CHAPTER XI.

STATE SOCIALISM.

I. _State Socialism and English Economics._

State socialism has been described by M. Leon Say as a German philosophy

which was natural enough to a people with the political history and

habits of the Germans, but which, in his opinion, was ill calculated to

cross the French frontier, and was contrary to the very nature of the

Anglo-Saxons. Sovereign and trader may be incompatible occupations, as

Adam Smith asserts, but in Germany, at least, they have never seemed so.

There, Governments have always been accustomed to enter very

considerably into trade and manufactures, partly to provide the public

revenue, partly to supply deficiencies of private enterprise, and

partly, within more recent times, for reasons of a so-called "strategic"

order, connected with the defence or consolidation of the new Empire.

The German States possess, every one of them, more Crown lands and

forests, in proportion to their size, than any other countries in

Europe, some of them, indeed, being able to meet half their public

expenditure from this source alone; and besides their territorial

domain, most of them have an even more extensive industrial domain of

State mines, or State breweries, or State banks, or State foundries, or

State potteries, or State railways, and their rulers are still

projecting fresh conquests in the same direction by means of brandy and

tobacco monopolies. But in England things stand far otherwise. She has

sold off most of her Crown lands, and is slowly parting with, rather

than adding to, the remainder. She abolished State monopolies in the

days of the Stuarts, as instruments of political oppression, and she has

abandoned State bounties more recently as nurses of commercial

incompetency. She owes her whole industrial greatness, her

manufactures, her banks, her shipping, her railways, to some extent her

very colonial possessions, to the unassisted energy of her private

citizens. England has been reared on the principle of freedom, and could

never be brought, M. Say might not unreasonably conclude, to espouse the

opposite principle of State socialism, unless the national character

underwent a radical change. And yet, while he was still writing, he was

confounded to see signs, as he thought, of this alien philosophy

obtaining, not simply an asylum, but really an ascendancy in this

country. It appeared to M. Say to be striking every whit as strong a

root in our soil and climate as it had done in its native habitat, and

he is disposed to join in the alarm, then recently sounded at Edinburgh

by Mr. Goschen, that the soil and climate had changed, that the whole

policy, opinion, and feeling of the English people with respect to the

intervention of the public authority had undergone a revolution.

Mr. Goschen had, in raising the alarm, shown some perplexity how far to

condemn the change and how far to praise it, but he was quite clear upon

its reality, and was possessed by a most anxious sense of its magnitude

and gravity. "We cannot," said he, "see universal State action enthroned

as a principle of government without misgiving." Mr. Herbert Spencer

took up the cry with more vehemence, declaring that the age of British

freedom was gone, and warning us to prepare for "the coming slavery." M.

de Laveleye, who is unquestionably one of the most careful and competent

foreign observers of our affairs, followed Mr. Spencer, and although,

being himself a State socialist, he welcomed this alleged new era as

much as Mr. Spencer deprecated it, he gave substantially the same

description of the facts; he said, England, once so jealous for liberty,

was now running ahead of all other nations on the career of State

socialism. And that seems to have become an established impression both

at home and abroad. The French Academy of Moral and Political Sciences

has devoted several successive sittings to the subject; the eminent

German economist, Professor Nasse, has discussed it--and with much

excellent discrimination--in an article on the decline of economic

individualism in England; and it is now the current assumption of the

journals and of popular conversation in this country, that a profound

change has come over the spirit of English politics in the course of the

present generation--a change from the old trust in liberty to a new

trust in State regulation, and from the French doctrine of

_laissez-faire_ to the German doctrine of State socialism.

But this assumption, notwithstanding the currency it has obtained and

the distinguished authorities by whom it is supported, is in reality

exaggerated and undiscriminating. While marking the growing frequency of

Government interventions, it makes no attempt to distinguish between

interventions of one kind and interventions of another kind, and it

utterly fails to recognise that English opinion--whether exhibited in

legislative work or economic writings--was not dominated by the

principle of _laissez-faire_ in the past any more than in the present,

but that it really has all along obeyed a fairly well-defined positive

doctrine of social politics, which gave the State a considerable

concurrent _role_ in the social and industrial development of the

community. The increasing frequency of Government interventions is in

itself a simple and unavoidable concomitant of the growth of society.

With the rapid transformations of modern industrial life, the increase

and concentration of population, and the general spread of

enlightenment, we cannot expect to retain the political or legislative

inactivity of stationary ages. As Mr. Hearn remarks, "All the volumes of

the statutes, from their beginning under Henry III. to the close of the

reign of George II., do not equal the quantity of legislative work done

in a decade of any subsequent reign." ("Theory of Legal Duties and

Rights," p. 21.) The process has been continuous and progressive, and it

suffered no interruption in the period which is usually supposed to have

been peculiarly sacred to _laissez-faire_. On the contrary, that period

will be found to exceed the period that went before it in legislative

activity, exactly as it has in turn been itself exceeded by our own

time. On any theory of the State's functions, an increase in the number

of laws and regulations was inevitable; it was only part and portion of

the natural growth of things; but such an increase affords no evidence,

not even a presumption, of any change in the principles by which

legislation is governed, or in the purposes or functions for which the

power of the State is habitually invoked. A mere growth of work is not

a multiplication of functions; to get a result, we must first analyze

the work done and discriminate this from that.

Now, in the first place, when compared with other nations, England has

been doing singularly little in the direction--the distinctively

socialistic direction--of multiplying State industries and enlarging the

public property in the means of production. Municipalities, indeed, have

widened their industrial domain considerably; it has become common for

them to take into their own hands things like the gas and water supply

of the community which would in any case be monopolies, and their

management, being exposed to an extremely effective local opinion, is

generally very advantageous. But while local authorities have done so

much, the central Government has held back. Many new industries have

come into being during the present reign, but we have nationalized none

of them except the telegraphs. We have added to the Post-Office the

departments of the Savings Bank and the Parcels Post; we have, for

purely military reasons, extended our national dockyards and arms

factories since the Crimean war, but without thereby enhancing national

confidence in Government management; we have, for diplomatic purposes,

bought shares in the Suez Canal; we have undertaken a few small jobs of

testing and stamping, such as the branding of herrings; but we are now

the only European nation that has no State railway; we have refrained

from nationalizing the telephones, though legally entitled to do so; and

we very rarely give subventions to private enterprises. This is much

less the effect of deliberate political conviction than the natural

fruit of the character and circumstances of the people, of their

powerful private resources and those habits of commercial association

which M. Chevalier speaks of with so much friendly envy, complaining

that his own countrymen could never be a great industrial nation because

they had no taste for acquiring them. In the English colonies, where

capital is more scarce, Government is required to do very much more;

most of them have State railways, and some--New Zealand, for

instance--State insurance offices for fire and life. These colonial

experiments will have great weight with the English public in settling

the problem of Government management under a democracy, and if they

prove successful, will undoubtedly influence opinion at home to follow

their example; but as things are at present, there is no appearance of

any great body of English opinion moving in that direction.

But while England has lagged behind other nations in this particular

class of Government intervention, there is another class in which she

has undoubtedly run far before them all. If we have not been multiplying

State industries, we have been very active in extending and establishing

popular rights, by means of new laws, new administrative regulations, or

new systems of industrial police. In fact, the greater part of our

recent social legislation has been of this order, and it is of that

legislation M. de Laveleye is thinking when he says England is taking

the lead of the nations in the career of State socialism. But that is

nothing new; if we are in advance of other nations in establishing

popular rights to-day, we have been in advance of them in that work for

centuries already. That peculiarity also has its roots in our national

history and character, and is no upstart fashion of the hour. Now,

without raising the question whether the rights which our recent social

legislation has seen fit to establish, are in all cases and respects

rights that ought to have been established, it is sufficient for our

present purpose to observe that at least this is obviously a very

different class of intervention from the last, because if it does not

belong to, it is certainly closely allied with, those primary duties

which are everywhere included among the necessary functions of all

government, the protection of the citizen from force and fraud. To

protect a right, you must first establish it; you must first recognise

it, define its scope, and invest it with the sanction of authority. With

the progress of society fresh perils emerge and fresh protections must

be devised; the old legal right needs to be reconstructed to meet the

new situation, or a new right must be created hitherto unknown perhaps,

unless by analogy, to the law. But even here the novelty lies, not in

the principle--for all right is a protection of the weak, or ought to be

so--but in the situation alone; in the rise of the factory system, which

called for the Factory Acts; in the growth of large towns, which called

for Health and Dwellings Acts; in the extension of joint-stock

companies, which called for the Limited Liability Acts; in the monopoly

of railway transportation, which called for the regulation of rates; or

in the spread of scientific agriculture, which required the constitution

of a new sort of property, the property of a tenant-farmer in his own

unexhausted improvements.

This peculiarity of the industrial and social legislation of England has

not escaped the acute intelligence of Mr. Goschen. Mistrustful as he is

of Government intervention, Mr. Goschen observes with satisfaction that

the great majority of recent Government interventions in England have

been undertaken for moral rather than economic ends. After quoting Mr.

Thorold Rogers' remark, that these interventions generally had the good

economic aim of preventing the waste of national resources, he says:

"But I believe that certainly in the case of the Factory Acts, and to a

great extent in the case of the Education Acts, it was a moral rather

than an economic influence--the conscientious feeling of what was right

rather than the intellectual feeling of ultimate material gain--it was

the public imagination touched by obligations of our higher

nature--which supplied the tremendous motive-power for passing laws

which put the State and its inspectors in the place of father or mother

as guardians of a child's education, labour, and health." ("Addresses,"

p. 62.)

The State interfered not because the child had a certain capital value

as an instrument of future production which it would be imprudent to

lose, but because the child had certain rights--certain broad moral

claims--as a human being which the parents' natural authority must not

be suffered to violate or endanger, and which the State, as the supreme

protector of all rights, really lay under a simple moral obligation to

secure. Reforms of this character are naturally inspired by moral

influences, by sentiments of justice or of humanity, by a feeling that

wrong is being done to a class of the community who are placed in a

situation of comparative weakness, inasmuch as they are

deprived--whether through the force of circumstances or the selfish

neglect of their superiors--of what public opinion recognises to be

essential conditions of normal human existence. Now, most of the

legislation which has led Mr. Goschen to declare that universal State

action is now enthroned in England has belonged to this order. It has

been guided by ethical and not by economic considerations. It has been

employed mainly in readjusting rights, in establishing fresh securities

for just dealing and humane living; but it has been very chary of

following Continental countries in nationalizing industries. When

therefore Mr. Spencer tells M. de Laveleye that the reason why England

is extending the functions of her Government so much more than other

nations "is obviously because there is great scope for the further

extension of them here, while abroad there is little scope for the

further extension of them," his explanation is singularly inappropriate.

