ·has been done by Dr. Schaffle in a .statement which will be accepted by all Socialists as a reasonable definition of their aims. 'The economic quintessence of the Socialistic programme, the real aim of the inter national movement is as follows :-To replace the system of private capital (i. c. the specu lative method of production, regulated on behalf of .society only by the free competitiQn of private enterprises) l~ya. system of collective capital, that is, by a method of production which would introduce a unified (social or collecti ve) organization of national labour, on RISKS OF STATE SOCIALISM 141 the basis of collective or common ownership of the means of production by all the ll1elnbers of the society. This collective method of pro duction would· remove the present competitive systenl, by placing under officialadministration such departments of production as can be managed collectively (socially or co-operatively), as well as the distribution among all of the common produce .of all, according to the amount a.rid social utility of the productive labour of each.' "

It will be noted that according to Schaffle's definition, adopted by Mr. Snowden, and accepted, according to him, by all Socialists, the common produce of all is to be distributed under officiaJ administration (lccording to the an10unt and social utility of the productive labour of each. Itappears from this passage that the wage-earner under Socialisn1 is going to be paid according to the anlount and social utility, whatever that may mean, of the work which he does. This very in1portant itenl in the Socialist progranlme is· also adopted and cle&rly expressed by Mr. Ranlsay 1\'Iacdonalcl on pages 122 and 123 of his book on 7ne Socialist MoVel1tent,one of the volumes of the Home University series. Mr. Macdonald tells 142 THE CASE FOR CAPITALISM us that it is a mistake to sonfuse Socialism with Communism. "Communism presupposes a common store of wealth which is to be drawn upon by the individual consumer not in accordance with services rendered, but in response to 'a human right to 'sustenance.' It may be in accordance with Communist principles to make this right to 'consume depend upon the duty of helping to· produce, and to exile from the economic con1munity everyone who declines to fulfil that duty. Some Communists insist th~t one of the certain results of their system will be the creation of so much moral robustness that in practice this question will never arise for actual answer. But be that as it may, the distribu ..

tive philosophy of Communism is as I have stated, and it contains the difference between that system and Socialism. ' From all accord ing to their ability; to each according. to his needs' is a Communist, not a Socialist formula. rrhe Socialist would insert 'services' for 'needs.' They both agree about the COlnmon stock; they disagree regarding the nature of what should be the effective claim of the individual to share in it. Socialists think of distribution through the channels of personal income; RISKS OF STATE. SOCIALISM 143 Communists think of distribution through the channels of human rights to live. Hence Socialism requires some medium of exchange whether it is pounds sterling or labour notes; Communism requires no such medium of ex change. The difference can best be illustrated if we remember the' difference between a cus tomer going to a grocer and buying sugar, and the child of the family cl~iming a' share of that' sugar the next morning at the breakfast table. Or the position may be stated in this way: Socialism accepts the idea of income, .subject to two safeguards. I t must be adequate to afford a satisfactory standard of life, and it must represent services given and not 'merely a power to exploit the labourofothers."

It ' thus, appears .that,. the economic freedom which modern reformers are groping after will be under','Socialism 'differenronlyin kind fr6m the economic freedom which is nowadayspos sessed. - I n this respect a difference in kind may be of the highest possible importance, because we have already recognized that com plete economic freedom is impossible to any body in a state of nature, since under natural conditions everybody mustdonl0reor less work in order to live, and is impossible to the 144 THE CASE FOR CAPITALISM great majority under society as at present organ ized. As things are at present, all the workers of the world have to work in order to provide something which the consuming public wants, generally under the management of an employer who organizes the particular enterprise in which that work is done, with the exception of' a few professional men who work directly f~r. their consuming customers. The wage-earner works under an employer in a factory, mine or railway for the consuming public; the journalist works under a newspaper proprietor for a reading public. '[he variety entertainment artist works under a theatrical or music-hall proprietor for the public that is trying to amuse itself. The author works under a publishing employer for a public which he hopes may be going to read his books. Under Socialism, instead of work ing under a proprietor employer for the consuming public, the worker would work under official adrninistrators for the consuming public.

