An Analysis of Socialism

Max Hirsch:
Democracy versus Socialism

PART I—An Analysis of Socialism

Content of Part I

Chapter I— The Economic Conceptions
Chapter II— The Industrial Proposals
Chapter III— The Industrial Proposals—Continued
Chapter IV— The Ethical Conceptions
Chapter V— The Distributive Proposals
Chapter VI— Modifications Of Family Relations
Chapter VII— The Political Conception
Chapter VIII— Is Socialism Scientific
Chapter IX— The Definition Of Socialism



THE fundamental economic conceptions of Socialism arise from Karl Marx’s theories of value and surplus value, and culminate in the conception that the income of landowners, capitalists, and employers alike, with the sole exception of some reward due to the employer as organiser and director of industry, are deductions from the wages of individual labourers, a tribute imposed upon labour.

The following extracts from Marx’s great work Capital give the substance of these theories :—

“That which determines the magnitude of the value of any article is the amount of labour socially necessary, or the labour-time socially necessary, for its production. Each individual commodity in this connection is to be considered as an average sample of its class. Commodities, therefore, in which equal quantities of labour are embodied, or which can be produced in the same time, have the same value. The value of one commodity is to the value of any other, as the labour-time necessary for the production of the one is to that necessary for the production of the other. As values all commodities are only definite masses of congealed labour-time” (p. 6).[6]

“The value of labour-power is determined, as in every other commodity, by the labour-time necessary for the production, and consequently also for the reproduction, of this special article. So far as it has value it represents no more than a definite quantity of the average labour of society incorporated in it. Labour-power consists only as a capacity or power of the living individual. Its production consequently presupposes his existence. Given the individual, the production of labour-power consists in his reproduction of himself or his maintenance. For his maintenance he requires a given quantity of the means of subsistence. Therefore the labour-time requisite for the production of labour-power reduces itself to that necessary for the production of these means of subsistence; in other words, the value of labour-power is the value of the means of subsistence necessary for the maintenance of the labourer.” (p. 149). 

“The value of a day’s labour-power amounts to three shillings, because on our assumption half a day’s labour is embodied in that quantity of labour-power, i.e. because the means of subsistence that are daily required for the production of labour-power cost half a day’s labour. But the past labour that is embodied in the labour-power, and the living labour that it can call into action, the daily cost of maintaining it, and its daily expenditure in work, are two totally different things. The former determines the exchange­value (i.e. wages) of the labour-power, the latter is its use­value. The fact that half a day’s labour is necessary to keep the labourer alive during twenty-four hours does not in any way prevent him from working a whole day. Therefore the value of labour-power and the value which that labour-power creates in the labour process are two entirely different magnitudes, and this difference of the two values was what the capitalist had in view when he was purchasing the labour-power” (p. 174). 

“The action of labour-power, therefore, not only reproduces its own value, but produces value over and above it. 

This surplus-value is the difference between the value of the product and the value of the elements consumed in the formation of the product; in other words, of the means of production (i.e. material and fractional parts of ‘fixed capital’) and the labour-power…. The means of production on the one hand, labour-power on the other, are merely the different modes of existence which the value of the original capital assumed when from being money it was transformed into the various factors of the labour­process. That part of capital, which is represented by the means of production, by the raw material, auxiliary material, and the instruments of labour, does not in the process of production undergo any quantitative alteration of value. … On the other hand, that part of capital represented by labour-power does in the process of production undergo an alteration of value. It produces the equivalent of its own value and also produces an excess, a surplus-value, which may itself vary, may be more or less according to circumstances” (pp. 191, 192). 

“If we now compare the two processes of producing value and of creating surplus-value, we see that the latter is nothing but a continuation of the former beyond a definite point. If, on the one hand, the process be not carried beyond the point where the value paid by the capitalist for the labour-power is replaced by an exact equivalent, it is simply a process of producing value; if, on the other hand, it be continued beyond that point, it becomes a process of creating surplus-value” (pp. 176, 177). 

“Capital has not invented surplus-labour. Wherever a part of society possesses the monopoly of the means of production, the labourer, free or not free, must add to the working time necessary for his own maintenance an extra working time in order to produce the means of subsistence for the owners of the means of production, whether this proprietor be the Athenian kaloskagaqos,Etruscan theocrat, Civis Romanus, Norman baron, American slave-owner, Wallachian boyard, modern landlord or capitalist” (p. 218). 

That this same idea of the unjust nature of surplus­value is entertained, though in slightly altered form, by the latest exponents of Socialism, in spite of the fact, which will be proved later on, that some of them repudiate the foundation on which the Marxian theory is built,—the labour-theory of value,—will be seen from the following quotation, taken from “Tract No. 69,” issued by the Fabian Society, and written by Mr. Sidney Webb, The Difficulties of Individualism (p. 7) :—

“When it suits any person having the use of land and capital to employ the worker, this is only done on condition that two important deductions, rent and interest, can be made from his product, for the benefit of two, in this capacity, absolutely unproductive classes-those exercising the bare ownership of land and capital. The reward of labour being thus reduced, on an average by about one-third, the remaining eight pence out of the shilling is then shared between the various classes who have co-operated in the production.” 