England has not been extending the functions of Government all round,

but she has moved in the direction where she had less scope to move, and

has stood still in the direction where she had more scope to move than

other countries. And it is important to keep this distinction in mind

when we hear it so often stated in too general terms that we have

discarded our old belief in individual liberty and set up "universal

State action" in its place.

But those who complain of England having broken off from her old

moorings, not only exaggerate her leanings to authority in the present,

but they also ignore her concessions to authority in the past. English

statesmen and economists have never entertained the rigid aversion to

Government interference that is vulgarly attributed to them, but with

all their profound belief in individual liberty they have always

reserved for the Government a concurrent sphere of social and economic

activity--what may even be designated a specific social and economic

mission. A few words may be usefully devoted to this English doctrine of

social politics here, not merely because they may serve to dispel a

prevailing error, but because they will furnish a good vantage-ground

for seizing and judging of a principle of government which is to-day in

every mouth, but unfortunately bears in every mouth a different

meaning--the principle of State socialism.

It is commonly believed that the English doctrine of social politics is

the doctrine of _laissez-faire_, and our economists are continually

reviled as if they sought to leave the world to the play of

self-interest and competition, unchecked by any ideas of social justice

or individual human right. But in truth the doctrine of _laissez-faire_

has never been held by any English thinker, unless, perhaps, Mr. Herbert

Spencer. Mr. Spencer's first work, "Social Statics," was an exposition

of the theory that the end of all government was the liberty of the

individual, the realization for every citizen of the greatest amount of

liberty it was possible for him to enjoy without interfering with the

corresponding claims of his fellow-citizens. The individual had only one

right--the right to equal freedom with everybody else, and the State had

only one duty--the duty of protecting that right against violence and

fraud. It could not stir beyond that task without treading on the right

of some one, and therefore it ought not to stir at all. It had nothing

to do with health, or religion, or morals, or education, or relief of

distress, or public convenience of any sort, except to leave them

sternly alone. It must, of course, renounce the thought of bounties and

protective duties, but it must also give up marking plate, minting coin,

and stamping butter; it must take no part in building harbours or

lighthouses or roads or canals; and even a town council cannot without

offence undertake to pave or clean or light the streets under its

jurisdiction. It is only fair to say that Mr. Spencer refuses to be

bound now by every detail of his youthful theory, but he has repeated

the substance of it in his recent work, "The Man _versus_ The State,"

which is written to prove that the only thing we want from the State is

protection, and that the protection we want most of late is protection

against our protector.

This theory is certainly about as extreme a development of individualism

as could well be entertained; and though it has been even distanced in

one or two points by Wilhelm von Humboldt--who objected, for example, to

marriage laws[7]--no important English writer has ventured near it. The

description of the State's business as the business of protecting the

citizens from force and fraud, has indeed been familiar in our

literature since the days of Locke, and isolated passages may be cited

from the works of various political thinkers, which, if taken by

themselves, would seem to deny to the State any right to act except for

purposes of self-protection. John Stuart Mill himself speaks sometimes

in that way, although we know, from the chapter he devotes to the

subject of Government interference in his "Principles of Political

Economy," that he really assigned to the State much wider functions.

When we examine the writings of English economists and statesmen, and

the principles they employ in the discussion of the social and

industrial questions of their time, it seems truly strange how they ever

came to be credited with any scruple on ground of principle to invoke

the power of the State for the solution of such questions when that

seemed to them likely to prove of effectual assistance.

The social doctrine which has prevailed in England for the last century

is "the simple and obvious system of natural liberty" taught by Adam

Smith; but the simple and obvious system of natural liberty is a very

different thing from the system of _laissez-faire_ with which it is so

commonly confounded. Its main principle, it is true, is this: "Every

man," says Smith, "as long as he does not violate the laws of justice,

is left perfectly free to pursue his own interest his own way, and to

bring both his industry and capital into competition with those of any

other man or order of men. The Sovereign is completely discharged from a

duty, in the attempting to perform which he must always be exposed to

innumerable delusions, and for the proper performance of which no human

wisdom or knowledge could ever be sufficient: the duty of superintending

the industry of private people and of directing it towards the

employments most suitable to the interests of the society." ("Wealth of

Nations," book iv., chap. ix.) But while the Sovereign is discharged

from an industrial duty which he is incapable of performing

satisfactorily, he is far from being discharged from all industrial

responsibility whatsoever, for Smith immediately proceeds to map out the

limits of his functions as follows: "According to the system of natural

liberty, the Sovereign has only three duties to attend to--three duties

of great importance, indeed, but plain and intelligible to common

understandings: first, the duty of protecting the society from the

violence or invasion of other independent societies; second, the duty of

protecting, as far as possible, every member of the society from the

injustice or oppression of every other member of it, or the duty of

establishing an exact administration of justice; and thirdly, the duty

of erecting and maintaining certain 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."

The State is required to protect us from other evils besides the evils

of force and fraud--infectious diseases, for example, are in the context

mentioned expressly--and to supply us with many other advantages besides

the advantage of protection. Some of these advantages are of a material

or economic order, and others of an intellectual or moral. The material

advantages consist for the most part of provisions for facilitating the

general commerce of the country--such things as roads, canals, harbours,

the post, the mint--or provisions for facilitating particular branches

of commerce; and among these he instances the incorporation of

joint-stock companies endowed by charter with exclusive trading

privileges; and the reason which, according to Smith, entitles the State

to intervene in this class of cases, and which at the same time

prescribes the length to which its intervention may legitimately go, is

that individuals are unable to do the work satisfactorily themselves, or

that the State has from its nature superior qualifications for the task.

The intellectual or moral advantages which Smith asks from the State are

mostly provisions for sustaining the national manhood and character,

such as a system of compulsory military training or a system of

compulsory--and if not gratuitous, still cheap--education; and it is

important to mark that he asks for these measures, not on the ground of

their political or military expediency, but on the broad ground that

cowardice and ignorance are in themselves public evils, from which the

State is as much bound, if it can, to save the people, as it is bound to

save them from violence or fraud. Of military training he observes: "To

prevent that sort of mental mutilation, deformity, and wretchedness

which cowardice necessarily involves in it from spreading themselves

through the great body of the people, would deserve the serious

attention of Government, in the same manner as it would deserve its most

serious attention to prevent a leprosy or any other loathsome and

offensive disease, though neither mortal nor dangerous, from spreading

itself among them, though perhaps no other public good might result from

such attention besides the prevention of so great a public evil."

("Wealth of Nations," book v., chap. i.) And he proceeds to speak of

education: "The same thing may be said of the gross ignorance and

stupidity which in a civilized society seems so frequently to benumb the

understanding of all the inferior ranks of people. A man without the

proper use of the intellectual faculties of a man is, if possible, more

contemptible than even a coward, and seems to be mutilated and deformed

in a still more essential part of the character of human nature. Though

the State was to derive no advantage from the instruction of the

inferior ranks of people, it would still deserve its attention that they

should not be altogether uninstructed." Compulsory military training and

a system of national education would no doubt be conducive to the

stricter ends of all government; the one would strengthen the defences

of the nation against foreign enemies and the other would tend to the

diminution of crime at home; but Smith, it will be seen, explicitly

refuses to take that ground. The State's duty in the case would be the

same, though no such results were to follow, for the State has other

duties to perform besides the maintenance of peace and the repression of

crime. It would probably be admitted, he thinks, that it was as

incumbent on the State to take steps to arrest the progress of a "mortal

and dangerous" disease as it was to stop a foreign invasion; but he goes

further, and contends that it was equally incumbent on the State to

arrest the progress of a merely "loathsome and offensive" disease, for

the simple reason that such a disease was a mutilation or deformity of

our physical manhood. And just as the State ought to prevent the

mutilation and deformity of our physical manhood, so the State ought to

prevent the mutilation and deformity of our moral and intellectual

manhood, and was bound accordingly to provide a system of military

training and a system of popular education, to prevent people growing up

ignorant and cowardly, because the ignorant man and the coward were men

without the proper use of the faculties of a man, and were mutilated and

deformed in essential parts of the character of human nature. At bottom

Smith's principle is this--that men have an original claim--a claim as

original as the claim to safety of life and property--to all the

essential conditions of an unmutilated and undeformed manhood, and that

is really only another expression for the principle that lies at the

foundation of all civil and human right, that men have a right to the

essential conditions of a normal humanity, to the presuppositions of all

humane living, to the indispensable securities for the proper

realization of our common vocation as human beings. The right to

personal liberty--to the power of working for ends of our own

prescribing, and the right to property--to the power of retaining what

we have made, to be the instrument of further activities for the ends we

have prescribed for ourselves--rest really on no other ground than that

the privileges claimed are essential conditions of a normal, an

unmutilated and undeformed manhood, and it is on this broad ground that

Adam Smith justifies the State's intervention to stop disease and supply

education.

