III. MARXISM
I: KARL MARX[964]
Everyone knows of the spell cast over the socialism of the last forty years by the doctrines of Karl Marx and the contempt with which this newer so-called scientific socialism refers to the earlier or Utopian kind. But what is even more striking than the success of Marxian socialism is its want of sympathy with the heretical doctrines of its predecessors the Communists and Fourierists, and the pride it takes in regarding itself as a mere development or rehabilitation of the great Classical tradition.
To give within the limits of a single chapter a résumé of a doctrine that claims to review and to reconstruct the whole of economic theory is clearly impossible, and we shall merely attempt an examination of two of Marx’s more essential doctrines, namely, his theory of surplus labour and value and his law of automatic appropriation, more familiarly but less accurately known as the law of concentration of capital. The first is based upon a particular conception of exchange value and the second upon a special theory of economic evolution. To employ Comtean phraseology, the one belongs to the realm of economic statics, the other to the domain of economic dynamics.
1. SURPLUS LABOUR AND SURPLUS VALUE
The laborious demonstration which follows will become clearer if we remind ourselves of the objects Marx had in view. Marx’s aim was to show how the propertied class had always lived upon the labour of the non-propertied classes—the possessors upon the non-possessing. This was by no means a new idea, as we have already made its acquaintance in the writings of Sismondi, Saint-Simon, Proudhon, and Rodbertus. But the essence of the criticism of these writers was always social rather than economic, the institution of private property and its injustice being the chief object of attack. Karl Marx, on the other hand, deliberately directed the gravamen of the charge against economic science itself, especially against the conception of exchange. He endeavours to prove that what we call exploitation must always exist, that it is an inevitable outcome of exchange—an economic necessity to which both master and man must submit.
It is convenient to begin with an examination of economic value. Marx lays down the doctrine that labour is not merely the measure and cause of value, but that it is also its substance. We have already had occasion to note how Ricardo was somewhat favourably inclined to the same view, though hardly willing to adopt it. There is no such hesitation on the part of Marx: it is all accepted in a characteristically thorough fashion. Of course, he does not deny that utility is a necessary condition of value and that it is really the only consideration in the case of “value in use.” But utility alone is not enough to explain value in exchange, since every act of exchange implies some common element, some degree of identity between the exchanged commodities. This identity is certainly not the result of utility, because the degree of utility is different in every commodity, and it is this difference that constitutes the raison d’être of exchange. The common or homogeneous element which is contained in commodities themselves heterogeneous in character is the quantity of labour, great or small, which is contained in them. The value of every commodity is simply the amount of crystallized human labour which it contains, and commodities differ in value according to the different quantities of labour which are “socially necessary to produce them.”[965]
Let us take the case of a working man, an employee in any kind of industry, working ten hours a day.
What will be the exchange value of the produce of his labour? It will be the equivalent of ten hours’ labour, whether the commodity produced be cloth or coal or what not. And since the master or the capitalist, as Marx always calls him, in accordance with the terms of the wage bargain, reserves for himself the right of disposing of that commodity, he sells it at its real value, which is the equivalent of ten hours’ labour.
The worker himself is cut off with a wage which simply represents the price which the capitalist pays for his labour force (Arbeitskraft), and the capitalist reserves to himself the right of disposing of the commodity at his own good pleasure. Its value is determined in the same way as that of every other exchangeable commodity. Labour-force or manual labour is just a commodity, and its value is determined by the number of hours of labour necessary for its production.[966]
“The quantity of labour necessary to produce the labour-force” is a somewhat formidable expression, and it is very difficult for any one who is beginning a study of Marx to appreciate its significance, but it is very essential that we should try, since everything turns upon a clear understanding of this phrase. But it is really not so mysterious after all. Suppose that instead of the labour of an artisan we take the work of a machine. No engineer would be surprised if we asked him the running expenses of that machine, and he might reply that it was costing one or two tons of coal per hour or eight or twelve per diem; and since the value of the coal merely represents a certain amount of human labour on the part of the coal-miner, there would be no difficulty in expressing it in terms of labour. Under the wage system the labourer is simply a machine, differing from the latter merely in the smaller quantity of wealth which he produces. The value of an hour’s labour or a day’s toil can be measured by the quantity of necessaries required to keep the worker in full productive efficiency during that period. Every employer who pays wages in kind—which is still the case in agriculture—always makes that kind of calculation, and even when the worker is paid a money wage things are much the same, for the money simply represents the cost of those necessaries.
Let us proceed a step farther. The value of the commodities necessary for the upkeep of labour is never equal to the value of the produce of that labour. In the instance given it would not equal the value of ten hours’ labour—perhaps not even five. Human labour under normal conditions always produces more than the mere value of the goods consumed.[967]
This is the crux of the problem. The mystery surrounding capitalist production is at last solved. The value produced by the labourer passes into the hands of the capitalist, who disposes of it and gives back to the labourer enough to pay for the food consumed by him during the time he was producing the commodity. The difference goes into the capitalist’s pocket. The product is sold as the equivalent of ten hours’ labour, but the labourer receives the equivalent of five hours only. Marx speaks of this as surplus value (Mehrwerth), a term that has become exceedingly popular since.[968]
Thus the capitalist gets ten hours’ labour out of the workman and only pays him for five,[969] the other five hours costing him nothing at all. During the first five hours the workman produces the equivalent of his wages, but after the end of the fifth hour he is working for nothing. The labour of this extra number of hours during which the surplus value is being produced and for which the worker receives nothing Marx calls surplus labour. By that he means the supererogatory labour which yields nothing to the worker, but merely involves an extra tax upon his energies and simply increases the capitalist’s fortune.
Naturally the capitalist’s interest is to augment this surplus value which goes to swell his profits. This can be effected in a number of ways, and an analysis of some of these processes is one of the most characteristic features of the Marxian doctrine. This analysis may be summed up under two main divisions.
1. The first method is to prolong the working day as much as possible in order to increase the number of hours of surplus labour. If the number of working hours can be increased from ten to twelve the surplus will automatically grow from five to seven. This is exactly what manufacturers have always tried to do. Factory legislation, however, has forced some of them to limit the number of hours, and this has resulted in checking the growth of surplus value somewhat. But this check applies only to a limited number of industries.
2. A second method is to diminish the number of hours necessary to produce the worker’s sustenance. Were this to fall from five to three it is clear that the surplus would again rise from five to seven. Such reduction is possible through the perfection of industrial organisation or through a reduction in the cost of living, a result which is usually effected by means of co-operation.[970] The capitalist also often manages to bring this about by setting up philanthropic institutions or by employing women and children, who require less for their upkeep than adults. Women and children have been taken from the house and the task of housekeeping and cookery has been left in the hands of the men. But laws regulating the employment of women and children have again defeated these tactics.[971]
Such is a very brief summary of Marx’s demonstration. Its real originality lies in the fact that it does not consist of commonplace recriminations concerning the exploitation of workers and the greed of exploiters, but shows how the worker is robbed even when he gets all that he is entitled to.[972] It cannot be said that the capitalist has robbed him. He has paid him a fair price for his labour; that is, he has given it its full exchange value. The conditions of the wage bargain have been observed in every particular: equal value has been given in exchange for equal value. Given the capitalistic régime and the free competition of labour, the result could not be otherwise. The worker, perhaps, may be surprised at this unexpected result, which only secures him half the value of his labour, but he can only look on like a bewildered spectator. Everything has passed off quite correctly. The capitalist, no doubt, is a shrewd person, and knows that when he buys labour power he has got hold of a good thing, because it is the only merchandise which possesses the mysterious capacity of producing more value than it itself contains.[973] He knows this beforehand, and, as Marx says, it is “the source of considerable pleasure to him.” “It is a particularly happy condition of things when the buyer is also allowed to sell it wherever and whenever he likes without having to part with any of his privileges as a vendor.” The result is that the worker has no means of defence either legal or economic, and is as helpless as a peasant who has sold a cow in calf without knowing it.
Hitherto we have spoken only of labour. But the outstanding personage in the book—the hero of the volume—is capital, whose name appears on the title-page. Our exposition of the Marxian doctrine of production would accordingly be very incomplete if we omitted to make reference to his treatment of capital.
Taken by itself capital is, of course, sterile, for it is understood that labour is the sole source of value. But labour cannot produce unless it consumes a certain proportion of capital, and it is important that we should understand something of the combination of capital and labour.
Marx distinguishes between two kinds of capital. The first serves for the upkeep of the working-class population, either in the way of wages or direct subsistence. The older economists referred to it as the Wages Fund, and Marx calls it “variable capital.” If this kind of capital does not directly take part in production, it is this fund, after all, when consumed by labour that begets value and the surplus which is attached to it.
That other kind of capital which directly assists the productive activity of labour by supplying it with machinery, tools, etc., Marx calls “constant capital.” This latter kind of capital, which is not absorbed or vitalized by labour, does not result in the production of surplus value. It simply produces the equivalent of its value, which is the sum total of all the values absorbed during the time when it was being produced. This constant capital is evidently the crystallized product of labour, and its value, like that of any other product, is determined solely by the number of hours of labour it has taken to produce. This value, whether it include the cost of producing the raw material or merely the cost of labour employed in elaborating it, should be rediscoverable in the finished product. But there is nothing more—no surplus. The economists refer to this as depreciation, and everyone knows that depreciation implies no profits at any rate.[974]
It seems quite obvious that it is to the interest of the capitalist to employ only variable capital, or at least that it will pay him to reduce the amount of constant capital used to the irreducible minimum.[975] But we are here met with an anomaly which is the despair of all Marxian commentators, and which must have caused Marx himself some amount of embarrassment, if we may judge by the laborious demonstration which he gives.[976]
If fixed capital is really unproductive, how is it that modern production is always increasing the quantity of fixed capital which it employs, until this has now become one of its most familiar features? Is it because it yields less profit than that yielded by the smaller handicrafts or agriculture? Again, how are we to account for the variation in the rates of profit in different industries according to the different quantities of capital employed, seeing that it is an axiom of political economy that under a régime of free competition with equal security for everybody the returns on different capitals should everywhere be the same?
Marx replies by saying that the rate of profit is the same for all capitalists within the country, but that this rate is the average of the different rates in all the different industries. In other words, it is the rate that would obtain if every industry in the country employing varying amounts of fixed and circulating capital formed a part of one whole. It must not be thought of as a kind of statistical average, but simply as a kind of average which competition brings about. The result is other than might have been expected.[977] Those industries which have a large amount of variable capital—agriculture, for example—find themselves with just the average rate of return, but draw much less in the way of surplus value than they had expected, and so Marx refers to them as undertakings of an inferior character. On the contrary, those industries which possess a large amount of constant capital draw more than their capital had led them to hope for, and Marx refers to them as industries of a superior character.[978] Hence those industries which employ a considerable amount of machinery expand at the expense of the others. It is because the latter kind find themselves in a more favourable position, or, in other words, realize greater profits, that they do employ surplus labour, from which surplus value is naturally derived.[979]
While admiring the ingenuity of the dialectics, we must not blind ourselves to the simple fact which Marx was so anxious to hide, but which is nevertheless implicit in all this, namely, that the rate of profit, which means also the value of the goods, is regulated by competition—that is, by demand and supply—but bears no relation to the quantity of labour employed. We must also remember that the entrepreneur, far from seeing his profits diminish as he employs less human labour, finds them increasing. This contradiction is just one of those flaws that finally cause the downfall of the majestic edifice so laboriously raised by Marx.
2. THE LAW OF CONCENTRATION OR APPROPRIATION
The law of concentration of capital,[980] which can only be interpreted in the light of economic history, is an attempt to show that the régime of private property and personal gain under which we live is about to give place to an era of social enterprise and collective property.[981] Let us try to follow the argument as given by Marx.
Again must we cast back our thoughts to a period before the earliest beginnings of capital in the sixteenth century—a period when, according to the socialists, there existed neither capital nor capitalist. Capital in the economic sense of a mere instrument of production must have existed even before this time, but the socialists are of opinion that it had quite a different significance then, and it is important that we should appreciate their point of view. Their employment of the term is closely akin to the vulgar use of the word as anything that yields a rent, and yields the said rent as the result, not of the capitalist’s labour, but of the toil of others. But under the guild system which preceded this condition of things the majority of the workers possessed most of the instruments of production themselves.
Then follows a description of a series of changes which we cannot attempt to study in detail, but which forms a singularly dramatic chapter in the writings of Marx. New means of communication are established and new markets opened as the result of important mechanical discoveries coupled with the consolidation of the great modern States. The rise of banks and of trading companies, together with the formation of public debts, all this resulted in the concentration of capital in the hands of a few and the expropriation of the small proprietor.
But all this was only a beginning. If capital in this newer sense of an instrument for making profit out of the labour of others was ever to come into its own and develop, if the surplus labour and surplus value of which we have given an analysis were really to contribute to the growth and upkeep of this capital, it was necessary that the capitalist should be able to buy that unique merchandise which possesses such wonderful qualities in the open market. But labour-force can never be bought unless it has been previously detached from the instruments of production and removed from its surroundings. Every connexion with property must be severed, every trace of feudalism and of the guild system must be removed. Labour must be free—that is, saleable; or, in other words, it “must be forced to sell itself because the labourer has nothing else to sell.” For a long time the artisan was in the habit of selling his goods to the public without the intervention of any intermediary, but a day dawned when, no longer able to sell his products, he was reduced to selling himself.[982]
The creation of this new kind of property based upon the labour of others meant the extinction of that earlier form of property founded upon personal labour and the substitution for it of the modern proletariat. This was the task to which the bourgeoisie resolutely set itself for about three centuries, and its proclamation of the liberty of the labourer and the rights of man is just its pæan of victory. Its task was accomplished. The expropriated artisan who was already swelling the ranks of the proletariat seemed an established fact.
In reality this end was only partially accomplished even in the more capitalistic countries, but that there is a general movement in that direction seems clear in view of the following considerations.
(a) The most suggestive fact in this connexion is the growth of production on a large scale, resulting in the employment of machinery and in the rise of new forms of organisation such as trusts and cartels, new systems that were unknown in Marx’s day, but which have helped to confirm his suspicions. These trusts and cartels are especially important from a social point of view because they not only absorb the capital of the small independent proprietor, but swallow the medium-sized industry as well. This wonderful expansion of production on a large scale means a corresponding growth in the numbers of the proletariat, and capitalism, by increasing the number of wage-earners, helps to swell the ranks of its own enemies. “What the bourgeoisie produces, above all, therefore, are its own gravediggers.”[983]
(b) Over-production is another fruitful method. A contraction of the market results in a superabundance of workmen whose services are always available. They form a kind of industrial reserve army upon which the capitalist may draw at his pleasure—at one moment indiscriminately taking on a number of them, and throwing them back on to the streets again as soon as the demand shows signs of slackening.[984]
(c) The concentration of the rural population in towns is another contributing factor. This movement itself is the result of the disappearance of the small holder and the substitution of pastoral for arable farming, the outcome of it all being an addition to the ranks of the expropriated proletariat of an increasing number of hitherto independent proprietors and producers.
Such is the advent and growth of capitalism. It comes into the world “with bloody putrescence oozing out of every pore.” How different is the real history of capital from the idyllic presentation to which we are treated by the economists! They love to picture it as the slowly accumulated fruit of labour and abstinence, and the coexistence of the two classes, the capitalists and the workers, is supposed to date from an adventure that befell them both a few days after creation, when the good and the wise decided to follow the high road of capitalism and the idle and vicious the stony path of toil.
In reality capitalism is the outcome of class struggle—a struggle that will some day spell the ruin of the whole régime, when the expropriators will themselves be the expropriated. We are given no details as to how this is to be accomplished, and this abstention from prophecy distinguishes Marx from the Utopian socialists of the last two thousand years. His one object was to show how those very laws that led to the establishment of the régime would some day encompass its ruin.[985] The force of circumstance seemed to make self-destruction inevitable. “The capital régime,” writes one Marxian socialist, “begets its own negation, and the process is marked by that inevitability which is such a feature of all natural laws.”[986] The following facts are deduced as proofs that this process of self-destruction is already in course of being accomplished.
