destroying one. In the books of the Bank of England are written the
names of a number of persons as the owners of capital to the value
of 7000 million pounds. They are said in common speech to be “worth
7000 millions”. Now they are in fact “worth” nothing at all. Their
7000 millions have long since been eaten, drunk, worn out, or blown
to smithereens, along with much other valuable property and precious
lives, on battle-fields all over the world. We are therefore in the
ridiculous position of pretending that our country is enriched by
property to the value of 7000 millions when as a matter of fact it is
impoverished by having to find 350 fresh millions a year for people
who are not doing a stroke of work for her in return: that is, who
are consuming a huge mass of wealth without producing any. It is as
if a bankrupt, asked if he has any assets, should reply proudly, “Oh
no: I have made ducks and drakes of all my assets; but then I have a
tremendous lot of debts”. The 7000 millions of capital standing in the
names of the stockholders in the Bank of England is not wealth, it is
debt. If we flatly repudiated it, the nation would be richer not only
by 350 millions a year, but by the work the stockholders would have to
do to support themselves when their incomes were cut off. The objection
to repudiating it is not that it would make the nation poorer, but that
repudiation would seem a breach of contract after which nobody would
ever lend money to the Government again. Besides, the United States,
which lent us a thousand millions of it, might distrain on us for that
amount by force of arms. Therefore we protest that nothing would
induce us to commit such an act of cynical dishonesty. But that does
not prevent us, as far as the debt is due to our own capitalists, from
paying them honestly with one hand, and forcibly taking back the money
plus seventeen per cent interest with the other.
By the way, lest somebody should come along and assure you that these
figures are inaccurate, and that I am not to be trusted, I had better
warn you that the figures are in round numbers; that they vary from
year to year through paying off and fluctuation of values; that the
thousand millions borrowed from America were lent by us to allies of
whom some cannot afford to pay us at all, and others, who can, are
trying how little we can be induced to take; that the rest of the money
was raised through the banks in such a way that indignant statisticians
have proved that we accepted indebtedness for nearly twice what we
actually spent; that the rise in the market price of hiring spare
money must have enriched the capitalists more than the war taxation
impoverished them: in short, that the simplicity of the case can be
addled by a hundred inessential circumstances when the object is to
addle and not to elucidate. My object being elucidatory, I have left
them all out, as I want to shew you the nest, not the hedge.
The point is that the war has produced an enormous consumption
of capital; and instead of this consumption leaving behind it an
addition to our industrial plant and means of communication and other
contrivances for increasing our output of wealth, it has effected a
wholesale destruction of such things, leaving the world with less
income to distribute than before. The fact that it has swept away
three empires, and substituted republicanism for monarchy as the
prevalent form of government in Europe, thus bringing Europe into
line with America as a republican continent, may seem to you to be
worth the money; or, as this is not in the least what was intended by
the British or any other of the belligerent Powers, it may seem to
you a scandalous disaster. But that is a matter of sentiment, not of
economics. Whether you regard the political result with satisfaction or
dismay, the cost of the war remains the same, and so does the effect
of our way of paying it on the distribution of our national income. We
are all heavily taxed to enable that section of the capitalist class
which invested in War Loan for five per cent interest (a high rate
considering the security), to draw henceforth a million a day from the
fruits of our daily labor without contributing to them. True, we take
that much, and more, back from the whole capitalist class by taxation;
so that what really happens is a redistribution of income among the
capitalists, leaving the proletariat rather better off than worse,
though unfortunately it is not the sort of redistribution that makes
for equality of income or discredit of idleness. But it illustrates the
point of this chapter, which is that a virtual confiscation of capital
to the amount of thousands of millions proved perfectly feasible when
the Government had employment in the shape of national service, even
in work of destruction, instantly ready for an unlimited number of
proletarians, male and female. Those had been halcyon days but for the
bloodshed.