Smith held but a poor opinion of the capacities of Government

management, and especially of English Government management, which, he

asserted, was characterized in times of peace by "the slothful and

negligent profusion that was natural to monarchies," and in times of war

by "all the thoughtless extravagance" that was peculiar to democracies;

but nevertheless he had no hesitation in asking Government to undertake

a considerable number of industrial enterprises, because he believed

that these were enterprises which Government with all its faults was

better fitted to conduct successfully than private adventurers were. On

the other hand, Smith entertained the highest possible belief in

individual liberty, but he had never any scruple about sacrificing

liberty of contract where the sacrifice was demanded by the great moral

end of Government--the maintenance of just and humane dealing between

man and man. For example, the suppression of the truck system, which is

sometimes condemned as an undue interference with freedom of contract,

was strongly supported by Smith, who declared it to be "quite just and

equitable," inasmuch as it merely secured to the workmen the pay they

were entitled to receive and "imposed no real hardship on the

masters--it only obliged them to pay that value in money which they

pretended to pay, but did not really pay, in goods." It was only a just

and necessary protection of the weaker party to a contract against an

oppressive exaction to which, like the apothecary in "Romeo and Juliet,"

his poverty might have consented, but not his will. Precisely analogous

is Smith's position concerning usury laws. Usury laws are seldom

defended now; for one thing, money has become so abundant that the

competition of lender with lender may be trusted to as a better security

for fair and reasonable treatment of borrowers than a Government

enactment could provide. But Smith in his day was strongly in favour of

fixing a legal rate of interest, because he thought it was necessary to

prevent the practice of extortion by unscrupulous dealers on necessitous

clients. His views on truck and usury show that he had no sympathy with

those who contend that the State must on no account interfere with

grown-up people in the bargains they may make, inasmuch as grown-up

people may be expected to be quite capable of looking effectively after

their own interest. Smith recognised that grown-up people were often in

natural circumstances where it was practically impossible for them to

assert effectively not their interests merely, but even their essential

claims as fellow-citizens; and that therefore it was the State's duty to

come to the aid of those whose own economic position was weak, and to

force upon the strong certain responsibilities--or at least secure for

the weak certain broad, positive conditions--which just and humane

dealing might demand.

Now, in these ideas about truck and usury, as in the proposals

previously touched upon for checking the growth of disease or cowardice

or ignorance, is not the principle of social politics that is applied by

Smith precisely the principle that runs through our whole recent social

legislation--factory, sanitary, and educational--the principle of the

State's obligation to secure the people in the essential conditions of

all normal manhood? German writers often take Smith for an exponent, if

not for the founder, of what they call the _Rechtstaat_ theory--the

theory that the State is mainly the protector of right; but in reality

Smith's doctrine corresponded pretty closely with their own

_Kultur-und-Wohlfahrtstaat_ theory--the theory that the State is a

promoter of culture and welfare; and if further proof were wanted, it

might be found in the fact that in his doctrine of taxation he departs

altogether from the economic principle, which is popularly associated

with the _Rechtstaat_ idea, and is supposed to be a corollary of it,

that a tax is a _quid pro quo_, a price paid for a service rendered, and

ought therefore to be imposed on individuals in proportion to the

service they respectively receive from the State; and instead of this

economic principle he lays down the broad ethical one, that a tax is a

public obligation which individuals ought to be called upon to discharge

in proportion to their respective abilities. The rich cannot fairly be

said to _get_ more good from the State than the poor; they probably get

less, because they are better capable of providing for their own

defence; but the rich are able to _do_ more good to the State than the

poor, and because they are able, they are bound.

Such is the social doctrine of Adam Smith, and it is manifestly no

doctrine of rigid individualism, calling out for freedom at any price,

or banning all interference with the natural play of self-interest and

competition. The natural liberty for which the great English economist

contended was not the mere ghost of liberty worshipped by Mr. Spencer.

An ignorant man might be free, as an imprisoned man was free, within

limits, but he was not free within normal human limits. He had not the

use of his mind; he was wanting in an essential part of his manhood.

First make him a man--a whole, complete, competent man, fit for man's

vocation--then make him free. There is a common metaphysical distinction

between the formal freedom of the will and the material freedom of the

will. The drunkard, the lunatic, is formally free, for he exerts his

choice, but he is materially enslaved. The difference between liberty

according to Mr. Spencer and liberty according to Adam Smith is

something analogous. The liberty Smith desires is a substantial liberty;

it is clothed with a body--a definite body of universal human

rights--which the State is bound to realize as it would realize liberty

itself. The reason of his difference from the _laissez-faire_ theory of

Mr. Spencer, which is so often erroneously attributed to him, is that he

takes a much broader and more practical view of the original moral

rights of individuals than such ultra-individualists are accustomed to

do. While they hold that the State is there only to secure to

individuals reality and equality of freedom, he holds it is there to

secure them reality and equality of all moral rights. He would supply

all alike, therefore, with certain material securities--the material

conditions necessary to secure their moral rights with equal

completeness,--and he would protect them in the enjoyment of those

conditions against the assaults of poverty and misfortune no less than

the assaults of murderers and thieves. But beyond this line he would

refuse to go; if he stands clearly out in advance of the _laissez-faire_

position of equality of legal freedom, he stands equally clearly far

short of the socialistic position of equality of material conditions.

Now this doctrine of the great founder of English political economy has

been substantially the doctrine of his successors as well. It would be

beyond my present scope to trace the history of the doctrine of social

politics through the writings of the whole succession of English

economists, nor is it necessary. I shall choose a representative

economist from the group who are generally reckoned the most narrow and

unsympathetic, who are accused of having shifted political economy off

the broader lines on which it had been launched by Smith, who are

counted the great idolaters of self-interest and natural law, and the

scientific associates of the much-abused Manchester school--viz., the

disciples of Ricardo. Ricardo himself touches only incidentally on the

functions of the State, but he then does so to defend interventions,

such as minting money, marking plate, testing drugs, examining medical

candidates, and the like, which are meant to guard people against

deceptions they are themselves incompetent to detect. Moreover, he was

a strong advocate for at least one important extension of the State's

industrial _role_--he would establish a National Bank of issue with

exclusive privileges; and it is not uninteresting to remember that in

his place in Parliament he brought forward the suggestion of a system of

Government annuities for the accommodation of working men, which was

introduced by Mr. Gladstone half a century later, and has been denounced

in certain quarters as that statesman's first step in socialism, and

that he was one of a very small minority who voted for a Parliamentary

inquiry into the social system of Robert Owen.

But if Ricardo is comparatively silent on the subject, we fortunately

possess a very ample discussion of it by one of his leading disciples,

J. E. McCulloch. When Ricardo died, James Mill wrote to McCulloch, "As

you and I are his two and only genuine disciples, his memory must be a

point of connection between us;" and it was on McCulloch that the mantle

of the master descended. His "Principles of Political Economy," which

may be said to be an exposition of the system of economics according to

Ricardo, was for many years the principal textbook of the science, and

will still be admitted to be the best and most complete statement of

what, in the cant of the present day, is called orthodox political

economy. McCulloch, indeed, is more than merely the expositor of that

system; he is really one of its founders, the author of one of its most

famous dogmas, at least in its current form, the now exploded doctrine

of the Wages fund; and of all the adherents of this orthodox tradition,

McCulloch is commonly considered the hardest and most narrow. There are

economists who are supposed to show a native generous warmth which all

the severities of their science are unable to quell. John Stuart Mill is

known to have come under St. Simonian influences in his younger days,

and to have been fond ever afterwards of calling himself a socialist;

and Professor Sidgwick, in our own day, is often credited--and not

unjustly--with a like breadth of heart, and in publishing his views of

Government interference, he gives them the name of "Economic Socialism."

But in selecting McCulloch, I select an economist the rigour of whose

principles has never been suspected, and yet so striking is the

uniformity of the English tradition on this subject, that in reality

neither Mill nor Mr. Sidgwick professes a broader doctrine of social

politics, or goes a step further, or more heartily on the road to

socialism than that accredited champion of individualism, John Ramsay

McCulloch.

McCulloch's "Principles" contains--from the second edition in 1830

onward to the last author's edition in 1849--a special chapter on the

limits of Government interference; and the chapter starts with an

explicit repudiation of the doctrine of _laissez-faire_, which was then

apparently only beginning to come into vogue in England.

"An idea," says McCulloch, "seems however to have been recently gaining

ground that the duty of the Government with regard to the domestic

policy of the country is almost entirely of a negative kind, and that it

has merely to maintain the security of property and the freedom of

industry. But its duty is by no means so simple and easily defined as

those who support this opinion would have us to believe. It is certainly

true that its interference with the pursuits of individuals has been, in

very many instances, exerted in a wrong direction, and carried to a

ruinous excess. Still, however, it is easy to see that we should fall

into a very great error if we supposed that it might be entirely

dispensed with. Freedom is not, as some appear to think, the end of

government; the advancement of the public prosperity and happiness is

its end; and freedom is valuable in so far only as it contributes to

bring it about. In laying it down, for example, that individuals should

be permitted, without let or hindrance, to engage in any business or

profession they may prefer, the condition that it is not injurious to

others is always understood. No one doubts the propriety of a Government

interfering to suppress what is or might otherwise become a public

nuisance; nor does any one doubt that it may advantageously interfere to

give facilities to commerce by negotiating treaties with foreign powers,

and by removing such obstacles as cannot be removed by individuals. But

the interference of Government cannot be limited to cases of this sort.

However disinclined, it is obliged to interfere in an infinite variety

of ways and for an infinite variety of purposes. It must, to notice

only one or two of the _classes_ of objects requiring its interference,

decide as to the species of contract to which it will lend its sanction,

and the means to be adopted to enforce true performance; it must decide

in regard to the distribution of the property of those who die

intestate, and the effect to be given to the directions in wills and

testaments; and it must frequently engage itself, or authorize

individuals or associations to engage, in various sorts of undertakings

deeply affecting the rights and interests of others and of society. The

furnishing of elementary instruction in the ordinary branches of

education for all classes of persons and the establishment of a

compulsory provision for the support of the destitute poor are generally

also included, and apparently with the greatest propriety, among the

duties incumbent on administration" (p. 262).

He allows State ownership and State management of industrial works,

wherever State ownership and management are more efficient for the

purpose than private enterprise--in other words, where they are more

economical--as in the cases of the coinage, roads, harbours, postal

communication, etc. He would expropriate land for railway purposes,

grant a monopoly to the railway company, and then subject it to

Government control in the public interest; he would impose many sorts of

restrictions on freedom of contract, freedom of industry, freedom of

trade, freedom of property, and freedom of bequest; and, what is more

important, he recognises clearly that with the growth of society fresh

interferences of a serious character will be constantly called for,

which may in some cases involve the application of entirely new

principles, or throw on the Government work of an entirely new

character.

For example, he is profoundly impressed with the dangers of the

manufacturing system, which he saw growing and multiplying all around

him, and so far from dreaming that the course of industry should remain

uncontrolled, he even ventures, in a remarkable passage, to express the

doubt whether it may not "in the end be found that it was unwise to

allow the manufacturing system to gain so great an ascendancy as it has

done in this country, and that measures should have been early adopted

to check and moderate its growth" (p. 191). He admits that a decisive

answer to this question could only be given by the economists of a

future generation, after a longer experience of the system than was

possible when he wrote, but he cannot conceal the gravest apprehension

at the preponderance which manufactures were rapidly gaining in our

industrial economy. And his reasons are worthy of attention. The first

is the destruction of the old moral ties that knit masters and men

together.