But there would be two great differences. Under official administration the consuming public would have to take what it could get, since owing to the abolition of competition, it would have. no chance of exercising choice in the RISKS OF STATE SOCIALISM 145 matter of goods and services which it would consume; and, the,worker, instead of viorking to put profit into the pockets of a proprietor employer, would be working to s.upply the general consumption, as organized, directed and controlled by official administrators. He would have no more freedonl, in fact he would have less, because owing to the cessation of competition and the .concentration of the whole organizatio,n of industry inofficial hands, he would have no power of exercising choice between one enlployer and another. N ever theless it is possible that the fact that he is working for the general consumer, without the intervention of a profit-making capitalist, might , give him a feeling of satisfac·tion which would very much more than balance his ]oss of choice . between one employer and another; while at the same titne the fact that the official adminis tration would, by a democratic organization of society, be to a· certain extent based upon the wishes and ideals of himself and his fellows, might enable him to believe that he was really only working for himself, and therefore give him that sense of freedom which is nearly as good as its actual possession.

The Socialistic artisan working ina State K 146 THE CASE FOR CAPITALISM boot factory would no, longer be dissatisfied because the harder, he worked the more profit he was going to' put into the pocket of his employer, without doing any good to himself, unless he were able to secure an increase in wages. He might feel that the harder he worked the more boots he would be turning out for the benefit of the other members of society, and that his efforts would be compen sated by similar efforts being made by all his brethren who were working in other ·industries for. the good of himself and other' c~nsumers. If he had not attained economic freedom, which is impossible for humanity until we have arrived at the point \vhen all the needs of life can be served by automatic machinery, he might have arrived at a state of things in which" the condi tionsof his work were so entirely different from what they are at present; that he would work hard ~or the joy of the thing, because he knew that he was helping everybody else, and that everybody else was working hard to help him.

If such a state of things could really bebi-ought about, it is clear that' the gain would be enor mous. Instead of restricting output so as not to "use up the amount of work that wants doing," every. worker would work as hard as he RISKS OF STATE SOCIALISM 147 could. He would welcome the introduction of labour-saving machinery ,because· it would lighten his task and that of everybody else, and it rnightquitepossibly be true that the different spirit in which industry would be managed might lead to a very great increase in output. All thislooks very nice, but would it be likely to happen? We have seen,. according to Mr. Snowden, workers would be paid, under Socialism, according to the amount and social utility of the productive labour of each. This clearly implies .a differential scale of wages, based on. piece-work in order to gauge the amount, and on the decision of somebody, or some Committee, concerning the· social utility of the labour of each. It may be that the strong prejudice against piece-work~ ·now com monly said to be cherished by trade unionists, nlight not survive under Socialism, but this is by no means . certain. The differential scale according to the anl0untof work done, would involve difficulties of measurement and would very probably produce jealousy and friction, and the question of social utility seems to open up endless possibilities of dispute and differ ences. If we could be sure that, as many Socialists seem· to assume, a radical. change in 148 ,THE CASE FOR CAPITAL.ISM the nature of all. orus would be wrought in the twinkling ofatl eye because we found ourselves men1bers of a . Socialist o' State, those details might not;-}ead to disaster. But natura 1zihil facit per saltum-nature does nothing with a jump. For some time to come we should con tinue to be human beingso "most remarkable like you "and .me---and it is only too probable that the jealousy between one Trade Union and another, which is so often a cause of ~ ..industrial strife and discord, might be renewed, under Socialism, in the 'shape of acute differ ences between the workers on the question of the \vages p~id to then1selves and others. With the best goodwill in the world orall parties the problem of social utility as' between the work of a coal-miner, a bootmaker ~nd a platelayer, . would be ° hard to settl,e;. and if instead of a .universal smile of goodwill there were the old natural desire on the part ofeach man to do the best for hinlself; ° the industrial.- strife of to~day n1ight .be reproduced aoan extended and much more unconlfortable· scale.