64
NATIONAL DEBT REDEMPTION LEVIES
Although the taxation of capital is nonsensical, it does not follow
that every proposal presented to you in that form must necessarily be
impracticable. It is true that the Government, if it wants ready money,
can obtain it only by confiscating income; but this does not rule out
operations for which no ready money is required, nor does it prevent
the Government from taking not only the income of a proprietor, but
the source of his income: that is, his property, as well. To take a
possibility that is quite likely to become a fact in your experience,
suppose the Government were driven to the conclusion that the National
Debt, or some part of it, must be wiped out, either because the
taxation needed to pay the interest of it is hampering capitalist
enterprise, which would be a Conservative Government’s reason, or
for the sake of redistributing income more equally, which would be a
Socialist Government’s reason! To pay off what we have borrowed from
America, or from foreigners of any nationality, would need ready money;
and therefore the simple wiping out of this part of the national debt
would be impossible except by flat repudiation, which would destroy
our credit abroad and probably involve us in a war of distraint. But
that part of the debt which we owe to ourselves could be wiped out
without a farthing of ready money by a tax presented and assessed as a
tax on capital, or rather a levy on capital (to indicate that it was
not to be an annual tax but only a once-in-a-way tax). Take the war
debt as an illustration of the possibility of a total wipe-out. Let us
suppose for the sake of simplicity that as much of the National Debt
as the Government owes to its own subjects is £100, all lent to it by
one woman (call her Mary Anne) for the war, and, of course, long since
spent and blown to bits, leaving nothing behind but the obligation of
the Government to pay Mary Anne £5 a year out of the taxes. Imagine
also that there is only one other capitalist in the country (say
Sarah Jane), whose property consists of £100 from stocks and land
yielding an income of £5 a year. That is, Sarah Jane owns the entire
industrial plant of the country; and Mary Anne is the sole domestic
(as distinguished from foreign) national creditor. The Chancellor of
the Exchequer brings in a tax of 100 per cent on capital, and demands
£100 from Sarah Jane and £100 from Mary Anne. Neither of them can pay
£100 ready money out of their £5; but Sarah Jane can hand over all her
share certificates to the Government; and the Government can transfer
Mary Anne’s War Loan of £100 to itself. Mary and Sarah, left destitute,
will have to work for their livings; and all the industrial plant of
the country will have passed into the hands of the Government; that is,
been nationalized.
In this transaction there is no physical impossibility, no selling of
worthless shares for non-existent ready money, no rocketing of the
Bank Rate, nothing but simple expropriation. The fact that the £200 at
stake are really thousands of millions, and that there are many Marys
and many Sarahs, each with her complement of Toms and Dicks, alters the
size of the transaction, but not its balance. The thing could be done.
Further, if the disturbance created by a sudden and total expropriation
would be too great, it could be done in instalments of any desired
magnitude. The 100 per cent tax on capital could be 50 per cent or
5 per cent or 2½ per cent every ten years or what you please. If
100 per cent meant a catastrophe (as it would) and 10 per cent only a
squeeze, then the Government could content itself with the squeeze.
By such a levy the Government could take off the taxation it had
formerly imposed to pay the home War Loan interest, and use the
dividends of the confiscated shares to pay the interest on our war debt
to America, taking off also the taxation that now pays that interest.
If it were a Conservative Government it would take it off in the form
of a reduction of income tax, supertax, excess profits tax (if any),
death duties, and other taxes on property and big business. A Labor
Government would leave these taxes untouched, and take taxes off food,
or increase its contributions to the unemployed fund, its grants-in-aid
to the municipalities for public work, or anything else that would
benefit the proletariat and make for equality of income. Thus the levy
could be manipulated to make the rich richer as easily as to raise the
general level of well-being; and this is why it is just as likely to be
done by a Capitalist as by a Labor Government until the domestic war
debt is--shall we say liquidated, as repudiated sounds so badly?
The special objection to such practicable levies is that they are raids
on private property rather than orderly and gradual conversions of
it into public property. The objection to raids is that they destroy
the sense of security which induces the possessors of spare money to
invest it instead of spreeing it. Insecurity discourages saving among
those who can afford to save, and encourages reckless expenditure. If
you have a thousand pounds to spare, and have not the slightest doubt
that by investing it you can secure a future income of £50 a year,
subject only to income tax, you will invest it. If you are led to
think it just as likely as not that if you invest it the Government
will presently take it or some considerable part of it from you under
pretext of a Debt Redemption Levy, you will probably conclude that
you may as well spend it while you are sure of it. It would be much
better for the country and for yourself if you could feel sure that
if the Government took your property it would buy it from you at full
market price, or, if that were for any reason impracticable, compensate
you fully for it. It is true that, as we found when we went into the
question of compensation, this apparently conservative way of doing it
is really as expropriative as the direct levy, because the Government
raises the purchase money or compensation by taxing property; so that
the proprietors buy each other out and are not as a body compensated
at all; but the sense of insecurity created by the raiding method
is demoralizing, as you will understand if you read the description
by Thucydides of the plague at Athens, which applies to all plagues,
pathological or financial. Plagues destroy the sense of security of
life: people come to feel that they will probably be dead by the end of
the week, and throw their characters away for a day’s pleasure just as
capitalists throw their money away when it is no longer safe. A raid on
property, as distinguished from a regular annual income tax, is like
a plague in this respect. Also it forms a bad precedent and sets up a
raiding habit. Thus domestic debt redemption levies, though physically
practicable, are highly injudicious.
