Socialism

SOCIALISM means the discarding of private property by transforming it into public property. Socialism advocates to divide public income equally and indiscriminately among the population. It reverses the policy of Capitalism.

Socialism arises in the final phases of capitalism. Capitalism leaves behind a division of society into an upper, a middle and a wage earner. In this division the proprietary class is purely parasitic, consuming without producing. As the inexorable operation of the economic law of rent makes this class richer and richer as the population increases, its demand for domestic servants and for luxuries of all kinds creates parasitic enterprise and employment for the middle class and the proletariat, not only withdrawing masses of them from productive industry, but also fortifying itself politically by a great body of workers and employers who vote with the owners because they are as dependent on the owners' unearned incomes as the owners themselves.Meanwhile the competition of employers for custom, which leads to the production of a dozen articles to satisfy the demand for one, leads to disastrous crises of feverish overproduction alternated with periods of bad trade ("booms" and "slumps"), making continuous employment of the proletariat impossible. When wages fall to a point at which saving also is impossible, the unemployed have no means of subsistence except public relief during the slumps.It is in this phase of capitalistic development, attained in Great Britain in the 19th century, that socialism arises as a revolt against a distribution of wealth that has lost all its moral plausibility. Colossal wealth is associated with unproductiveness, and sometimes with conspicuous worthlessness of character; and lifetimes of excessive toil beginning in early childhood leave the toiler so miserably poor that the only refuge left for old age is a general workhouse, purposely made repulsive to deter proletarians from resorting to it as long as they have strength enough left for the most poorly paid job in the labour market. The inequalities become monstrous: hardworking men get four or five shillings a day (post-War rates) in full view of persons who get several thousands a day without any obligation to work at all, and even consider industrial work degrading. Such variations in income defy all attempts to relate them to variations in personal merit. Governments are forced to intervene and readjust distribution to some extent by confiscating larger and larger percentages of incomes derived from property (income tax, supertax, and estate duties) and applying the proceeds to unemployment insurance and extensions of communal services, besides protecting the proletariat against the worst extremities of oppression by an elaborate factory code which takes the control of workshops and factories largely out of the hands of their proprietors, and makes it impossible for them to exact grossly excessive hours of labour from their employees or to neglect their health, physical safety, and moral welfare with complete selfishness.This confiscation of private property incomes for public purposes without any pretence of compensation, which is now proceeding on a scale inconceivable by Victorian ministers, has destroyed the integrity of private property and inheritance; and the success with which the confiscated capital has been applied to communal industries by the municipalities and the central Government, contrasted with the many failures and comparative costliness of capitalist industrial adventure, has shaken superstition that private commercial management is always more effective and less corrupt than public management. In particular, the British attempt to depend on private industry for munitions during the War of 1914-8 nearly led to defeat; and the substitution of national factories was so sensationally successful, and the post-War resumption of private enterprise, after a brief burst of illusory prosperity, was followed by so distressing a slump, that the reversal of the relative efficiency prestige of socialism and capitalism was vigorously accelerated, leaving capitalism unpopular and on the defensive, whilst confiscation of private capital, communal enterprise, and nationalisation of the big industries, grew steadily in popularity in and out of Parliament.This change in public opinion had already deeply penetrated the middle class, because of the change for the worse in the position of the ordinary employer. He, in the 19th century, was admittedly master of the industrial, and, after the Reform of 1832, of the political situation. He dealt directly and even domineeringly with the proprietary class, from which he hired his land and capital either directly or through agents who were his servants and not his masters. But the sums required to set on foot and develop modern industrial schemes grew until they were out of reach of ordinary employers. The collection of money to be used as capital became a special business, conducted by professional promoters and financiers. These experts, though they had no direct contact with industry, became so indispensable to it that they are now virtually the masters of the ordinary routine employers. Meanwhile the growth of joint-stock enterprise was substituting the employee-manager for the employer, and thus converting the old independent middle class into a proletariat, and pressing it politically to the left.With every increase in the magnitude of the capital sums required for starting or extending large industrial concerns comes the need for an increase in the ability demanded by their management; and this the financiers cannot supply: indeed they bleed industry of middle class ability by attracting it into their own profession. Matters reach a point at which industrial management by the old-fashioned tradesman must be replaced by a professionally trained and educated bureaucracy; and as Capitalism does not provide such a bureaucracy, the industries tend to get into difficulties as they grow by combination (amalgamation), and thus outgrow the capacity of the managers who were able to handle them as separate units. This difficulty is increased by the hereditary element in business.An employer may bequeath the control of an industry involving the subsistence of thousands of workers, and requiring from its chief either great natural ability and energy or considerable scientific and political culture, to his eldest son without being challenged to prove his son's qualifications, whilst if he proposes to make his second son a doctor or a naval officer he is peremptorily informed by the Government that only by undergoing an elaborate and prolonged training, and obtaining official certificates of qualification, can his son be permitted to assume such responsibilities. Under these circumstances, much of the management and control of industry gets divided between routine employers who do not really understand their own businesses, and financiers, who, having never entered a factory nor descended a mine shaft, do not understand any business except the business of collecting money to be used as capital, and forcing it into industrial adventures at all hazards, the result being too often reckless and senseless over-capitalisation, leading to bankruptcies (disguised as reconstructions) which reveal the most astonishing technical ignorance and economic blindness on the part of men in high repute as directors of huge industrial combinations, who draw large fees as the remuneration of a mystical ability which exists only in the imagination of the shareholders.II. All this steadily saps the moral plausibility of capitalism. The loss of popular faith in it has gone much further than the gain of any widespread or intelligent faith in socialism. Consequently the end of the first quarter of the 20th century finds the political situation in Europe confused and threatening: all the political parties diagnosing dangerous social disease, and most of them proposing disastrous remedies. National governments, no matter what ancient party slogans they raise, find themselves controlled by financiers who follow the slot of gigantic international usuries without any public aims, and without any technical qualifications except their familiarity with a rule-of-thumb city routine quite inapplicable to public affairs, because it deals exclusively with stock exchange and banking categories of capital and credit. These, though valid in the money market when conducting exchanges of future incomes for spare ready money by the small minority of persons who have these luxuries to deal in, would vanish under pressure of any general political measure like--to take a perilously popular and plausible example--a levy on capital. Such a levy would produce a money market in which there were all sellers and no buyers, sending the Bank Rate up to infinity, breaking the banks, and bringing industry to a standstill by the transfer of all the cash available for wages to the national treasury. Unfortunately the parliamentary proletarian parties understand this as little as their capitalist opponents. They clamour for taxation of capital; and the capitalists, instead of frankly admitting that capital as they reckon it is a phantom, and that the assumption that a person with an income of  5 a year represents to the state an immediately available asset of 100 ready money, though it may work well enough as between a handful of investors and spendthrifts in a stockbroker's office, is pure fiction when applied to a whole nation, ignorantly defend their imaginary resources as if they really existed, and thus confirm the proletariat in its delusion instead of educating it.The financiers have their own ignis fatuus, which is that they can double the capital of the country, and thus give an immense stimulus to industrial development and production, by inflating the currency until prices rise to a point at which goods formerly marked 50 are marked 100, a measure which does nothing nationally but enable every debtor to cheat his creditor, and every insurance company and pension fund to reduce by half the provision for which it has been paid. The history of inflation in Europe since the War of 1914-8, and the resultant impoverishment of pensioners and officials with small fixed incomes, forces the middle classes to realise the appalling consequences of abandoning finance and industry direction to the unskilled, politically ignorant, unpatriotic "practical business men.