(a) Industrial crises, whether of over-production or under-consumption, have already become a chronic evil. The fact that to some extent they are to be regarded as the direct outcome of the capitalist system of production cannot prevent their damaging that system. The continual growth of fixed at the expense of circulating capital, involving as it does the substitution of machinery for hand labour, must also involve a continual reduction of the surplus value. In order to counteract this tendency the capitalists find themselves forced to keep ahead with production; they are driven to rely upon quantity, as they put it. The workers, on the other hand, find that it is gradually becoming impossible for them to buy the products of their labour with the wages which they get, because they never get a wage which is equal to the value of the product of their labour. Moreover, they periodically find themselves out of employment altogether and almost on the verge of starvation. Proudhon, as we have already seen, laid considerable stress upon this, and it is one of the instances in which Marx is obviously influenced by Proudhon.
The idea which underlies the Marxian theory is that every crisis involves a readjustment of the equilibrium between fixed and circulating capital. The growth of the former, though continuous, is not always uniform, and whole sections of it may occasionally be found to be without solid foundation which would warrant such expansion. But the crises which result in the destruction of these speculative accretions give a new spirit to the creation of further surplus value, which results in the creation of further fixed capital and more crises, and so the process goes on.[987]
(b) The growth of pauperism, which is the direct outcome of crises and want, is another factor. “The bourgeoisie is unfit any longer to be the ruling class in society, and to impose its conditions of existence upon society as an overriding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state that it has to feed him instead of being fed by him.”[988]
(c) The rapid multiplication of joint stock companies is the final buttress with which the Marxians have strengthened their contention. Under the joint stock principle the right of property is simply reduced to the possession of a few strips of paper giving the anonymous owner the right to draw dividends in some commercial concern or other. Profit is seen in all its nakedness as a dividend which is wholly independent of all personal effort and produced entirely as the result of the workers’ drudgery. The duty of personally supervising the methods of production and of opening up new and better ways of manufacturing, which served to disguise the real character of the individual employer and to justify his existence, is no longer performed by the owner, but falls to the lot of two new functionaries, the parasitic company director on the one hand and the salaried official on the other.
Once the whole industry of a country becomes organized on a joint stock basis—or, better still, once it passes over into the hands of a trust, which is simply a manifestation of the joint-stock principle at its highest—expropriation will be a comparatively simple matter. By a mere stroke of the pen property hitherto held by private shareholders will be transferred into the custody of the State with hardly a change in the economic mechanism itself.
Thus the expropriation of the bourgeoisie will be a much easier task than was the expropriation of the artisan by the bourgeois a few centuries ago. In the past it was a case of the few subjugating the many, but in the future the many will overwhelm the few—thanks to the law of concentration.
But what is to be the outcome of the Marxian programme (we cannot speak of its aim or ideals, for Marx scorned such terms)? The general opinion seems to be that it involves the abolition of private property, and that the opinion is not altogether without foundation may be seen from a perusal of the Manifesto, where we read that “the theory of the Communists may be summed up in the single sentence: Abolition of private property.”[989]
The Manifesto also explains in what sense we are to understand this. The private property which so much needs suppressing is not the right of the worker to the produce of his own toil, but the right of others to appropriate for themselves the produce of that labour. This is private property as they understand it. They think, however, it would be better to call it bourgeois property, and they feel quite confident that it is destined to disappear under a collectivistic régime. As to a man’s right to the product of his own labour, that surely existed formerly, before the peasant and the craftsman were overwhelmed by capitalism and replaced by the proletariat. Collectivism, far from destroying this kind of property, will rather revive it, not in the antiquated individualistic form of letting each man retain his own, which is obviously impossible under division of labour and production on a large scale, but of giving to every man a claim upon the equivalent of what he has produced.[990]
This twofold task can only be accomplished by undoing all that capitalism has done; by taking from the capitalists the instruments of production which they now possess and restoring them to the workmen, not individually—that would be impossible under modern conditions—but collectively. To adopt the formula which figures at the head of the party’s programme, this means the socialisation of the means of production—land, including surface and subsoil, factories and capital. The produce of everyone’s labour, after allowing for certain expenses which must be borne by the community as a whole, will be distributed according to each one’s labour. Surplus labour and surplus value will thus disappear simultaneously.
This expropriation of the capitalists will be the final stage, for, unlike the preceding movements, it will not be undertaken for the benefit of a single class—not even for the benefit of the workers. It will be for the interest of everybody alike, for the benefit of the nation as a whole. It will also be adequate to cope with the change which industry has recently undergone; in other words, both production and distribution will be on a collective basis.
II: THE MARXIAN SCHOOL
After this summary exposition of the principal theories of Karl Marx, we must now try to fix the general character of the school that bears his name[991] and to distinguish it from the other socialist schools that we have already studied.
(a) In the first place, it proudly claims for its teaching the title of scientific socialism, but much care must be exercised in interpreting the formula. No economist has ever shown such contempt or betrayed such passion in denouncing Phalanstères, Utopias, and communistic schemes of every kind. To think that the Marxians should add to the number of such fantastic dreams! What they claim to do, as M. Labriola points out (may the shades of Fourier forgive their presumption!), is to give a thoroughly scientific demonstration of the line of progress which has actually been followed by civilised societies.[992] Their one ambition is to gauge the significance of the unconscious evolution through which society has progressed and to point the goal towards which this cosmic process seems to be tending.
The result is that the Marxian school has a conception of natural laws which is much nearer the Classical standpoint than that of its predecessors. Of this there can be no doubt. The Marxian theories are derived directly from the theories of the leading economists of the early nineteenth century, especially from Ricardo’s. Marx is in the line of direct succession. Not only is this true of the labour-value theory and of his treatment of the conflict between profits and wages, but it also applies to his theory of rent and to a whole host of Ricardian doctrines that have been absorbed wholesale into the Marxian philosophy. And, paradoxical as it may sound, his abstract dogmatic method, his obscure style, which encourages disciples to retort that the critics have misunderstood his meaning and to give to many a passage quite an esoteric significance, is of the very essence of Ricardo.[993] Marx’s theories are, of course, supported by a wealth of illuminating facts, which unfortunately have been unduly simplified and drawn upon for purely imaginary conclusions. We have already had occasion to remark that Ricardo also owes a good deal more to the observation of facts than is generally believed, and his practice of postulating imaginary conditions is of course notorious. The impenitent Marxian who still wishes to defend some of the more untenable theories of Marx, such as his doctrine of labour-value, generally finds himself forced to admit that Marx had supposed (the use of suppositions is an unfailing proof of Ricardian influence) the existence of society wherein labour would be always uniform in quality.[994]
Marxism is simply a branch grafted on the Classical trunk. Astonished and indignant as the latter may well seem at the sight of the strange fruit which its teaching has borne, it cannot deny the fact that it has nourished it with its own life-blood. “Das Kapital,” as Labriola notes, “instead of being the prologue to the communal critique, is simply the epilogue of bourgeois economics.”[995]
Not only has Marxism always shown unfailing respect for political economy even when attacking individual economists, who are generally accused of inability to grasp the full significance of their own teaching, but, strangely enough, it betrays an equal affection for capitalism.[996] It has the greatest respect for the task which it has already accomplished, and feels infinitely grateful for the revolutionary part (such are the words used) which it has played in preparing the way for collectivism, which is almost imperceptibly usurping its place.[997]
But the Marxians have one serious quarrel with the older economists. It seemed to them that the earliest writers on political economy never realized the relatively transient nature of the social organism which they were studying. This was possibly because they were conservative by instinct and had the interest of the bourgeois at heart. They always taught, and they fully believed it, that private property and proletarianism were permanent features of the modern world, and that social organisation was for ever destined to remain upon a middle-class foundation. They were at least unwilling to recognize that this also, like the rest, was simply a historical category, and, like them, also was destined to vanish.[998]
(b) The Marxian school also differs from every previous socialist school in the comparative ease with which it has eschewed every consideration of justice and fraternity, which always played such an important rôle in French socialism. It is interested, not in the ideal, but in the actual, not in what ought to be, but in what is likely to be. “The theoretical conclusions of the communists are in no way based on ideas or principles that have been invented, or discovered by this or that would-be universal reformer. They merely express, in general terms, actual relations springing from an existing class struggle, from a historical movement going on under our very eyes.”[999]
To economic facts they attributed an importance altogether transcending their influence in the economic sphere. Their belief was that the several links which unify the many-sided activities of society, whether in politics, literature, art, morality, or religion, are ultimately referable to some economic fact or other. None of them but is based upon a purely economic consideration. Most important of all are the facts relating to production, especially to the mechanical instruments of production and their operation. If we take, for example, the production of bread and the successive stages through which the mechanical operation of grinding has passed from the hand-mill of antiquity to the water-mill of the Middle Ages and the steam-mill of to-day, we have a clue to the parallel development of society from the family to the capitalistic system and from the capitalistic to the trust, with their concomitants slavery, serfdom, and proletarianism. This affords a far better explanation of the facts than any bourgeois cant about “the growth of freedom” or humbug of that nature. These are the real foundations upon which every theory has to be reared. This materialistic conception of history,[1000] implying as it does a complete philosophy of history, is no longer confined to the purely economic domain.
Taken in the vulgar sense, it seems to involve the exclusion of every moral and every humanitarian consideration. As Schäffle put it in that oft-quoted phrase of his, it means reducing the social question to a “mere question of the belly.” The French socialists find the doctrine somewhat difficult to swallow, and they hardly display the same reverence for Marx as is shown in some other countries.[1001]
The orthodox Marxians immediately proceed to point out that such criticism is useless and shows a complete misunderstanding of Marx’s position. Materialism in the Marxian sense (and all his terms have a Marxian as well as the ordinary significance) does not exclude idealism, but it does exclude ideology, which is a different thing. No Marxian has ever advocated leaving mankind at the mercy of its economic environment; on the contrary, the Marxian builds his faith upon evolution, which implies man’s conscious, but not very successful, effort to improve his economic surroundings.[1002] The materialistic conception of history apparently is simply an attempt at a philosophy of human effort.[1003] Criticism of such elusive doctrines is not a very easy task.
(c) The socialism of Karl Marx is exclusively a working-class gospel. This is its distinctive trait and the source of the power it wields. To some extent it also explains its persistence. Other socialist systems have been discredited and are gone, but the Marxian gospel—no longer, of course, the sublime masterpiece it was when its author first expounded it—has lost none of its ancient vigour, despite the many transformations which it has undergone.
The socialists of the first half of the nineteenth century embraced all men without distinction, worker and bourgeois alike, within their broad humanitarian schemes. Owen, Fourier, and Saint-Simon reckoned upon the co-operation of the wealthy governing classes to found the society of the future. Marxism implies a totally different standpoint. There is to be no attempt at an understanding with the bourgeoisie, there must be no dallying with the unclean thing, and the prohibition is to apply not only to the capitalists, but also to the intellectuals[1004] and to the whole hierarchical superstructure that usually goes by the name of officialdom. Real socialism aims at nothing but the welfare of the working classes, which will only become possible when they attain to power.
It may, of course, be pointed out that socialism has always involved some such struggle between rich and poor, but it is equally correct to say that the battle has hitherto been waged over the question of just distribution. Beyond that there was no issue. But in the Marxian doctrine the antagonism is dignified with the name of a new scientific law, the “class war”—the worker against the capitalist, the poor versus the rich. The individuals are the same, but the casus belli is quite different. “Class war” is a phrase that has contributed not a little to the success of Marxism, and those who understand not a single word of the theory—and this applies to the vast majority of working men—will never forget the formula. It will always serve to keep the powder dry, at any rate.
“Class war” was not a new fact. “The history of all hitherto existing society is the history of class struggles.”[1005] But although it has always existed, it cannot continue for ever. And the great struggle that is now drawing nigh and which gives us such a tragic interest in the whole campaign will be the last. The collectivist régime will destroy the conditions that breed antagonism, and so will get rid of the classes themselves. Let us note in passing that this prophecy is not without a strong tinge of that Utopian optimism which the Marxians considered such a weakness in the earlier French socialism.
(d) A final distinction of Marxism is its purely revolutionary or catastrophic character, which is again unmistakably indicated by its adoption of “class war” as its watchword. But we have only to remind ourselves that the adjective “revolutionary” is applied by the Marxians to ordinary middle-class action to realize that the term is employed in a somewhat unusual fashion.
The revolution will result in the subjection of the wealthier classes by the working men, but all this will be accomplished, not by having recourse to the guillotine or by resorting to street rioting, but in a perfectly peaceful fashion. The means may be political and the method even within the four corners of the law, for the working classes may easily acquire a majority in Parliament, seeing that they already form the majority of the electors, especially in those countries that have adopted universal suffrage. The method may be simply that of economic associations of working men taking all economic services into their own hands.[1006]
The final catastrophe may come in yet another guise, and most Marxians seem to centre their hopes upon this last possibility. This would take the form of an economic crisis resulting in the complete overthrow of the whole capitalist régime—a kind of economic felo de se. We have already noted the important place which crises hold in the Marxian doctrines.
But if Marxism does not necessarily involve resort to violence, violent methods are not excluded. Indeed, it considers that some measure of struggle is inevitable before the old social forms can be delivered of the new—before the butterfly can issue from the chrysalis. “Force is the birth-pangs of society.”[1007]
This is not the place for false sentimentalism. Evil and suffering seem to be the indispensable agents of evolution. Had anyone been able to suppress slavery or serfdom or to prevent the expropriation of the worker by the capitalist, it would have merely meant drying up the springs of progress and more evil than good would probably have resulted.[1008] Every step forward involves certain unpleasant conditions, which must be faced if the higher forms of existence are ever to become a reality. And for this reason the reform of the bourgeois philanthropist and the preaching of social peace would be found to be harmful if they ever proved at all successful. There is no progress where there is no struggle. This disdainful indifference to the unavoidable suffering involved in transition is inherited from the Classical economists, and provides one more point of resemblance between the two doctrines. Almost identical terms were employed by the Classical economists when speaking of competition, of machinery, or of the absorption of the small industry by a greater one. In the opinion of the Marxians no attempt at improving matters is worthy the name of reform unless it also speeds the coming revolution. “But it can shorten and lessen the birth-pangs.”[1009]
III: THE MARXIAN CRISIS AND THE NEO-MARXIANS
To speak of Neo-Marxism, which is of quite recent growth, is to anticipate the chronological order somewhat, but some such procedure seems imperative in the interests of logical sequence. It has the further merit of dispensing with any attempt at criticism, a task which the Neo-Marxians[1010] have exclusively taken upon their own shoulders.
The two phases of the crisis must needs be kept distinct. The one, which is predominantly critical—or reformative, if that phrase be preferred—is best represented by M. Bernstein and his school. The other, which is more or less of an attempt to revive Marxism, has become current under the name of Syndicalism.
1. THE NEO-MARXIAN REFORMISTS
If we take Marx’s economic theories one by one as we have done, we shall find that there is nothing very striking in any of them, and that even the most important of them will not stand critical scrutiny. We might even go farther and say that this work of demolition is partly due to the posthumous labours of Marx himself. It was the publication of his later volumes that served to call attention to the serious contradiction between the later and the earlier sections of his work. Marxism itself, it seems, fell a prey to that law of self-destruction which threatened the overthrow of the whole capitalistic régime. Some of Marx’s disciples have, of course, tried to justify him by claiming that the work is not self-contradictory, but that the mere enumeration of the many conflicting aspects of capitalistic production strikes the mind as being contradictory.[1011] If this be so, then Kapital is just a new edition of Proudhon’s Contradictions économiques, which Marx had treated with such biting ridicule. And if the capitalist régime is really so full of contradictions that are inherent in its very nature, how difficult it must be to tell whether it will eventuate in collectivism or not and how very rash is scientific prophecy about annihilation and a final catastrophe![1012]
The fundamental theory of Marxism, that of labour-value, appears to be abandoned by the majority of modern Marxians, who are gradually veering round and adopting either the “final utility” or the “economic equilibrium” theory.[1013] Even Marx himself, despite his formal acceptance of the labour-value theory, is constantly obliged to admit—not explicitly, of course—that value depends upon demand and supply.[1014] Especially is this the case with profits, as we have already had occasion to remark. What appears as an indisputable axiom in the first volume is treated as a mere working hypothesis in the later ones.
