CHAPTER I

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SOCIALISM AS IT IS

A SURVEY OF THE WORLD-WIDE REVOLUTIONARY MOVEMENT

BY

WILLIAM ENGLISH WALLING

New York

THE MACMILLAN COMPANY

1918

_All rights reserved_

COPYRIGHT, 1912,

BY THE MACMILLAN COMPANY.

Set up and electrotyped. Published April, 1912. Reprinted October, 1912;

January, 1915.

Norwood Press

J. S. Cushing Co.--Berwick & Smith Co.

Norwood, Mass., U.S.A.

PREFACE

The only Socialism of interest to practical persons is the Socialism of

the organized Socialist movement. Yet the public cannot be expected to

believe what an organization says about its own character or aims. It is

to be rightly understood only _through its acts_. Fortunately the

Socialists' acts are articulate; every party decision of practical

importance has been reached after long and earnest discussion in party

congresses and press. And wherever the party's position has become of

practical import to those outside the movement, it has been subjected to

a destructive criticism that has forced Socialists from explanations

that were sometimes imaginary or theoretical to a clear recognition and

frank statement of their true position. To know and understand Socialism

as it is, we must lay aside both the claims of Socialists and the

attacks of their opponents and confine ourselves to the concrete

activities of Socialist organizations, the grounds on which their

decisions have been reached, and the reasons by which they are

ultimately defended.

Writers on Socialism, as a rule, have either left their statements of

the Socialist position unsupported, or have based them exclusively on

Socialist authorities, Marx, Engels, and Lasalle, whose chief writings

are now half a century old. The existence to-day of a well-developed

movement, many-sided and world-wide, makes it possible for a writer to

rely neither on his personal experience and opinion nor on the old and

familiar, if still little understood, theories. I have based my account

either on the acts of Socialist organizations and of parties and

governments with which they are in conflict, or on those responsible

declarations of representative statesmen, economists, writers, and

editors which are not mere theories, but the actual material of

present-day polities,--though among these living forces, it must be

said, are to be found also some of the teachings of the great Socialists

of the past.

It will be noticed that the numerous quotations from Socialists and

others are not given academically, in support of the writer's

conclusions, but with the purpose of reproducing with the greatest

possible accuracy the exact views of the writer or speaker quoted. I am

aware that accuracy is not to be secured by quotation alone, but depends

also on the choice of the passages to be reproduced and the use made of

them. I have therefore striven conscientiously to give, as far as space

allows, the leading and central ideas of the persons most frequently

quoted, and not their more hasty, extreme, and less representative

expressions.

I have given approximately equal attention to the German, British, and

American situations, considerable but somewhat less space to those of

France and Australia, and only a few pages to Italy and Belgium. This

allotment of space corresponds somewhat roughly to the relative

importance of these countries in the international movement. As my idea

has been not to describe, but to interpret, I have laid additional

weight on the first five countries named, on the ground that each has

developed a distinct type of labor movement. As I am concerned with

national parties and labor organizations only as parts of the

international movement, however, I have avoided, wherever possible, all

separate treatment and all discussion of features that are to be found

only in one country.

The book is divided into three parts; the first deals with the external

environment out of which Socialism is growing and by which it is being

shaped, the second with the internal struggles by which it is shaping

and defining itself, the third with the reaction of the movement on its

environment. I first differentiate Socialism from other movements that

seem to resemble it either in their phrases or their programs of reform,

then give an account of the movement from within, without attempting to

show unity where it does not exist, or disguising the fact that some of

its factions are essentially anti-Socialist rather than Socialist, and

finally, show how all distinctively Socialist activities lead directly

to a revolutionary outcome.

I am indebted to numerous persons, Socialists and anti-Socialists, who

during the twelve years in which I have been gathering material--in

nearly all the countries mentioned--have assisted me in my work. But I

must make special mention of the very careful reading of the whole

manuscript by Mr. J. G. Phelps Stokes, and of the numerous and vital

changes made at his suggestion.

CONTENTS

PAGE

PREFACE v

INTRODUCTION ix

PART I

"STATE SOCIALISM" AND AFTER

CHAPTER

I. THE CAPITALIST REFORM PROGRAM 1

II. THE NEW CAPITALISM 16

III. THE POLITICS OF THE NEW CAPITALISM 32

IV. "STATE SOCIALISM" AND LABOR 46

V. COMPULSORY ARBITRATION 66

VI. AGRARIAN "STATE SOCIALISM" IN AUSTRALASIA 85

VII. "EQUALITY OF OPPORTUNITY" 97

VIII. THE "FIRST STEP" TOWARDS SOCIALISM 108

PART II

THE POLITICS OF SOCIALISM

I. "STATE SOCIALISM" WITHIN THE MOVEMENT 117

II. "REFORMISM" IN FRANCE, ITALY, AND BELGIUM 131

III. "LABORISM" IN GREAT BRITAIN 146

IV. "REFORMISM" IN THE UNITED STATES 175

V. REFORM BY MENACE OF REVOLUTION 210

VI. REVOLUTIONARY POLITICS 231

VII. THE REVOLUTIONARY TREND 248

PART III

SOCIALISM IN ACTION

I. SOCIALISM AND THE "CLASS STRUGGLE" 276

II. THE AGRICULTURAL CLASSES AND THE LAND QUESTION 300

III. SOCIALISM AND THE "WORKING CLASS" 324

IV. SOCIALISM AND LABOR UNIONS 334

V. SYNDICALISM; SOCIALISM THROUGH DIRECT ACTION OF LABOR UNIONS 354

VI. THE "GENERAL STRIKE" 387

VII. REVOLUTION IN DEFENSE OF CIVIL GOVERNMENT 401

VIII. POLITICAL AND SOCIAL REVOLUTION 416

IX. THE TRANSITION TO SOCIALISM 426

NOTES 437

INDEX 447

INTRODUCTION

The only possible definition of Socialism is the Socialist movement.

