private industries. Why should not the Government set up for itself
in the industry it desires to nationalize, and extinguish its private
competitors just as the big multiple shops extinguish the small shops,
by underselling them, and by all the other methods of competitive
trade? The Birmingham municipality has begun the nationalization of
banking without troubling itself about the private banks: it has simply
opened its bank in the street and gone ahead. The parcel post was
established without any compensation to private carriers; and the Cash
on Delivery development of it was effected without any consideration
for the middlemen whom it superseded. Private employers have always
proceeded in this manner on competitive principles; why should not the
State, as public employer, do just the same?
The reason is that the competitive method is an extremely wasteful one.
When two bakeries are set up in a district that could be quite well
served by one, or two milk carts ply in the same street, each trying
to snatch the other’s custom, it means that the difference between the
cost of running two and one is sheer waste. When a woman wears out her
hat, or rather when the hatmakers change the fashion so as to compel
her to buy a new hat before the one she is wearing is half worn out,
and fifty shops make new hats on the chance of selling that one to her,
there is overproduction, with its sequel of unemployment.
Now apply this to, for example, the nationalization of railways. The
Government could, no doubt, construct a network of State railways
parallel with the existing railways; so that you could go from London
to Penzance either by the Great Western or by a new State line running
side by side with it. The State could then, by introducing the system
of Penny Transport proposed by Mr Whately Arnold on the lines of Penny
Postage, undersell the separate private companies and take all their
traffic from them. That would be the competitive method. Then there
would be two railways to Penzance and Thurso and Bristol and Cromer and
everywhere else, one of them carrying nearly all the traffic, and the
other carrying only its leavings and holiday overflows until it fell
into hopeless and dangerous decay and ruin.
But can you imagine anything more idiotically wasteful? The cost
of making the competing State railway would be enormous, and quite
unnecessary. The ruin of the private railway would be sheer destruction
of a useful and sufficient means of communication which had itself cost
a huge sum. The land occupied by one of the railways would be wasted.
What Government in its senses would propose such a thing when it could
take over the existing railways by compensating the shareholders in
the manner I have described: that is, distributing their loss over the
propertied class without a farthing of expense to the nation as a whole?
The same considerations must lead the State to take over the existing
banks. Municipal banks on the Birmingham model may be competing banks;
but when a national banking service comes, it will come by way of
nationalizing the existing private banks.
There is another objection to the competitive method. If the State is
to compete with private enterprise, it must allow private enterprise to
compete with it. Now this is not practicable if the full advantage of
nationalization is to be obtained. The Post Office is able to establish
a letter service and C.O.D. parcel post in every village in the
country, and a telephone and telegraph service in most of them, with
charges reckoned in pence and halfpence, on condition that profiteers
are not allowed to come in and pick out the easy bits of the business
to exploit for themselves. The Postmaster-General does things for the
nation that no profiteer would or could do; but his rule is All or
Nothing.
A Banker-General would have to insist on the same rule. He would
establish banks, if not literally everywhere, at least in hundreds of
places where the private banks would no more dream of opening a branch,
even on the open-once-a-week scale, than of building a Grand Opera
House. But he, too, would say “All or Nothing: I will not have any
intelligent Jewish gentleman, or rapacious Christian person trained in
the intelligent Jewish gentleman’s office, picking the plums out of my
pudding”.
Yet do not conclude that all State activities will be State monopolies.
Indeed the nationalization of banking will certainly enlarge the
possibilities of private activity in all sorts of ways. But as the big
public services will have to be made practically ubiquitous, charging
more than they cost in one place and less in another, they must be
protected against sectional private competition. Otherwise we should
have what prevails at present in municipal building, where all the
lucrative contracts for the houses of the rich and the offices of the
capitalists and the churches and institutions and so forth go to the
private employer, whilst the municipality may build only dwellings
for the poor at a loss, which they conceal from the ratepayers by
fictitious figures as to the value of the land. Municipal building is
always insolvent. If it had a monopoly it could afford to make every
town in the land a ratepayers’ and tenants’ paradise.
This reminds me to remind you that every nationalization of an industry
or service involves the occupation of land by the State. This land
should always be nationalized by purchase and compensation. For if it
is merely rented, as I am sorry to say it sometimes is, the charges
made to the public must be raised by the amount of the rent, thus
giving the ground landlord the money value of all the advantages of the
nationalization.