Because under Socialism °therewould be o no mediator in the shape 'of 000 the State or public opinion. TheStatewould··be the employer and a party in the quarrel, and 'nearlyall the < RISKS OF, STATE SOCIAJ-JISM 149 public would be liable at ;any time to be directly interested in similar disputes and so would be unable to approach thenl with the detachment which is so necessary to impartiality. Mr. Snowden, following Schaffle, does not propose that all private enterprises shall be abolished under Socialism, but he does, as will be shown later, lay down conditions which seem most likely to abolish it. So· that whenever there is a quarrel between any workers and the State, all the other ,yorkers who, with their depend ents, will be all the conlmunity except the ruling bureaucrats, will feel that itrnight be their turn next. But even if all these difficulties were over come and the workers worked with an enthu siasm and success that profit-making enlployers have so far failed to secure fronl their efforts, we are· still faced by .the· very serious doubt as to the efficiency of official management. Ready work by the rank and file is of little or no use if it is ill .directed, and if those responsible for leadership are not always eager to adopt new lnethods and to take risks by tryingexperi nlents which. rnay. cost th~m, or somebody else, dear in case .of failure. We have to remember that in order to make the world that we want, a 150 THE CASE FQR CAPITALISM great increase in output, as .was shown in Chap ter I, is necessary. If every man,woman and child in the countr, is to have a real chance of a real life, .it is. not enough to·· do about as well as we did, with a power of consumption measured at about £42 (pre-war) per head of the population, according to the highest esti mate. We have to go ahead rapidly. Are we as likely to do so under bureaucratic manage mentas under private enterprise, with the incentive of profit before it, tempting and spur ring it to make experiments ·and take risks?

Are we not much more likely to fall into a slough in which movement is much more difficult because those who would have to initiate new departures would· get little or no·reward if they succeeded, but would be· liable to criticism and blame if they. failed? Those who oppose nationalization of industry on this ground, that it would be most unlikely to secure the adaptability and enterprise .that are necessary to progress, are sometimes accused of "attacking Government officials." I hope that as far as lam ·concerned there is no truth in .this charge. Having had the honour of being, for a short time, a Government official, ·1 can testify from personal· knowledge to the RISKS OF STATE SOCIALISM lSI great store of ability. that is to be found in our Government offices-this goes without saying, ~eeing that the intellectual flower of ourUni versity youths used to go year by year into the Civil Service-and also to the devotion with which, at least during the war, they overworked themselves into pulp. In the matter of· ability and hard work our officials are unsurpassed if not unrivalled. And yet, owing to some fault in the systenl, even before the war, the net result of their efforts was .the subject of much criticism. And it is putting it mildly to say that the experience of Government manage ment and control during the war does not at all encourage one··to expect that any Government which it would now be possible to call into existence could· deal with the tremendous task of organizing the natiQn's economic activities with any approach to success.

This experience must not tetnpt us to be too certain about future possibilities. We may be able to create some day a bureaucracy which shall be efficient, intelligoent and economical in the best sense· of the word. It is not much more than a century since Adam Smith in com paring the possibilities of joint-stock enterprise with .private activity, decided that Joint-stock 152 THE CASE FOR CAPITALISM enterprises owing to want of adaptability and erasticity could only compete with private enterprise in businesses such as banking and transport, which could be' conducte~ more ()f less in accordance with routine. It is true that in those departments which Adam Smith marked out as the special province' of joint stock companies, joint-:stock enterprise has won some of its greatest triumphs, but it is also true that it has driven the private undertaker out of many other fields of activity in which he has expected to be victorious, and that even in such matters as retail shopkeeping, the joint-stock company is rapidly establishing itself as the dominant force. As joint-stock enterprise has grown and improved itself, it is quite possible that State enterprise worked by official adminis tration might do likewise. But \vhenwe have made the fullest allowances for what the State might or might not be able to do some day, the fact remains that at the present crisis we have no right to gamble on possibilities. As things are at present, it seems most probable that it would be economically disastrous to hand over the whole productive power ,of .society to officials. The mere hugeness, of the scale on which things would have to be done must, until RISKS OF STATE SOCIALISl\1 153 we have bred a race of supermen, lead to cumbersome and. tardy managenlent. It is said that· so.nle of the big industrial amalga mations, and also their smaller competitors, are beginning to find that size, after a point~ brings weakness.

