Chapter XIV: Tendencies Towards Socialism

So much may fairly be said regarding the influence of socialistic speculation on the opinion of the civilised world. It must be admitted, however, that as yet the change is mainly in the region of opinion. For in the domain of practice the competitive system, in spite of many very important modifications, still holds the field; and the old Political Economy, though greatly discredited, still finds its strongest justification in the fact that it is a reasonably accurate analysis of an existing and working system. When asked for any grounds that may be brought forward for believing that the socialistic ideal is becoming a reality, we can only point to symptoms or tendencies, not to definite results on a scale commensurate with the development of modern industry.

Yet these tendencies are large, most significant, and visibly increasing. The following are the main lines along which they may be observed:—

1. The State, which by a reasonable socialism should be regarded as the association of men on a large scale, and as such should continue to have a most important function.

2. The Municipality, or Commune, which, notwithstanding certain objections, is the more convenient word, as it includes the parish as well as the municipality, and which should be regarded as the association for local purposes. As every one knows how greatly the range of State and municipal action for the common good has been extended in recent years, we need not enlarge on this aspect of our subject. But in what we have to say it will be convenient to consider the State and the local body together, as they are really complements of each other. In a well-ordered community there should be no real opposition between the two. Under the conditions which now prevail there can be no nourishing local life except in reasonable relation to an efficient central organ; and the central organ can do its part wisely and effectively only by allowing suitable scope to local energy. No absolute rules can be laid down for the relations of the two to each other; these must be determined by considerations of time and circumstance. But the problem of their opposition under any _régime_ can be a difficulty only for unwise statesmanship.

It may not be a new thing in theory, that the State should be an association for the promotion of the common interests of all its members, or that the commune should be an association for the general good of the inhabitants of a locality; but it is practically new. It is only during the last generation that the people who form the majority of every society have received any reasonable consideration from the organs of the State. We have during the last seventy years seen a tardy reversal of the old injustice in our own country, and for some years the movement towards improvement has been growing apace. But our leading statesmen seem even yet to be reluctant or only half willing to advance. The domestic history of recent times is the record of concessions made, not because the leaders of either of our great parties particularly approved of them, but because they were demanded by large sections of voters. In fact the initiative in legislation has now passed from the statesmen to the democracy. We can hardly regard it as the outcome of a reasoned and comprehensive theory of the State when politicians trained in the theory and practice of _laissez-faire_ in 1908 passed an Old Age Pensions Bill, which under certain restrictions gave a pension of 5s. a week to persons over 70.

The statesmen of Germany have been more consistent; for when they inaugurated their schemes of State socialism they frankly proclaimed their adhesion to its principles. In this they were encouraged by the old law of Prussia, which recognised the duty of the State to provide subsistence for those who could not make a living, and labour for those who were out of employment. The position of the Prussian kingdom has always been such that it required to foster the full strength of the State by all available means, and therefore could not afford to neglect any considerable portion of its population. In his State socialism, therefore, Bismarck could appeal with some show of reason to the traditional policy of Prussia. But it was really a new departure.

Its leading principles were announced in an Imperial message to the Reichstag on the 17th of November 1881. Besides the repressive measures necessary to restrain the excesses of the Social Democracy, the Emperor declared that the healing of social evils was to be sought in positive measures for the good of the working man. The measures proposed were for the insurance of the workmen against accident, sickness, old age, and inability to work, by arrangements under State control. ‘The finding of the right ways and means for this State protection of the working man is a difficult task, but also one of the highest duties that concern every society standing on the ethical foundations of the Christian national life.’ The aged Emperor next went on to say that he would look back with greater satisfaction on the successes with which Providence had visibly blessed his reign, if he could bequeath to the Fatherland new and lasting pledges of peace at home, and to the needy greater security and larger means for rendering the help to which they had a claim. The message also spoke of ‘organising the life of the people in the form of corporative associations under the protection and furtherance of the State, to render possible the solution of problems which the central power alone cannot undertake.’ The Imperial programme has now been realised. It may be regarded as the beginning of better things to come. The help provided by its various measures is scanty enough, but no one can reasonably doubt that it is immeasurably superior to our English Poor Law.

So much for State socialism in Germany. To find a democracy which is really government of the people by the people for the people, we must go to our colonies at the antipodes. It is a democracy which both in theory and practice has most fully recognised that the State is an association for the promotion of the well-being of the whole people. New Zealand, one of the youngest of the English colonies, is the finest example of such a State. The State in New Zealand owns and works railways, telegraphs, and telephones. When the Bank of New Zealand was on the point of stopping payment, with the most disastrous results to the country, the government came to its help with a guarantee of £4,000,000 and made it a State institution. It made advances of cheap money to settlers and passed legislation to break up large estates. The laws for the protection of labour are of the most advanced type. It settles labour disputes by compulsory arbitration, and has in operation an old-age pension scheme by which persons over 65 years of age receive an annual pension. At first fixed at £18, this has been raised to £26, or 10s. a week. It has introduced women’s suffrage, graduated taxation, a complete system of local option in the drink trade, a public system of life insurance and of medical care, and a public trustee with very wide and beneficent powers.