I have said nothing about one of the cruelest effects of superseding an
industry by competition instead of buying it up. The process consists
fundamentally of the gradual impoverishment and ruin of those who
are carrying on the superseded business. Capitalism is ruthless on
this point: its principle is “Each for himself; and devil take the
hindmost!” But the State has to consider the loser as well as the
winner. It must not impoverish anybody. It must let the loser down
easily; and there is no other way of doing this except the way of
purchase and compensation.
58
PRELIMINARIES TO NATIONALIZATION
You now see that nationalization and municipalization are so desirable
as a means of cheapening the things we all need that the most violently
anti-Socialist Parliaments and municipal corporations have established
nationalized and municipalized industries in the past, and are quite
likely to do so in future under electoral pressure from Conservative
voters. You see also that the alleged enormous expense of buying out
private owners, which has been alleged by a Coal Commission as an
insuperable objection to the nationalization of our coal mines, is a
bogey, because, though the coalowners (of whom, by the way, I am one)
will be fully compensated, the proprietary class as a whole will pay
the bill out of their unearned incomes, leaving the nation richer
instead of poorer by the transaction. So far so good. Theoretically,
nationalization is perfectly sound.
Practically, it takes, as the people very accurately put it, a lot
of doing. A mere proclamation that such and such an industry is
nationalized can do nothing but just put a stop to it. Before any
industry or service can be effectively nationalized a new department
of the Civil Service must be created to carry it on. Unless we had a
War Office we could not have an army, because no soldier could get his
pay, or his uniform, or his weapons. Without an Admiralty, no navy.
Without a General Post Office and a Postmaster-General, no letters
in the morning. Without a Royal Mint and a Master of the Mint, no
money. Without Scotland Yard in London, and Watch Committees in the
country, no police. And as in the present so in the future. Without a
great extension of the Treasury, banking cannot be nationalized, nor
coal without the creation of a Department of Mines much bigger than
our existing Department of Woods and Forests, nor railways without a
Railway Board and a Railroadmaster-General as important as the Post
Office and the Postmaster-General.
Such institutions can be set up by stable and highly organized States
only, which means--and here is the political moral of it--that they
cannot be done by revolutions, or by improvised dictatorships, or
even by permanent States in which, as in America, where in some cases
the civil services are still regarded as the spoils of office, a new
set of officials oust the old ones whenever the Opposition ousts the
Government. What a revolution can do towards nationalization is to
destroy the political power of the class which opposes nationalization.
But such a revolution by itself cannot nationalize; and the new
Government it sets up may be unable even to carry on the nationalized
services it finds in existence, and be obliged to abandon them to
private enterprise.
A nationalizing Government must also be financially honest, and
determined to make the nationalization a success, and neither plunder
it to eke out the general revenue, nor discredit and wreck it so to
have an excuse for giving the nationalized service back to the private
profiteers. State railways have sometimes been standing examples of
what State management can be at its worst. The Governments, instead of
keeping the railways in proper repair, grabbed all the money paid by
the public in fares and freightage; applied it to the relief of general
taxation; and let the stations and rolling stock decay until their
railways were the worst in the world, and there was a general clamor
for their denationalization. Private profiteering enterprises have gone
to pieces in the same way and worse; but, as they have been responsible
to themselves only, their failures and frauds have passed unnoted,
whilst the failures and frauds of Governments have raised great popular
agitations and even provoked revolutions. The misdeeds of Governments
are public and conspicuous: the misdeeds of private traders are
practically invisible; and thus an illusion is created that Governments
are less honest and efficient than private traders. It is only an
illusion; but all the same, honesty and good faith are as necessary in
nationalized businesses as in private ones. Our British nationalized
services are held up as models of integrity; yet the Postmaster-General
overcharges us a little for our letters, and puts the profit into the
pockets of the propertied class in the form of reduced income tax; and
the Admiralty is continually fighting against the tendency to keep down
taxation by starving the navy. These depredations do not amount to
much; but they illustrate what may be done when voters are not vigilant
and well instructed.
59
CONFISCATION WITHOUT COMPENSATION
Our study of nationalization by compensated or distributed
confiscation has no doubt relieved you from all anxiety as to the
need for nationalization without compensation. But there is always a
loud-mouthed, virtuously indignant political group, still saturated
with the revolutionary traditions of Liberalism, which opposes
compensation. If the property owner is, in effect, a thief, they say,
why should he be compensated for being compelled to cease to do evil
and learn to do well? If by taxation we can make the whole capitalist
class find the money to buy out the coalowners, and thus transfer their
property to the nation to that extent, why not take the rest of their
property simply for the sake of transferring it also to the nation?