Karl Marx wrote in 1875 at the time of the Gotha Convention, where the

present German party was founded, that "every step of the real movement

is of more importance than a dozen programs," while Wilhelm Liebknecht

said, "Marx is dear to me, but the party is dearer."[1] What was this

movement that the great theorist put above theory and his leading

disciple valued above his master?

What Marx and Liebknecht had in mind was a _social class_ which they saw

springing up all over the world with common characteristics and common

problems--a class which they felt must and would be organized into a

movement to gain control of society. Fifty years before it had been

nothing, and they had seen it in their lifetime coming to preponderate

numerically in Great Britain as it was sure to preponderate in other

countries; and it seemed only a question of time before the practically

propertyless employees of modern industry would dominate the world and

build up a new society. This class would be politically and economically

organized, and when its organization and numbers were sufficient it

would take governments out of the hands of the old aristocratic and

plutocratic rulers and transform them into the instruments of a new

civilization. This is what Marx and Liebknecht meant by the "party" and

the "movement."

From the first the new class had been in conflict with employers and

governments, and these struggles had been steadily growing in scope and

intensity. Marx was not so much interested in the immediate objects of

such conflicts as in the struggle itself. "The real fruit of their

victory," he said, "lies, not in immediate results, but in the ever

expanding union of the workers."[2] As the struggle evolved and became

better organized, it tended more and more definitely and irresistibly

towards a certain goal, whether the workers were yet aware of it or not.

If, therefore, we Socialists participate in the real struggles of

politics, Marx said of himself and his associates (in 1844, at the very

outset of his career), "we expose new principles to the world out of the

principles of the world itself.... We only explain to it the real object

for which it struggles."[3]

But the public still fails, in spite of the phenomenal and continued

growth of the Socialist movement in all modern countries, to grasp the

first principle on which it is based.

"Socialism has many phases," says a typical editorial in the

_Independent_. "It is a political party, an economic creed, a religion,

and a stage of history. It is world-wide, vigorous, and growing. No man

can tell what its future will be. Its philosophy is being studied by the

greatest minds of the world, and it deserves study because it promises a

better, a safer, and a fairer life to the masses. But as yet it is only

a theory, a hypothesis. It has never been tried _in toto_.... It has

succeeded only where it has allied itself with liberal and opportunist

rather than radical policies."[4]

As the Socialist movement has nowhere achieved political power,

obviously it can neither claim political success or be accused of

political failure. Nor does this fact leave Socialism as a mere theory,

in view of its admitted and highly significant success in organizing and

educating the masses in many countries and animating them with the

purpose of controlling industry and government.

Mr. John Graham Brooks, in the _Atlantic Monthly_, gives us another

equally typical variation of the same fundamental misunderstanding.

"Never a theory of social reconstruction was spun in the gray mists of

the mind," says Mr. Brooks, "that was not profoundly modified when

applied to life. Socialism as a theory is already touching life at a

hundred points, and among many peoples--Socialism has been a faith. It

is slowly becoming scientific, in a sense and to the extent that it

submits its claims to the comparative tests of experience."[5]

Undoubtedly Socialist theories have been spun both within and without

the movement, and to many Socialism has been a faith. But neither faith

nor theory has had much to do with the great reality that is now

overshadowing all others in the public mind; namely, the existence of a

Socialist movement. The Socialism of this movement has never consisted

in ready-made formulas which were later subjected to "the comparative

test of experience"; it has always grown out of the experience of the

movement in the first instance.

Another typical article, in _Collier's Weekly_, admits that Socialism

is now a movement. But as the writer, like so many others, conceives of

Socialism as having been, in its inception, a "theory," a "doctrine"

promoted by "Utopian dreaming," "incendiary rhetoric," an "anti-civic

jargon," he naturally views it with little real sympathy and

understanding even in its present form. The same Socialism that was

accused of all this narrowness is suddenly and completely transformed

into a movement of such breadth that it has neither a new message nor

even a separate existence.

"It is merely a new offshoot of a very old faith indeed," we are now

told, "the ideal of the altruistic dreamers of all ages, an awakened

sense of brotherhood in men. Stripped of all its husks, Socialism stands

for no other aim than that. All its other teachings, the public

ownership of the land, for example, the nationalization of the means of

production and distribution, the economic emancipation of woman, have

only program values, as they lead to that one end. Whether, so stripped,

it ceases to be Socialism and becomes merely the advance guard of the

world-wide liberal movement is not, of course, a question of more than

academic interest."[6]

The moment it can no longer be denied that Socialism is a movement, it

is at once confused with other movements to which it is fundamentally

and irreconcilably opposed. Surely this is no mere mental error, but a

deep-seated and irrepressible aversion to what is to many a disagreeable

truth,--the rapid growth and development, in many countries, of

political parties and labor organizations more and more seriously

determined to annihilate the power of private property over industry and

government.