65
THE CONSTRUCTIVE PROBLEM SOLVED
You may now stop for breath, as you are at last in possession not only
of the object of Socialism, which is simply equality of income, but
of the methods by which it can be attained. You know why coal mining
and banking should be nationalized, and how the expropriation of the
coalowners and bankers can be compensated so as to avoid injustice to
individuals or any shock to the sense of security which is necessary
to prevent the continued investment of spare money as capital. Now
when you have the formula for these two nationalizations, one of a
material industry involving much heavy manual work, and the other a
service conducted by sedentary brain work, you have a formula for all
nationalizations. And when you have the formula for the constitutional
compensated expropriation of the coalowners and bankers by taxation
you have the formula for the expropriation of all proprietors. Knowing
how to nationalize industry you know how to place the Government in
control of the distribution of the income produced by industry. We
have not only found these formulas, but seen them tested in practice
in our existing institutions sufficiently to have no more doubt that
they would work than we have that next year’s budget will work.
Therefore we need no longer be worried by demands for what people call
a constructive program. There it is for them; and what will surprise
them most about it is that it does not contain a single novelty. The
difficulties and the novelty are not, as they imagine, in the practical
part of the business, which turns out to be quite plain sailing, but
in the metaphysical part: that is, in the will to equality. We know
how to take the distribution of the national income out of the hands
of the private owners of property and place it under the control of
the Government. But the Government can distribute it unequally if it
decides to do so. Instead of destroying the existing inequality it can
intensify it. It can maintain a privileged class of idlers with huge
incomes, and give them State security for the continuance of those
incomes.
It is this possibility that may enlist and to a certain extent has
already enlisted the most determined opponents of Socialism on the side
of nationalization, expropriative taxation, and all the constructive
political machinery of Socialism, as a means of redistributing income,
the catch in it being that the redistribution at which they aim is not
an equal distribution, but a State-guaranteed unequal one. John Bunyan,
with his queer but deep insight, pointed out long ago that there is
a way to hell even from the gates of heaven; that the way to heaven
is therefore also the way to hell; and that the name of the gentleman
who goes to hell by that road is Ignorance. The way to Socialism,
ignorantly pursued, may land us in State Capitalism. Both must travel
the same road; and this is what Lenin, less inspired than Bunyan,
failed to see when he denounced the Fabian methods as State Capitalism.
What is more, State Capitalism, plus Capitalist Dictatorship (Fascism),
will compete for approval by cleaning up some of the dirtiest of our
present conditions: raising wages; reducing death rates; opening the
career to the talents; and ruthlessly cashiering inefficiency, before
in the long run succumbing to the bane of inequality, against which no
civilization can finally stand out.
This is why, though you are now equipped with a complete answer to
those who very properly demand from Socialists constructive plans,
practical programs, a constitutional parliamentary routine, and so
forth, you are still not within eight score pages of the end of this
book. We have still to discuss not only the pseudo-Socialism against
which I have just warned you, but other things which I cannot omit
without leaving you more or less defenceless against the alarmist
who, instead of being sensibly anxious about constructive methods,
is quite convinced that the world can be turned upside down in a
day by an unwashed Russian in a red tie and an uncombed woman with
a can of petrol if only they are wicked enough. These poor scared
things will ask you what about revolution? what about marriage? what
about children? what about sex? when, as they assume, Socialism will
have upset all our institutions and substituted for our present
population of sheep a raving pack of mad dogs. No doubt you can tell
them to go away, or to talk about such matters as they are capable
of understanding; but you will find that they are only the extreme
instances of a state of mind that is very common. Not only will plenty
of your most sensible friends want to discuss these subjects in
connection with Socialism, but you yourself will be as keen about them
as they. So now that we know exactly what Socialism aims at and how it
can be done, let us leave all that as settled, and equip ourselves for
general conversation on or around the subject.