But seeing that the other Marxian doctrines—the theories of surplus value and surplus labour, for example—are mere deductions from the principle of labour-value, it follows that the overthrow of the first principle must involve the ruin of the other two. If labour does not necessarily create value, or if value can be created without labour, then there is no proof that labour always begets a surplus value and that the capitalist’s profit must largely consist of unremunerated labour. The Neo-Marxians in reply point to the fact that surplus labour and surplus value do exist, else how could some individuals live without working? They must obviously be dependent upon the labour of others.[1015] All this is very true, but the fact had been announced by Sismondi long before, and the evil had been denounced both by him and the English critics. It is the old problem of unearned increment which formed the basis of Saint-Simon’s doctrine and Rodbertus’s theory, and which has been taken up quite recently by the English Fabians.
It is difficult to see what definite contribution Marx has made to the question, and the old problem as to whether workers are really exploited or not and whether the revenues obtained by the so-called idle classes correspond to any real additional value contributed by themselves still remains unsettled. We can only say that his historical exposition contains several very striking instances which seem to prove this exploitation, and that this is really the most solid part of his work.
Passing on to the law of concentration—the vertebral column of the Marxian doctrine—we shall find upon examination that it is in an equally piteous condition. The most unsparing critic in this case has been a socialist of the name of Bernstein, who has adduced a great number of facts[1016]—many of them already advanced by the older economists—which go to disprove the Marxian theory. It may be impossible to deny that the number of great industries is increasing rapidly and that their power is growing even more rapidly than their numbers, but it certainly does not seem as if the small proprietors and manufacturers were being ousted. Statistics, on the contrary, show that the number of small independent manufacturers (the artisans who, according to Marxian theory, had begun to disappear as far back as the fourteenth century) is actually increasing. Some new invention, such as photography, cycling, or the application of electricity to domestic work, or the revival of an industry such as horticulture, gives rise to a crowd of small industries and new manufactures.
But concentration as yet has scarcely made an appearance even in agriculture, and all the efforts of the Marxians to make this industry fit in with their theory have proved utterly useless. America as well as Europe has been laid under tribute with a view to supplying figures that would prove their contention. The statistics, however, are so confusing that directly opposite conclusions may be drawn from the same set of figures. The amount of support which they lend to the Marxian contention seems very slight indeed. On the whole they may be said to lend colour to the opposite view that the number of businesses is at least keeping pace with the growth of population. Were this to be definitely verified it would set a twofold check upon the Marxian theory. Not only would it be proved that petite culture is on the increase, but it would also be found that it is on the increase simply because it is more productive than “the great industry.”
But suppose for the sake of hypothesis that we accept the law of concentration as proved. That in itself is not enough to justify the Marxian doctrine. To do this statistics proving an increasing concentration of property in the hands of fewer individuals are also necessary; but in this case the testimony of the figures is all in the opposite direction. We must not be deceived by the appearance of that new species, the American millionaire. There are men who are richer than the richest who ever lived before, but there are also more men who are fairly rich than ever was the case before. The number of men who make a fortune—not a very great one, perhaps, but a moderate-sized or even a small one—is constantly growing. Joint stock companies, which according to the Marxian view afforded striking evidence of the correctness of his thesis, have, on the contrary, resulted in the distribution of property between a greater number of people, which proves that the concentration of industry and the centralisation of property are two different things. Or take the wonderful development of the co-operative movement and reflect upon the number of proletarians who have been transformed into small capitalists entirely through its instrumentality. To think that expropriation in the future will be easier because the number of expropriated will be few seems quite contrary to facts. It looks as if it were the masses, whose numbers are daily increasing, who will have to be expropriated, after all. More than half the French people at the present day possess property of one kind or another—movable property, land, or houses. And yet the collectivists never speak except with the greatest contempt of these rag-ends and tatters of property, fondly imagining that when the day of expropriation comes the expropriated will joyfully throw their rags aside in return for the blessings of social co-proprietorship. Apparently, however, the Marxians themselves no longer believe all this. Their language has changed completely, and just now they are very anxious to keep these rags and tatters in the hands of their rightful owners.
The changes introduced into the programme as a result of this have transformed its character almost completely. When it was first drawn up and issued as a part of the Communist Manifesto nearly fifty years ago everybody expected that the final disappearance of the small proprietor was a matter of only a few years, and that at the end of that time property of every description would be concentrated in the hands of a powerful few. This continuous expropriation would, of course, swell the ranks of the proletariat, so that compared with their numbers the proprietors would be a mere handful. This would make the final expropriation all the easier. With such disparity in numbers the issue was a foregone conclusion, no matter what method was employed, were it a revolution or merely a parliamentary vote.
Unfortunately for the execution of this programme, not only do we find the great capitalist still waxing strong, which is quite in accordance with the orthodox Marxian view, but there is no evidence that the small proprietor or manufacturer is on the wane. The Marxian can scarcely console himself with the thought that the revolution is gradually being accomplished without opposition when he sees hundreds of peasant proprietors, master craftsmen, and small shopkeepers on every side of him. Nor is there much chance of forcing this growing mass of people, which possibly includes the majority of the community even now, to change its views. We can hardly expect them to be very enthusiastic about a programme that involves their own extinction.
A distinction has obviously been drawn between two classes of proprietors. The socialisation of the means of production is only to apply to the case of wealthy landowners and manufacturers on a large scale—to those who employ salaried persons. But the property of the man who is supporting himself with the labour of his own hands will always be respected. The Marxians defend themselves from the reproach of self-contradiction and opportunism by stating that their action is strictly in accordance with the process of evolution. You begin by expropriating those industries that have arrived at the capitalistic and wage-earning stage. The criterion must be the presence or otherwise of a surplus value.
The conclusion is logical enough, but one would like to know what is going to become of the small independent proprietor. Will he be allowed to grow and develop alongside of the one great proprietor—the State? We can hardly imagine the two systems coexisting and hopelessly intermingled, as they would have to be, but still with freedom for the individual to choose between them. The collectivists have at any rate made no attempt to disguise the fact. They look upon it merely as a temporary concession to the cowardice of the small proprietor, who will presently willingly abandon his own miserable bit of property in order to share in the benefits of the new régime, or who will at any rate be put out of the running by its economic superiority. But since the prospects do not seem very attractive to those immediately concerned, it may be as well to dispense with any further consideration of the subject.
But there is another question. What has become of the class struggle in Neo-Marxism? The doctrine, though not altogether denied, is no longer presented as a deadly duel between two classes and only two, but as a kind of confused mêlée involving a great number of classes, which makes the issue of the conflict very uncertain. The picture of society as consisting merely of two superimposed layers is dismissed as being altogether too elementary. On the contrary, what we find is increasing differentiation even within the capitalist class itself. There is a perpetual conflict going on between borrower and lender, between manufacturer and merchant, between trader and landlord, the last of which struggles is especially prominent in the annals of politics. It has a long history, but in modern times it takes the form of a political battle between the Conservative and Liberal parties, between Whigs and Tories. These undercurrents complicate matters a great deal, and on occasion they have a way of dramatically merging with the main current, when both parties seek the help of the proletariat. In England, for example, the manufacturers succeeded in repealing the Corn Laws, which dealt a hard blow at the landed proprietors, who in turn passed laws regulating the conditions of labour in mines and factories. In both cases the working classes gained something—tertius gaudens! Then there are the struggles among the working classes themselves. Not to speak of the bitter animosity between the syndicats rouges and the syndicats jaunes, there is the rivalry between syndicalists and non-syndicalists, between skilled workmen and the unskilled. As Leroy-Beaulieu remarks, not only have we a fourth estate, but there are already signs of a fifth.
And what of the great catastrophe? The Neo-Marxians no longer believe in it. The economic crises which furnished the principal argument in support of the catastrophic theory are by no means as terrible as they were when Marx wrote. They are no longer regarded as of the nature of financial earthquakes, but much more nearly resemble the movements of the sea, whose ebb and flow may to some extent be calculated.
And the materialistic conception of history? “Every unbiased person must subscribe to that formula of Bernstein: The influence of technico-economic evolution upon the evolution of other social institutions is becoming less and less.”[1017] What a number of proofs of this we have! Marxism itself furnishes us with some. The principle of class war and the appeal to class prejudice owe much of the hold which they have to a feeling of antagonism against economic fatalism. In other words, they draw much of their strength from an appeal to a certain ideal. It is, of course, true that facts of very different character, economic, political, and moral, react upon one another, but can anyone say that some one of them determines all the others? Economists have been forced to recognise this, and the futile attempt to discover cause or effect has recently given place to a much more promising search for purely reciprocal relations.
It is by no means easy to determine how much Marxism there is in Neo-Marxism. “Is there anything beyond the formulæ which we have quoted, and which are becoming more disputable every day? Is it anything more than a philosophical theory which purports to explain the conflicts of society?”[1018] Bernstein tells us somewhere that socialism is just a movement, and that “the movement is everything, the end is nothing.”[1019]
2. THE NEO-MARXIAN SYNDICALISTS
Doctrinaire Marxism seemed languishing when a number of professed disciples found a fresh opportunity of reviving its ideals and of justifying its aims in a new movement of a pre-eminently working-class character known as Syndicalism.
Our concern is not with the reformist movement, occasionally spoken of as Trade Unionism, which constitutes the special province of M. Bernstein and the Neo-Marxians of his school,[1020] but rather with militant syndicalism, which as yet scarcely exists anywhere except in France and Italy, and which in France is represented by the Confédération générale du Travail.
What connection is there between Marxism and syndicalism? Of conscious, deliberate relationship there is scarcely any. The men who direct the Confédération have never read Marx, possibly, and would hardly concern themselves with the application of his doctrines. On the other hand, we have recently been told that the programme of the Confédération générale du Travail (C.G.T.) is in strict conformity with the Marxian doctrine; that since the reforming passion has so seized hold of the Neo-Marxians as to drive them to undermine the older doctrine altogether, it is necessary to turn to the new school to find the pure doctrine. They make the further claim of having aroused new enthusiasm for the Marxian doctrines.
(a) In the first place they have re-emphasised the essentially proletarian character of socialism. Not only is there to be no dealing with capitalist or entrepreneur, but no quarter is to be given to the intellectuals or the politicians. The professional labour syndicate is to exclude everyone who is not a workman, and it has no interest at heart other than that of the working class.[1021] Contempt for intellectualism is a feature of Marxism, and so is the emphasis laid upon the beauty and worth of labour, not of every kind of labour, but merely of that labour which moulds or transforms matter—that is, of purely manual labour.
No institution seems better fitted to develop class feeling—that is, the sense of community of interests binding all the proletarians together against the owners—than the syndicat. Organisation is necessary if social consciousness is to develop. This is as true in the economic as it is in the biological sphere, and this is why the syndicat is just what was needed to transform the old socialistic conception into real socialism. Marx could not possibly have foreseen the vast potentialities of the syndicat. If he had only known it how his heart would have rejoiced! The Neo-Marxians can never speak of syndicalism without going into raptures. No other new source of energy seems left in this tottering middle-class system. But syndicalism has within it the promise of a new society, of a new philosophy, even of a new code of morality which we may call producers’ ethics, which will have its roots in professional honour, in the joy that comes from the accomplishment of some piece of work, and in their faith in progress.[1022]
(b) New stress has been laid upon the philosophy of class war, and a fresh appeal has been made for putting it into practice. The only real, sensible kind of revolution is that which must sooner or later take place between capitalists on the one hand and wage-earners on the other, and this kind of revolution can only be effected by appealing to class feeling and by resorting to every instrument of conflict, strikes, open violence, etc. All attempts at establishing an understanding with the bourgeois class, every appeal for State intervention or for concessions, must be abandoned. Explicit trust must be placed in the method of direct action.[1023]
Strife is to be the keynote of the future, and in the pending struggle every trace of bourgeois legalism will be ruthlessly swept aside. The fighting spirit must be kept up, not with a view to the intensification of class hatred, but simply in order to hand on the torch.
The struggle has hitherto been the one concern of the revolutionary syndicalists. Unlike the socialists, they have never paid any attention either to labour or to social organisation. All this has, fortunately, been done by the capitalist, and all that is required now is simply to remove him.[1024]
(c) Nor has the catastrophic thesis been forgotten. This time it has been revived, not in the form of a financial crisis, but in the guise of a general strike. What will all the bourgeois generalship, all the artillery of the middle class, avail in a struggle of that kind? What is to be done when the worker just folds his arms and instantly brings all social life to a standstill, thus proving that labour is really the creator of all wealth? And although one may be very sceptical as to the possibility of a general strike—the scepticism is one that is fully shared in by the syndicalists themselves—still this “myth,” as Sorel calls it, must give a very powerful stimulus to action, just as the Christians of the early centuries displayed wonderful activity in view of their expectation of the second coming of Christ.
The word “myth” has been a great success, not so much among working men, to whom it means nothing at all, but among the intellectuals. It is very amusing to think that this exclusively working-class socialism, which is not merely anti-capitalist, but also violently anti-intellectual, and which is to “treat the advances of the bourgeoisie with undisguised brutality,” is the work of a small group of “intellectuals” possessed of remarkable subtlety, and even claiming kinship with Bergsonian philosophy.[1025] A myth perhaps! But what difference is there between being under the dominion of a myth and following in the wake of a star such as guided the wise men of the East, or being led by a pillar of flame or a cloud such as went before the Israelites on their pilgrimage towards the Promised Land?[1026] Such faith and hope borrowed from the armoury of the triumphant Church of the first century, such a conception of progress which swells its followers with a generous, almost heroic passion, puts us out of touch with the historic materialism so dear to the heart of Marx and brings us into line with the earlier Utopian socialists whom he so genuinely despised. Sorel recognises this. “You rarely meet with a pure myth,” says he, “without some admixture of Utopianism.”
IV. DOCTRINES THAT OWE THEIR INSPIRATION TO CHRISTIANITY
Everyone who knows the Bible at all or has the slightest acquaintance with the writings of the early Fathers must have been struck by the number of texts which they contain bearing upon social and economic questions. And one has only to recall the imprecations of the prophets as they contemplate the misdeeds of merchants and the greed of land-grabbers, or strive to catch the spirit of the parables of Jesus or the epistles of the Fathers concerning the duty of the rich towards the poor—a point emphasised by Bossuet in his sermon on The Eminent Dignity of the Poor—or dip into the folios of the Canonists or the Summa of Aquinas, to realise how imperative were the demands of religion and with what revolutionary vehemence its claims were upheld.[1027]
But not until the middle of the nineteenth century do we meet with social doctrines of a definitely Christian type, and not till then do we witness the formation of schools of social thinkers who place the teaching of the Gospel in the forefront of their programme, hoping that it may supply them with a solution of current economic problems and with a plan of social reconstruction.[1028] It is not difficult to account for their appearance at this juncture. Their primary object was to bear witness to the heresy of socialism, and the nature of the object became more and more evident as socialism tended to become more materialistic and anti-Christian. It became the Church’s one desire to win back souls from the pursuit of this new cult. It was the fear of seeing the people—her own people—enrol themselves under the red flag of the Anti-Christ that roused her ardour.[1029] But to regard it as a mere question of worldly rivalry would be childish and misleading. Rather must we see in it a reawakening of Christian conscience and a searching of heart as to whether the Church herself had not betrayed her Christ, and in contemplation of her heavenly had not forgotten her earthly mission, which was equally a part of her message; whether in repeating the Lord’s Prayer for the coming of the Kingdom and the giving of daily bread she had forgotten that the Kingdom was to be established on earth and that the daily bread meant, not charity, but the wages of labour.
Both doctrines and schools are of a most heterogeneous character, ranging from authoritative conservatism to almost revolutionary anarchism, and it will not be without some effort that we shall include them all within the limits of a single chapter. But it is not impossible to point to certain common characteristics, both positive and negative, which entitle us to regard them all as members of one family.