The radical misconceptions above quoted, almost universal where

Socialism is still young, are by no means confined to non-Socialists.

Many writers who are supposed, in some degree at least, to voice the

movement, are as guilty as those who wholly repudiate it. Mr. H. G.

Wells, for instance, says that Socialism is a "system of ideas," and

that "Socialism and the Socialist movement are two different things."[7]

If Socialism is indeed no more than a "growing realization of

constructive needs in every man's mind," and if every man is more or

less a Socialist, then there is certainly no need for that antagonism to

employers and property owners of which Mr. Wells complains.

Mr. Wells himself gives the true Socialist standpoint when he goes on to

write that political parties must be held together "by interests and

habits, not ideas." "Every party," he continues, "stands essentially for

the interests and mental usages of some definite class or group of

classes in the existing community.... No class will abolish itself,

materially alter its way or life, or drastically reconstruct itself,

albeit no class is indisposed to coöperate in the unlimited

socialization of any other class. In that capacity of aggression upon

the other classes lies the essential driving force of modern

affairs."[8]

The habits and interests of a large and growing part of the population

in every modern country are developing a capacity for effective

aggression against the class which controls industry and government. As

this class will not socialize or abolish itself, the rest of the people,

Socialists predict, will undertake the task. And the abolition of

capitalism, they believe, will be a social revolution the like of which

mankind has hitherto neither known nor been able to imagine.

FOOTNOTES:

[1] John Spargo, "Karl Marx," pp. 312, 331.

[2] John Spargo, _op. cit._, p. 116.

[3] John Spargo, _op. cit._, p. 73.

[4] The _Independent_ (New York), commenting on the Socialist victory in

the Milwaukee municipal elections of April, 1910.

[5] "Recent Socialist Literature," by John Graham Brooks, _Atlantic

Monthly_, 1910. Page 283.

[6] _Collier's Weekly_, July 30, 1910.

[7] H. G. Wells, "Socialism and the Family."

[8] H. G. Wells, "The New Macchiavelli."

SOCIALISM AS IT IS

PART I

"STATE SOCIALISM" AND AFTER

CHAPTER I

THE CAPITALIST REFORM PROGRAM

Only that statesman, writer, or sociologist has the hearing of the

public to-day who can bind all his proposed reforms together into some

large and far-sighted plan.

Mr. Roosevelt, in this new spirit, has spoken of the "social

reorganization of the United States," while an article in one of the

first numbers of _La Follette's Weekly_ protested against any program of

reform "which fails to deal with society as a whole, which proposes to

remedy certain abuses but admits its incapacity to reach and remove the

roots of the other perhaps more glaring social disorders."

Some of those who have best expressed the need of a general and complete

social reorganization have done so in the name of Socialism. Mr. J. R.

MacDonald, recently chairman of the British Labour Party, for example

writes that the problem set up by the Socialists is that of

"co-ordinating the forces making for a reconstruction of society and of

giving them rational coherence and unity,"[9] while the organ of the

middle-class Socialists of England says that their purpose is "to compel

legislators to organize industry."[10]

Indeed, the necessity and practicability of an orderly and systematic

reorganization in industrial society has been the central idea of

British Socialists from the beginning, while they have been its chief

exponents in the international Socialist movement. But the idea is

equally widespread outside of Socialist circles. It will be hard for

British Socialists to lay an exclusive claim to this conception when

comrades of such international prominence as Edward Bernstein, who holds

the British view of Socialism, assert that Socialism itself is nothing

more than "organizing Liberalism."[11]

Whether Socialists were the first to promote the new political

philosophy or not, it is undeniable that the Radicals and Liberals of

Great Britain and other countries have now taken it up and are making it

their own. Mr. Winston Churchill, while Chairman of the Board of Trade,

and Mr. Lloyd George, Chancellor of the Exchequer, members of the

British Cabinet, leaders of the Liberal Party, recognize that the

movement among governments towards a conscious _reorganization of

industry_ is general and demands that Great Britain should keep up with

other countries.

"Look at our neighbor and friendly rival, Germany," said Mr. Churchill

recently. "I see that great State organized for peace and organized for

war, to a degree to which we cannot pretend.... A more scientific, a

more elaborate, a more comprehensive social organization is

indispensable to our country if we are to surmount the trials and

stresses which the future years will bring. It is this organization that

the policy of the Budget will create."[12]

Advanced and radical reformers of the new type all over the world, those

who put forward a general plan of reform and wish to go to the common

roots of our social evils, demand, first of all, _reorganization_. But

how is such a reorganization to be worked out? The general programs have

in every country many features in common. To see what this common basis

is, let us look at the generalizations of some of the leading reformers.

One of the most scientific and "constructive" is Mr. Sidney Webb. No one

has so thoroughly mastered the history of trade unionism, and no one has

done more to promote "municipal Socialism" in England, both in theory

and in practice, for he has been one of the leaders of the energetic and

progressive London County council from the beginning of the present

reform period. He has also been one of the chief organizers of the more

or less Socialistic Fabian Society, which has done more towards

popularizing social reform in England than any other single educative

force, besides sending into all the corners of the world a new and

rounded theory of social reform--the work for the most part of Sidney

Webb, Bernard Shaw, and a few others.