"But we doubt whether any country, how wealthy soever, should be looked

upon as in a healthy, sound state, where the leading interest consists

of a small number of great capitalists, and of vast numbers of

workpeople in their employment, but unconnected with them by any ties of

gratitude, sympathy, or affection. This estrangement is occasioned by

the great scale on which labour is now carried on in most businesses;

and by the consequent impossibility of the masters becoming acquainted,

even if they desired it, with the great bulk of their workpeople.... The

kindlier feelings have no share in an intercourse of this sort; speaking

generally, everything is regulated on both sides by the narrowest and

most selfish views and considerations; a man and a machine being treated

with about the same sympathy and regard" (p. 193).

The second reason is the suppression of the facilities of advancement

enjoyed by labourers under the previous _regime_. "Owing to the greater

scale on which employments are now mostly carried on, workmen have less

chance than formerly of advancing themselves or their families to any

higher situation, or of exchanging the character of labourers for that

of masters" (p. 188). For the majority of the working-class to be thus,

as he expresses it, "condemned as it were to perpetual helotism," is not

conducive to the health of a nation. The third reason is the comparative

instability of manufacturing business. It becomes a matter of the most

serious concern for a State, "when a very large proportion of the

population has been, through their agency, rendered dependent on foreign

demand, and on the caprices and mutations of fashion" (p. 192). That

also is a state of things fraught with danger to the health of a

community. McCulloch always treats political economy as if he defined

it--and the definition would be better than his own--as the science of

the working of industrial society in health and disease; and he always

throws on the State a considerable responsibility in the business of

social hygiene; going so far, we have seen in the passages just quoted,

as to suggest whether a legal check ought not to have been imposed on

the free growth of the factory system, on account of its bad effects on

the economic position of the labouring class. We had suffered the system

to advance too far to impose that check now, but there were other

measures which, in his opinion, the Legislature might judiciously take

in the same interest. It is of course impossible, by Act of Parliament,

to infuse higher views of duty or warmer feelings of ordinary human

regard into the relations between manufacturers and their workmen; but

the State might, according to McCulloch, do something to mitigate the

modern plague of commercial crises, by a policy of free trade, by

adopting a sound monetary system, by securing a continuance of peace,

and by "such a scheme of public charity as might fully relieve the

distresses without insulting the feelings or lessening the industry of

the labouring classes" (p. 192).

As with commercial crises, so with other features of the modern

industrial system; wherever they tend to the deterioration of the

labouring class, McCulloch always holds the State bound to intervene, if

it can, to prevent such a result. He would stop the immigration of what

is sometimes called pauper labour--of bodies of workpeople brought up in

an inferior standard of life--because their example and their

competition tend to pull down the native population to their own level.

The example he chooses is not the Jewish element in the East End of

London, but the much more important case of the Irish immigration into

Liverpool and Glasgow; and while he would prefer to see Government

taking steps to improve the Irish people in Ireland itself, he declares

that, if that is not practicable, then "justice to our own people

requires that measures should be adopted to hinder Great Britain from

being overrun with the outpourings of this _officina pauperum_, to

hinder Ireland from dragging us down to the same hopeless abyss of

pauperism and wretchedness in which she is sunk" (p. 422). This policy

may be wise, or it may not, but it shows very plainly--what appears so

often in his writings--how deeply McCulloch's mind was penetrated with

the conviction that one of the greatest of all the dangers from which

the State ought to do what it well can to preserve the people, was the

danger of falling to a lower standard of tastes and requirements, and

thereby losing ambition and industry, and the very possibility of rising

again.

"This lowering of the opinions of the labouring class with respect to

the mode in which they should live is perhaps the most serious of all

the evils that can befall them.... The example of such individuals or

bodies of individuals as submit quietly to have their wages reduced, and

who are content if they get only mere necessaries, should never be held

up for public imitation. On the contrary, everything should be done to

make such apathy be esteemed discreditable. The best interests of

society require that the rate of wages should be elevated as high as

possible--that a taste for comforts and enjoyments should be widely

diffused, and, if possible, interwoven with national habits and

prejudices. Very low wages, by rendering it impossible for increased

exertions to obtain any considerable increase of advantages, effectually

hinder them from being made, and are of all others the most powerful

cause of that idleness and apathy that contents itself with what can

barely continue animal existence" (p. 415).

And he goes on to refute the idea of Benjamin Franklin, that high wages

breed indolent and dissipated habits, and to contend that they not only

improve the character and efficiency of the labourer, but are in the end

a source of gain, instead of loss, to the employer. But, although the

maintenance of a high rate of wages is so great an object of public

solicitude, it was an object which it was, in McCulloch's judgment,

outside the State's province, simply because it was outside its power,

to do anything directly to promote, because while authority could fix a

price for labour, it could never compel employers to engage labour at

that price; and consequently its interference in such a way would only

end in injury to the class it sought to befriend, as well as to the

trade of the country in general. Still, McCulloch is far from wishing to

repel the State's offices or the offices of public opinion in

connection with the business altogether. In the passage just quoted he

expressly makes an appeal to public opinion for an active interference

in a direction where, he believes, its interference might be useful; and

as for the action of the State, he approves, for one thing, of the

legalization of trades unions, and, for another, of the special

instruction of the public, at the national expense, in the principles on

which a high rate of wages depend.

In regard to the Factory Acts, while he would have the hours of labour

in the case of grown-up men settled by the parties themselves, because

he thought them the only persons competent to settle them

satisfactorily, he strongly supported the interference of the

Legislature, on grounds of ordinary humanity, to limit the working day

of children and women, because "the former are naturally, and the latter

have been rendered, through custom and the institutions of society,

unable to protect themselves" (p. 426); and he seconded all Lord

Shaftesbury's labours down to the Ten Hours Act of 1847, to which he

objected on the ground that it involved a practical interference with

all adult factory labour. On the other hand, he was in favour of the

principle of employers' liability for accidents in mines and workshops,

because there seemed no other way of saving the labourers from their own

carelessness, except by making the masters responsible for the

enforcement of the necessary regulations (p. 307).

But McCulloch's general position on this class of questions is still

better exemplified in the view he takes of the State's duty on a matter

of great present interest, the housing of the poor. Here he has no

hesitation in throwing the principal blame for the bad accommodation of

the working-classes of that day, for the underground cellar dwellings of

Liverpool and Manchester, the overcrowded lodging-houses of London, and

the streets of cottages unsupplied with water or drainage, on "the

culpable inattention of the authorities." Mr. Goschen vindicates the

legitimacy of Government interference with the housing of the people, on

the ground that it is the business of Government to see justice done

between man and man. When a man hired a house, Government had a right to

see that he got a house, and a house meant a dwelling fit for human

habitation. The inspection of houses is, according to this idea, only a

case of necessary protection against fraud, like the institution of

medical examinations, the assaying of metals, or the testing of drugs;

and protection against fraud is admitted everywhere to be the proper

business of Government. McCulloch bases his justification of the

intervention on much broader grounds. Government needs no other warrant

for condemning a house that is unfit for human habitation but the simple

fact that the house is unfit for human habitation, and it makes no

difference whether the tenant is cheated into taking the bad house, or

takes it openly because he prefers it. In fact, the strongest reason, in

McCulloch's opinion, for invoking Government interference in the case at

all, is precisely the circumstance that so many people actually prefer

unwholesome houses from motives of economy.

"Such cottages," he says, "being cheap, are always sure to find

occupiers. Nothing, however, can be more obvious than that it is the

duty of Government to take measures for the prevention and repair of an

abuse of this sort. Its injurious influence is not confined to the

occupiers of the houses referred to, though if it were, that would be no

good reason for declining to introduce a better system. But the diseases

engendered in these unhealthy abodes frequently extend their ravages

through all classes of the community, so that the best interests of the

middle and higher orders, as well as of the lowest, are involved in this

question. And, on the same principle that we adopt measures to guard

against the plague, we should endeavour to secure ourselves against

typhus, and against the brutalizing influence, over any considerable

portion of the population, of a residence amid filth and disease" (p.

308).

The last clause is remarkable. The State is required to protect the

people from degrading influences, to prevent them from being brutalized

through the avarice or apathy of others, and to prevent them being

brutalized through the avarice or apathy of themselves. It is not what

many persons would expect, but here we have political economy, and the

most "orthodox" political economy, forcing people to go to a dearer

market for their houses, in order to satisfy a sentiment of humanity,

and imposing on the State a social mission of a broad positive

character--the mission of extirpating brutalizing influences. Yet,

expected or not, this is really the ordinary tradition of English

economists--it is the principle laid down by Smith of obliging the State

to secure for the people an unmutilated and undeformed manhood, to

provide for them by public means the fundamental conditions of a humane

existence.

McCulloch's position comes out more clearly still in the reasons he

gives for advocating a compulsory provision for the able-bodied poor,

and a national system of popular education. With regard to the impotent

poor, he is content with saying that it would be inhumanity to deny them

support, and injustice to throw their support exclusively on the

benevolent. A poor-rate is sometimes defended on what are professed to

be strictly economical grounds, by showing that it is both less

mischievous and less expensive than mendicity; but what strikes

McCulloch is not so much the wastefulness of private charity in the

hands of the benevolent as the injustice of suffering the avaricious to

escape their natural obligations. Few, however, have much difficulty in

finding one good reason or another for making a public provision for the

impotent poor; the crux of the question of public assistance is the case

of the able-bodied poor. A provision for the able-bodied poor is

practically a recognition in a particular form of "the right to labour,"

and the right to labour resounds with many revolutionary terrors in our

English ears, although it has, as a matter of fact, been practised

quietly, and most of the time in one of its most pernicious forms, in

every parish of England for nearly three hundred years.