Occupying a place in the economic teaching of Socialism similar to that of surplus-value, is that of the evil of industrial competition. Industrial competition, it asserts, springs from and is inseparable from private ownership and management of land and capital, and the only possible method of putting an end to industrial competition and to the evils, which it generates, is to abolish such private ownership and management.

Two lines of reasoning are put forward in support of the maleficent influence of competition. The first of these is based on the limitation of competition. Owing, it states, to the inevitable tendency of modern machine production towards the concentration of industry in the hands of a comparatively small number of powerful in­dividual capitalists, or associations of capitalists, competition has become one-sided. These capitalists instead of competing with each other, form monopolistic combinations to exclude competition between themselves. The inevitable trend of industrial progress is towards the extension of such monopolies until they must include every considerable industry in which machinery is largely employed. 

While, however, the capitalist is thus enabled to shelter himself from the evil results of competition, the wage­earners remain exposed to all its horrors. The only remedy for this one-sided competition is the total abolition of industrial competition. 

Some examples of this line of reasoning will be found in the following quotations. The first is from the Bible of Modern “Scientific” Socialism, Karl Marx’s Capital, pp. 788, 789: “That which is now to be expropriated is no longer the labourer working for himself, but the capitalist exploiting many labourers. This expropriation is accomplished by the action of the immanent laws of capitalistic production itself, by the centralisation of capital. One capitalist always kills many. … Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation. … The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with it, and under it.” 

The following is an extract from Fabian Essaysin Socialism, the official publication of the Fabian Society, London.[7]It states, pp. 89, 90 :—

“I now come to treat of the latest forms of capitalism, the ‘ring’ and the ‘trust’ whereby capitalism cancels its own principles, and, as a seller, replaces competition by combination. When capitalism buys labour as a commodity it effects the purchase on the competitive principle. … But when it turns round to face the public as a seller, it casts the maxims of competition to the winds and presents itself as a solid combination. Competition, necessary at the outset, is found ultimately, if unchecked, to be wasteful and ruinous. … 

“No doubt the ‘consumer’ has greatly benefited by the increase in production and the fall in prices; but where is ‘free competition’ now? Almost the only persons still competing freely are the small shopkeepers, trembling on the verge of insolvency, and the working men competing with one another for permission to live by work.” 

The next quotation is taken from John A. Hobson’s The Evolution of Modern Capitalism, p. 357, a work which is conceived and executed in a spirit of patient research and careful analysis, which might serve as an example to many opponents of Socialism. 

“Since the general tendency of industry, so far as it falls under modern economics of machinery and method, is either towards wasteful competition or towards monopoly, it is to be expected that there will be a continual expansion of State interference and State undertakings. This growing socialisation of industries must be regarded as the natural adjustment of society to the new conditions of machine production.”

In addition, it may not be without interest to quote from the best-known and most widely-circulated work of an American socialist, Laurence Gronlund’s The Co­operative Commonwealth. Though Gronlund is repudiated by more modern socialists as favouring the catastrophic realisation of their doctrines, they do not materially differ from him as far as the doctrines themselves are concerned, and his book is still widely disseminated by socialist organisations. On pp. 42, 43, and 50, he states :—

“The great weapon at the command of the capitalist is competition. … It deserves the name of cut-throat competition when the wage-workers are forced into a struggle to see who shall live and who shall starve. … But these are by no means the only sufferers. The small employers, the small merchants, are just as much victims of that cruel kind of competition as the wage-workers. … 

“But our big capitalists have a still more powerful sledge-hammer than that of competition ready at hand­to wit, combination. … They have already found that, while competition is a very excellent weapon to use against their weaker rivals, combination pays far better in relation to their peers.” 

While the preceding authorities assert the failure of competition to remain free and equal under the conditions of modern industry, and base the proposals of Socialism on this failure, other authorities base them on the evil of competition qua competition. They disregard the arguments, which arise from one-sided competition and boldly declare industrial competition as such to be the cause of the exploitation and degradation of labour and incompatible with the moral and physical wellbeing of the people. 

Thomas Kirkup, one of the most careful and conservative of socialist authors, declares in An Inquiry into Socialism,p 94 :—

“So long and so far as the present competitive system prevails, it must tend to the degradation of the workers, to social insecurity, and disaster.” 