We are not justified In drawing too decided inferences from what has happened during the late war. Government control has unquestion ably exasperated, not only the exnployers and organizers of industry, but the great majority of the working classes, and the great rnajority of the consumers, but then we must remember that Governnlent control has had to undertake a task for which we had previously done our best to make it unfit for something Dlore than a century, by telling the Governnlent to do as little· as possible in the n1atter of controlling industry. It is true that the post office, which has many years behind it of experience and practice in conducting an important enterprise, showed. great lack of adaptability during the war., It took nearly two years to induce it to bring honle to the nation the need for putting its money into war bonds by the use of a post nlark stamp on envelopes, and the nlanner in which it handled the selling of War Saving 154 THE CASE FOR CAPITALISM Certificates and the various forms of. Govern Olent securities which have been issued through it was a cause\ of much complaint. But here again we must remember that owing to· the claims of the recruiting sergeant and· the. con scription officer, the post office lost many of its best workers at a time when the work thrown upon it· was greatly· increased.

More serious in its immediate practical effect was the competition between one Government office and another for the goods and services which they required. Attention was called in the fourth·· year of the war to this .form· of extravagance in a Report of the National ExpenditureComnlittee. It does seem aston ishing that Government offices.should not by that time have evolved some better system than going into the market against one another, raising .the cost of their administration . and. impairing their efficiency.. Unfortunately this fault was probably only.a symptom of inter departmental jealousy, the extent of which is almost incredible to those who have not been brought face to face .. with it, and cause4 some cynics to maintain that during the. war the departments were much more eager to win victories over one another than to defeat the RISKS OF STATE SOCIALISM 155 Gernlans. If these things could happen at a time when the nation's existence was in jeo pardy, anything like good teatu work between the depart men ts for the furtherance of industry in normal times seems to be a very remote aspiration.

But when we dwell upon all the evils of Government control that have been evident during the war-·. extravagance, friction between one department and another, changes of policy which have involved enormous waste, (tnd an attitude towards labour. which has cost the country millions. in the payment of wages, while only increasing discontent and unrest among those who thought that they were not being paid enough-. we have to remember that the advocates of nationalization have a good deal to say on the other side. There is no doubt that the Government was able, by inquiry into costs of production, and by centralizing production on a great scale, to effect most valuable economies in the price of shells and other munitions. On the other hand, the industrial problem that it had to face was a very simple one as compared with that which is before the producer in ordinary times. The Government knew that all that it had to do was 156 I'HE CASE FOR CAPITALISM to turn out as much of these articles as its available resources. allowed. There "vas no question of turning out too much or of not finding a buyer at a. price that would repay the capital and energy put into the work, anq so nearly all th~. difficulties which call for skill, experience, judgment and courage in ordinary industry were eliminated for it. Any manu facturer who was told that he had a certain market for the whole amount of any particular product that he could turn out, and could call upon the whole resources of the nation to provide him with raw material and labour, could· bring down the price of it to an astonish· ing extent without loss.