All these measures and others which we need not name are the outcome in New Zealand of a great wave of agrarian labour and socialistic feeling which spread over the world about twenty years ago. It has been well described as socialism without dogma. Every measure has been examined and approved on its merits. The policy therefore is all the more valuable as a mass of testimony to the beneficent tendency of a reasonable socialism. The conditions have no doubt been exceptionally favourable. New Zealand is a young country with great natural advantages and a small population which has a very high average of intelligence, initiative, and energy. It is an example, however, which should be most encouraging to the world, as it shows what may be done in a true democracy, where the government is in entire sympathy with the people and responsive to their wishes. The high honour of carrying out this model legislation belongs to Richard Seddon and his associates. Seddon was Prime Minister of New Zealand from 1893 to his death in 1906.

3. The co-operative society or association for the ordinary purposes of industry.—Co-operation for some time made comparatively little progress in production, but when we consider the low point from which the movement started, only about sixty years ago, and how painfully capital, experience, and skill had to be acquired by the poor workers, we should rather be surprised at the advance that has been made in so many progressive countries. It is only a partial realisation of the socialistic ideal, but it is well founded, solid, and most promising. Its strongest point is that it has arisen directly out of the people and remains in close touch with them.

In England a co-operative society is usually a group of workers who manage distribution with their joint capital in their own interests. The group is entirely democratic, open to every one, organised on the principle of one man one vote, and choosing their own committee or executive; the manager is a social functionary; no member can legally hold more than £200 of capital in any society. Production, especially for domestic consumption, has now made very great progress. In 1907 the movement had 1566 registered societies and 2,434,000 members. By that date the £28 with which the movement started in 1844 had expanded into a capital of £32,000,000, with an annual turnover of £105,000,000, and an annual profit of £12,000,000. It provides for the consumption of one-fifth of the population. The co-operative movement in Great Britain is already an industrial and economic power of no mean order. If it has not solved the social question, it has at least done much to clear the way towards a solution. The movement is also making rapid progress in Germany, Austria, Belgium, France, and Italy, and its greatest successes are in other fields than distribution. In Denmark the co-operative system is one of the brightest features of recent history. More recently a co-operative movement of great promise has begun in Ireland.

The co-operative society, therefore, is a self-governing group of workers, which has already made very considerable progress in controlling the economic interests of the labouring class. Not a little disappointment is felt that it has not accomplished greater results; as we believe, without good ground. It might reasonably have been expected that human nature would survive among co-operators, and that the self-regarding principle would continue to be the mainspring of individual action. Better social arrangements can only provide for it a more efficient system of regulation.

It is particularly regrettable that co-operative societies have not always had sufficient regard for their employees. There can be little doubt that the contrast between producers and consumers, and between the centralising and de-centralising tendencies in organisation, will long be a difficulty among co-operators, who do not thoroughly understand the new system to which they belong. Yet it should also be said that many of the objections raised by the critics of the movement are really due to the fact that they do not understand its real nature, and imagine that they find old things where really they meet only old names.

The noblest embodiment of the co-operative idea is to be found in one of the oldest seats of industry in Western Europe. This is the Vooruit (Forward) Society, which was founded at Ghent in a season of scarcity by Edouard Anseele and a few weavers in 1873. It was started with a capital of 84 francs and 93 centimes, about £3: 8s., at first naturally as a bakery, and has grown till it embraces the economy and life of about 100,000 out of the 165,000 inhabitants of the city. Besides the enormous and splendidly-equipped bakeries, it has huge stores and the largest cotton factory in Ghent, with an eight-hours’ day. It has its own printing works, a daily and weekly press, its own system of life insurance, and old-age pensions. It offers to its members at its People’s Palace the means of education and of wholesome recreation and it encourages art. This is a great achievement in a country where Church and State, landlord and capitalist, have so long combined to keep the workers in the lowest ignorance and degradation. The Vooruit has been a model to similar co-operative enterprises not only in Belgium, but in France, Holland, and Germany.