Mr. Webb has given us several excellent phrases which will aid us to sum

up the typical social reformers' philosophy in a few words. He insists

that what every country requires, and especially Great Britain, is to

center its attention on the promotion of the "national efficiency." This

refers largely to securing a businesslike and economic administration

of the existing government functions. But it requires also that _all_

the industries and economic activities of the country should be

considered the business of the nation, that the industrial functions of

the government should be extended, and that, even from the business

point of view, the chief purpose of government should be to supervise

economic development.

To bring about the maximum of efficiency in production would require, in

Mr. Webb's opinion and that of the overwhelming majority of reformers

everywhere, a vast extension of government activities, including not

only the nationalization and municipalization of many industries and

services, but also that the individual workman or citizen be dealt with

as the chief business asset of the nation and that wholesale public

expenditures be entered into to develop his value. Mr. Webb does not

think that this policy is necessarily Socialistic, for, as he very

wisely remarks, "the necessary basis of society, whether the

superstructure be collectivist or individualist, is the same."

Mr. Wells in his "New Worlds for Old" also claims that the new policy of

having the State do everything that can promote industrial efficiency

(which, unlike Mr. Webb, he persists in calling Socialism) is to the

interest of the business man.

"And does the honest and capable business man stand to lose or gain

by the coming of such a Socialist government?" he asks. "I submit

that on the whole he stands to gain....

"Under Socialist government such as is quite possible in England at

the present time:--

"He will be restricted from methods of production and sale that are

socially mischievous.

"He will pay higher wages.

"He will pay a large proportion of his rent-rate outgoings to the

State and Municipality, and less to the landlord. Ultimately he

will pay it all to the State or Municipality, and as a voter help

to determine how it shall be spent, and the landlord will become a

government stockholder. Practically he will get his rent returned

to him in public service.

"He will speedily begin to get better-educated, better-fed, and

better-trained workers, so that he will get money value for the

higher wages he pays.

"He will get a regular, safe, cheap supply of power and material.

He will get cheaper and more efficient internal and external

transit.

"He will be under an organized scientific State, which will

naturally pursue a vigorous scientific collective policy in support

of the national trade.

"He will be less of an adventurer and more of a citizen."[13]

Mr. Churchill while denying any sympathy for Socialism, as both he and

the majority of Socialists understand it, frankly avows himself a

collectivist. "The whole tendency of civilization," he says, "is towards

the multiplication of the collective functions of society. The ever

growing complications of civilizations create for us new services which

have to be undertaken by the State, and create for us an expansion of

the existing services. There is a growing feeling, which I entirely

share, against allowing those services which are in the nature of

monopolies to pass into private hands. [Mr. Churchill has expressed the

regret that the railways are not in the hands of the State.] There is a

pretty steady determination, which I am convinced will become effective

in the present Parliament to intercept _all_ future unearned increment,

which may arise from the increase in the speculative value of the

land."[14] (Italics mine.)

Mr. Churchill's declared intention ultimately "to intercept _all_ future

unearned increment" of the land is certainly a tremendous step towards

collectivism, as it would ultimately involve the nationalization of

perhaps a third of the total wealth of society. With railways and

monopolies of all kinds also in government hands, a very large part of

the industrial capital of the country would be owned by the State, and,

though all agricultural capital, and therefore the larger part of the

total, remained in private hands, we are certainly justified in calling

such a state of society _capitalist collectivism_.

But not one of the elements of this collectivism is a novelty. Railroads

are owned by governments in most countries, and monopolies often are.

The partial appropriation of the "unearned increment" is by no means

new, since a similar policy is being adopted in Germany at the present

moment, and is favored not by the radicals alone, but by the most

conservative forces in the country; namely, the party of landed Prussian

nobility. Count Posadovsky, a former minister, has written a pamphlet in

which he urges that the State should buy up the land in and about the

cities, and also that it should fix a definite limit beyond which land

values must not rise. Nearly all the chief cities of Prussia, more than

a hundred, are enforcing such a tax in a moderate form, and the

conservatives in the Reichstag proposed that the national government

should be given a right to tax in the same field. Their bill was

enacted, and, in the second half of 1911, the German government, it was

estimated, would raise over $3,000,000 by this tax, and in 1912 it is

expected to give $5,000,000. This tax, which is collected when land

changes hands by sale or exchanges, rises gradually to 30 per cent when

the increase has been 290 per cent or more. Of course this scale is

likely to be still further raised and to be made more steep as the tax

becomes more and more popular.

Mr. Churchill's defense of the new policy of the British government is

as significant as the new laws it has enacted:--

"You may say that unearned increment of the land," he says, "is on

all-fours with the profit gathered by one of those American

speculators who engineer a corner in corn, or meat, or cotton, or

some other vital commodity, and that _the unearned increment in

land is reaped by the land monopolist in exact proportion, not to

the service but to the disservice done_. It is monopoly which is

the keynote; and where monopoly prevails, the greater the injury to

society the greater the reward of the monopolist will be....