Now on this question McCulloch was a convert. He confessed to the

Committee on the State of the Poor in Ireland, in 1830, that he had

changed his views on the subject entirely since his previous evidence in

1825. He had formerly been, he said, "too much imbued with mere theory,

with the opinions of Malthus and Townsend"; but he had become a firm

believer in the necessity and the public advantage of a legal provision

for the able-bodied poor, and he strongly recommended the introduction

of such a system into Ireland, in the first instance as an instrument of

individual relief, but also as an effectual engine of social

improvement. He gives the reasons for his conversion partly in his

evidence, and partly in a more systematic form in his "Principles of

Political Economy." First, Malthus had attributed to the Poor Law itself

effects which really sprang from certain bad arrangements that had been

engrafted on the English system of relief, but were not essential to

it--viz., the allowance system, and the law known as Gilbert's Act,

which deprived parishes of the right to refuse relief except in

workhouses, and forced them to provide work for paupers, if paupers

desired it, at or near their own houses. These two arrangements, in

McCulloch's opinion, converted the English provision for the able-bodied

poor from what we may term a wise and conditional right of labour into

an unwise and dangerous one. In the second place, he had come to see

that a legal provision for the poor, instead of having, as was alleged,

a necessary tendency to multiply pauperism, had in reality a natural

tendency to prevent its growth, because it gave the landlords and

influential ratepayers a strong pecuniary as well as moral interest in

producing that result. Its effect was thus to establish in every parish

a new local stimulus to social improvement, and it was on account of

this effect of a Poor Law that McCulloch thought it would be specially

beneficial to Ireland, because there was nothing Ireland needed more

than just such a local stimulus. In the third place, he had become more

and more profoundly impressed with the increasing gravity of the

vicissitudes and fluctuations of employment to which English labourers

were subject since England became mainly a manufacturing country, and

that unhappy feature of manufacturing industry was his principal reason

for invoking legislative assistance. A purely agricultural country, he

thought, might be able to do without a Poor Law, because agricultural

employment was comparatively steady; but in a manufacturing country a

Poor Law was indispensable, on account of the long periods of depression

or privation which were normal incidents in the life of labour in such a

country, and on account of the pernicious effect which these periods of

privation would, if unchecked, be certain to exercise upon the character

and habits of the labouring classes, through "lowering their estimate of

what is required for their comfortable and decent subsistence."

("Political Economy," p. 448.)

"During these periods of extraordinary privation the labourer, if not

effectually relieved, would imperceptibly lose that taste for order,

decency, and cleanliness which had been gradually formed and accumulated

in better times by the insensible operation of habit and example, and no

strength of argument, no force of authority, could again instil into the

minds of a new generation, growing up under more prosperous

circumstances, the sentiments and tastes thus uprooted and destroyed by

the cold breath of penury. Every return of temporary distress would

therefore vitiate the feelings and lower the sensibilities of the

labouring classes" (p. 449).

McCulloch quotes these words from Barton, but he quotes them to express

his own view, and their teaching is very explicit on the duty of

Government to the unemployed in seasons of commercial distress. In such

seasons of "extraordinary privation" the State is called upon to take

"effectual" measures--extraordinary measures, we may infer, if

extraordinary measures were necessary--for the relief of the unemployed,

not merely to save them from starvation, but to prevent them from losing

established habits of "order, decency, and cleanliness"; from getting

their feelings vitiated, their sensibilities impaired, so that they were

in danger of remaining content with a worse standard of living, and

sinking to a lower scale in the dignity of social and civilized being.

In a word, it is held to be the duty of the State to prevent, if it can,

the temporary reverses of the labouring class from resulting in its

permanent moral decadence; and as the object of the State's intervention

is to preserve the dignity, the self-respect, the moral independence and

energy of the labouring class, the manner of the intervention, the

choice of actual means and steps for administering the relief, must, of

course, be governed by the same considerations. "The true secret of

assisting the poor," says McCulloch, borrowing the words of Archbishop

Sumner, "is to make them agents in bettering their own condition, and to

supply them, not with a temporary stimulus, but with a permanent energy"

(p. 475).

The same principles come out even more strongly in McCulloch's remarks

on national education. He says, "the providing of elementary instruction

for all classes is one of the most pressing duties of Government" (p.

473); and the elementary instruction he would provide would not stop at

reading and writing, but would include even a knowledge of so much

political economy as would explain "the circumstances which elevate and

depress the rate of wages" (p. 474). It was the duty of Government to

extirpate ignorance, because, "of all obstacles to improvement,

ignorance was the most formidable"; and it was its duty to establish

Government schools for the purpose, because charity schools impaired the

self-respect and sense of independence which were themselves first

essentials of all social improvement.

"No extension of the system of charity and subscription schools can ever

fully compensate for the want of a statutory provision for the education

of the public. Something of degradation always attaches to the fact of

one's having been brought up in a charity school. The parents who send

children to such an institution, and even the children, know that they

have been received only because they are paupers unable to pay for their

education; and this consciousness has a tendency to weaken that state of

independence and self-respect, for the want of which the best education

may be but an imperfect substitute. But no such feeling could operate on

the pupils of schools established by the State" (p. 476).

There is no question with McCulloch about the right of the State to take

steps to forward the moral progress, or to prevent the moral decadence,

of the community--or any part of the community--under its care; that is

simply its plain and primary duty, though there may be question with the

State, as with other agencies, whether particular measures proposed for

the purpose are really calculated to effect it.

After this long, and I fear tedious, account of the opinions of

McCulloch, it would be needless to call more witnesses to refute those

who so commonly accuse English economists of teaching an extreme

individualism. For McCulloch may be said to be their own witness; they

hold him up as the hardest and narrowest of a hard and narrow school;

one of the ablest of them, Mr. J. K. Ingram, who writes McCulloch's

memoir in the _Encyclopaedia Britannica_, going so far as to accuse him

of exhibiting "a habitual deadness in the study of social questions to

all but material considerations." We have adduced enough to disprove

that statement. The reader of McCulloch's writings is constantly struck

to observe how habitually his judgment of a social question is governed

by ethical rather than economic considerations, and how his supreme

concern always seems to be to guard the labouring poor from falling into

any sort of permanent decadence, and to place them securely on the lines

of progressive elevation. But perhaps a word may be required about the

Manchester school. Mr. Ingram states--and again his statement probably

agrees with current prepossessions--that McCulloch occupied

"substantially the same theoretic position as was occupied at a somewhat

later period by the Manchester school" (_Encyc. Brit._, art. "Political

Economy"). We have seen what McCulloch's theoretic position really was,

and it is certainly not the Manchester doctrine of popular anathema; it

is not the _Manchesterismus_ of the German schools. But the Manchester

men can scarcely be said to have properly had anything in the nature of

a general theoretic position. They were not a school of political

philosophy--they were a band of practical politicians leagued to promote

particular reforms, especially two reforms in international policy which

involved large curtailments of the _role_ of Government--viz., free

trade with other countries, and nonintervention in their internal

affairs; but they were far from thinking that, because it would be well

for the State to abstain from certain specific interferences, it would

be well for it to abstain from all; or that if the State had no

civilizing mission towards the people of other countries, it had

therefore no civilizing mission towards its own. Cobden, for example--to

go no farther--was a lifelong advocate of a national system of

education; he was a friend of factory legislation for women and

children, and, with respect to the poor, he taught in one of his

speeches the semi-socialistic doctrine that the poor had the first right

to maintenance from the land--that they are, as it were, the first

mortgagees. The Manchester school is really nothing but a stage

convention, a convenient polemical device for marking off a particular

theoretical extreme regarding the task of the State; but the persons in

actual life who were presumed to compose the school were no more, all

of them, adherents of that theory than Scotchmen, off the stage, have

all short kilts and red hair. And as for that theory itself, the theory

of _laissez-faire_, it has never in England been really anything more

than it is now, the plea of alarmed vested interests stealing an

unwarranted, and I believe an unwelcome, shelter under the aegis of

economic science. English economists, from Smith to McCulloch, from

McCulloch to Mr. Sidgwick, have adhered with a truly remarkable

steadiness to a social doctrine of a precisely contrary character--a

social doctrine which, instead of exhibiting any unreasonable aversion

to Government interference, expressly assigns to Government a just and

proper place in promoting the social and industrial development of the

community. In the first place, in the department of production, they

freely allow that just as there are many industrial enterprises in the

conduct of which individual initiative must, for want of resources or

other reasons, yield to joint-stock companies, so there are others for

which individuals and companies alike must give place to the State,

because the State is by nature or circumstances better fitted than

either to conduct them satisfactorily; and in the next place, in the

department of distribution, while rating the moral or personal

independence of the individual as a supreme blessing and claim, they

have no scruple in calling on the State to interfere with the natural

liberty of contract between man and man, wherever such interference

seems requisite to secure just and equitable dealing, to guard that

personal independence itself from being sapped, or to establish the

people better in any of the other elementary conditions of all humane

living. We sometimes take pride at the present day in professing a

distrust for doctrinaire or metaphysical politics, and we are no doubt

right; but that reproach cannot justly be levelled against the English

economists. They were not Dutch gardeners trying to dress the world

after an artificial scheme; that is more distinctive of the social

systems they opposed. Their own system indeed was to study Nature, to

discover the principles of sound natural social growth, and to follow

them; but they had no idea on that account of leaving things to grow

merely as they would, or of renouncing the help of good husbandry. They

had, as we have seen, a positive doctrine of social politics, which

required from the State much more than the protection of liberty and the

repression of crime; they asked the State to undertake such industrial

work as it was naturally better fitted to perform than individuals or

associations of individuals, and they asked the State to secure to the

body of the citizens the essential conditions of a normal and

progressive manhood.

Now this doctrine--which may be called the English doctrine of social

politics--seems to furnish a basis of considerable practical value for

discriminating between a wholesome and effective participation by

Government in the work of social reform, on the one hand, and those

pernicious and dangerous forms of intervention on the other, which may

be correctly known by the name of State socialism.