4. Of all the recent movements for the better ordering of society in England, we believe the co-operative movement to be the most hopeful, because the most thorough and practical, but it is only one of many. During the last half-century we have seen a long succession of efforts, partially successful, towards a new organisation of society rendered necessary by the changes due to the industrial revolution. In all spheres the watchword of the new era has been freedom, the removal of restraint. But it has been found that positive measures of reconstruction were also necessary. Factory legislation carried in opposition to the prevailing economic theory, trade-unions, employers’ combinations, industrial partnerships, boards of conciliation, the co-operative system,—all these are real, if partial, endeavours towards a new organisation of society suited to the new conditions. They are all modifications and limitations imposed on the competitive system, and to them the progress of the last sixty years is largely due. Socialism claims to be the comprehensive scheme of organisation which embraces in a complete and consistent unity all these partial efforts.

5. But the most striking feature of recent economic history is the continuation of the movement which began with the industrial revolution. Through this process the small producer was superseded by the capitalist, the smaller capitalist by the larger. And now the single capitalist is being absorbed by the company, an increasing proportion of the world’s business being so vast that only a great company can provide the requisite capital and organisation; whilst in the large companies, in case they cannot drive each other out of the field, there is a marked tendency to bring about a fusion of interests. In all this we see a great constructive process going on as the result of the inherent laws of industrial development.

The movement is active in our own country; but it is far surpassed in magnitude and activity by similar phenomena in the United States of America, where it is favoured by special circumstances. Under the protective system the economic development of America has proceeded without being disturbed by the industrial power of England. It is a self-contained and self-sufficing continent with a vast area and enormous natural resources. The people have not such a wide variety of political, social, literary, and artistic interests as have the ruling classes of England, and have therefore been all the more keenly engaged in the exploitation of the new world that lay open to them. Capitalism in America has shown an energy, acuteness, and fertility of resource which even in England are unparalleled. But in the various departments of industry the chiefs have found that competition may be suicidal and mutually destructive, and have therefore seen it expedient to arrange with each other for the regulation of production, of prices and wages. Hence the trusts, or great combinations of capitalists, which now confront American society and the American Republic, and which, as the latest development of capitalism, are well calculated to excite scientific curiosity in every country.

The trust system is, however, by no means confined to America. A like organisation under the name of cartels or syndicates is, in proportion to the size of the country, almost equally strong in Germany. In forms more or less open and undisguised it is spreading in England, Austria, and other lands. It may be regarded as an inevitable stage in the natural history of capitalism.

Thus far have we come through the natural growth of the company. If we consider the nature and development of the company, we shall find that it is not entirely undemocratic. The directors are, in principle at least, elected and removable by the shareholders. And as the shares are open for purchase by any one, a porter may be a shareholder in the railway company of which he is a servant, with, so far, a voice in the management. But in point of fact the companies are owned and controlled by the capitalist classes, and are a development of capitalism. The directors are usually large capitalists. Their main aim is to produce dividends. The relation of the management to the employees cannot have much of a kindly, human, and personal element.

On the other hand, the development of the company in a large degree means that the real administration of the economic movement is passing out of the hands of the owner of capital as such. The companies are for the most part managed by paid officials, who may or may not have a substantial holding in the capital. That is, the capitalists do not really manage the companies in which their capital is embarked. The manager, with a staff of paid officials, has become the pivot of the industrial movement. Generally speaking, the large company is more amenable to social regulation than a variety of small enterprises. And now we see that the natural development of the company has prepared the whole organisation necessary for its complete transference to social ownership and control, if such a step were deemed advisable. A great railway or system of water-supply can be transferred to State or municipal control without any particular change in the organisation by which it is worked. In fact, capitalism has prepared or is preparing the mechanism by which it may be superseded. It has done its work so thoroughly that it has been rendering even itself superfluous. We need not add that preparatory steps towards the transformation of the company may also be seen in the spread of the principle of industrial partnerships or profit-sharing. In America, where the industrial development is more recent, the founders of the great corporations still to a large degree continue to control them. Yet we can see how the constructive talent they have so marvellously shown has paved the way for social control when the time may come for it.

6. But the greatest force in the social evolution of the present time consists of the human beings who are most directly interested in it—the modern democracy. This democracy is marked by a combination of characteristics which are new to history. It is being educated and enlightened in the school and by the cheap press; it is being drilled and organised in large factories, in the national armies, by vast popular demonstrations, in the gigantic electoral struggles of the time. Thus it is becoming conscious of its enormous power, and able to make use of it. It is becoming conscious also of its unsatisfactory social and economic position. The democracy which is growing to be the master-force of the civilised world is still for the most part economically a proletariat dependent on precarious wage-labour. While they are resolved to proceed with the consummation of the political change which is involved in the establishment of democracy, their goal is an economic transformation. But the inevitable process of concentration of industrial operations already referred to is entirely against the continuance or restoration of the small producer, whether workman or peasant proprietor. Such efforts of continuance or restoration are reactionary: they are economically unsound and must fail. The economic transformation must be sought in the application of the principle of association to the large industry.