"Every form of enterprise, every step in material progress, is only

undertaken after the land monopolist has skimmed the cream off for

himself, and every where to-day the man, or the public body, who

wishes to put land to its highest use is forced to pay a

preliminary fine in land values to the man who is putting it to an

inferior use, and in some cases to no use at all.... _If there is a

rise in wages, rents are able to move forward because the workers

can afford to pay a little more_. If the opening of a new railway

or a new tramway, or the institution of an improved service of

workmen's trains, or the lowering of fares, or a new invention, or

any other public convenience affords a benefit to the workers in

any particular district, it becomes easier for them to live, and

therefore the landlord and the ground landlord, one on top of the

other, are able to charge them more for the privilege of living

there." (Italics mine.)[15]

But we cannot believe that the government of Great Britain, which draws

so much of its support from the wealthy free trade merchants and

manufacturers has been persuaded to adopt this new principle so much by

the argument that a land rent weighs on the working classes, though it

is true that the manufacturer may have to pay for this in higher _money_

wages, as it has by that other argument of Mr. Churchill's that it

weighs directly on business.

"The manufacturer proposing to start a new industry," he says,

"proposing to erect a great factory offering employment to

thousands of hands, is made to pay such a price for his land that

the purchase price hangs around the neck of his whole business,

hampering his competitive power in every market, clogging far more

than any foreign tariff in his export competition; and the land

values strike down through the _profits of the manufacturer_ on to

the wages of the workman. The railway company wishing to build a

new line finds that the price of land which yesterday was only

rated at its agricultural value has risen to a prohibitive figure

the moment it was known that the new line was projected; and either

the railway is not built, or, if it is, it is built only on terms

which largely transfer to the landowner _the profits which are due

to shareholders_ and the privileges which should have accrued to

the traveling public." (My italics.)[16]

No doubt Mr. Churchill's failure to mention shippers was inadvertent.

It was a practical application of these business principles and chiefly

in the interest of the employers, manufacturers, investors, and

shippers, that the State decided, as a first step, to take 20 per cent

of all the increase in land values from the present date and to levy an

annual tax of one fifth of one per cent on all land held for

speculation, _i.e._ used neither for agricultural nor for industrial nor

building purposes.

The collectivist policy, that governments should undertake to reorganize

industry and to develop the industrial efficiency of the population, is

a relatively new one, however, and where non-Socialist Liberals and

Radicals are adopting it, they do so as a rule with apologies. For while

such reforms can be considered as investments which in the long run

repay not only the community as a whole, but also the business

interests, they involve a considerable initial cost, even beyond what

can be raised by the gradual expropriation of city land rents, and the

question at once arises as to who is to pay the rest of the bill. The

supporter of the new reforms answers that the business interests should

do so, since the development of industry, which is the object of this

expenditure, is more profitable to them than to other classes. While Mr.

Churchill declares that Liberalism attacks landlordism and monopoly

only, and not capital itself, as Socialism does, he is at great pains to

show that the cost of the elaborate program of social reform is borne

not by monopolist alone, but by that larger section of the business

interests vaguely known as those possessing "Special Privileges." In

distributing the new taxes in the House of Commons, the question to be

asked of each class of wealth is, he says, "By what process was it got?"

and a distinction is to be made, not between monopoly and competitive

business, but "between wealth which is the fruit of productive

enterprise and industry or of individual skill, and wealth which

represents the capture by individuals of socially created values."[17]

"A special burden," says Mr. Churchill, "is to be laid upon certain

forms of wealth which are clearly social in their origin and have not at

any point been derived from a useful or productive process on the part

of their possessors."[18] And since all income "derived from dividends,

rent, or interest," is, according to Mr. Churchill, unearned increment,

it is evident that nearly every business, all being beneficiaries, ought

to share the burden of the new reforms.[19] At the same time he hastens

to reassure his wealthy supporters, especially among merchants and

shippers, on grounds explained below by Mr. Lloyd George that the new

taxes will not rise faster than the new profits they will bring in, that

they "will not appreciably affect, have not appreciably affected, the

comfort, the status, or even the style of living of any class in the

United Kingdom."[20]

Mr. Lloyd George in proposing the so-called Socialistic Budget of 1910

reminded the representatives of the propertied interests [he might have

added "in proportion to their wealth"] that the State, in which they all

owned a share, should not be looked upon so narrowly as a capitalistic

enterprise. They could afford to allow the State to wait longer for its

returns.

"A State can and ought to take a longer and a wider view of its

investments," said Mr. Lloyd George, "than individuals. The

resettlement of deserted and impoverished parts of its own

territories may not bring to its coffers a direct return which

would reimburse it fully for its expenditure; but the indirect

enrichment of its resources more than compensate it for any

apparent and immediate loss. The individual can rarely afford to

wait; a State can; the individual must judge of the success of his

enterprise by the testimony given for it by his bank book; a State

keeps many ledgers, not all in ink, and when we wish to judge of

the advantage derived by a country from a costly experiment, we

must examine all those books before we venture to pronounce

judgment....

"We want to do more in the way of developing the resources of our

own country....