II. _The Nature and Principle of State Socialism._

Few words are at present more wantonly abused than the words socialism

and State socialism. They are tossed about at random, as if their

meaning, as was said of the spelling of former generations, was a mere

affair of private judgment. There is, in truth, a great deal of

socialism in the employment of the word; little respect is paid to the

previous appropriation of it; and especially since it has become, as has

been said, _hoffaehig_, men press forward from the most unlikely

quarters, claim kindred with the socialists, and strive for the honour

of being called by their name. Many excellent persons, for example, have

no better pretext to advance for their claim than that they also feel a

warm sentiment of interest in the cause of the poor. Churchmen whose

duties bring them among the poor are very naturally touched with a sense

of the miseries they observe, and certain of them, who may perhaps

without offence be said to love the cause well more than wisely, come to

public platforms and declare themselves socialists--socialists, they

will sometimes explain, of an older and purer confession than the Social

Democratic Federation, but still good and genuine socialists--merely

because the religion they preach is a gospel of moral equality before

God, and of fraternal responsibility among men, whose very test in the

end is the test of human kindness--"Inasmuch as ye did it not to one of

the least of these My brethren, ye did it not to Me." But socialism is

not a feeling for the poor, nor yet for the responsibilities of society

in connection with their poverty; it is neither what is called

humanitarianism, nor what is called altruism; it is not an affair of

feeling at all, but of organization, and the feeling it breathes may not

be altruistic. The revolutionary socialists of the Continent, for

instance, are animated by as vigorous a spirit of self-interest and an

even more bitter class antagonism than a trade union or a land league.

They fight for a particular claim of right--the utterly unjustifiable

claim to the whole product of labour--and they propose to turn the world

upside down by a vast scheme of social reconstruction in order to get

their unjust, delusive, and mischievous idea realized. The gauge of

their socialism, therefore, must, after all, be looked for in their

claim and their remedy, and not in the vague sympathies of a benevolent

spectator who, without scrutinizing either the one or the other, thinks

he will call himself a socialist because he feels that there is much in

the lot of the poor man that might be mended, and that the rich might be

very properly and reasonably asked to make some sacrifices for their

brethren's sake out of their abundance. The philanthropic spectator

suffers from no scarcity of words to express his particular attitude if

he desires to do so; why then should he not leave socialists the

enjoyment of their vocable?

There is often at the bottom of this sentimental patronage of socialism

the not unchivalrous but mistaken idea that the ordinary self-interest

of the world has been glorified by economists into a sacred and

all-sufficing principle which it would be interfering with the designs

of Providence to restrict, and that therefore it is only right to side

with socialism as a protest against the position taken by the apologists

of the present system of things, without being understood to commit

one's self thereby to the particular system which socialism may propose

to put in its place. But while the economists think very rightly that

self-interest must always be regarded as the ordinary guide of life, and

that the world cannot be reasonably expected to become either better, or

better off, if everybody were to look after other people's interests

(which he knows nothing about) instead of looking after his own (of

which he at least knows something), they are far from showing any

indifference to the danger of self-interest running into selfishness. On

the contrary, they have constantly insisted--as the evidence I have

already produced abundantly proves--that where the self-interest of the

strongly placed failed to subject itself spontaneously to the restraints

of social justice and the responsibilities of our common humanity, it

was for society to step in and impose the restraints that were just and

requisite, and to do so either by public opinion or by public authority

in the way most likely to be practicable and effectual. Another thing

our sentimental friends forget is that the socialists of the present day

have no thought of substituting any other general economic motive in the

room of self-interest. If they had their schemes realized to-morrow, men

would still be paid according to the amount of their individual work,

and each would work so far for his own hand. His daily motive would be

his individual interest, though his scope of achievement would be

severely limited by law with the view of securing a better general level

of happiness in the community. The question between economists and

socialists is not whether the claims of social justice are entitled to

be respected, but whether the claims which one or other of them make

really are claims of social justice or no. Still, so firm is the hold

taken by the notion that the socialists are the special champions of

social justice, that one of our most respected prelates has actually

defined socialism in that sense. The Bishop of Rochester (now of

Winchester), in his Pastoral Letter to his Clergy at the new year of

1888, takes occasion, while warning the younger brethren against the too

headlong philanthropy which "scouts what is known as the science of

political economy," to describe socialism as "the science of maintaining

the right proportion of equity and kindness while adjudicating the

various claims which individuals and society mutually make upon each

other." In reality, socialism would be better defined as a system that

outsteps the right proportion of equity and kindness, and sets up for

the masses claims that are devoid of proportion and measure of any kind,

and whose injustice and peril often arise from that very circumstance.

If bishops carry the term off to one quarter, philosophers carry it to

another. Some identify socialism with the associative principle

generally, and see it manifested in the growth of one form of

organization as much as in the growth of another, or at most they may

limit it to the intervention of the associative principle in things

industrial, and in that event they would consider a joint-stock company,

or a co-operative store, or perhaps a building like Queen Anne's

Mansions, or the common-stair system of Scotland, to be as genuine

exhibitions of socialism as the collectivism or anarchism of the

Continental factions or the State monopolies of Prince Bismarck. But a

joint-stock company is no departure from--it is rather an extension

of--the present _regime_ of private property, free competition, and

self-interest; and why should it be described by the same name as a

system whose chief pretension is to supersede that _regime_ by a better?

Another very common definition of socialism--perhaps the most common of

all, and the last to which I shall refer here--is that socialism is the

general principle of giving society the greatest possible control over

the life of the individual, in contradistinction to the opposite

principle of individualism, which is taken to be the principle of giving

the individual the greatest possible immunity from the control of

society. Any extension of the authority of the State, any fresh

regulation of the transactions of individual citizens, is often

pronounced to be socialistic without asking what the object or nature of

the regulations may be. Socialism is identified with any enlargement,

and individualism with any contraction, of the functions of government.

But the world has not been made on this socialist principle alone, nor

on this individualist principle alone, and it can neither be explained

nor amended by means of the one without the other. Abstractions of that

order afford us little practical guidance. The socialists of real life

are not men who are bent on increasing Government control for the mere

sake of increasing Government control. There are broad tracts of the

individual's life they would leave free from social control; they would

give him, for example, full property in his house and furniture during

his lifetime, and the right to spend his income, once he had earned it,

in his own way. Their scheme, if carried out, might be found to compel

them to restrict this latter right, but their own desire and belief

undoubtedly is that the individual would have more freedom of the kind

then than he has now. They seek to extend Government control only

because, and only so far as, they believe Government control to be

necessary and fitted to realize certain theories of right and well-being

which they think it incumbent on organized society to realize; and

consequently the thing that properly characterizes their position is not

so much the degree of their confidence in the powers of the State as the

nature of the theories of right for which they invoke its intervention.

And just as socialists do not enlarge the bounds of authority from the

mere love of authority, so their opponents do not resist the enlargement

from the mere hatred of authority. They raise no controversy about the

abstract legitimacy of Government encroachments on the sphere of private

capital or of legal enlargements of the rights or privileges of labour.

There is no socialism in that; the socialism only comes in when the

encroachments are made on a field where Government administration is

unlikely to answer, and where the rights conferred are rights to which

labour can present no just and reasonable claim.

It will be objected that this is to reduce socialism to a mere matter of

more or less. The English economists, it will be said, practised a

little socialism, because they allowed the use of State means to elevate

the condition of the working classes, or to provide for the wants of the

general community; and the Continental Social Democrats only practise a

little more socialism when they cry for a working-class State or for the

progressive nationalization of all industries. But in practical life the

measure is everything. So many grains of opium will cure; so many more

will kill. The important thing for adjusting claims must always be to

get the right measure, and the objection to socialistic schemes is

precisely this, that they take up a theory of distributive justice which

is an absolutely wrong measure, or else some vague theory of

disinheritance which contains no measure at all. They would nationalize

industries without paying any respect to their suitability for

Government management, simply because they want to see all industries

nationalized; and they would grant all manner of compensating

advantages to the working class as instalments of some vague claim,

either of economic right from which they are alleged to have been ousted

by the system of capitalism, or of aboriginal natural right from which

they are said to have been disinherited by the general arrangements of

society itself. What distinguishes their position and makes it socialism

is therefore precisely this absence of measure or of the right measure,

and one great advantage of the English doctrine of social politics which

I have expounded, is that it is able to supply this indispensable

criterion. That doctrine would limit the industrial undertakings of the

State to such as it possessed natural advantages for conducting

successfully, and the State's part in social reform to securing for the

people the essential conditions of all humane living, of all normal and

progressive manhood. It would interfere, indeed, as little as possible

with liberty of speculation, because it recognises that the best way of

promoting social progress and prosperity is to multiply the

opportunities, and with the opportunities the incentives, of talent and

capital; but, while giving the strong their head, in the belief that

they will carry on the world so far after them, it would insist on the

public authority taking sharp heed that no large section of the common

people be suffered to fall permanently behind in the race, to lose the

very conditions of further progress, and to lapse into ways of living

which the opinion of the time thinks unworthy of our common humanity.

Now State socialism disregards these limits, straying generally far

beyond them, and it may not improperly be defined as the system which

requires the State to do work it is unfit to do in order to invest the

working classes with privileges they have no right to get.

The term State socialism originated in Germany a few years ago to

express the antithesis not of free, voluntary, or Christian socialism,

as seems frequently to be imagined here, but of revolutionary socialism,

which is always considered to be socialism proper, because it is the

only form of the system that is of any serious moment at the present

day. State socialism has the same general aims as socialism proper, only

it would carry out its plans gradually by means of the existing State,

instead of first overturning the existing State by revolution and

establishing in its place a new political organization for the purpose,

the Social Democratic Republic. There are socialists who fancy they have

but at any moment to choose a government and issue a decree, as Napoleon

once did--"Let misery be abolished this day fortnight"--and misery would

be abolished that day fortnight. But the State socialists are unable to

share this simple faith. They are State socialists not because they have

more confidence in the State than other socialists, but because they

have less. They consider it utterly futile to expect a democratic

community ever to be able to create a political executive that should be

powerful enough to carry through the entire socialistic programme. Like

the Social Conservatives of all countries, like our own Young England

party, for example, or the Tory Democrats of the present generation,

they combine a warm zeal for popular amelioration with a profound

distrust of popular government; but when compared with other socialists,

they take a very sober view of the capacity of government of any kind;

and although they believe implicitly in the "Social Monarchy of the

Hohenzollerns," they doubt whether the strongest monarchy the world has

ever seen would be strong enough to effect a socialistic reconstruction

of the industrial system without retaining the existence for many

centuries to come of the ancient institutions of private property and

inheritance.

All that is at least very frankly acknowledged by Rodbertus, the

remarkable but overrated thinker whom the State socialists of Germany

have chosen for their father. Rodbertus was always regarded as a great

oracle by Lassalle, the originator of the present socialist agitation,

and his authority is constantly quoted by the most eminent luminary

among the State socialists of those latter days, Professor Adolph

Wagner, who says it was Rodbertus that first shed on him "the Damascus

light that tore from his eyes the scales of economic individualism."