As a negative trait we have their unanimous repudiation of Classical Liberalism. This does not necessarily imply a disposition to invoke State aid, for some of them, as we shall see, are opposed even to the idea of a State. Neither does it imply a denial of a “natural order,” for under the name of Providence and as a manifestation of the will of God the “order” was a source of perennial delight to them. But man was to them an outcast without lot or portion in the “order.” Fallen and sinful, bereft of his freedom, it was impossible that of himself he should return to his former state of bliss. To leave the natural man alone, to deliver him over to the pursuit of personal interest in the hope that it might lead him to the good or result in the rediscovery of the lost way of Paradise, was clearly absurd. It was as futile in the economic as it was in the religious sphere. On the contrary, the Christian schools maintained that the “natural” man, the old man, the first Adam of the New Testament, must somehow be got rid of before room could be found for the new man within us. Every available force, whether religious, moral, or merely social, must be utilised to keep people from the dangerous slope down which egoism would inevitably lead them.[1030]
The new doctrines are also distinct from socialism, despite the fact that their followers frequently outbid the socialists in the bitterness of their attacks upon capital and the present organisation of society. They refuse to believe that the creation of a new society in the sense of a change in economic conditions or environment is enough. The individual must also be changed. To those who questioned Christ as to when the Kingdom of God should come, He replied, “The kingdom of God cometh not with observation … for, behold, the kingdom of God is within you,” and His answer is witness to the fact that social justice will only reign when it has achieved victory over human hearts. Social Christianity must never be compared with the socialism of the Liberals or the Associationists, for the latter believed man to be naturally good apart from the deteriorating effects of civilisation. Nor must it ever be classed with the collectivism of Marx, which has its basis in a materialistic conception of history and class war. Some of these Christian authors, it is true, regard State Socialism with a certain degree of favour and would possibly welcome co-operation, but to most of them legal coercion does not seem very attractive and they prefer to put their faith in associations such as the family, the corporation, or the co-operative society. We could hardly expect otherwise, seeing that every church is an organisation of some kind or other. The Catholic Church especially, whatever opinion we may have of it, is at once the greatest and the noblest association that ever existed. Its bonds are even stronger than death. The Church militant below joins hands with the Church triumphant above, the living praying for the dead and the dead interceding for the living.
From a constructive standpoint they defy classification. They have a common aspiration in their hope of a society where all men will be brothers, children of the one Heavenly Father,[1031] but many are the ways of attaining this fraternal ideal. In the same spirit they speak of a just price and a fair wage much as the Canonists of the Middle Ages did. In other words, they refuse to regard human labour as a mere commodity whose value varies according to the laws of supply and demand. The labour of men is sacred, and Roman law even refused to recognise bartering in res sacræ. But when it becomes a question of formulating means of doing this, the ways divide. Numerous as are the Biblical texts which bear upon social and economic questions, they are extraordinarily vague. At least they seem capable of affording support to the most divergent doctrines.
Some might consider it a mistake to devote a whole chapter to these doctrines, seeing that they are moral rather than economic, and that, with perhaps the exception of Le Play, who is only indirectly connected with this school, we have no names that can be compared with those already mentioned. But not a few intellectual movements are of an anonymous character. The importance of a doctrine ought not to be measured by the illustrious character of its sponsor so much as by the effect which it has had upon the minds of men. No one will be prepared to deny the influence which these doctrines have exercised upon religious people, an influence greater than either Fourier’s, Saint-Simon’s, or Proudhon’s. Moreover, they are connected with the development of important economic institutions, such as the attempt to revive the system of corporations in Austria, the establishment of rural banks in Germany and France, the development of co-operative societies in England, the growth of temperance societies, the agitation for Sunday rest, etc. Nor must we forget that the pioneers of factory legislation, the founders of workmen’s institutes, men like Lord Shaftesbury in England, Pastor Oberlin, and Daniel Legrand the manufacturer, were really Christian Socialists.
I: LE PLAY’S SCHOOL
Le Play’s[1032] school is very closely related to the Classical Liberal, some of its best known representatives actually belonging to both. There is the same antipathy to socialism and the same dread of State intervention.
But it is not difficult to differentiate from the more extreme Liberal school which finds its most optimistic expression in the works of certain French writers. The cardinal doctrine of that school, namely, that individual effort is alone sufficient for all things, finds no place in Le Play’s philosophy. Man, it seemed to him, was ignorant of what his own well-being involved. In the realm of social science no fact seemed more persistent or more patent than error. Every individual appeared to be born with a natural tendency to evil, and he picturesquely remarks that “every new generation is just an invasion of young barbarians that must be educated and trained. Whenever such training is by any chance neglected, decadence becomes imminent.”[1033]
Among the errors more particularly denounced by Le Play were the special idols of the French bourgeois—the “false dogmas of ’89” as he calls them.[1034] It seemed to him that no society could ever hope to exist for any length of time and still be content with the rule of natural laws, which merely meant being ruled by the untamed instincts of the brute. It must set to and reform itself. Hence his book is entitled Social Reform, and the school which he founded adopted the same title.
Some kind of authority is clearly indispensable; the question is what it should be. The old paterfamilias relation immediately suggests itself as being more efficacious than any other, seeing that it is founded in nature and not on contract or decree, and springs from love rather than coercion. The family group under the authority of its chief, which was the sole social unit under the patriarchal system, must again be revived in the midst of our complex social relations. But parental control cannot always be relied upon, for the parent is frequently engrossed with the other demands of life, and there is positive need for some social authority. This new social authority will not be the State—that is, if Le Play can possibly avoid it. The first chance will be given to “natural” authorities—those authorities which rise up spontaneously. The nobility is well fitted for the task where it exists. In the absence of nobility, or where, as was unfortunately the case in France, they were impervious to a sense of duty, society must fall back upon the landed proprietors, the employers, and persons of ripe judgment—men who hardly deserve the title of savants, but nevertheless with considerable experience of life. Failing these it could still appeal to the local authorities, to those living nearest the persons concerned, to the parish rather than the county, the county rather than the State. State intervention is indispensable only when all other authorities have failed—in the enforcement of Sunday observance, for example, where the ruling classes have shown a disposition to despise it. The necessity for State intervention is evidence of disease within the State, and the degree of intervention affords some index of the extent of the malady.[1035]
Seeing that he attaches such importance to the constitution of the family, Le Play is also bound to give equal prominence to the question of entail, which determines the permanence of the family. Herein lies the kernel of Le Play’s system. He distinguishes three types of families:
1. The patriarchal family. The father is the sole proprietor, or, more correctly, he is the chief administrator of all family affairs. At his death all goods pass by full title to the eldest son. Such is the most ancient form of government of which we have any record. It is the political counterpart of the pastoral régime, and both may still be seen in full operation on the Russian steppes.
2. The family group. Children and grandchildren no longer remain under paternal authority throughout life. With a single exception they leave the family hearth and proceed to found new homes. Whoever remains at home becomes the heir, after first becoming his father’s associate during the latter’s lifetime. He becomes the new head of the family by paternal wish, and not of legal right or necessity. The property thus passes to the worthiest, to him who is thought best able to preserve it. It is this régime, Le Play thinks, that explains the extraordinary stability of China; and the same system, though somewhat shaken, is the source of England’s strength and vitality. There were some parts of France where, in spite of the Civil Code, a similar system was still in vogue. There was one such family in particular, that of the Pyrenean peasant Melouga, whose history showed a wonderful continuity, and the story of that family recurs as a kind of leitmotiv through the whole of the writings of Le Play and his immediate disciples. The Melouga family has since become extinct.
3. The unstable family, where all the children, as soon as they arrive at maturity, quit the home and set up for themselves. At the father’s death the family, already scattered, is completely dissolved. The patrimony is divided equally between all its members, and any business which the father may have possessed, whether agricultural or industrial, goes into immediate liquidation. This is the régime born of individualism which is characteristic of all modern societies, especially France.
Le Play’s sympathy is entirely with the second, for the family group seems to hold the balance evenly between the two antagonistic forces which are both indispensable for the welfare of society, namely, the spirit of conservatism and the spirit of innovation. Under the patriarchal system the former preponderates,[1036] while under the régime of the unstable family it is utterly wanting. The latter reminds us of Penelope’s web—each generation making a fresh beginning. But this periodical division of wealth fails to give the desired degree of equality, for the removal of every trace of solidarity between the members means that the one may become rich and the other sink into poverty. Everyone fights for his own hand. Moreover, when children only remain with their parents for just a short period of tutelage there is a powerful incentive given to race suicide, as is clearly shown in the case of France. As soon as the offspring find themselves in a position of self-sufficiency they leave the old home, just as the young animal does. Under such circumstances it is clearly to the interest of parents to have as few children as possible.[1037]
The family group, on the other hand, entrusts its traditions and their preservation to the keeping of the child who remains at home. Those who leave have their way to make, and become heirs of that industrial spirit which has made England the mistress of the world. True fraternal equality is also preserved, for the old home always remains open—a harbour of refuge to those who fail in the industrial struggle. To mention but one instance, the “old maid,” whose lot is often exceedingly hard, need never be without a home.
Apart from moral reform, there seemed only one way of establishing the family group in France, namely, by greater freedom of bequest, or at the very least by increasing the amount of goods that may be given to any one child, so that a father might be able to transmit the whole of his land or his business to any one of his children on condition that the heir fairly indemnified each of his brothers should their respective shares be insufficient.[1038]
A father’s authority over his children is an indispensable element in the stability of society, and a master’s authority over his men, though derivative in character, is scarcely less so. The continuance of social peace largely depends upon the latter, and the preservation of social peace should be the essential aim of social science.[1039] We are continually meeting with the expression “social peace” in the writings of Le Play and his school, and the associations which they founded became known as “Unions of Social Peace.”
Play’s first essay, an admirably planned Exposition of Social Economics, was published in 1867. The sole object of its author was to further the establishment of such institutions as were likely to promote understanding among all persons employed in the production of the same goods. We might even be tempted to say that the whole co-partnership movement started by Dollfus at Mulhouse in 1850 with the utterance of the famous phrase, “The master owes something to the worker beyond his mere wages,” was inspired by Le Play.[1040] Le Play pinned his faith to the benevolent master. It was quite natural that the apostle of the family group should regard the factory as possessing a great deal of the stability and many of the other characteristics of the family, such as its quasi-permanent engagements[1041] and its various grades of working men all grouped together under the authority of a well-respected chief.
Le Play’s thesis that the salvation of the working classes can only come from above seems to have even less foundation than the opposite doctrine of syndicalism, which claims that their deliverance is in their own hands, and it was once for all refuted in a brilliant passage of Stuart Mill’s:[1042] “No times can be pointed out in which the higher classes of this or any other country performed a part even distantly resembling the one assigned them in this theory. All privileged and powerful classes as such have used their power in the interest of their own selfishness.… I do not affirm that what has always been must always be. This at least seems to be undeniable, that long before the superior classes could be sufficiently inspired to govern in the tutelary manner supposed, the inferior classes would be too much improved to be so governed.”
Besides the master and the State there was still another factor of social progress which is of prime importance at the present time, namely, working men’s unions. One might reasonably have expected a more sympathetic treatment for them at Le Play’s hands, especially when we remember that they were proscribed by the “false dogmas of ’89.” But he had little faith in union, whether a corporation or a co-operative society.[1043] Trade unionism especially seemed rather useless, because it tended to destroy the more natural and more efficient organisation which appeared to him to be merely an extension of the family group. It is true that Le Play never saw unionism in operation, but it is hardly probable that he would have modified his opinion. At any rate, the attitude of his disciples is not much more favourable.
One feels tempted to say that there is nothing very new in all this. The remark would have been particularly gratifying to Le Play, who considered that invention was impossible in social science and that what he himself had done was merely to make a discovery.
The discovery of “the essential constitution of humanity,” as he called it, was, he thought, the outcome of his methods of observation. His method was really always more important than his doctrine. It has always enjoyed a considerable measure of success, and it seems to-day as if it would survive the doctrine. Le Play was brought up as a mining engineer and had travelled extensively.[1044] Twenty years of his life had been spent in this way, and during that period he had travelled over almost the whole of Europe, even as far as the Urals. It was while staying in the neighbourhood of those mountains that he conceived the idea of writing monographs dealing with individual families belonging to the working classes, a method of investigation which he is never weary of contrasting with that other “disdainful method of invention.”[1045]
To write a family monograph[1046] à la Le Play is not merely to relate its history, to describe its mode of life, and to analyse its means of subsistence, but also to sum up its daily life in a kind of double-entry book-keeping where every item of expenditure is carefully compared and balanced with the receipts. But there is much that is artificial and a great deal that is childish in this seemingly mathematical precision, where not merely economic wants but such needs as those of education, of recreation, and of intemperance, virtues as well as vices, are catalogued and reckoned in terms of £ s. d. Its advantage lies in its holding the attention of the observer, even when he is a mere novice at the work, by obliging him to put something in every column and allowing nothing to escape his notice.[1047]
But when Le Play proceeds to declare that this method has revealed the truth to him and helped him to formulate the doctrines of which we have just given a résumé it really seems as if he were making a great mistake. Actually it has only revealed what Le Play expected to find; in other hands it might have yielded quite different results. He declares that it has proved to him that only those families which are grouped under paternal authority and which obey the Ten Commandments are really happy.[1048] That may be, but how would he define a happy family? “A happy family is one that dwells in unity and abides in the love of God.” He has thus armed himself with a definite a priori criterion of happiness;[1049] but there is nothing to prove that the unstable disorganised family of the Parisian factory hand may not be infinitely more happy than the family group of Melouga or the patriarchal family of the Bashkirs of Turkestan.
A comparison has often been drawn between Le Play’s school and the German Historical school. It is pointed out that both schools lay great emphasis upon the method of observation and focus attention upon the institutions of the past, and that to some extent they both represent a reaction against Liberalism and Classical optimism. But the resemblance is wholly superficial. At bottom the two schools are not merely different, but even divergent. The German school seeks the explanation of the present in the past, while Le Play’s school is merely out to learn a few lessons. The one studies the germ which is to develop and to bear fruit, while the other admires the type and the model to which it thinks it necessary to conform. The one is evolutionary, the other traditional, and the conclusions of the former are radical in the extreme, and even socialistic, while those of the latter are usually conservative.
And so Play’s true position is in the chapter dealing with Social Christianity, and not among the writers of the Historical school.
His unshaken belief in the natural propensity of man to evil and error is sufficient to give him his place. But we must beware of confusing his doctrine with that of the Social Catholics, for, unlike them, he is rather prone to invoke the authority of the Mosaic law, especially the Decalogue, and to take his illustrations from England, which is a Protestant country, or from China or Mohammedan lands. His importance among authorities on social questions is not very great, but his attitude towards Church and clergy was on the whole defiant,[1050] and the plan of reform of which we have just given an outline is very different from that of the Social Catholics.
There was a schism in the school in 1885. The “Unions of Social Peace,” with their organ, La Réforme sociale, have on the whole remained faithful to the programme as outlined in this chapter. The dissenting branch, on the other hand, with M. Demolins and the Abbé de Tourville as leaders, has developed the doctrine on its ultra-individualistic or Spencerian side, so that only in origin can it be regarded as at all connected with the school of Le Play.
The “School of Social Science,” as it is called—at least, that is the name it has given to its review—claims that it is still faithful to the method of the master. It even goes so far as to say that Le Play was ignorant of the full possibilities of this method, and condemns his failure to establish a positive science by means of it. In reality, however, the master’s method has quite a subordinate rôle in the activities of this new school, for the simple reason that it is practically useless except for the production of monographs. The new school arranges its facts according to their natural relations, and attempts to link the study of social science to the study of geographical environment.[1051] The study of environment receives some attention in the works of Le Play himself, but it has assumed much greater importance since then. To give but a single instance, the new school attempts to show how the configuration of the Norwegian fiord, the almost complete absence of arable land, and the consequent recourse to fishing as a means of livelihood, even the very dimensions of their sea-craft, have helped to fix the type of family and even the political and economic constitutions prevalent among the Anglo-Saxon race. In a similar fashion, the vast steppes of central and southern Asia have begotten a civilisation of their own. It is the Historical materialism of the Marxian school reappearing in the more picturesque and more suggestive guise of geographical determinism.[1052]
The new school, however, is not very favourably inclined to Le Play’s programme of social reform, especially its teaching concerning the family. Their aim is not the preservation of the family, but the placing of each child in a position to found a family of his own as soon as possible. Their object is neither family nor communal solidarity, but self-help, not the family group, but the single individual family, not the English, but the American home. Demolins is an ardent believer in the struggle for existence, and no one has ever professed greater contempt for the solidarist doctrine. “Social salvation, like eternal life,” says he, “is essentially a personal affair”—a singularly heterodox declaration, by the way, for if salvation is a purely personal matter of what use is the Church?[1053]
II: SOCIAL CATHOLICISM
The term “Catholic Socialism,” which is occasionally employed as an alternative to the above title, is objected to by the majority of Catholics as being excessively restrictive. The generic term “Christian Socialism” was first employed by a Frenchman, Francis Huet, in a book entitled Le Règne social du Christianisme, published in 1853.[1054]
But at least two other authors, namely, Buchez in his Essai d’un Traité complet de Philosophie au point de vue du Catholicisme et du Progrès (1838-40), and the fugitive Abbé de Lamennais in La Question du Travail (1848), can lay considerable claims to priority in the matter. Buchez was the founder of the Co-operative Association of Producers (1832), and Lamennais outlined a scheme of co-operative banks almost exactly like those afterwards established in Germany by Raiffeisen.[1055]
Present-day Catholicism, however, shows no great desire to honour any of them. The one ambition of these three republicans was to effect a union between the Church and the Revolution.[1056] The most advanced of the Social Catholics of to-day, on the other hand, would be well satisfied could they establish some kind of understanding between the Church and democracy. Such at least is the programme recently laid down by M. Marc Sangnier, the founder of the Sillon.