"The State can help by instruction, by experiment, by

organization, by direction, and even, in certain cases which are

outside the legitimate sphere of individual enterprise, by

incurring direct responsibility. I doubt whether there is a great

industrial country in the world which spends less money on work

directly connected with the development of its resources than we

do. Take, if you like, and purely as an illustration, one industry

alone,--agriculture,--of all industries the most important for the

permanent well-being of any land. Examine the budgets of foreign

lands,--we have the advantage in other directions,--but examine and

compare them with our own, and Honorable Members will be rather

ashamed at the contrasts between the wise and lavish generosity of

countries much poorer than ours and the short-sighted and niggardly

parsimony with which we dole out small sums of money for the

encouragement of agriculture in our country....

"We are not getting out of the land anything like what it is

capable of endowing us with. Of the enormous quantity of

agricultural and dairy produce, and fruit, and the timber imported

into this country, a considerable portion could be raised on our

own lands."[21]

The proposed industrial advance is to be secured largely at the expense

of capital, but for its ultimate profit. The capitalists are to pay the

initial cost. Mr. Lloyd George is very careful to remind them that even

if the present income tax were doubled, five years of the phenomenal yet

steady growth of the income of the rich and well-to-do who pay this tax,

would leave them as well off as they were before. He proposes to leave

the total capital in private hands intact on the pretext that it is

needed as "an available reserve for national emergencies." And as an

evidence of this he refused to increase the existing rate of inheritance

tax levied against the very largest estates (15 per cent on estates of

more than £3,000,000). Though up to this point he graduated this tax

more steeply than before, and nothing could be more widely popular than

a special attack on such colossal estates, Mr. Lloyd George draws the

line at 15 per cent, on the ground that a large part of the income from

such estates goes into investments, and more confiscatory legislation

might seriously affect the normal increase of the capital and "the

available reserves of taxation" of the country.[22]

Mr. Lloyd George does not fail to guarantee to capital as a whole,

"honest capital," that it will suffer no loss from his reforms. "I am

not one of those who advocate confiscation," he said several years ago,

"and at any rate as far as I am concerned _honest_ capital, capital put

in honest industries for the development of the industry, the trade,

the commerce, of this country will have nothing to fear from any

proposal I shall ever be responsible for submitting to the Parliament of

this realm." (My italics.)[23]

Mr. Lloyd George is well justified, then, in ridiculing the idea that he

is waging war against industry or property or trying to destroy riches.

He not only disproves this accusation by pointing to the capitalist

character of his collectivist program, but boasts that the richest men

in the House of Commons are on the Liberal side, together with hundreds

of thousands of the men who are building up trade and business.

And the attitude of the Radicals of the present British government is

the same as that of capitalist collectivists elsewhere. However certain

vested interests may suffer, there is nowhere any tendency to weaken

capitalism as a whole. Capitalism is to be the chief beneficiary of the

new movement.

There are many differences of opinion, however, as to the _ultimate_

effect of the collectivist program. In Great Britain, which gives us our

best illustration, there are Liberals who claim that it is Socialistic

and others who deny that it has anything to do with Socialism;

Conservatives who accept part of the program, and others who reject the

whole as being Socialistic; Socialists, who claim that their ideas have

been incorporated in the last two Budgets, and other Socialists who deny

that either had anything in common with their principles.

While it is certain that the present policy of the British government is

by no means directed against the power or interests of the capitalist

class as a whole, and in no way resembles that of the Socialists, were

not Socialist arguments used to support the government's position, and

may not these lead towards a Socialist policy?

Certainly some of the principles laid down seem at first sight to have

been Socialistic enough. For example, when Mr. Churchill said that

incomes from dividends, rent, and interest are unearned, or when Mr.

Lloyd George cried out: "Who is responsible for the scheme of things

whereby one man is engaged through life in grinding labor to win a bare

and precarious subsistence for himself, and when, at the end of his

days, he claims at the hands of the community he served, a poor pension

of eight pence a day, he can only get it through a revolution, and

another man who does not toil receives every hour of the day, every

hour of the night, whilst he slumbers, more than his poor neighbor

receives in a whole year of toil? Where did the table of that law come

from? Whose fingers inscribed it?"[24]

Lord Rosebery has pointed to the extremely radical nature of Mr. Lloyd

George's arguments. The representatives of the Government had urged, he

said, that the land should be taxed without mercy:--

"(1) because its existence is not due to the owner;

"(2) because it is limited in quantity;

"(3) because it owes nothing of its value to anything the owner

does or spends;

"(4) because it is absolutely necessary for existence and

production."[25]

Lord Rosebery says, justly, that all these propositions except the last

apply to many other forms of property than land, as, for instance, to

government bonds, and that it certainly would be Socialism to attempt to

confiscate these by taxation.

Lord Rosebery's task would have become even easier later, when Mr. Lloyd

George enlarged his attack on the landlords definitely into an attack

against the idle upper classes, who with their dependents he reckoned at

two million persons. He accused this class of constituting an

intolerable burden on the community, said that its existence was the

symptom of the disease of society, and that only bold remedies could

help. The whole class of inactive capitalists he viewed as a load both

on the non-capitalist, wage-earning, salaried and professional classes,

and on the active capitalists. Mr. Lloyd George argues with his

capitalist supporters that capitalism will be all the stronger when

freed from its parasites. But Lord Rosebery could answer that the active

could no more be distinguished from the passive capitalists than

landowners from bondholders.