Rodbertus had lived for a quarter of a century in a political sulk

against the Hohenzollerns. Though he had served as a Minister of State,

he threw up his political career rather than accept a constitution as a

mere royal favour; he refused to work under it or recognise it by so

much as a vote at the polls. But when the power of the Hohenzollerns

became established by the victories of Koeniggraetz and Sedan, and when

they embarked on their new policy of State socialism, Rodbertus

developed into one of their most ardent worshippers. Their new social

policy, it is true, was avowedly adopted as a corrective of socialism,

as a kind of inoculation with a milder type of the disease in order to

procure immunity from a more malignant; but Bismarck contended at the

same time that it was nothing but the old traditional policy of the

House of Prussia, who had long before placed the right of existence and

the right of labour in the statute-book of the country, and whose most

illustrious member, Frederick the Great, used to be fond of calling

himself "the beggars' king." Under these circumstances Rodbertus came to

place the whole hope of the future in the "Social Monarchy of the

Hohenzollerns," and ventured to prophesy that a socialist emperor would

yet be born to that House who would rule possibly with a rod of iron,

but would always rule for the greatest good of the labouring class.

Still, even under a dynasty of socialist emperors Rodbertus gave five

hundred years for the completion of the economic revolution he

contemplated, because he acknowledged it would take all that time for

society to acquire the moral principle and habitual firmness of will

which would alone enable it to dispense with the institutions of private

property and inheritance without suffering serious injury.

In theory Rodbertus was a believer in the modern social democratic

doctrine of the labourer's right to the full product of his labour--the

doctrine which gives itself out as "scientific socialism," because it is

got by combining a misunderstanding of Ricardo's theory of wages with a

misunderstanding of the same economist's theory of value--and which

would abolish rent, interest, profit, and all forms of "labourless

income," and give the entire gross product to the labourer, because by

that union of scientific blunders it is made to appear that the labourer

has produced the whole product himself. Rodbertus, in fact, claimed to

be the author of that doctrine, and fought for the priority with Marx,

though in reality the English socialists had drawn the same conclusions

from the same blunders long before either of them; but author or no

author of it, his sole reason for touching the work of social reform at

all was to get that particular claim of right recognised. Yet for five

hundred years Rodbertus will not wrong the labourers by granting them

their full rights. He admits that without the assistance of the private

capitalist during that interval labourers would not produce so much

work, and therefore could not earn so much wages as they do now; and

consequently, in spite of his theories, he declines to suppress rent and

interest in the meantime, and practically tells the labourers they must

wait for the full product of labour till the time comes when they can

produce the full product themselves. That is virtually to confess that

while the claim may be just then, it is unjust now; and although

Rodbertus never makes that acknowledgment, he is content to leave the

claim in abeyance and to put forward in its place, as a provisional

ideal of just distribution more conformable to the present situation of

things, the claim of the labourer to a progressive share, step for step

with the capitalist, in the results of the increasing productivity given

to labour by inventions and machinery. He thought that at present, so

far from getting the whole product of labour, the labourer was getting a

less and less share of its products every day, and though this can be

easily shown to be a delusive fear, Rodbertus's State socialism was

devised to counteract it.

For this purpose the first requisite was the systematic management of

all industries by the State. The final goal was to be State property as

well as State management, but for the greater part of five centuries the

system would be private property and State management. Sir Rowland Hill

and the English railway nationalizers proposed that the State should own

the lines, but that the companies should continue to work them;

Rodbertus's idea, on the contrary, is that the State should work, but

not own. But then the State should manage everything and everywhere.

Co-operation and joint-stock management were as objectionable to him as

individual management. He thought it a mere delusion to suppose, as some

socialists did, that the growth of joint-stock companies and

co-operative societies is a step in historical evolution towards a

socialist _regime_. It was just the opposite; it was individual property

in a worse form, and he always told his friend Lassalle that it was a

hopeless dream to expect to bring in the reign of justice and

brotherhood by his plan of founding productive associations on State

credit, because productive societies really led the other way, and

created batches of joint-stock property, which he said would make itself

a thousand times more bitterly hated than the individual property of

to-day. One association would compete with another, and the group on a

rich mine would use their advantage over the group on a poor one as

mercilessly as private capitalists do now. Nothing would answer the end

but State property, and nothing would conduce to State property but

State management.

The object of all this intervention, as we have said, is to realize a

certain ideal or standard of fair wages--the standard according to which

a fair wage is one that grows step by step with the productive capacity

of the country; and the plan Rodbertus proposes to realize it by is

practically a scheme of compulsory profit-sharing. He would convert all

land and capital into an irredeemable national stock, of which the

present owners would be constituted the first or original holders, which

they might sell or transfer at pleasure but not call up, and on which

they should receive, not a fixed rent or rate of interest, but an annual

dividend varying with the produce or profits of the year. The produce of

the year was to be divided into three parts: one for the landowners, to

be shared according to the amount of stock they respectively held; a

second for the capitalists, to be shared in the same way; and the third

for the labourers, to be shared by them according to the quantity of

work they did, measured by the time occupied and the relative strain of

their several trades. This division was necessarily very arbitrary in

its nature; there was no principle whatever to decide how much should go

to the landowners, and how much to capitalists, and how much to

labourers; and although there was a rule for settling the price of

labour in one trade as compared with the price of labour in another, it

is a rule that would afford very little practical guidance if one came

to apply it in actual life. At all events, Rodbertus himself toiled for

years at a working plan for his scheme of wages, but though he always

gave out that he had succeeded in preparing one, he steadily refused to

disclose it even to trusted admirers like Lassalle and Rudolph Meyer,

on the singular pretext that the world knew too little political

economy as yet to receive it, and at his death nothing of the sort seems

to have been discovered among his papers. Is it doing him any injustice

to infer that he had never been able to arrive at a plan that satisfied

his own mind as to its being neither arbitrary nor impracticable?

Now this is a good specimen of State socialism, because it is so

complete and brings out so decisively the broad characteristics of the

system. In the first place, it desires a progressive and indiscriminate

nationalization of all industries, not because it thinks they will be

more efficiently or more economically managed in consequence of the

change, but merely as a preliminary step towards a particular scheme of

social reform; in the next place, that scheme of social reform is an

ideal of equitable distribution which is demonstrably false, and is

admittedly incapable of immediate realization; in the third place, a

provisional policy is adopted in the meanwhile by pitching arbitrarily

on a certain measure of privileges and advantages that are to be

guaranteed to the labouring classes by law as partial instalments of

rights deferred or compensations for rights alleged to be taken away.

It may be that not many State socialists are so thoroughgoing as

Rodbertus. Few of them possibly accept his theory of the labourer's

right--which is virtually that the labourer has a right to everything,

all existing wealth being considered merely an accumulation of unpaid

labour--and few of them may throw so heavy a burden on the State as the

whole production and the whole distribution of the country. But they all

start from some theory of right that is just as false, and they all

impose work on the State which the State cannot creditably perform. They

all think of the mass of mankind as being disinherited in one way or

another by the present social system, perhaps through the permission of

private property at all, perhaps through permission of its inequalities.

M. de Laveleye, indeed, goes a step further back still. In an article he

has contributed on this subject to the _Contemporary Review_, he uses as

his motto the saying of M. Renan that Nature is injustice itself, and he

would have society to correct not merely the inequalities which society

may have itself had a share in establishing, but also the inequalities

of talent or opportunity which are Nature's own work. Accordingly, M. de

Laveleye describes himself as a State socialist, because he thinks "the

State ought to make use of its legitimate powers for the establishment

of the equality of conditions among men in proportion to their personal

merit." Equality of conditions and personal merit are inconsistent

standards, but if they were harmonious, it would be beyond the power of

the State to realize them for want of an effective calculus of either.

Few State socialists, however, profess the purpose of correcting the

differences of native endowment; for the most part, when they found

their policy on any theoretic idea at all, they found it on some idea of

historical reparation. In this country, socialist notions always crop up

out of the land. German socialists direct their attack mainly on

capital, but English socialism fastens very naturally on property in

land, which in England is concentrated into unnaturally few hands: and a

claim is very commonly advanced for more or less indefinite compensation

to the labouring class on account of their alleged disinheritance,

through the institution of private property, from their aboriginal or

natural rights to the use of the earth, the common possession of the

race. That is the ground, for example, which Mr. Spencer takes for

advocating land nationalization, and Mr. Chamberlain for his various

claims for "ransom." The last-comer is held to have as good a right to

the free use of the earth as the first occupant; and if society deprives

him of that right for purposes of its own, he is maintained to be

entitled to receive some equivalent, as if society does not already give

the new-comer vastly more than it took away. His chances of obtaining a

decent living in the world, instead of being reduced, have been

immensely multiplied through the social system that has resulted from

the private appropriation of land. The primitive economic rights whose

loss socialists make the subject of so much lamentation are generally

considered to be these four: (1) the right to hunt; (2) the right to

fish; (3) the right to gather nuts and berries; and (4) the right to

feed a cow or sheep on the waste land. Fourier added a fifth--which was

certainly a right much utilized in early times--the right of theft from

people over the border of the territory of one's own tribe. Let that

right be thrown in with the rest; then the claim with which every

English child is alleged to be born, and for which compensation is

asked, is the claim to a thirty-millionth part of the value of these

five aboriginal uses of the soil of England; and what is that worth?

Why, if the "prairie value" of the soil is estimated at the high figure

of a shilling the acre per annum, it would only give every inhabitant

something under half a crown, and when compensation is demanded for the

loss of this ridiculous pittance, one calls to mind what immensely

greater compensations the modern child is born to. Civilization is

itself a social property, a common fund, a people's heritage,

accumulating from one generation to another, and opening to the

new-comer economic opportunities and careers incomparably better and

more numerous than the ancient liberties of fishing in the stream or

nutting in the forest. The things actually demanded for the poor in

liquidation of this alleged claim may often be admissible on other

grounds altogether, but to ask them in the name of compensation for the

loss of those primitive economic rights--even though it was done by

Spencer or Cobden--is certainly State socialism.