About the same time we find Monseigneur von Ketteler, Bishop of Mayence, preaching a doctrine which drew its inspiration, not from “the false dogmas of ’89,” but from the institutional life of the Middle Ages, from the guilds and the other corporative associations, which are minutely described by him and his disciples, especially Canon Moufang and the Abbé Hitze. Some such institutional activity was again to form the corner-stone of Social Catholicism.[1057]
During the period of the Second Empire most of the Social Catholics seem to have fallen asleep, but they were aroused from their slumbers by the disaster of 1870. The Comte Albert de Mun proved the inspirer this time, and his noble eloquence, which led to the formation of unions of Catholic working men, was instrumental in giving the movement a vigorous start. The same period witnessed the appearance of L’Association catholique, a review which took as its programme the study of economic facts in a Catholic spirit—an object that has always been kept steadily in view.
Organisation in the form of corporations was given first place in the Social Catholic programme.[1058] Le Play’s corner-stone—the family organisation—was not rejected, but they considered that though the family was to remain the basis for moral reform a wider association of an economic character must serve as a basis for economic reform.
At first sight this may seem somewhat surprising. The connection between these professional associations and the teaching of the Gospel is not very evident, nor is it very clear how such organisations could ever hope to Christianise society. But although the Gospels know nothing of a corporative or any other régime we must not forget their prominence during the Middle Ages—when the authority of the Church was in the ascendant. As long as this régime lasted what we understand as the social question—the vexed problem as to whether we possess sufficient moral strength to keep the peace between capital and labour—never presented itself. The problem is, of course, somewhat different to-day, but its solution may possibly require the exercise of similar virtues, namely, obedience to a detailed system of organisation coupled with a feeling of brotherhood—the chastening of the whole complexity of social relations by the spirit of Christianity.
Some of their opponents have not hesitated to charge these Catholics with a desire to return to the feudalism of the Middle Ages, which is of course utterly false. What the Social Catholics wished to do was to build up the new social structure upon the basis of the modern trade union, or upon syndicalism; and the proof that the foundation is not at any rate too narrow lies in the fact that the new schools of socialists can conceive of none better. With this as the foundation they looked forward not merely to the development of a new society, but also to the rise of a new ethic. The fact that they forestalled the socialists in this respect shows that the Social Catholics were at least not hopelessly antiquated.
Early in the history of the movement they tried to organise a kind of mixed syndicat consisting both of masters and men, because this seemed to them to offer the best guarantee for social peace. But the results proved disappointing, and they were soon forced to relinquish that idea and to content themselves with a separate organisation of masters and men co-operating only in matters relating to the regulation of work or the settling of differences.[1059] Such collateral unions, it was at first thought, would gradually become the organs of labour legislation, and the State would entrust them with the discharge of that function because of their greater freedom in the making of experiments. All questions affecting the interests of a trade, the hours of labour, Sunday observance, apprenticeship, the sanitary condition of the workshops, the labour of women and children, and even the rate of wages paid, instead of being regulated as they are at present by brutal, inflexible laws which are seldom suited to meet every individual case, would henceforth be settled by the union, and the rules of the union would be incumbent upon all the members of the trade or profession, both masters and men. Everyone would be free to enter the union or to decline membership just as he chose, but no member would be allowed to violate the rules of the union or to lower the conditions of labour in any way. “Free association within an organised profession,” such is the formula.[1060]
To those Liberals who feign indignation at seeing purely private institutions thus invested with legislative authority it may be answered that the “labour union” so constituted forms an association which is as natural and as necessary—understanding by this that it is independent of the voluntary conventions of the parties interested—as one based upon community of residence. Everybody admits that the inhabitants of the commune ought to submit to the rule of the organised majority. What difference would it make if the majority thus organised constituted a corporation rather than a commune?[1061]
Some go so far as to regard these professional associations as possessed of an important political rôle, and would even go the length of making this new corporative unit the basis of a new franchise for the election of at least one of the two Chambers.
It is not very easy, perhaps, to get a clear idea of what a society built upon a plan of this kind would really be like, but the difficulty is no greater in this case than in some others.
In the first place it would have to be a society professing the Catholic faith.[1062] Should the enemies of religion or even the indifferent by any chance ever gain the upper hand in the social unit the whole structure would immediately fall to the ground. Its realisation, accordingly, is quite hypothetical.
It would also be a society founded upon brotherhood in the full sense of the term. The only real brotherhood is that founded upon the fatherhood of God, and not upon any socialistic conception of equality. But even brotherhood and a common parentage may not be sufficient to prevent irregularities, and the family relation in addition to this almost inevitably implies the rights of the youngest and the duties of the oldest. Within the corporative unit already outlined true equality would always reign, for the humblest, meanest task would be of equal dignity with the most exalted office in the State, and everyone would be content and even proud to live where God had placed him.[1063]
Such a society would be a pure hierarchy. All the authority and responsibility, all the duties involved, would be on the master’s side. On the worker’s side would be rights respected, life assured on the minimum level, and a re-establishment of family life.[1064]
Social Catholicism further undertook to disprove the first article in the socialist creed, namely, that “the emancipation of the workers can only be accomplished by the workers themselves.” It maintained that, on the contrary, this object could only be accomplished by the help of the masters and of all the other classes in society, not excluding even the non-professional classes, landed proprietors, rent-receivers, and consumers generally,[1065] all of whom ought to be informed of the responsibilities which their different positions impose upon them and of the special duty which is incumbent upon all men of making the most of the talents with which the Master has entrusted them.
The German Christliche Gewerkvereine, which gets most of its recruits among the Catholics, is already taking an important part in German political life and is doing something to counterbalance the “Reds,” or the revolutionary socialists. They advocate the union of masters and men, but are extremely anxious not to be confused with the “Yellows,” or those who advocate mixed unions. In other words, they are independent both of the masters and the socialists.
State intervention might be necessary at first in order to establish the corporative régime, but once founded it would naturally monopolise all the legislative and police power which affects labour in any way, especially in the matter of fixing wages,[1066] arranging pensions, etc. The legislature would still find ample material to exercise its powers upon outside these merely professional interests, especially in regulating the rights of property, prohibiting usury, protecting agriculture, etc.[1067]
“The State,” says the Immortale Dei, an Encyclical of Pope Leo XIII—repeating a text of St. Paul—“is the minister of God for good.” Elsewhere St. Paul declares that the Law is the schoolmaster to bring us unto Christ, and if we paraphrase this to mean that the function of law is to lead men to a higher conception of brotherhood we have a fairly exact idea of what Social Catholicism considered to be the function of the State. Occasionally the party has betrayed signs of more advanced tendencies which would bring it more into line with modern socialism. But for the most part such indications have been of the nature of individual utterances, which have generally resulted in the formal disapproval of Rome and the submission of the rebel.
It was M. Loesewitz in 1888 who made the first violent attack upon the so-called productivity theory of capital in L’Association catholique.[1068] It caused quite a sensation at the time, and provoked a disapproving reply from the Comte de Mun. Afterwards, however, the article became the programme of a party known as “Les jeunes Abbés.” Nor must we omit to mention the growth of the Sillon, founded in 1890, the political ambition of whose members is the reconciliation of the Church and democracy and even republicanism, and whose economic aim is the abolition of the wage-earner and his master.[1069] This is also the aim of the syndicalists, and Article 2 of the Confédération générale du Travail (C.G.T.) declares that one of the avowed objects of the federation is the disappearance of the wage-earner and the removal of his master. Instead of seeking a solution of the problem in the parallel action of syndicats of men on the one hand and of masters on the other, it would suppress the latter altogether, leaving the men the right of possessing their own instruments of production and of keeping intact the produce of their labour. It is true that the Sillon is under the ban of the Pope, but this essentially syndicalist movement is still in existence.
If the Catholic school has experienced some difficulty in throwing out a left wing it has never been without a right wing which has always shown a predilection for the masters. “The problem is not how to save the worker through his own efforts, but how to save him with the master’s co-operation”—the benevolent master of Le Play’s school over again.[1070] The right wing, moreover, thinks that the existing institutions would prove quite equal to a solution of the so-called social question if they were once thoroughly permeated with the Christian spirit or if the leaders really knew how to deal with the people.
III: SOCIAL PROTESTANTISM
Belief in the essentially individualistic nature of Protestantism is fairly widespread.[1071] For confirmation there is the emphasis it has always laid upon the personal nature of salvation and its denial of the necessity for any mediator between God and man, save only the Man Christ Jesus, whereas Roman Catholicism teaches that only through the Church—that great community of the faithful—is salvation ever possible. Protestantism is the religion of self-help, and naturally enough its social teaching is somewhat coloured by its theological preconceptions. Nor must we lose sight of its connection with middle-class Liberalism; and thus while in politics it is generally regarded as belonging to the left, in matters economic it is generally on the extreme right.[1072]
Whatever truth there may be in this attempt to sum up its doctrine and history, we shall find as a matter of actual fact that on economic grounds it is much more advanced than the Social Catholic school; and its extreme left, far from being content with the extinction of the proletariat, also demands the abolition of private property and the establishment of complete communal life.
Social Protestantism, or Christian Socialism as it is known in England, has a birthday which may be determined with some degree of accuracy. It was in the year 1850 that there was founded in England a society for promoting working men’s associations, having for its organ a paper entitled The Christian Socialist.[1073] Its best known representatives were Kingsley and Maurice, who subsequently became respectively professors of history and philosophy at Cambridge. A small number of lawyers also joined the society, among whom Ludlow, Hughes, and Vansittart Neale are the most familiar names. Kingsley was much in the public eye just then, not only because of his impassioned eloquence, but also on account of the success of his novel Alton Locke, which is perhaps the earliest piece of socialistic fiction that we possess. It is the story of a journeyman tailor and his sufferings under the sweating system—the horrors of which were thus revealed to the public for the first time.[1074]
The object which the Christian Socialists[1075] had in view, as we have already seen, was the establishment of working men’s associations. What type they should adopt as their model was not very easily determined. The trade unions, little known as yet, were just then struggling through the convulsions of their early infancy. Moreover, they were exclusively concerned with professional matters, with the struggle for employment and the question of wages, and altogether did not seem very well fitted to develop the spirit of sacrifice and love which was indispensable for the realisation of their ideal. Neither did the co-operative associations of consumers seem very attractive. True they had attained to some degree of success at Rochdale, but they were inspired by the teaching of Owen, which was definitely anti-Christian. The fact also that they merely proposed to make life somewhat less costly and a little more comfortable implied a certain measure of stoicism which hardly fitted them to be the chosen vessels of the new dispensation. And so the Christian Socialists naturally turned their attention to producers’ associations, just as the earliest Social Catholics had done before them. But it would be a mistake to imagine that they owed anything to Buchez, whom they appear to have ignored altogether. The reawakened interest in the possibilities of association which exercised such a fascination over John Stuart Mill in 1848 had touched their imagination, and Ludlow, one of their number, had the good fortune to be resident in Paris, and so witnessed this glorious revival. Such associations seemed to be just the economic instruments needed if a transformation was ever to be effected, and the very process of establishing them, it was hoped, would supply a useful means of discipline in the subordination of individual to collective interests. But the process of disillusion proved as rapid as it was complete. Contrary to what was the case in France, it cannot be said that they were ever really attempted in England.
But the work of the “Association” had not been altogether in vain. Defeated in its attempts to arouse the worker from his lethargy, and thwarted in its efforts by legal restrictions of various kinds, it began a campaign in favour of a more liberal legislation in matters affecting the welfare of the working classes. The result was the passing of the Industrial and Provident Societies Acts of 1852-62, which conferred legal personality for the first time upon co-operative associations, with consequent benefit to themselves and to other working men’s associations.
The Christian Socialists thought that the methods by which their ideals might be attained were of quite secondary importance. Experience had taught them that voluntary association or legislation even by itself could never be of much avail until the whole mental calibre of the worker was changed.[1076] What they strove for above all else was moral reform, and whenever they use the word “co-operation” they conceive of it not merely as a particular system of industry, but rather as the antithesis of the competitive régime or as the negation of the struggle for existence. Their thoughts are admirably summed up in a letter of Ludlow’s to Maurice written from Paris in March 1848, in which he speaks of the necessity for “Christianising socialism.”
Christian Socialism in England, though it has survived its founders, has been obliged to change its programme. It has abandoned the idea of a producers’ association, but still advocates other forms of co-operation. Just now its chief demand is for a reorganisation of private property, which is a particularly serious question in England, where the land is in the hands of a comparatively few people. In the words of the Psalmist, the Christian Socialists often cry out, “The earth is the Lord’s,” and they are never weary of pointing out how under the Mosaic law the land was redistributed every forty-nine years with a view to bringing it back to its original owners. And so it finds itself supporting the doctrines of Henry George, who may himself be classed as one of the Christian Socialists.[1077] There is also the Institutional Church, with its network of organisations for the satisfaction of the material, intellectual, and moral needs of the worker, which is becoming a prominent feature of modern English Church life. Moreover, several of the Labour leaders—Keir Hardie, for example—are earnest Christians. The Federation of Brotherhoods, which to-day includes over 2000 societies, with a membership of over a million working men, combines an ardent evangelical faith with a strong advocacy of socialism.[1078]
In the United States of America Christian Socialism is still more aggressive and outspoken in its attacks upon capitalism. The earliest society of Christian Socialists was founded at Boston in 1889. Since then these associations have multiplied rapidly. The latest of them defines its objects in the following terms: “To help the message of Jesus to permeate the Christian Churches and to show that socialism is necessarily the economic expression of the Christian life.” A little farther on it declares itself persuaded “that the ideal of socialism is identical with that of the Church, and that the gospel of the co-operative commonwealth is the Gospel of the Kingdom of God translated into economic terms.”[1079]
For the other extreme—the extreme right—we must look to Germany. In 1878 Pastors Stöcker and Todt founded the Christian Social Working Men’s Party, which, despite its title, drew most of its recruits from the middle classes. Later on Stöcker became Court preacher, and during his occupation of that post this kind of socialism found such favour in official quarters that he was able to say that it was his personal conviction that a social revolution was within the bounds of practical politics.[1080] But in 1890 the Emperor William II dismissed his pastor, and Christian Socialism immediately lost its official status.[1081]
At the Congress of Erfurt in 1896 two young pastors of Frankfort named Naumann and Goehre[1082] tried to win the adherence of the working classes by endeavouring to give the Protestant churches a more distinctively socialist bias. But the suggestion was condemned by the official Lutheran Church, the masters opposed it, and it received but very slight support from the Social Democrats. Altogether the movement proved abortive, and the pastors have long since turned aside to other interests.
In Switzerland also the movement is making considerable headway, and in Professor Ragaz and Pastors Kutter[1083] and Pflüger, the latter of whom has recently been made a deputy, it has found advocates whose views are at any rate sufficiently advanced.
In France there is at least one—there may possibly be more—Social Protestant school. But as it only includes a small fraction of Protestantism, which is itself in a hopeless minority, its influence is not very great. There are several important social movements, however, such as the crusades against alcoholism and pornography, the revival of co-operation and the demand for the erection of “People’s Palaces”—known as Solidarités—which are entirely due to the activities of this school. An association for the inductive study of social questions was founded in 1887 by Pastor Gouth, another pastor named Tomy Fallot being its president and inspirer.[1084] At first the demands of this group were extremely moderate, co-operation being their only mode of action and solidarity their social doctrine.[1085] This new doctrine of solidarity, although rather belonging to the Radical wing, being the very antithesis of Christian charity, as we shall see by and by, has been enthusiastically welcomed by the Social Protestants. The Protestants even claim that it was originally their own peculiar doctrine, and that other schools merely borrowed it; for where can be found a fuller expression of the law of solidarity than the two Christian doctrines of the fall and redemption of man? “For as in Adam all die, even so in Christ shall all be made alive.”