An article in the world's leading Socialist newspaper, _Vorwaerts_, of

Berlin, shows that many Socialists even regarded these speeches as

revolutionary:--

"The Radical wing of the British Liberals," it said, "is leading

the attack with ideal recklessness and lust of battle. It is

conducting the agitation in language which in Germany is

customarily used only by a 'red revolutionist.' If the German

Junker (landlord conservative) were to read these speeches, he

would swear that they were delivered by the Social Democrats of the

reddest dye, so ferociously do they contrast between the rich and

the poor. They appeal to the passion of the people; they exploit

social distinctions in the manner best calculated to fire popular

anger against the Lords.

"In the heart of battle the Liberals are employing language which

at other times they would have considered twice. Their words will

some day be assuredly turned against them, when more than the mere

Budget or the existence of the Lords is at stake. When the

Liberals, allied with the conservative enemy of to-day, are

fighting the working classes, the Socialists will recall this

language as proof that the Liberals themselves recognize the

injustice of the existing order.

"Mr. Lloyd George made such a speech at Newcastle that the seeds he

is planting may first bring forth Liberal fruit, but there can be

no doubt that Socialism will eventually reap the harvest. His

arguments must arouse the workingmen, and when they have accustomed

themselves to look at things from this standpoint it is certain

that once standing before the safes of the industrial capitalists

they will never close their eyes."

It is perhaps true that the Socialists will at some future day reap the

harvest from Mr. Lloyd George's and Mr. Churchill's campaigns, though a

careful analysis of the expressions of these statesmen will show that

they have said nothing and done nothing in contradiction to their

State-capitalistic or "State Socialist" standpoint.

There is no doubt that the principle of the new taxes and the new

expenditure these statesmen are introducing is radical, and that it

marks a great stride towards a collectivist form of capitalism. Let us

assume that development continues along the lines of their present

policies. In a very few years the increased expenditure on social reform

will be greater than the increased expenditure on army and navy, and the

increase of direct and graduated taxes that fall on the upper classes

will be greater than that of the indirect taxes that fall on the masses.

We will assume even that military expenditure and indirect taxes on

articles the working people consume will begin some day to decrease,

while graduated taxes directed against the very wealthy and social

reform expenditures rise until they quite overshadow them. There is

every reason to believe that the social reformers of the British and

other governments hope for such an outcome and expect it. This would be

in no way inconsistent with their policy of subordinating everything, to

use one of their expressions, to "that trade and commerce which

constitutes the source of our wealth."

For the collectivist expenditures, intended to increase the national

product through governmental enterprises for the promotion of industry,

and for raising the industrial efficiency of the workers, would be

introduced gradually, and would soon be accompanied by results which

would show that they paid financially. And finally, even if railways and

monopolies were nationalized and their profits as well as _all_ the

future rise in land value went to the State to be used for these

purposes, as Mr. Churchill hopes, and even if a method could be found by

which a large part of the income of the idle rich would be confiscated

without touching the active capital of the merchant and manufacturer,

the position of the latter classes, through this policy, might become

still more superior relatively to that of the masses than it is at

present. The industrial capitalists might even control a larger share of

the national income and exercise a still more powerful influence over

the State than they do to-day.

The classes that the more or less collectivist budgets of 1910 and 1911

actually do favor, those whose economic and political power they

actually do increase, are the small and middle-sized capitalists and

even the larger capitalists other than landlords and monopolists. The

great mass of income taxpayers, business men, farmers, and the

professional classes with incomes from about £200 to £3000 ($1000 to

$15,000) are given every encouragement, while those with somewhat larger

incomes are only slightly discriminated against on the surface, in the

incidence of the taxes, and not at all when we inquire into the ways in

which the taxes are being expended. Certainly nothing is being done that

will "appreciably affect the status or style of living of any class in

the United Kingdom," or that will check materially the enormous rise of

this "upper middle" class both in wealth and numbers--for the income tax

payers have doubled their income in a little more than a decade, until

it has reached the total of more than a billion pounds a year. And

surely no tendency could be more diametrically opposed to a Socialism

whose purpose it is to improve the _relative_ position of the "lower

middle" and working classes.

While the new reform programs of the various parties are in general

agreement in all countries, in that they are all collectivist, and favor

as a rule the same social classes, there is much controversy as to

names, whether they shall be called Socialistic or merely radical or

progressive. The question is really immaterial.

"Capital, divested of its perversions, would be natural Socialism,"

says one of Henry George's most prominent disciples.[26] Whether the

proposed reforming is done with a purified and strengthened capitalism

in view, or in the name of "natural Socialism" or "State Socialism," the

program itself is in every practical aspect the same.

If a contrast formerly appeared to exist between "Individualist" and

"State Socialist" reformers, it was never more than a contrast in

theory, quickly dispelled when the time for action arrived. The

individualist radical would have the State do as little as possible, but

still is compelled to resort to an increase of its powers at every turn;

the "State Socialist" would have the State do as much as practicable,

but would still retain State action within the rigid limits imposed by

the need of gaining capitalist support and the desire for immediate

political success. In economic policy the Individualist is for checking

the excess of monopoly and special privilege in order to allow "equal

opportunity" or a free development to whatever competition or "natural

Capitalism" remains, while the "State Socialist" is more concerned with

protecting and promoting the natural checking of the excesses of

competitive capitalism and private property that comes with "natural

monopoly" and its regulation by government. The "State Socialist,"

however critical he is towards competition, recognizes that the first

practical possibility of putting an end to its excesses comes when

monopoly is already established, and when it is relatively easy for the

State to step in to nationalize or municipalize; the Individualist

reformer who wishes to preserve competition where practicable, at the

same time recognizes that it is impossible to do so where monopolies

have become firmly rooted in certain industries, and he also at this

point proposes nationalization, municipalization, or thoroughgoing

governmental control.