But after all, all these arguments from what happened during the war have to be used with great caution, because the whole state of affairs was artificial. Extreme urgency was the cause and justification of much extravagance that seemed ·to be appalling, while on the other hand the spirit of the nation and· the eagerness of all classes to meet the crisis put advantages into the hands of the Government of which it ITlight have been expected to have made much more profitable use. Many pages could be covered with a record of the blunders and "absurdities RISKS OF STATE SOCIALISM 157 perpetrated by Government departments during the war, but it.·is enough for our present purpose to observe that the war's experience has cer tainly increased the doubt that one feels con cerning the efficiency of G6vernmentcontrol of industry. It is a perpetual puzzle to those who know from what a brilliant class of young n1en the Governnlent officials were recruited, and have seen the untiring zeal with which they do their work, to account for the unsatisfactory results which were produced by them both before and after the war. Take a recent example-arising out of the introduction of rabies into England.

If there was one thing which our officials might have been expected to tackle with all the effectiveness of which they were capable, it was the protection of the citizens. from the horrible death with which the outbreak of rabies menaced then1. How the Board of Agriculture dealt with it is sho\vn in the follo,ving extracts from a letter signed, " An old Soldier in Wales," published in theT£l1zes of July I, 1919 :"On Monday last I was bitten by a stray cur on the main road here, both its condition and behaviour being such as to arouse the gravest suspicion in anyone who has, like myself,seen IS8 THE CASE f~OR CAPITALISM not a few cases of rabies in dogs. I hurried off by motor to my doctor, who dressed the wound, and certified his opinion that the dog should be destroyed, and the head sent for examination, to see if it were infected with .rabies. The police-station-we went to report-was empty, but late that evening the. doctor motored out to me with a brochure issued by the· Board of Agriculture on this subject, obtained from the polic~; it contained very precise rules of pro ce.dure for various subordinate officials, and very minute instructions for the proper sepulture of a rabid dog, but, on a cursory examination, revealed nothing applying to a person bitten, or a doctortreating him, or as to the means to be taken' to secure a certain diagnosis.

II It did, howe~er, say that a telegram was to be sent, by some. official, to this Board, and, to avoid inordinate delay, it was decided that I had better myself telegraph to them. On Tuesday morning I did this, giving the doctor's opinion, and asking where the head should be sent. On Wednesday evening, having received no reply, I wrote to the secretary of the Board, giving full details, stating that the o\vner of the dog consented to its destruction, and urgently asking. where I could send the head. On RISKS OF STATE SOCIALISM 159 Thursda y, evidently after the receipt of this letter, I got, the only reply vouched, this tele gram-· 'If rabies suspected intimation should be given to the police.' On Friday, as' a result of doing so, I was visited by a fine specimen of the thick-headed rural constable, with written instructions 'to inquire into my complaint against the owner of a savage dog'!

" To-day, Saturday, my doctor is telegraphiJ;1g elsewhere for the inforn1ation denied us by the Board, but it will be Monday before the head can be sent, and probably a fortnight from the date of the bite before the result 'can be known, and then, if unfavourable, three weeks before I could get to Paris for treatment." Such were the methods applied by brilliant and devoted Government officials· to a com paratively simpI~ though enormously important problem. Would they. have ·good results if applied to industry and· production? Finally before we leave the question of Government control a word has to be said concerning the contention of many Socialists that workers would work cheerfully, contentedly and well for the community, and that industrial friction would be practically abolished. This 160 THE CASE FOR CAPITALISM theory has been blo,vn into bits by the railway strike of last September. The railways were in the hands of the Government, which was paying a fixed rate for' their use to their pro prietors, and yet the rail\\?aymen declared a lightning strike which inflicted untold hardship almost entirely upon the poorer classes. They had, in my opinion, avery genuine grievance, 'but it CQuld not affect them for six months, yet such was the action that they thought fit to take when working for the Government.

It will also be remembered that the Prime Minister when he announced that the Govern ment did not intend to adopt l"lr.J ustice Sankey's recommendation that the coal-mining industry should be nationalized laid stress on this aspect of the 'question. Mr. Justice Sankey'srecom nlendation ,had been based upon the hope that nationalization would tend to smooth the rela,tions between the workers and ~their employer, but Mr. Duncan Graham, M.P., a mining leader, had declared at a conference of the. National U nionof the Scottish Mine-VI orkers, "that if the mines became the property of the nation the miners would need to be more determined than ever in their policy and more vigorous in the Trade Union organization because instead of RISKS OF STA1"E SOCIALISM 101 fighting local employers they would be fighting the Government:' 1 If Government control is only to mean harder fighting between Labour arid its employer, there' is a sweet prospect ahead of the Socialistic State.