Curiously enough there is another group of young pastors who closely resemble what is known in Catholic circles as the Abbots’ Party. They are dissatisfied with the moderate claims of the Catholics as a whole, and like their American colleagues they demand the establishment of a form of collectivism.[1086] They think, at any rate, that the question of property ought to come up for consideration almost immediately.
In short, it seems true to say that in almost every country Social Christianity is gradually evolving into Christian Socialism, and the change of title is an index to the difference of attitude. In other words, Social Protestantism accepts the essential principles of international socialism, such as the socialisation of the means of production, class war, and internationalism, and endeavours to show that they are in complete accordance with the teaching of the Gospels.
But the stress which it lays upon the necessity for moral reform saves Social Protestantism from being hopelessly confused with collectivism, and the fact that it believes that individual salvation is impossible without social transformation helps to distinguish it from individual Protestantism.[1087] Conversion implies a change of environment. What is the use of preaching chastity when people have to sleep together in the same room without distinction of age or of sex? “Society,” says Fallot, “ought to be organised in such a fashion that salvation is at least possible for everyone.” “The régime of the great industry,” says M. Gounelle, “is the greatest obstacle to the salvation of sinners that the religion of Christ has yet met.” Protestant Socialism remains individualistic in the sense that while seeking to suppress individualism in the form of egoism as a centripetal force, it wishes to uphold it and to strengthen it as a principle of disinterested activity—as a centrifugal force. It takes for its motto those words of Vinet which may be found carved on the pedestal of his statue at Lausanne: “I want man to be his own master in order that he may give better service to everybody else.”[1088]
IV: THE MYSTICS
No review of Christian Social doctrines, however summary, can afford to omit the names of certain eminent writers who, though belonging to none of the above-mentioned schools, and having no definite standing either as socialists or economists, being for the most part littérateurs, historians, and novelists, have nevertheless lent the powerful support of their eloquence to the upholding of somewhat similar doctrines.[1089]
Tolstoy and Ruskin are the best known representatives of this movement on the borderland of Social Christianity, although they are by no means the only ones.[1090] These two grand old men, who both died at an advanced age, appeared to their contemporaries in much the same light as the prophets of old did to Israel. True descendants of Isaiah and Jeremiah, they exultantly prophesied the downfall of capitalism—the modern Tyre and Sidon—and announced the coming of the New Jerusalem—the habitation of justice. Their language even is modelled on Holy Writ, and Ruskin, we know, was from his youth upwards a diligent reader of the Bible.[1091] Both of them condemn the Hedonistic principle and denounce money as an instrument of tyranny which has resulted in setting up something like a new system of slavery,[1092] and they both advocate a return to manual labour as the only power that can free the individual and regenerate social life. They differ, however, in their conception of future society, which to Ruskin must be aristocratic, chivalrous, and heroic, while Tolstoy lays stress upon its being equalitarian, communal, and above all ethical. The one looks at society from the standpoint of an æsthete, the other from that of a muzhik: the one would breed heroes, the other saints.
Thomas Carlyle also deserves mention. Among the numerous books which he wrote we may mention, among others, his French Revolution (1837) and his Heroes and Hero-worship. Chronologically he precedes both Tolstoy and Ruskin, and his influence upon economic thought was greater than either of theirs. But we could hardly put him among the Christian Socialists because of his extreme individualism, and if he were to be given a place at all it would be with such writers as Ibsen and Nietzsche. His economic ideas, however, run parallel to Ruskin’s; and nowhere except perhaps in the choruses of the old Greek tragedies do we get anything approaching the passion which is displayed in their declamations against the present economic order.[1093]
Carlyle is possibly the strongest adversary that the old Classical school ever encountered. It was he who spoke of political economy as “the dismal science.” That abstract creation of the Classicists, the economic man, afforded him endless amusement, and he very aptly described their ideal State as “anarchy plus the policeman.” He is no less fierce in his denunciation of laissez-faire as a social philosophy.[1094] But he left us no plan of social reconstruction, being himself content to wait upon individual reform—a trait which brings him into intimate connection with the Christian Socialists.[1095]
Ruskin, on the other hand, has given us a programme of social regeneration which might be summarised as follows:[1096]
1. Manual labour should be compulsory for everybody. His readers were reminded of those words of St. Paul, “If any would not work, neither should he eat.” He thought it both absurd and immoral that a man should live in idleness merely by using money inherited from his ancestors to pay for the services of his fellow-men. Life is the only real form of payment; in other words, labour ought to be given in return for labour. To live upon the fruits of dead labour is surely absurd and contradictory. And it must be real human labour. Machinery of all kinds must be renounced except that which may be driven by wind or water—natural forces which, unlike coal, do not defile, but rather purify.
Ruskin wanted labour to be artistic, and he longed to see the artisan again become an artist as he was in the Middle Ages (which is a somewhat hasty generalisation perhaps). In practice this is not very easy. Some of his immediate disciples have set up as artistic bookbinders, but the number of people who can find employment at such trades must be exceedingly few.
Tolstoy, on the other hand, does not strive for artistic effect. His heart is set upon rural work, which he magnificently describes as “bread work,” and which seemed to him sufficiently noble without embellishment of any kind.
2. Work for everyone is the natural complement and the necessary corrective of the preceding rule of no idleness and no unemployment. In society as at present organised everybody is not obliged to work, while some individuals are obliged to be idle.[1097] This monstrous inequality must be remedied. There would be no difficulty about finding plenty of work for everyone if everyone did something. Under such a system there would be no unemployment, although there would be more leisure for some.
3. Labour would no longer be paid for according to the exigencies of demand and supply, which tend to reduce manual work to the level of a mere commodity. It would be remunerated according to the eternal principles of justice, which would not of necessity imply an appeal to any written law, but solely to custom, which even now fixes the salaries of doctors, lawyers, and professors. In these professions there are no doubt some individual inequalities, but there is also the norm, and it is a breach of professional etiquette to take less than this. The norm does occasionally find expression in the rules of the association, and in some such way Ruskin would fix not merely a minimum but also a maximum wage. Whatever profession a person follows, whether he be workman, soldier, or merchant, he should always work not merely for profit but for the social good. He must, of course, be suitably rewarded if his position as a worker is to be maintained and the work itself efficiently performed, but it can never be done if gain becomes the end and labour merely the means.
4. The natural sources of wealth—land, mines, and waterfalls—and the means of communication should be nationalised.
5. A social hierarchy graded according to the character of the services rendered should be established. The gradation must be accepted in no intolerant spirit, and must be respected by everybody. Chivalry is as necessary in an industrial as in a military society, and a new crusade against Mammonism[1098] should be preached both far and wide.
6. Above all else must come education—not mere instruction. What needs developing above everything is a sense of greatness, a love of beauty, respect for authority, and a passion for self-sacrifice. What especially need acquiring are the faculties of admiration, of hope, and of love.[1099]
Only the last item on the programme seems anywhere near realisation, but that by itself would justify our reference to Ruskin’s scheme. Not only has the suggestion resulted in the creation of working men’s colleges at Oxford and of Ruskin Colleges elsewhere, but it has also given rise to the garden city movement. These new cities are built with the express purpose of relieving the worst features of industrial life, and are so planned as not to interfere in any way either with the beauties of nature or with the health of the citizens.[1100]
Ruskin speaks of himself somewhere as an out-and-out communist, but his communism had also a touch of the aristocrat and the æsthete about it which possibly proved a recommendation in English society. Tolstoy is a much more thoroughgoing communist, and is violently opposed to “that low, bestial instinct which men call the right of private property.”[1101] His cry was “Back to the land,” and the practice of coaration; his ideal the mir. He was not anxious to know that everyone was working at some trade or other, but he thought everyone ought to produce his own food, which is the one inevitable law of human existence. Division of labour, which has been so extravagantly praised by economists, he thought of as a mere machination of the devil enabling men to evade the Divine commandment. At any rate it should only be adopted when the need for it arises, and after consultation with all the parties interested, and not indiscriminately, as is at present the case, with competition, over-production, and crises as the result.[1102]
If we are to take Tolstoy’s words literally, as he suggested we should take Christ’s words, then the society that he dreamt of is very far beyond even the communist ideal. More towns, more commerce, more subdivision of trades, more money, more art for art’s sake—such was to be the economic Nirvana of the communists.
V. RECENT DOCTRINES
In the earlier sections of this work no special difficulty was experienced in giving the essential traits of the economic thought of each period. But on the threshold of this last book we naturally feel some trepidation. The newer theories can scarcely be said to have fallen into their true perspective, and their full import is not clear to us contemporaries. Here, if anywhere, we shall run the risk of being arbitrary in our choice. It seems to us, however, that the economic thought of the end of the nineteenth and the beginning of the twentieth centuries reveals at least four dominant tendencies.
1. In the first place there is a quite unexpected revival of theoretical studies. Pure economic theory, which had been deliberately neglected by the Historical school, by the State and Christian Socialists, was in 1875 again taken up by a group of eminent writers who flourished in England, France, and Austria. With the aid of conceptions that had not been in current use since the days of Condillac, coupled with the application of the mathematical method, which had not been attempted since the time of Cournot, they have succeeded in substituting an attractive and ingenious theory of prices for the somewhat halting hypothesis put forth by the Classical theorists. The success of the method in other fields of economic inquiry is every day enhancing its reputation. A number of writers both in America and Europe (excepting France, perhaps) are engaged upon this task, following in the wake of Walras, of Jevons, and of Menger. Diagrams, algebraical formulæ, and subtle reasoning again characterise the works of economists. Pure economics, so much decried since the days of Ricardo, has once more justified its claim to a position of honour, and despite keen opposition it is attracting attention everywhere. From the point of view of economic science this is the most notable fact of recent years.
2. Parallel with this has gone on a profound change in socialism. We have already shown in the course of the preceding book the transformations undergone by Marx’s ideas at the hands of even his own followers. The decline is equally evident everywhere else. All pretension to set up a proletarian in opposition to a bourgeois economics has been renounced. “It is necessary,” says M. Sorel somewhere, “to abandon every thought of transforming socialism into a science.” In fact, French syndicalists, English Fabians, and German revisionists have rallied with more or less good grace to the scientific ideas of Pareto, Marshall, or Böhm-Bawerk. But the real reason for this change of attitude is the strong desire to devote themselves with greater vigour to the social and political demands of socialism. The general strike, the creation of syndicats, the establishment of co-operative societies, and the problems of municipal socialism are attracting more and more attention, whereas the theory of surplus value is falling into the background. Even more striking still, as we shall see, is the attempt made by some of them, especially the advocates of land nationalisation—to reconcile Liberalism and socialism upon the basis of a doctrine that is Classical par excellence—the theory of rent.
3. This is not the only change that socialism has undergone. The ideal of collectivism which long prevailed among the working classes was that of a centralised sovereign authority, and the active part taken by the collectivist party in the legislative and even in the administrative work of some countries still further encouraged this belief. But the old revolutionary spirit, always individualistic to the core, was still alive, especially in the Latin countries, and it began to show signs of impatience at the turn things had taken. And so we witness among the working classes a revival of Liberalism, harsh and violent in its expression perhaps, and doubtless very different from the founders’. Smith and Bastiat would have some difficulty in recognising it, and with a view to avoiding confusion with the older doctrine it has assumed the name libertaire, but is generally known by the no less authentic title of “anarchism.” This tendency towards extreme individualism and anarchy, of which there is unmistakable evidence even in the annals of the International, has gained the ascendancy over the working classes, leaving a deep mark upon the recent syndicalist movement in France and Italy. At the same time there has also appeared among writers of the bourgeois class a kind of philosophical and moral anarchism which affords further proof of the revival of individualism.
4. Owing to these transformations in the theories of individualism and socialism, that other doctrine which in an earlier book went by the name of State Socialism has also undergone a change. In France, at any rate, it has reappeared under the name of Solidarism, which attempts a justification of State intervention by basing it on new foundations and confining it within just limits. It thus really represents an effort at synthesising individualism and socialism.
These are the main currents which we have attempted to describe in the following chapters. By describing them as recent doctrines our aim was not to emphasise the date of their appearance—which indeed is often in the distant past—but to show that they are merely a fresh effort to rejuvenate the older theories of which they are the latest manifestation. We might perhaps have borrowed a term from another domain and referred to them as modernist doctrines did it not seem rash to group under a perfectly definite term conceptions that are so very diverse in character and which have nothing more than a chronological order binding them together.
I. THE HEDONISTS
I: THE PSEUDO-RENAISSANCE OF THE CLASSICAL SCHOOL
If we are to give this new doctrine its true setting we must return for a moment to our study of the Historical school. The criticism of that school, as we have already seen, was directed chiefly against the method of the Classical writers. The faith which their predecessors had placed in the permanence and universality of natural law was scornfully rejected, and the possibility of ever founding a science upon a chain of general propositions emphatically denied. Political economy, so it was decreed, was henceforth to be concerned merely with the classification of observed facts.
It would not have been difficult to foretell that the swing of the pendulum—in accordance with that strange rhythm which is such a feature of the history of thought—would at the opportune moment cause a reversion to the abstract method. That is exactly what happened. Just at the moment when Historical study seemed to be triumphantly forging ahead—that is, about the years 1872-74—several eminent economists in Austria, England, Switzerland, and America suddenly and simultaneously made their appearance with an emphatic demand that political economy should be regarded as an independent science. They brought forward the claims of what they called pure economics. Naturally enough there ensued the keenest controversy between the champions of the two schools, notably between Professors Schmoller and Karl Menger.
The new school had one distinctive characteristic. In its search for a basis upon which to build the new theory it hit upon the general principle that man always seeks pleasure and avoids pain, getting as much of the former with as slight a dilution of the latter as he possibly can.[1103] A fact of such great importance and one that was not confined to the field of economic activities, but seemed present everywhere throughout nature in the guise of the principle of least resistance, could scarcely have escaped the notice of the Classical theorists. They had referred to it simply as “personal interest,” but to-day we speak of it as Hedonism, from the Greek ἠδονή (pleasure or agreeableness). Hence the name Hedonists, by which we have chosen to designate these two schools.
The elimination of all motives affecting human action except one does not imply any desire on the part of these writers to deny the existence of others. They simply lay claim to the right of abstraction, without which no exact science could ever be constituted. In other words, they demand the right of eliminating from the field of research every element other than the one which they wish to examine. The study of the other motives belongs to the province of other social sciences. The homo œconomicus of the Classicals which has been the object of so much derision has been replaced on its pedestal. But it has in the meantime undergone such a process of simplification that it is scarcely better than a mere abstraction. Men are again to be treated as forces and represented by curves or figures as in treatises on mechanics. The object of the study is to determine the interaction of men among themselves, and their reaction upon the external world.
We shall also find that the new schools arrive at an almost identical conclusion with the old, namely, that absolutely free competition alone gives the maximum of satisfaction to everybody. Allowing for the differences in their respective points of view, to which we shall refer later on, what is this but simply a revival of the great Classical tradition?
Little wonder, then, that we find a good deal of sympathy shown for the old Classical school. Indeed, it is throughout regarded with almost filial piety.[1104]
This does not mean that the Classical doctrine is treated as being wholly beyond reproach, although it does mean that the new school could scarcely accuse it of being in error, seeing that it comes to similar conclusions itself. But what it does lay to the charge of the older writers is a failure to prove what they assumed to be true and a tendency to be satisfied with a process of reasoning which too often meant wandering round in a hopeless circle. Especially was this the case with their study of causal relations, forgetting that as often as not cause was effect and effect cause. The attempt to determine which is cause and which effect is clearly futile, and the science must rest content with the discovery of uniformities either of sequence or of coexistence.
This applies especially to the three great laws which form the framework of economic science, namely, the law of demand and supply, the law of cost of production, and the law of distribution, none of which is independent of the others. Let us review them briefly.