7. We are thus brought to the conclusion that the competitive system, with precarious wage-labour as the lot of the vast majority of the people, is not a suitable and adequate form for the social development of the future. The competitive system has led to great strikes, which have been the cause of widespread misery, almost as grievous as the suffering endured during the worst campaigns under the old style of warfare. It has led to great commercial and industrial crises, which have scattered over the civilised world panic and ruin, followed by long-continued stagnation and depression. Thus anarchy, waste, and starvation have been its too frequent attendants, while the normal position of the workmen under it has been precarious and unworthy of free, enlightened men. England has had less reason than most countries to regret the prevalence of competition, for her industrial supremacy has generally left her victor in the struggle, and she has hitherto looked forward to widening markets as the solution of her economic troubles. But the rapid development of Germany and America may teach us that our industrial position is not so secure against assault as it used to be, and that we may in future suffer the bitter experience of the vanquished, which we have so long inflicted on others. And we may thus learn that reason and law should control industry and commerce as well as other spheres of human activity.

In America the development of the trust system is only another proof of the inadequacy of the competitive system. The supporters of the trusts maintain with very good show of reason that unregulated competition is harmful and may be ruinous to all concerned, and that they can maintain fair prices, pay fair wages, and secure a fair return to capital only by mutual arrangement among the producers. But the system obviously involves the serious objection, that the great industrial chiefs who organise and direct the trusts are thereby constituted supreme judges of their own interests and of the economic interests of the whole American people; that such combinations form a huge monopoly in so many of the leading articles of consumption, and establish an economic, social, and political power which may be a danger to American society. In short, we are driven to the result that while competition has been hurtful or ruinous to those engaged in it, the now prevailing system of regulation by capitalism in its own interests is a serious danger to the whole people. There is only one right way out of such a dilemma. A return to the competitive method is neither possible nor desirable. Monopoly is incompatible with freedom. The only course for peoples who desire to be free is to adopt some form of social ownership and control. This appears to be the lesson taught us by the development of the trusts.

8. The success of socialism greatly depends on the realisation of the two ideals, which may be regarded as the main pillars of the theory, when applied to practice. These are:—

(_a_) The normal working day: the general reduction of the working day to eight hours in the immediate future, and eventually to a shorter time. Such a desirable change would be better accomplished by voluntary agreement under the pressure of public opinion than by legislation; but it would be better made by legislation than by the cruel and clumsy method of strikes.

(_b_) A remuneration which will ensure a suitable standard of living; in other words, the means of a normal development. A reasonable standard of living, the competent means of a normal development have been determined by science and are no longer a matter of utopian guess-work. A fairly definite measure of fresh air, food, clothing, house comfort, recreation, and of satisfaction for the affections associated with wife and children constitute the rational needs of the average man. This is the moral and scientific basis of a rational system of distribution. The competitive wage determined by the _iron law of wages_ of the older economists should be superseded by a remuneration embodying this principle. It is the Daily Bread of the Lord’s Prayer as definable by modern science.

The effect of the socialistic theory on these points is to remove two vital interests of man from the range of competition, and to place them on an ethical and scientific basis under social control. In so far as the working day of the employees of government, municipalities, co-operative societies, companies, and private firms approximates to eight hours, in so far as the wage paid by them secures to the workers a fit and reasonable standard of living, in so far is the socialistic ideal realised. Every one conversant with the history of the last sixty years knows how vast an improvement has been made in both respects.

We have thus reviewed the great social and economic movements of our time. How shall we interpret them? There are two main tendencies: one towards control of the economic processes by the people in state, municipality, and co-operative society; the other towards the consolidation of capitalism in trusts. In both we see plan, constructive and organising intelligence, the limitation of the anarchy of competition. But while the former makes for the public good, the latter is subservient to overgrown wealth.

The portentous growth of the trusts is indeed an object-lesson to the world. It proves that socialism is not an idle question; nor is it utopian or revolutionary merely. It is a question forced upon the present generation by the most gigantic industrial movement of recent times. All good citizens, all friends of righteousness and of progress, all inquirers worthy of the name, are under an imperative obligation to understand the true inwardness of the subject.

In considering the question of the practicability of a rational socialism, let us remember that it only proposes to accomplish on a wider scale and for a more enlightened time a task analogous to that undertaken by the guilds for the mediæval world. The guild was an organisation for the promotion of the common interests of the workers at a time when law and order were not sufficiently established by strong central governments, and when the present distinction between labourer and capitalist had not declared itself. It was a fairly equitable organisation of an industry which was local and associated with city life, and which worked with a very limited and undeveloped technique. Socialism proposes an equitable organisation of industry for the modern world with its enormous mechanical development and large industry, under a democracy guided by science and professing allegiance to the highest moral ideals.