Henry George himself recognizes that "State Socialism," which he called

simply "Socialism," and the "natural Capitalism" he advocated, far from

being contradictory, were complementary and interdependent. Mr. Louis

Post says:--

"Even in the economic chapters of 'Progress and Poverty' its author

saw the possibility of society's approaching the 'ideal of

Jeffersonian Democracy, the promised land of Herbert Spencer, the

abolition of government. But of government only as a directing and

repressive power.' At the same time and in the same degree of

approach, he regarded it as possible for society also to realize

the dream of Socialism."[27]

The following passage leaves no doubt that Mr. Post is correct, and at

the same time shows in the clearest way how the two policies of reform

were interwoven in Henry George's mind:--

"Government could take up itself the transmission of messages by

telegraph, as well as by mail, of building and operating railroads,

as well as of the opening and maintaining common roads. With the

present functions so simplified and reduced, functions such as

these could be assumed without danger or strain, and would be under

the supervision of public attention, which is now distracted. There

would be a great and increasing surplus revenue from the taxation

of land values for material progress, which would go on with great

accelerated rapidity, would tend constantly to increase rent. This

revenue arising from the common property would be applied to the

common benefit, as were the revenues of Sparta. We might not

establish public tables--they would be unnecessary, but we could

establish public baths, museums, libraries, gardens, lecture rooms,

music and dancing halls, theaters, universities, technical schools,

shooting galleries, playgrounds, gymnasiums, etc. Heat, light, and

motive power, as well as water, might be conducted through our

streets at public expense; our roads be lined with fruit trees;

discoveries and inventors rewarded, scientific investigation

supported; in a thousand ways the public revenues made to foster

efforts for the public benefit. _We should reach the ideal of the

Socialist_, but not through government repression. _Government

would change its character, and would become the administration of

a great coöperative society. It would become merely the agency by

which the common property was administered for the common

benefit_." (Italics mine.)[28]

But the "State Socialist" and the Individualist reformer, who are often

combined in one person, as in the case of Henry George, differ sharply

from Socialists of the Socialist movement in aiming at a society, which,

however widely government action is to be extended, is after all to

remain a society of small capitalists.

Professor Edward A. Ross very aptly sums up the reformer's objections to

the anti-capitalist Socialists. Capitalism must be "divested of its

perversions," the privately owned monopolies and their political

machines, primarily for the purpose of strengthening it _against_

Socialism. "Individualism should make haste to clean the hull of the old

ship for the coming great battle with the opponents of private

capital...."[29] The reformers, as a rule, like Professor Ross,

consciously stand for a new form of private capitalism, to be built up

with the aid of the State. This is the avowed attitude of the larger

part of the "progressives," "radicals," and "insurgents" of the day.

The new reform programs, however radical, are aimed at regenerating

capitalism. The most radical of all, that of the single taxers, who plan

not only that the state shall be the sole landlord, but that the

railways and the mines shall be nationalized and other public utilities

municipalized, do not deny that they want to put a new life into private

capitalism, and to stimulate commercial competition in the remaining

fields of industry. Mr. Frederick C. Howe, for instance, predicts a

revival of capitalistic enterprise, after these measures are enacted,

and even looks forward to the indefinite continuation of the struggle

between capital and labor.[30]

FOOTNOTES:

[9] The _Socialist Review_ (London), April, 1909.

[10] The _New Age_ (London), Nov. 4, 1909.

[11] Edward Bernstein, "Evolutionary Socialism," p. 154.

[12] Winston Churchill, "Liberalism and the Social Problem," p. 345.

[13] H. G. Wells, "New Worlds for Old," p. 185.

[14] Winston Churchill, _op. cit._, p. 80.

[15] Winston Churchill, _op. cit._, pp. 326, 327.

[16] Winston Churchill, _op. cit._, pp. 326.

[17] Winston Churchill, _op. cit._, p. 396.

[18] Winston Churchill, _op. cit._, p. 399.

[19] Winston Churchill, _op. cit._, p. 336.

[20] Winston Churchill, _op. cit._, p. 339.

[21] Lloyd George, "Better Times," p. 163.

[22] Lloyd George, _op. cit._, pp. 94-101.

[23] Lloyd George, _op. cit._, p. 58.

[24] Lloyd George, _op. cit._, p. 174.

[25] Lord Rosebery's Speech at Glasgow, Sept. 10, 1909.

[26] Louis F. Post, "Social Service," p. 341.

[27] _The Public_ (Chicago), Nov. 4, 1910.

[28] Henry George, "Progress and Poverty," Book IV, p. 454.

[29] Professor E. A. Ross, "Sin and Society," p. 151.

[30] Frederick C. Howe, "Privilege and Democracy in America," p. 277.

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