Our joint stock companies work as well with one set of shareholders
as with another: in fact their shares change hands so continually in
the Money Market that they never have the same set of shareholders
from one working day to the next. If all the railway shares in the
country were held on Monday by the inhabitants of Park Lane, and on
Tuesday by the British Government, the railways would go on just the
same. In like case so would any other of the great industrial services
now in joint stock ownership. If a landlord had to hand over the
title-deeds of half a dozen farms and an urban street to the Exchequer,
the farmers would go on farming, and the tenants go on living in the
street, unaffected by the obligation to pay their rents in future to
an agent of the Government instead of to the agent of a duke or any
other plutocrat. The business of a bank would proceed just as smoothly
after as before the owners had handed over their claims on its profits
to the Chancellor of the Exchequer. Then why not at once push taxation
of capital to the point at which the capitalist taxpayer, unable to
find the money, will be forced to surrender to the Government his share
certificates, his War Loan interest, and his title-deeds? The share
certificates would not be worth a farthing on the Stock Exchange,
because there would be all sellers and no buyers there; but none the
less each certificate would, like the title-deeds to the land, carry
the right to an income out of the future harvests of the country; and
if the Government could immediately use that income for the benefit of
the nation, it would be extremely well worth its while to get hold of
it by accepting the certificates at their face value.
It could even do so with a show of generosity; for it could say to the
capitalist, “You owe the tax collector a thousand pounds (say); but
instead of selling you up we are authorizing him to give you a clean
receipt, not for the money, but for ten paper certificates marked a
hundred pounds each, for which the cleverest stockbroker in London
could not get you twopence”. “But”, exclaims the cornered capitalist,
“what becomes of my income? What am I to do for a living?” “Work for
it, as others have to do”, is the reply. In short, from the point of
view of its Socialist advocates, taxation of capital, though absurd
as a means of raising ready money for the expenses of Government, is
a way of confiscating without compensation the title-deeds of, and
thereby nationalizing, the land and the mines and the railways and all
the other industries which the capitalists now hold as their private
property.
The scheme is plausible enough.
60
REVOLT OF THE PARASITIC PROLETARIAT
But there is an objection to it; and that objection may be learnt from
the stupidest woman you ask in the street. She will tell you that
you must not take away the property of the rich, because “they give
employment”. Now, as we have seen, it is quite true that fundamentally
it is nonsense to say that an unproductive rich person can give
employment in any other sense than as a lunatic gives employment to
her keeper. An idle rich woman can give no productive employment: the
employment she gives is wasteful. But wasteful or not, she gives it
and pays for it. She may not have earned the money she pays with; but
it will buy as good bread and clothes for her employee as the most
honestly earned money in the kingdom. The idler is a parasite: and
the idler’s employee, however industrious, is therefore a parasite
on a parasite; but if you leave the parasite destitute you leave
the parasite’s parasites destitute; and unless you have productive
employment ready for them they will have to starve or steal or rebel;
and as they will certainly not choose to starve, their choice of the
remaining two alternatives (which they will probably combine) may upset
the Government if they are numerous enough. And they are, as a matter
of fact, very numerous, as you may see by counting the Conservative
votes that are given at every General Election by people who work for
weekly wages in wholly or partly parasitic occupations. The plunder
of the proletariat is shared handsomely by the plunderers with the
proletarians. If our capitalists could not plunder our proletarians,
our proletarians and their middle class organizers, from the Bond
Street art dealers and jewellers to the errand boys of Bournemouth,
could not live on the custom of our capitalists. That is why neither
Bond Street nor Bournemouth can be persuaded to vote for uncompensated
expropriation, and why, if it came to fighting instead of voting, they
would fight against it.
The trouble would begin, not with the nationalized industries, but with
the others. As we have seen, the mines and banks and railways, being
already organized as going concerns, and managed by directors elected
by the votes of the shareholders, could be confiscated by taxing the
shareholders heavily enough to oblige them to transfer their shares to
the Government in payment of the tax. But the income derived from these
shares would therefore go into the pocket of the Government instead of
into the pockets of the shareholders. Thus the purchasing power of the
shareholders would pass to the Government; and every shop or factory
that depended on their custom would have to shut up and discharge all
its employees. The saving power of the shareholders, which means, as
we now understand, the power of supplying the spare money needed for
starting new industrial enterprises or extending old ones to keep pace
with civilization, would also pass to the Government. These powers,
which must be kept in action without a moment’s interruption, operate
by continual expenditure (mainly household expenditure) and continual
investment of the enormous total of all our private incomes.