A similar lesson can be learnt from the experience of municipal enterprise in the report of the conference between the Prime· Minister and the miners' ·leaders on'· the subject of the nationalization of coal-mines. ThePrime Minister was reported as saying :-.. " Municipalities in their communal ownership own gigantic industries, but I do .oot think you can point to· a single case where it ~an be· said that workmen working for the commune, either the local commune· or ·the na~ional one,·· work more heartily, work harder, or increase the output in comparison with their fellows who are working for a ·syndicate-not one." Whereupon Mr. Smillie replied, "Yes, the Glasgow trams are. They work more loyally." Mr. W. E. Treir,editof of theEtectrz~Rat"tway and Tramway Journal, wrote a letter that was printed in the Tz"mes of October 17, 19I 9, in which he stated that the above-quoted passage 1 Times, August IS, 1919.

L 162 THE CASE FOR CAPITALISM had led him to analyse the records of strikes published in his jO,urnal during the twelve months ended June 30, 19! 9, in order to ascertain whether there were more strikes or fewer on British municipal or on company operated. tranlways during that period, and that he had found that there had been twelve on municipally-owned and operated tramways, including Glasgow, and on company operated tramways four. I-Ie added,.however, that "the fact that in the United Kingdom municipally operated tramways are much more numerous than company tramways has some bearing on the figures, but does not affect the argument put forward by Mr. Smillie." As to the method by which Socialism is to be arrived at, Mr. Snowden tells us that there is no dispute. H All Socialists.," he tells us on page 138 of his book, "are now agreed that the economic changes which are aimed a~ must be brought about by political action. Mr. Sidney Webb says there can be no doubt that the progress towards Socialism will be, (1) Demo cratic-that is, prepared for in the minds of people and accepted by thetn; (2) Gradual causing no dislocation of industry however rapid the progress may be; (3) Moral-that RISKS OF STATE SOCIALISM 163 is, not· regarded by the sense of the community as· being immoral; (4) Constitutional--that is, by legal enactment sanctioned by a democratic Parliament."

He then quotes, with disapproval, Mr. Arthur Balfour, who had stated in a speech at Birmingham in 19°7 that "Socialism has one nleaning only. Socialism means, .and can mean nothing else than that the community or State is to take all the means of production into its own hands, •that private enterprise and private property are to come to an end, and all that private enterprise and private property carry with them." Mr. Snowden thinks that this definition "is not an accurate .and precise. statement of the aims of present-day Socialism .... Socialism only proposes to make such of the means of production into public property as can be conveniently and advantageously owned and controlled by the comnlunity .... If private enterprise. can carry ·on· any productive works, or conduct any public service better than the community 'can· .do it, a Socialist State nlight certainly be trusted to encourage· that form of enterprise which would bring the best results to the community. . . . But whatever private 164 THE CASE FOR CAPITALISM production or voluntary enterprise does exist in the Socialist State will not be private ca.pita.lism.

Capitalism means capital emp~oyed for the purpose of appropriating profit or surplus value. There can be no Socialist State in which the exploitation of labour for the profit of others is allowed. There can be no Socialist State where economic rent is appropriated by n10nopolists. The reason why Socialists aim at the control and ownership of land and capital is because, generally· speaking, that is the only way· in which rent, interest and profit can be secured for the comnlunity, and also because, gene"rally speaking,. the community can work a concern or public service more economically and efficiently than private enterprise· can do it." " This latter assumption "is by no· means borne out by such examples as the manage ment by the post office of the telegraphs and telephones. And i~ a,s Mr. Snowden ·seems to indicate, no private production or voluntary enterprise in the Socialist State would·· be allowed. to· earn a profit, it would seem that all the means " of production are likely to. be transferred· to the State, unless human nature were radically altered, since no one else would have any in~entjve for· making RISKS OF STATE SOCIALIS:M' 165 use of them. And ·in tl)at case, Mr. Balfour's view that private enterprise and private property would necessarily come to an end,' would clearly .