Mr. Chamberlain's famous "ransom" speeches are an example of that. There

was nothing socialist about the substance of his proposals. He expressly

disclaimed all sympathy with the idea of equality of conditions; he

hesitated about applying the graduated taxation principle to anything

but legacies; he explicitly said he would do nothing to discourage the

cumulative principle in the rich, or the habit of industry in the poor;

he asked mainly for free schools, free libraries, free parks, and other

things of a like character; but then he asked for them as a penalty for

wrong-doing, instead of an obligation of ability--as a ransom to be paid

by the rich, or by society generally, for having ousted the poor out of

their aboriginal rights. Mr. Chamberlain merely pled for useful social

reforms in a socialistic spirit.

The favourite theory on which the German State socialists proceed seems

to be that men are entitled to an equalization of opportunities, to an

immunity, as far as human power can secure it, from the interposition of

chance and change. That at least is the view of Professor Adolph

Wagner, whose position on the subject is of considerable consequence,

because he is the economist-in-ordinary to the German Government, and

has been Prince Bismarck's principal adviser in connection with all his

recent social legislation. Professor Wagner may be taken as the most

eminent and most authoritative exponent of the theory of State

socialism, and he recently developed his views on the subject afresh in

some articles in the Tuebingen _Zeitschrift fuer die Gesammten

Staatswissenschaften_ for 1887, on "Finanz-politik und

Staatsozialismus." According to Wagner, the chief aim of the State at

present--in taxation and in every other form of its activity--ought to

be to alter the national distribution of wealth to the advantage of the

working class. All politics must become social politics; the State must

turn workman's friend. For we have arrived at a new historical period;

and just as the feudal period gave way to the absolutist period, and the

absolutist period to the constitutional, so now the constitutional

period is merging in what ought to be called the social period, because

social ideas are very properly coming more and more to influence and

control everything, alike in the region of production, in the region of

distribution, and in the region of consumption. Now, according to

Wagner, the business of the State socialist is simply to facilitate the

development of this change--to work out the transition from the

constitutional to the social epoch in the best, wisest, and most

wholesome way for all parties concerned. He rejects the so-called

"scientific socialism" of Marx and Rodbertus and Lassalle, and the

practical policy of the social democratic agitation; and he will not

believe either that a false theory like theirs can obtain a lasting

influence, or that a party that builds itself on such a theory can ever

become a real power. But, at the same time, he cannot set down the

socialistic theory as a mere philosophical speculation, or the

socialistic movement as merely an artificial product of agitation. The

evils of both lie in the actual situation of things; they are

products--necessary products, he says--of our modern social development;

and they will never be effectually quieted till that development is put

on more salutary lines. They have a soul of truth in them, and that soul

of truth in the doctrines and demands of radical socialism is what

State socialism seeks to disengage, to formulate, to realize. It is

quite true, for example, that the present distribution of wealth, with

its startling inequalities of accumulation and want, is historically the

effect, first, of class legislation and class administration of law; and

second, of mere blind chance operating on a legal _regime_ of private

property and industrial freedom, and a state of the arts which gave the

large scale of production decided technical advantages. In one of his

former writings, Professor Wagner contended that German peasants lived

to this day in mean thatched huts, simply because their ancestors had

been impoverished by feudal exactions and ruined by wars which they had

no voice in declaring; and he seems to be now as profoundly impressed

with the belief that the present liberty allowed to unscrupulous

speculators to utilize the chances and opportunities of trade at the

cost of others is producing evils in no way less serious, which ought to

be checked effectively while there is yet time. So long as such

tendencies are left at work, he says it is idle trying to treat

socialism with any cunning admixture of cakes and blows, or charging

State socialists with heating the oven of social democracy. State

socialists, he continues, comprehend the disease which Radical

socialists only feel wildly and call down fire to cure, and they are as

much opposed to the purely working-class State of the latter, as they

are to the purely constitutional State of our modern _Liberalismus

vulgaris_, as Wagner calls it.

The true Social State lies, in his opinion, between the two. What the

new social era demands--the era which is already, he thinks, well in

course of development, but which it is the business of State socialism

to help Providence to develop aright--is the effective participation of

poor and rich alike in the civilization which the increased productive

resources of society afford the means of enjoying; and this is to be

brought about in two ways: first, by a systematic education of the whole

people according to a well-planned ideal of culture, and second, by a

better distribution of the income of society among the masses. Now, to

carry out these requirements, the idea of liberty proper to the

constitutional era must naturally be finally discarded, and a very

large hand must be allowed to the public authority in every department

of human activity, whether relating to the production, distribution, or

consumption of wealth. In the first place, in order to destroy the

effect of chance and of the utilization of chances in creating the

present accumulations in private hands, it is necessary to divert into

the public treasury as far as possible the whole of that part of the

national income which goes now, in the form of rent, interest, or

profit, into the pockets of the owners of land and capital, and the

conductors of business enterprises. Wagner would accordingly nationalize

(or municipalize) gradually so much of the land, capital, and industrial

undertakings of the country as could be efficiently managed as public

property or public enterprises, and that would include all undertakings

which tend to become monopolies even in private hands, or which, being

conducted best on the large scale, are already managed under a form of

organization which, in his opinion, has most of the faults and most of

the merits of State management--viz., the form of joint-stock companies.

He would in this way throw on the Government all the great means of

communication and transport, railways and canals, telegraphs and post,

and all banking and insurance; and on the municipalities all such things

as the gas, light, and water supply. Although he recognises the

suitability of Government management as a consideration to be weighed in

nationalizing an industry, he states explicitly that the reason for the

change he proposes is not in the least the fiscal or economic one that

the industry can be more advantageously conducted by the Government, but

is a theory of social politics which requires that the whole economic

work of the people ought to be more and more converted from the form of

private into the form of public organization, so that every working man

might be a public servant and enjoy the same assured existence that

other public servants at present possess.

In the next place, since many industries must remain in private hands,

the State is bound to see the existence of the labourers engaged in

private works guaranteed as securely as those engaged in public works.

It must take steps to provide them with both an absolute and a relative

increase of wages by instituting a compulsory system of paying wages as

a percentage of the gross produce; it must guarantee them a certain

continuity of employment; must limit the hours of their labour to the

length prescribed by the present state of the arts in the several

trades; and supply a system of public insurance against accidents,

sickness, infirmity, and age, together with a provision for widows and

orphans.

In the third place, all public works are to be managed on the

socialistic principle of supplying manual labourers with commodities at

a cheaper rate than their social superiors. They are to have advantages

in the matters of gas and water supply, railway fares, school fees, and

everything else that is provided by the public authority.

In the fourth place, taxation is to be employed directly to mitigate the

inequalities of wealth resulting from the present commercial system, and

to save and even increase the labourer's income at the expense of the

income of other classes. This is to be done by the progressive

income-tax, and by the application of the product of indirect taxation

on certain articles of working-class consumption to special

working-class ends. For example, he thinks Prince Bismarck's proposed

tobacco monopoly might be made "the patrimony of the disinherited."

In the fifth place, the State ought to take measures to wean the people

not only from noxious forms of expenditure, like the expenditure on

strong drink, but from useless and wasteful expenditure, and to guide

them into a more economic, far-going, and beneficial employment of the

earnings they make.

Now for all this work, involving as it does so large an amount of

interference with the natural liberty of things, Wagner not unreasonably

thinks that a strong Government is absolutely indispensable--a

Government that knows its own mind, and has the power and the will to

carry it out; a Government whose authority is established on the history

and opinion of the nation, and stands high above all the contending

political factions of the hour. And in Germany, such an executive can

only be found in the present Empire, which is merely following

"Frederician and Josephine traditions" in coming forward, as it did in

the Imperial message of November, 1881, as a genuine "social monarchy."

In this doctrine of Professor Wagner we find the same general features

we have already seen in the doctrine of Rodbertus. It is true he would

not nationalize all industries whatsoever; he would only nationalize

such industries as the State is really fit to manage successfully. He

admits that uneconomic management can never contribute to the public

good, and so far he accepts a very sound principle of limitation. But

then he applies the principle with too great laxity. He has an excessive

idea of the State's capacities. He thinks that every business now

conducted by a joint-stock company could be just as well conducted by

the Government, and ought therefore to be nationalized; but experience

shows--railway experience, for example--that joint-stock management,

when it is good, is better than Government management at its best. Then

Professor Wagner thinks every industry which has a natural tendency to

become in any case a practical monopoly would be better in the hands of

the Government; but Government might interfere enough to restrain the

mischiefs of monopoly--as it does in the case of railways in this

country, for example--without incurring the liabilities of complete

management. Professor Wagner would in these ways throw a great deal of

work on Government which Government is not very fit to accomplish

successfully, and he would like to throw everything on it, if he could

overcome his scruples about its capabilities, because he thinks

industrial nationalization would facilitate the realization of his

particular views of the equitable distribution of wealth. It is true,

again, that Wagner's theory of equitable distribution is not the theory

of Rodbertus--he rejects the right of labour to the whole product; but

his theory, if less definite, is not less unjustifiable. It is virtually

the theory of equality of conditions which considers all inequalities of

fortune wrong, because they are held to come either from chance,

or--what is worse--from an unjust utilization of chance, and which, on

that account, takes comparative poverty to constitute of itself a

righteous claim for compensation as against comparative wealth. Now, a

state of enforced equality of conditions would probably be found neither

possible nor desirable, but it is in its very conception unjust. It may

be well, as far as it can be done, to check refined methods of deceit,

or cruel utilizations of an advantageous position, but it can never be

right to deprive energy, talent, and character of the natural reward and

incentive of their exertions. The world would soon be poor if it

discouraged the skill of the skilful, as it would soon cease to be

virtuous if it ostracized those who were pre-eminently honest or just.

The idea of equality has been a great factor in human progress, but it

requires no such outcome as this. Equality is but the respect we owe to

human dignity, and that very respect for human dignity demands security

for the fruits of industry to the successful, and security against the

loss of the spirit of personal independence in the mass of the people.

But while that is so, there is one broad requirement of that same

fundamental respect for human dignity which must be admitted to be

wholly just and reasonable--the requirement which we have seen to have

been recognised by the English economists--that the citizens be, as far

as possible, secured, if necessary by public compulsion and public

money, in the elementary conditions of all humane living. The State

might not be right if it gave the aged a comfortable superannuation

allowance, or the unemployed agreeable work at good wages; but it is

only doing its duty when, with the English law, it gives them enough to

keep them, without taking away from the one the motives for making a

voluntary provision against age, or from the other the spur to look out

for work for themselves.