What could the Government do with that total? If it simply dropped
it into the national till, and sat on it, most of it would perish by
natural decay; and meanwhile a great many of the people would perish
too. There would be a monster epidemic of bankruptcy and unemployment.
The tide of calamity would sweep away any Government unless it
proclaimed itself a Dictatorship, and employed, say, a third of the
population to shoot down another third, whilst the remaining third
footed the bill with its labor. What could the Government do to avert
this, short of handing back the confiscated property to the owners with
apologies for having made a fool of itself?
61
SAFETY VALVES
It could distribute the money in doles; but that would only spread the
very evil the confiscation was intended to destroy: that is to say, the
evil of unearned income. A much sounder plan (and do not forget this
when next you are tempted to give a spare £5 note to a beggar instead
of putting it on deposit at your bank) would be to throw all the money
into the confiscated banks, and lend it to employers at unprecedentedly
cheap rates. Another expedient would be to raise wages handsomely in
the confiscated industries. Another, the most desperate of all, but by
no means the least probable, would be to go to war, and waste on the
soldier the incomes formerly wasted on the plutocrat.
These expedients do not exclude oneanother. Doles, cheap capital
available in Government-owned banks, and high wages, could be resorted
to simultaneously to redistribute purchasing power and employing power.
The doles and pensions would tide over the remaining years of those
discharged servants of the ruined rich who were incapable of changing
their occupations, and of the ruined rich themselves. The cheap capital
at the banks would enable employers to start new businesses, or modify
old ones, and to cater for the increased purchasing power of the
workers whose wages had been raised, thereby giving employment to the
workers who had lost their jobs in Bournemouth or Bond Street. The art
dealers could sell pictures to the National Gallery and the provincial
municipal galleries. There would be a crisis: but what of that?
Capitalism has often enough produced displacements of purchasing power
and loss of livelihood to large bodies of citizens, and fallen back
on doles in the shape of Mansion House Funds and the like as safety
valves to ease the pressure when the unemployed began to riot and break
windows. Why should we not muddle through as we have always done?
Well, we might. But serious as the biggest crises of Capitalism have
been, they have never been as big as the crash that would follow
confiscation by the Government of the entire property of the whole
propertied class without any preparation for the immediate productive
employment not only of the expropriated owners (who are too few to give
much trouble) but of the vast parasitic proletariat who produce their
luxuries. Would the safety valves act quickly enough and open widely
enough? We must examine them more closely before we can judge.
A civilized country depends on the circulation of its money as much
as a living animal depends on the circulation of its blood. A general
confiscation of private property and its incomes would produce an
unprecedented congestion in London, where the national Treasury is,
of money from all over the kingdom; and it would become a matter of
life or death for the Government to pump that congested money promptly
back again to the extremities of the land. Remember that the total
sum congested would be much larger than under the capitalist system,
because, as the capitalists spend much more of their incomes than they
save, the huge amount of this expenditure would be saved and added to
the Government revenue from the confiscated property.
Now for the safety valves. A prodigious quantity of the congested money
would come from the confiscated ground rents of our cities and towns.
The present proprietors spend these rents where they please; and they
seldom please to spend them in the places where they were produced by
the work of the inhabitants. A plutocrat does not decide to live in
Bootle when he is free to live in Biarritz. The inhabitants of Bootle
do not get the benefit of his expenditure, which goes to the west
end of London and to the pleasure resorts and sporting grounds of all
the world, though perhaps a little of it may come back if the town
manufactures first class boots and riding breeches and polo mallets.
The dwellers in the town enjoy a good deal of municipal communism;
but they have to pay for it in rates which are now oppressively heavy
everywhere. And they would be heavier still if the Government did not
make what are called Grants-in-Aid to the municipalities.
An obvious safety valve, and a popular one with the ratepayers, would
be the payment of the rates by the Treasury through greatly increased
grants. If you are a ratepaying householder, and your landlord were
suddenly to announce that in future he would pay the rates, you
would rejoice in the prospect of having that much more money to
spend on yourself. A similar announcement by the Chancellor of the
Exchequer would be equally welcome. It would relieve the congestion
at the Treasury, and send a flood of money back from the heart to the
extremities.
Then there is the combination of raised wages in the confiscated
industries with a flood of cheap capital pumped to all the business
centres through the confiscated banks. The raised wages would check
the flow of income to the Treasury by reducing dividends; and the
cheapening of capital would enable new businesses to be started and old
ones re-equipped to meet the demand created by the increased purchasing
power (pocket money) of the wage workers and the disburdened ratepayers.