be correct. And Mr. Balfour's reading of the meaning of Socialism, rather than 'Mr. Snow· den's, is borne out by a speech "made by Mr. Tom Sha'vv, M.P., at the Trade Union Congress of September 1919. "If," he said,'" Socialism means anything, it means the nationalization of the means 'Of production, distribution and exchange, ,and their administration 'by the whole nation for the good of the whole nation." . He seemed,to recognize no exceptions. Among practical steps to be taken towards the establishment of Socialism Mr. Snowden enumerated an eight-hour working day, a tninimUln wage for all adult workers, complete provision against sickness, free education for .all children at the primary, secondary and tech nical schools, adequate provision for all aged and infirm persons, and other reforms aimed at the raising of the general standard of the workers' life. Also" demands for the abolition of in direct taxation and the gradual transference of all,public burdens on to unearned inc~mes, with the view to their ultimate extinction. n He further advocated the organization of .schemes 166 THE CASE FOR CAPITALISM for the unemployed or the maintenance of the unemployed by the taxation of surplus value, so that workmen may. be relieved from vieing against each other for employment, and as a means to that end he tells us that "Socialists demand that the State shall emba'rk upon schemes of national development, such as the improvement of roads, .harbours, waterways, and the afforestation of suitable· wastes, They also suggest that the policy of agricultural holdings for the labourers shall he extended, and that help shall be given by the State.

in the form of encouraging co-operative effort among these· State tenants, with the assistance of State capital.!' Municipal enterprise might " start competitive enterprises in house puilding, fire insurance, coal supply, milk supply, bakeries, refreshment houses, stores and the like," and "the national ization of land; mines, railways and other means of transport would be atremendous step towards Socialism. " The question of finding. money for this pro gramme is a difficulty which, as Mr. Snowden says, is "felt only by those persons who give Socialists credit for sufficient honesty as to be..; lieve that compensation will be· paid. " And he RISI(S OF STATE SOCIALISl\1 167 points out that these difficulties vanish when it is remembered that the railways have been nationalized in many other countries without confiscation, and that " in this country we have transferred fron1 priva~e to public ownership such great concerns as the telephone system, the London Docks, the Metropolitan Water Companies and tens or millions of property in tramways and gas and electricity works."

It is quite true that the transfer of property froin private to public hands (can be carried through quite equitably without raising any money for the actual process of transfer. The State takes over the capital and debts of the enterprise, and creates national securities \\'ith which to buyout. the holders. 1'he State debt is enormously increased, but it is only increased by the cancellation of the capital and debts of the enterprise acquired. The charge upon the country's wealth and productive po\ver is not necessaril y increased at all, and is only increased if the State or municipality pays extravagant prices. But there is a danger which past experi ence shows to be a very real one, that State administration, being at present inefficient and extravagant, will not provide a better service to the community, \vill not be able to treat its 168 THE CASE FOR CAPITALISM workers any better, or to get a more wHling and loyal service .from them; and, owing to its inefficiency, and ,extravagance, will not be able to earn' a sufficient 'sum to meet the interest. .

and redemptiol) of the, debt created in order to buyout the private owners. In that case, every enterprisew:hi~hthe,State takes over would, in~rease its charges and diminish the income 'out ~f' which it has to meet 'these charges. If these things are so, any attempt to, jntrodu~e Socialism prematurely before collective authorities 'had, learnt to conduct enterprise 6n business lines, might, instead of opening, the way to the· Promised Land, only lead, to~conomicdisaster. Is it worth while to gamble on such a risk?