The law stating that “price varies directly with demand and inversely with supply” possessed just that degree of mathematical precision necessary to attract the attention of the new writers. In fact, it just served for the passage from the old to the new economics. But no sooner was the crossing effected than the bridge was destroyed. Little difficulty was experienced in pointing out that this so-called law which had been considered to be one of the axioms of political economy, the quid inconcussum upon which had been raised all the superstructure of economic theory, was an excellent example of that circular reasoning of which we have just spoken. There was a considerable flutter among the economists of the mid-nineteenth century when they found themselves forced to recognise this. However true it may be that price is determined by demand and supply, it is equally true that demand and supply are each in their turn determined by the price, so that it is impossible to tell which is cause or which is effect. Stuart Mill had already noted this contradiction, and had attempted correction in the way already described (p. 359). But he was ignorant of the fact that Cournot had completely demolished the formula by setting up another in its place, namely, that “demand is a function of price.”[1105] The substitution of that formula marks the inauguration of the Hedonistic calculus. Demand is now shown to be connected with price by a kind of see-saw movement, falling when prices rise and rising when prices fall. Supply is equally a function of price, but it operates in the opposite fashion, moving pari passu with it—rising as it rises and falling as it falls. Thus price, demand, and supply are like three sections of one mechanism, none of which can move in isolation, and the problem is to determine the law of their interdependence.
This does not by any means imply that there is no longer any place in economics for the law of demand and supply. It has merely been given a new significance, and the usual way of expressing it nowadays is by means of a supply and demand curve, which simply involves translating Cournot’s dictum into figures.
The same is true of the law stating that cost of production determines value. There is the same petitio principii here. It is easy enough to see, on the contrary, that the entrepreneur regulates his cost of production according to price. The Classical school had realised this as far as one of the elements in the cost of production was concerned, for it was quite emphatic in its teaching that price determined rent, but that rent did not determine price. It is just as true of the other elements. In other words, the second law is just as fallible as the first. It is obviously imperative that the vain quest for causal relations should be abandoned and that economists should be content with the statement that between cost of production and price there exists a kind of equilibrating action in virtue not of any mysterious solidarity which subsists between them, but because the mere absence of equilibrium due either to a diminution or an increase in the quantity of products immediately sets up forces which tend to bring it back to a position of equilibrium. This interdependent relation, which is extremely important in itself and upon which the Hedonists lay great store, is simply one example taken from among many where the value of one thing is just a function of another.
Similar criticism applies to the law of distribution, to the Classical doctrine of wages, interest, and rent. The way the Classical writers treated of these questions was extraordinarily naïve. Take the question of rent. You just subtract from the total value of the product wages, interest, and profit, and you are left with rent. Or take the question of profit. In this case you will have to subtract rent, if there is any, then wages and interest, the other component elements, and what remains is profit. Böhm-Bawerk wittily remarks that the saying that wages are determined by the product of labour apparently only amounts to this—that what remains (if any) after the other co-operators have had their share is wages. Each co-partner in turn becomes a residual claimant and the amount of the residuum is determined by assuming that we already know the share of the other claimants![1106]
The new school refuses any longer to pay honour to this ancient trinity. It is impossible to treat each factor separately because of the intimate connection between them, and their productive work, as the Hedonists point out, must necessarily be complementary. In any case, before we can determine the relative shares of each we must be certain that our unknown x is not reckoned among the known. This naturally leads them on to the realm of mathematical formulæ and equations.
All the Hedonists, however, do not employ mathematics. The Psychological school, especially the Austrian section of it, seems to think that little can be gained by the employment of mathematical formulæ. Some of the Mathematical economists, on the other hand, are equally convinced of the futility of psychology, especially of the famous principle of final utility, which is the corner-stone of the Austrian theory.[1107]
For the sake of clearness it may be better to take the two branches—the Psychological and the Mathematical—separately.
II: THE PSYCHOLOGICAL SCHOOL
The feature of the Psychological school is its fidelity to the doctrine of final utility, whatever that may mean.[1108] The older economists had got hold of a similar notion when they spoke of value in use, but instead of preserving the idea they dismissed it with a name, and it was left to the Psychological school to revive it in its present glorified form.
It must not be imagined that the term is employed in the usual popular sense of something beneficial. All that it connotes is ability to satisfy some human want, be that want reasonable, ridiculous, or reprobatory. Bread, diamonds, and opium are all equally useful in this sense.[1109]
Nor must we fall into the opposite error of thinking of it as the utility of things in general. Rather is it the utility of a particular unit of some specific commodity relative to the demand of some individual for that commodity, whether the individual in question be producer or consumer. It is not a question of bread in general, but of the number of loaves. To speak of the utility of bread in general is absurd, and, moreover, there is no means of measuring it. What is interesting to me is the amount of bread which I want. This simple change in the general point of view has effectively got rid of all the ambiguities under which the Classical school laboured.[1110]
1. The first problem that suggests itself in this connection is this: Why is the idea of value inseparable from that of scarcity? Simply because the utility of each unit depends upon the intensity of the immediate need that requires satisfaction, and this intensity itself depends upon the quantity already possessed, for it is a law of physiology as well as of psychology that every need is limited by nature and grows less as the amount possessed increases, until a point zero is reached. This point is called the point of satiety, and beyond it the degree of utility becomes negative and desire is transformed into repulsion.[1111] Hence the first condition of utility is limitation of supply.
So long as people held to the idea of utility in general it was impossible to discover any necessary connection between utility and scarcity. It was easy enough to see that an explanation that was not based upon one or other of these two ideas was bound to be unsatisfactory, but nobody knew why. As soon as the connection between the two was realised, however, it became evident that utility must be regarded as a function of the quantity possessed, and that this degree of utility constitutes what we call value.
2. Just as the notion of final utility solved one of the most difficult problems in economics, namely, why water, for example, has less value than diamonds, it also helped to clear up another mystery that had perplexed many economists from the Physiocrats downward, namely, how exchange, which by definition implies the equivalence of the objects exchanged, can result in a gain for both parties. Here at last is the enigma solved. In an act of exchange attention must be focused not upon the total but upon the final utility. The equality in the case of both parties lies in the balance between the last portion that is acquired and the last portion that is given up.
Imagine two Congoese merchants, the one, A, having a heap of salt, and the other, B, a heap of rice, which they are anxious to exchange. As yet the rate of exchange is undetermined, but let them begin. A takes a handful of salt and passes it on to B, who does the same with the rice, and so the process goes on. A casts his eye upon the two heaps as they begin mounting up, and as the heap of rice keeps growing the utility of each new handful that is added keeps diminishing, because he will soon have enough to supply all his wants. It is otherwise with the salt, each successive handful assuming an increasing utility. Now, seeing that the utility of the one keeps increasing, while that of the other decreases, there must come a time when they will both be equal. At that point A will stop. The rate of exchange will be determined, and the prices fixed by the relative measures of the two heaps. At that moment the heap of rice acquired will not have for A a much greater utility than has the heap of salt with which he has parted.
But A is not the only individual concerned, and it is not at all probable that B will feel inclined to stop at the same moment as A; and if he had made up his mind to stop before A had been satisfied with the quantity of rice given him no exchange would have been possible. We must suppose, then, that each party to the exchange must be ready to go to some point beyond the limit which the other has fixed in petto. This point can only be arrived at by bargaining.[1112]
3. Another question that requires answering is this: How is it that there is only one price for goods of the same quality in the same market? Once it is clearly grasped that the utility spoken of is the utility of each separate unit for each separate individual it will be realised that there must be as many different utilities as there are units, for each of them satisfies a different need. But if this is the case, why does a person who is famishing not pay a much higher price for a loaf than a wealthy person who has very little need for it? or, why do I not pay more when I am hungry than when I am not? The reason is that it would be absurd to imagine that goods which are nearly identical and even interchangeable should have different exchange values on the same market and especially for the same person. This law of indifference,[1113] as it is called, is derived from another law to which the Psychological school rightly attaches great importance, and which constitutes one of its most precious contributions to the study of economics, namely, the law of substitution. This law implies that whenever one commodity can be exchanged for another for the purpose of satisfying the same need, the commodity replaced cannot be much more valuable than the commodity replacing it.[1114]
For what is substitution but mutual exchange? And exchange implies equality, so that if there is a series of interchangeable goods none of them can be of greater value than any of the rest.
Consequently, if an individual has at his disposal 100 glasses of water, which is easily available everywhere except in the Sahara, perhaps, no one of these glasses, not even that one for which he would be willing to give its weight in gold were he very thirsty and that the only glassful available, will have a greater value than has the hundredth, which is worth exactly nothing. The hundredth is always there ready to be substituted for any of the others.
But the best way of getting a clear idea of final utility is not to consider the value of the object A, but of the object B, which can replace it. It becomes evident, then, that if I am about to lose some object, A, which I value a good deal but which can be perfectly replaced by another object, B, that object A cannot be much more valuable than B; and if I had the further choice of replacing it by C, C being less valuable than B, then A itself cannot be much more valuable than C.[1115]
We arrive, then, at this conclusion: The value of wealth of every kind is determined by the value of its least useful portion—that is, by the least satisfaction which any one portion of it can give.
* * * * *
Hitherto we have been concerned with the notion of final utility as applied to the problems of value and exchange, but has it the same effect when applied to problems of production, distribution, or consumption? The Hedonists have no doubt as to the answer, for what are production, distribution, and consumption but modifications of exchange?
Take production, for example. How is it that under a system of free competition the value of the product is regulated by its cost of production? It is because a competitive régime is by every definition a régime where at any moment one product may be exchanged for another of a similar character, the similarity in this case being simply the result of a certain transformation of the raw material. The law of substitution is operative here, and the reason why cost of production regulates value is that the cost of production at any moment represents the last interchangeable value.
The same is true of consumption, as we can see if we only watch the way in which each of us distributes his purchases and arranges his expenditure. There is evident everywhere an attempt to get the best out of life—to get all the enjoyment which our different incomes may be made to yield; here spending more on house-room and less on food, there curtailing on amusement and extending on charity, until a rough kind of equilibrium is reached where the final utility of the last exchanged objects—or, if another phrase be preferred, the intensities of the last satisfied needs—are equal. If the coin spent in purchasing the last cigar does not yield the same pleasure as the same coin yields when spent on a newspaper, the newspaper will in future probably take the place of the cigar. Consumption seems really to be a kind of exchange, with conscience for mart and desires as buyers and sellers.[1116]
Nor is the realm of distribution even beyond the reach of the utility theory. Its application to the problems of interest, wages, and rent is largely the work of American economists, especially of J.B. Clark. It is quite impossible for us to give an exposition of the subtle analyses in which the quarterly reviews of the American universities take such a delight, and which undoubtedly afford a very welcome relaxation in an atmosphere so charged with pragmatism and realism. But we must just glance at the theory of wages. Wages, like other values, must be determined by final utility. But the final utility of what, and for whom? The final utility of the services which the worker renders to the entrepreneur. Following other factors of production, the final productivity of the workers will determine their wages. That is, their final utility is fixed by the value produced by the marginal worker—no matter how worthless he may be—who only just pays the entrepreneur. The value produced by this almost supernumerary worker not only fixes the maximum which the employer can afford to give him, but also the wages given to all the other workers who can take his place, i.e. who are employed upon the same kind of work as his, although they may produce much more than he does; just as in the case of the 100 glasses of water the least valuable glassful determines the value of all the rest.[1117]
Thus is the productivity theory of wages at once confirmed and corrected. But this time it is the productivity of the least productive worker, of the individual who barely keeps himself. No wonder the theory has lost its optimistic note. Somehow or other it does not seem very different from the old “brazen law.”
The rate of interest follows a similar line—the marginal item of capital fixing the rate. It is even more true of capital, which is more completely standardised, with the result that the principle of substitution works much more easily.[1118]
Rent is treated at greater length in the next chapter.
Gradually we begin to realise how the observation of certain facts apparently of a worthless or insignificant character, such as the substitution of chicory for coffee or the complete uselessness of a single glove, enabled the Psychological school to propound a number of general theories such as the law of substitution and the doctrine of complementary goods which shed new light upon a great number of economic questions. There is something very impressive about this deductive process that irresistibly reminds one of the genie of the Thousand and One Nights, who grew gradually bigger and bigger until he finally reached the heavens. But then the genie was nothing but flame. It still remains to be seen whether this is equally true of the Hedonistic theories.
III: THE MATHEMATICAL SCHOOL[1119]
The Mathematical school is distinguished for its attachment to the study of exchange, from which it proposes to deduce the whole of political economy. Its method is based upon the fact that every exchange may be represented as an equation, A = B, which expresses the relation between the quantities exchanged. Thus the first step plunges us into mathematics.
However true this may be, the application of the method must necessarily be very limited if it is always to be confined to exchange. It is, however, a mistake to suppose that this is really the case, and one of the most ingenious and fruitful contributions made by the new school was to show how this circle could be gradually enlarged so as to include the whole of economic science.
Distribution, production, and even consumption are included within its ambit. Let us take distribution first and inquire what wages and rent are. In a word, what are revenues? A revenue is the price of certain services rendered by labour, capital, and land, the agents of production, and paid for by the entrepreneur as the result of an act of exchange.
And what is production? It is but the exchanging of one utility for another—a certain quantity of raw materials and of labour for a certain quantity of consumable goods. Even nature might be compared to a merchant exchanging products for labour, and Xenophon must have had a glimpse of this ingenious theory when he declared that “the gods sell us goods in return for our toil.” The analogy might be pushed still farther, and every act of exchange may be considered an act of production. Pantaleoni puts it elegantly when he says that “a partner to an exchange is very much like a field that needs tilling or a mine that requires exploiting.”[1120]
And what are capitalisation, investment, and loan but the exchange of present goods and immediate joys for the goods and enjoyments of the future?
It was a comparison instituted between the lending of money and an ordinary act of exchange that led Böhm-Bawerk to formulate his celebrated theory of interest. Böhm-Bawerk, however, is a representative of the Austrian rather than the Mathematical school.
Even consumption—that is, the employment of wealth—implies incessant exchanging, for if our resources are necessarily limited that must involve a choice between the object which we buy and that which with a sigh we are obliged to renounce. To give up an evening at the theatre in order to buy a book is to exchange one pleasure for another, and the law of exchange covers this case just as well as any other.[1121] It is the same everywhere. To pay taxes is to give up a portion of our goods in order to obtain security for all the rest. The rearing of children involves the sacrifice of one’s own well-being and comfort in exchange for the joys of family life and the good opinion of our fellow-men.
It is not impossible, then, to discover among economic facts certain relations which are expressible in algebraical formulæ or even reducible to figures. The art of the Mathematical economist consists in the discovery of such relations and in putting them forth in the form of equations.
For example, we know that when the price of a commodity goes up the demand for it falls off. Here are two quantities, one of which is a function of the other.[1122] Let us see how the law of demand in its amended form would express this.
If along a horizontal line A B we take a number of fixed points equidistant from one another to represent prices, e.g. 1, 2, 3, 4, 5 … 10, and from each of these points we draw a vertical line to represent the quantity demanded at that price, and then join the summits of these vertical lines, which are known as the ordinates, we have a curve starting at a fairly high point—representing the lowest prices—and gradually descending as the prices rise until it becomes merged with the horizontal, at which point the demand becomes nil.[1123]
What is very interesting is that the curve is different for different products. In some cases the curve is gentle, in others abrupt, according as the demand, as Marshall puts it, has a greater or lesser degree of elasticity. Every commodity has, so to speak, its own characteristic curve, enabling us, at least theoretically, to recognise that product among a hundred.[1124]
Geometrical figures can always take the place of equations, for every equation can be expressed in the form of a curve. Geometrical representation makes a quicker appeal to the eye, and it is extremely useful where people are not conversant with the calculus which is frequently employed by Cournot and other Mathematical writers. But it is hardly as fruitful, for a geometrical figure can only trace the relation between two quantities, one of which is fixed and the other is variable, or between three at most, when two would be variable. Even in this case recourse would be necessary to projections, and the figures in that case would not be very clear. In the case of algebraical formulæ, on the other hand, we can have as much variation as we like provided we have as many equations as there are variables.
We would naturally expect the supply curve to be just the inverse of the demand curve, rising with a rising price and descending with a falling one, so that by the time the price is zero supply is nil, whereas the demand is infinite.[1125]
But it is not quite correct to regard it as merely the inverse of the demand curve. A supply curve is really a much more complicated affair, because supply itself depends upon cost of production, and there are some kinds of production—agriculture, for example—where the cost of production increases much more rapidly than the quantity produced. In industry, on the other hand, the cost of production decreases as the quantity produced increases.