66
SHAM SOCIALISM
The example of the war shews how easy it is for a government to
confiscate the incomes of one set of citizens, and hand them over to
another without any intention of equalizing distribution or effecting
any nationalization of industries or services. If any class or trade
or clique can obtain control of Parliament, it can use its power to
plunder any other class or trade or clique, to say nothing of the
nation as a whole, for its own benefit. Such operations are of course
always disguised as reforms of one kind or another, or as political
necessities; but they are really intrigues to use the State for selfish
ends. They are not on that account to be opposed as pernicious: rogues
with axes to grind must use popular reforms as bait to catch votes for
Acts of Parliament in which they have some personal interest. Besides,
all reforms are lucrative to somebody. For instance, the landlords of
a city may be the warmest supporters of street improvements, and of
every public project for making the city more attractive to residents
and tourists, because they hope to reap the whole money value of the
improvements in raised rents. When a public park is opened, the rents
of all the houses looking on that park go up. When some would-be public
benefactor endows a great public school for the purpose of making
education cheap, he unintentionally makes all the private houses within
reach of it dear. In the long run the owners of the land take from us
as rent in one form or another everything that we can do without. But
the improvements are none the less improvements. Nobody would destroy
the famous endowed schools of Bedford because rents are higher there
than in towns which possess no such exceptional advantage. When Faust
asked Mephistopheles what he was, Mephistopheles answered that he was
part of a power that was always willing evil and always doing good; and
though our landlords and capitalists are certainly not always either
willing evil or doing good, yet Capitalism justifies itself and was
adopted as an economic principle on the express ground that it provides
selfish motives for doing good, and that human beings will do nothing
except for selfish motives. Now though the best things have to be done
for the greater glory of God, as some of us say, or for the enlargement
of life and the bettering of humanity, as others put it, yet it is
very true that if you want to get a philanthropic measure enacted by
a public body, parliamentary or municipal, you may find it shorter to
give the rogues an axe to grind than to stir up the philanthropists
to do anything except preach at the rogues. Rogues, by which perhaps
rather invidious name I designate persons who will do nothing unless
they get something out of it for themselves, are often highly effective
persons of action, whilst idealist talkers only sow the wind, leaving
the next generation of men of action to reap the whirlwind.
It is already a well-established method of Capitalism to ask the
Government to provide for some private enterprise on the ground of its
public utility. Some good has been done in this way: for instance,
some of our modern garden cities and suburbs could not have been
built if the companies that built them had not been enabled, under
the Industrial and Provident Societies Act, to borrow a large share
of their capital from the Government on the understanding that the
shareholders were poor people holding no more than £200 capital
apiece. But this limitation is quite illusory, because, though the
companies may not issue more than £200 in shares to any individual,
they may and do borrow unlimited sums by creating what is called Loan
Stock; and the very same person who is not allowed to have more than
£200 in shares may have two hundred millions in Loan Stock if the
company can use them. Consequently these garden cities, which are most
commendable enterprises in their way, are nevertheless the property
of rich capitalists. As I hold a good deal of stock in them myself I
am tempted to claim that their owners are specially philanthropic and
public-spirited men, who have voluntarily invested their capital where
it will do the most good and not where it will make the most profit for
them; but they are not immortal; and we have no guarantee that their
heirs will inherit their disinterestedness. Meanwhile the fact remains
that they have built up their property largely with public money: that
is, by money raised by taxing the rest of the community, and that this
does not make the nation the owner of the garden city, nor even a
shareholder in it. The Government is simply a creditor who will finally
be paid off, leaving the cities in the hands of their capitalist
proprietors. The tenants, though led to expect a share in the surplus
profits of the city, find such profits practically always applied to
extending the enterprise for the benefit of fresh investors. The garden
cities and suburbs are an enormous improvement on the manufacturing
towns produced by unaided private enterprise; but as they do not pay
their proprietors any better than slum property, nor indeed as well, it
is quite possible that this consideration may induce the future owners
to abolish their open spaces and overcrowd them with houses until they
are slums. To guarantee the permanence of the improvement it would
be safer for the Government to buy out the shareholders than for the
shareholders to pay off the Government, though even that would fail if
the Government acted on Capitalist principles by selling the cities to
the highest bidders.
A more questionable development of this exploitation of the State by
Capitalism and Trade Unionism is the subsidy of £10,000,000 paid by
the Government to the coalowners in 1925 to avoid a strike. The coal
miners said they would not work unless they got such and such wages.
The employers vowed they could not afford to keep their mines open
unless the men would accept less; and a great press campaign was set
up to persuade us that the country was on the verge of ruin through
excessive wages when as a matter of fact the country was in a condition
that at many earlier periods would have been described as cheerfully
prosperous. Finally the Government, to avert a strike which would
have paralyzed the main industries of the country, had either to make
up out of the taxes the wages offered by the employers to the wages
demanded by the men, or else nationalize the mines. Being a Capitalist
Government, pledged not to nationalize anything, it chose to make up
the wages out of the taxes. When the £10,000,000 was exhausted, the
trouble began again. The Government refused to renew the subsidy; the
employers refused to go on without it unless the miners worked eight
hours a day instead of seven; the miners refused to work more or take
less; there was a big strike, in which the workers in several other
industries at first took part “sympathetically” until they realized
that by using up the funds of the Trade Unions on strike pay they were
hindering the miners instead of helping them; and many respectable
people were, as usual on such occasions, frightened out of their wits
and into the belief that the country was on the verge of revolution.
And there was this excuse for them: that under fully-developed
Capitalism civilization is always on the verge of revolution. We live
as in a villa on Vesuvius.