Mathematical political economy, not content with seeking relations of mutual dependence between isolated facts, claims to be able to embrace the whole field within its comprehensive formulæ. Everything seems to be in a state of equilibrium, and any attempt to upset it is immediately corrected by a tendency to re-establish it.[1126] To determine the conditions of equilibrium is the one object of pure economics.
The most remarkable attempt at systematisation of this kind was made by Professor Walras, who endeavoured to bring every aspect of the economic world within his formula, a task almost as formidable as that attempted by Laplace in his Mécanique céleste.[1127]
Let us imagine the whole of society included within one single room, say the London Stock Exchange, which is full of the tumult of those who have come to buy and sell, and who keep shouting their prices. In the centre, occupying the place usually taken up by the market, sits the entrepreneur, a merchant or manufacturer or an agriculturist, as the case may be, who performs a double function.
On the one hand he buys from producers, whether rural or urban, landlords, capitalists, or workers, what Walras calls their “productive services,” that is, the fertility of their lands, the productivity of their capital or their labour force, and by paying them the price fixed by the laws of exchange he determines the revenue of each; to the proprietor he pays a rent, to the capitalist interest, to the workman wages. But how is that price determined? Just as at the Exchange all values whatsoever are determined by the law of demand and supply, so the entrepreneur demands so many services at such and such a price and the capitalist or workman offers him so many at that price, and the price will rise or fall until the quantity of services offered is equal to the quantity demanded.
The entrepreneur on his side disposes of the manufactured goods fashioned in his factory or the agricultural products grown on his farm to those very same persons, who have merely changed their clothes and become consumers. As a matter of fact the proprietors, capitalists, and workers who formerly figured as the vendors of services now reappear as the buyers of goods. And who else did we expect the buyers to be? Who else could they be?
And in this market the prices of products are determined in just the same fashion as we have outlined above.
All at once, however, a newer and a grander aspect of the equilibrium comes to view. Is it not quite evident that the total value of the productive services on the one hand and the total value of the products on the other must be mathematically equal? The entrepreneur cannot possibly receive in payment for the goods which he has sold to the consumers more than he gave to the same persons, who were just now producers, in return for their services. For where could they possibly get more money? It is a closed circuit, the quantity that comes out through one outlet re-enters through another.
With the important difference that it keeps much closer to facts, the explanation bears a striking resemblance to Quesnay’s Tableau économique.[1128]
We have two markets in juxtaposition,[1129] the one for services and the other for products, and in each of them prices are determined by the same laws, which are three in number:
(a) On the same market there can be only one price for the same class of goods.
(b) This price must be such that the quantity offered and the quantity demanded shall exactly coincide.
(c) The price must be such as will give maximum satisfaction to the maximum number of buyers and sellers.
All these laws are mathematical in character and involve problems of equilibrium.
In some such way would the new school reduce the science of economics to a sort of mechanism of exchange, basing its justification upon the contention that the Hedonistic principle of obtaining the maximum of satisfaction at the minimum discomfort is a purely mechanical principle, which in other connections is known as the principle of least resistance or the law of conservation of energy. Every individual is regarded simply as the slave of self-interest, just as the billiard-ball is of the cue. It is the delight of every economist as of every good billiard-player to study the complicated figures which result from the collision of the balls with one another or with the cushion.[1130]
Another problem of equilibrium is to discover the exact proportion in which the different elements combine in production. Jevons compares production to the infernal mixture which was boiled in their cauldron by the witches in Macbeth. But the ingredients are not mixed haphazard, and Pareto thinks that they conform to a law analogous to the law known in chemistry as the law of definite proportions, which determines that molecules shall combine in certain proportions only. The combination of the productive factors is perhaps not quite so rigidly fixed as is the proportion of hydrogen and oxygen which goes to form water. Similar results, for example, may be obtained by employing more hand labour and less capital, or more capital and less hand labour. But there must be some certain proportion which will yield a maximum utility, and this maximum is obtainable in precisely the same way as in other cases of equilibrium—that is, by varying the “doses” of capital and labour until the final utility in the case both of capital and labour becomes equal. Generally speaking, this is the law that puts a limit to the indefinite expansion of industry, for whenever one element runs short, be it land or capital, labour or managing ability or markets, all the others are directly affected adversely and the undertaking as a whole becomes more difficult and less effective. Pareto rightly enough attaches the greatest importance to this law, and we have only to remember that it is the direct antithesis of the famous law of accumulation of capital to realise its full significance.
There are several other cases of interdependence to which the new school has drawn attention, as, for example, that of certain complementary goods whose values cannot vary independently. What is the use of one glove or one stocking without another, of a motor-car without petrol, of a table service without glasses? Not only is this true of consumption goods; it also applies to production goods. The value of coke is necessarily connected with the value of gas, for you cannot produce the one without the other, and this applies to all by-products. The possibility of utilising a by-product always lowers the price of the main commodity.
IV: CRITICISM OF THE HEDONISTIC DOCTRINES
The triumph of the new doctrines has been by no means universal. England, Italy, and Germany, and even the United States, where one would least expect enthusiasm for abstract speculation, have supplied many disciples, and several professorial chairs and learned reviews have been placed at their disposal. But up to the present France seems altogether closed to them. Not only was Walras, the doyen of the new school, forced to leave France to find in foreign lands a more congenial environment for the promulgation of his ideas, but until recently it would have been quite impossible to mention a single book or a single course of lectures given either in a university or anywhere else in which these doctrines were taught or even criticised.[1131]
We might have understood this antipathy more easily if France, like Germany, had already been annexed by the Historical school. There would have been some truth in a theory of incompatibility of tempers under circumstances of that kind. But the great majority of French economists were still faithful to the Liberal tradition, and one might naturally have expected a hearty welcome for a school that is essentially Neo-Classical and pretends nothing more than to give a fuller demonstration of the theories already taught by the old masters.[1132]
The mere fact, however, that they presumed to draw fresh lessons or to deduce new principles from those already formulated by the older writers appeared an unwarranted interference with doctrines that had hitherto seemed good enough for everyone. Criticism of that kind, of course, is not worth serious attention.
An easier line of criticism, and one very frequently adopted, is to maintain that the wants and desires of mankind are incapable of measurement and that mathematical causations can never be reconciled with the doctrine of free will. But such claims as these were never put forward by the Mathematical school. On the contrary, it has always recognised that every man is free to follow his own bent—trahit sua quemque voluptas—merely inquiring how man is to act if he is to obtain the maximum satisfaction out of the means at his disposal and to overcome the obstacles that stand in his way. Neither has it ever ventured to say that such and such a man is forced to sell corn or to buy it, but simply that if he does buy or sell it will be with a determination to make the best of the bargain, and that such being the case the buying or selling will take place in such and such a fashion. It further claims that the action of a number of individuals under similar circumstances is equally calculable. So is the movement of the balls on the billiard-table, but that does not interfere with the liberty of the players.[1133]
Nor do they pretend to be able to measure our desires. What they do—and it is not so absurd after all, because we are all doing it—is to express in pounds, shillings, and pence the value we put upon the acquisition or loss of an object that satisfies our desire. Moreover, the Mathematical school does not make much use of numbers, but confines itself to algebraical notation and geometrical figures—that is, to the consideration of abstract quantities. To write down a problem in the form of a mathematical equation is to show that the problem can be solved and to give the conditions under which solution is alone possible. Beyond this the economist never goes. He never tries to fix the price of corn, whatever it may be; he leaves that to the speculators.[1134]
From the other side—that is, from the historians, interventionists, solidarists, socialists—comes criticism which is quite as bitter and not a whit easier to justify. The Hedonistic doctrine appears to them simply as a fresh attempt to restore the optimistic teaching of the Manchester school, with its individualism and egoism, its free competition and general harmony, its insidious justification of interest, rent, and starvation wages—in the name of some imaginary entity which they call marginal utility. In short, it looks just like another proof of the thesis that the present economic order is the best possible—a proof that is all the less welcome seeing that it claims to be scientific and mathematically infallible.
This sort of criticism is nothing less than caricature. It would be futile to deny that the new school has undertaken the task of carrying on the work of the Classical writers, but what possible harm can there be in that? The royal road of science often turns out to be nothing better than a very narrow path—but it does lead somewhere. There would be no progress in economic science or in any other if every generation were to throw overboard all the work done by its predecessors. What the Hedonistic school has tried to do is to distinguish between the good and the bad work of the Classical writers and to retain the one while rejecting the other.
The main object of the equilibrium and final utility theories is not to justify the present economic régime, but merely to explain it,[1135] which is quite a different matter. But it does happen in this case that the explanation justifies the conclusion that under the conditions of a free market the greatest good of the greatest number would naturally be secured. The term “good,” however, is used in a purely Hedonistic and not in the ethical sense. No attention is paid to the pre-existing conditions of the exchange, and none is bestowed upon its possible consequences. The old-time bargain between Esau and Jacob, when the former sold his birthright for a mere mess of pottage, gave the maximum of satisfaction to both, even to Esau, of whom it is related that he was at the point of death, and to whom accordingly the pottage must have been of infinite value. Even if Jacob had offered him a bottle of absinthe instead the result would have been equally satisfactory from a Hedonistic standpoint. The theory takes as little account of hygiene as it does of morals.
The Hedonist, by way of amendment, might suggest that Esau would have made a better bargain if there had been, not one, but several Jacobs offering the pottage, which helps to explain why they are so partial to competition and so strongly opposed to monopoly.[1136] No Hedonist would deny that Esau was exploited by Jacob; but, on the other hand, they would point out that there is no necessity to imagine that society is made up only of Esaus and Jacobs.[1137]
The same thing applies to Böhm-Bawerk’s celebrated theory of interest. Indeed, Böhm-Bawerk quite definitely states that he merely wants to discover some explanation of interest, but does not anticipate that he will be able to justify it, and in that spirit he condemns the ethical justifications that were attempted some centuries back. His object is to show that interest is neither due to the productivity of capital nor to the differential advantages enjoyed by its possessor. Neither is it a tax levied upon the exploited borrower: it is simply a time-payment. In other words, it represents the difference between the value of a present good and the same good on some future occasion. It is just the result of exchanging a present good for a future one. A hundred francs a year hence are not equal in value to a hundred francs here and now. To make them equal we must either add something by way of interest to the future item or take away something by way of discount from the present one.[1138]
Turning to the theory of wages, according to which the wages of each class of producers is supposed to be determined by the productivity of the marginal worker in that class, we are struck by the fact that it is only a little less pessimistic than the old “brazen law.” What it really implies is that the marginal worker—the worker whom the entrepreneur is only just induced to employ—consumes all that he produces.
The Hedonistic school, in short, has no theory of distribution, neither does it seem very anxious to have one. It speaks, not of co-sharers, but of productive services, whose relative contributions it is interested to discover. But it is one thing to know exactly what fraction of the work is due to a certain unit of capital or a given individual workman, and quite another to know whether workers or capitalists are being unfairly treated.
The best proof that the Hedonists are not mere advocates of laissez-faire is the general attitude of the leaders. It is true that the Austrian school has always shown itself quite indifferent to the social or working-class question,[1139] as it is sometimes called, but it certainly has a perfect right to confine itself to pure economics if it wishes. The other leaders of the school, however, have clearly shown that the method followed need involve no such approval or acquiescence. Not to mention Stanley Jevons, who in his book Social Reform makes a very strong case for intervention, we have also Professor Walras, who stands in the front rank of agrarian socialists. Leaving aside merely utilitarian considerations, he points out that in the interest of justice, which, as he has been careful to emphasise, involves quite a different point of view, he wants to establish a régime of absolutely free competition. But how is this to be accomplished? Merely by means of laissez-faire, as the old Liberal school had thought? Not at all. It can only be done through the abolition of monopoly of every kind, and land monopoly, which is the foundation of every other, must go first. The reform advocated in his Économie sociale consists of two items, land nationalisation and the abolition of all taxation. The two items are intimately connected because the rents now become the possession of the State will take the place of the taxes, and the object of both is the same, namely, the extension of free competition by securing to every citizen the full produce of his work. Under existing conditions the producer is doubly taxed—in the first place by the landowner and then by the State.[1140] Moreover, when we remember that the point of equilibrium in Walras’s system occurs just where the selling price exactly coincides with the cost of production—in other words, where profit is reduced to zero—we begin to realise how far it is from anything in the nature of an apology for the present condition of things.
Vilfredo Pareto, another representative of this school, although ultra-individualistic in his opinions and extremely hostile to interventionism or solidarity, takes good care not to connect his personal opinion with the Hedonistic doctrines. As a matter of fact he thinks that, theoretically at least, the maximum of well-being might be equally attainable under a collectivist régime, although he does not think that collectivism is yet possible. But this opinion is founded upon “ethical and other considerations which are quite outside the scope of economics.”[1141]
M. Pantaleoni, who soars higher still into the realm of pure, transcendental science, ventures to declare that the substitution of purely altruistic motives for merely selfish ones would involve about as much change in the calculation as would the substitution throughout of a plus for a minus sign in an algebraical equation. All extremes meet. Complete disinterestedness and absolute egoism would necessarily work out very much the same. Devotion to duty would replace the clamour for rights; sacrifices would be exchanged instead of utilities. But the laws determining their exchange would still be the same. The Hedonists are not so much concerned with the morality of such laws as with the productive capacity of a given economic state, just as in the case of a piece of machinery the engineer’s sole concern is to gauge the output of that machine.
But the most serious criticism passed upon the work of the school is that at the end of the reckoning nothing has been discovered that was not already known, to which the Hedonists reply that they have at least succeeded in making certain what was only tentative before. The discovery of truth appears to be an intermittent process, and the first vague presentiment is often as useful as the so-called scientific discovery. Astronomy, which is the most perfect of the sciences, has progressed just in this way. The older economists felt fully convinced that the régime of free competition was best, but they gave no reason for the faith that was in them and no demonstration of the conditions under which the doctrine was true. Such a demonstration the Mathematical economists claim to have given by showing that a régime of free competition is the only one where a maximum of satisfaction is available at a minimum of sacrifice for both parties. The same consideration applies to the law of demand and supply, the law of indifference, cost of production, wages, interest, rent, etc. To have given an irrefutable demonstration of theories that were formerly little better than vague intuitions[1142] or amorphous hypotheses is certainly something. We may laugh as much as we like at the homo œconomicus, who is by this time little better than a skeleton, but it is the skeleton that has helped the science to stand upright and make progress. It has helped forward the process from the invertebrate to the vertebrate.
But admitting that all these doctrines have been definitely proved, as the Hedonists claim they have, is the science going to profit as much as they thought by it? Somebody has remarked that mathematics is a mere mill that grinds whatever is brought to it. The important question is, What is the corn like? In this case it consists of a mass of abstractions—a number of individuals actuated by the same selfish motives, alike in what they desire to get and are willing to give,[1143] the assumed ubiquity of capital and labour, facility for substitution, etc. It is possible enough that the flour coming from the mill may not prove very nutritious. When ground out the result would at any rate be as unlike reality as the new society outlined by Fourier, the Saint-Simonians, or the anarchists, and its realisation quite as improbable, unless we presuppose an equally miraculous revolution. The Hedonists frankly recognise this, and in this respect they show themselves superior to the Classical economists, who when they talk of free competition believe that it actually exists.[1144]
But however sceptical they are about the possibility of ever realising all this, they are somewhat emphatic about the virtues of the new method, and they are not exempt, perhaps, from a certain measure of dogmatic pride which irresistibly reminds one of the Utopian socialists. Could we not, for example, imagine Fourier writing in this strain: “What has already been accomplished is as nothing compared with what may be discovered” (by the application of the mathematical method);[1145] or “The new theories concerning cost of production have the same fundamental importance in political economy that the substitution of the Copernican for the Ptolemaic system has in astronomy”?[1146] We have already called attention to the comparison of Walras’s system with Newton’s Principia—all of which rather savours of enthusiasm outrunning judgment.
While recognising the very real services which the Mathematical and Austrian schools have rendered to the science, and admitting that they mark an era in the history of economics which can never be forgotten, we cannot do better than conclude with the advice of an economist who is himself an authority both in the Mathematical and Classical schools, and who is therefore well qualified to judge: “The most useful applications of mathematics to economics are those which are short and simple and which employ few symbols; and which aim at throwing a bright light on some small part of the great economic movement rather than at representing its endless complexities.”[1147]