W. D. P. Bliss, a well-known American statistician and writer on economic and industrial subjects, states in A Handbook of Socialism, pp. 18, 20, and 21 :—

“Individual competition of manufacturers and employers compels them to produce as cheaply as possible in order to sell as cheaply as possible. If they do not they must go out of business; for, under free competition, he who sells a given article the cheapest will get the trade. Therefore, the manufacturer and producer, compelled to buy in the cheapest market, strive among other things to buy labour as cheaply as possible. The labourer, meanwhile, having no good land and no adequate capital, is compelled to sell his labour-force at the best price he can. But since men multiply rapidly while land and capital are limited, and since machinery and invention constantly enable fewer and fewer men to do work formerly done by many, there soon comes to be competition of two (or two thousand) men to get the same job. Now the employer we have seen to be compelled to employ those who will work cheapest. There thus comes to be a competition between workmen to see who will work cheapest, and so get the job. This goes on developing till wages fall to just that which will support and renew the lowest form of life, that will turn out the requisite grade of work. 

“Profit sharing, trades unions, partial co-operation, model tenements, charities, may do a little temporary good, but are mere bubbles on the ocean of competition; the only way is to slowly replace competition by universal co-operation, which is Socialism. 

“Nor would Socialism limit all competition. Competition is not its devil. It recognises good as well as evil in competition. It would simply abolish industrial competition.” 

The Guild of St. Matthew’s is an association of socialist clerics of the Church of England. In a Memorial addressed to the Pan-Anglican Conference[8]by the Guild, the following statements occur :—

“Our present social system—if the words ‘social system’ can be used for that which is largely the outcome of anarchic competition—is cruel and dishonest, and needs drastic reform and radical reorganisation. … The socialist objects to the competitive commercial system under which we live, that it robs the poor because he is poor,” etc.

While the two lines of reasoning here exhibited differ materially one from the other, they are not mutually exclusive. The socialist who objects to private monopoly may, and does, equally object to the freest and most untrammelled industrial competition. This is actually the state of mind prevailing among socialists who otherwise may widely differ from each other. The monopolistic argument is used mainly against the theory that free competition by itself will cure the evils which beset our industrial system, in order to show that such free competition is itself disappearing; while the argument against competition as such is the one mainly relied upon to justify the novel industrial proposals of Socialism. The economic theory of Socialism with regard to competition, therefore, is that of the destructive and disintegrating influence of industrial competition as such. The main difference between Socialism and other non-socialistic methods of social reform will be found to be that, while the former condemns competition as such, the latter condemn the one-sided and inequitable conditions under which competition is now carried on, and look forward to the removal of these unjust conditions and to the establishment of a really free and equal system of competition—the possibility of which Socialism denies—as the cure for the fundamental injustice of modern societies. 

These two conceptions, that of the destructive influence of industrial competition qua competition, and that interest and rent and profit or surplus-value are deductions from the product, and, therefore, from the legitimate reward of the producers, form the bases of the industrial proposals of Socialism. The latter are devised for the purpose of abolishing industrial competition, and the exaction of rent, and interest, and profit, or surplus­value as the only measures, which can secure to labour its full and just reward. 


SOCIALISTS as well as their opponents have, almost exclusively, sought to define Socialism in terms of its industrial proposals. As a consequence, these proposals have been set out more frequently, and have been framed in more definite terms than is the case with socialist principles generally. Nevertheless, there is no complete agreement between the authorities, even on this, the central point of Socialism, though the differences, as will be seen, are not of sufficient importance to prevent a definite conclusion being arrived at. 

The Social Democratic party of Germany is the most numerous and influential body of socialists. Their enunciation of the principles and aspirations, which animate them is, therefore, of sufficient importance to justify the republication here, in full, of that part of their latest platform which deals with general principles. It was framed at the Convention of the party, which took place at Erfurt in October 1891, and is known as The Erfurt Programme. 

“The economic development of industrial society tends inevitably to the ruin of small industries, which are based on the workman’s private ownership of the means of production. It separates him from these means of production, and converts him into a destitute member of the proletariat, whilst a comparatively small number of capitalists and great landowners obtain a monopoly of the means of production. 

“Hand in hand with this growing monopoly goes the crushing out of existence of these shattered small industries by industries of colossal growth, the development of the tool into the machine, and a gigantic increase in the productiveness of human labour. But all the advantages of this revolution are monopolised by the capitalists and great landowners. To the proletariat and to the rapidly sinking middle classes, the small tradesmen of the towns, and the peasant proprietors (Bauern), it brings an increasing uncertainty of existence, increasing misery, oppression, servitude, degradation, and exploitation. 

“Ever greater grows the mass of the proletariat, ever vaster the army of the unemployed, ever sharper the contrast between oppressors and oppressed, ever fiercer the war of classes between bourgeoisie and proletariat which divides modern society into two hostile camps and is the common characteristic of every industrial country. The gulf between the propertied classes and the destitute is widened by the crises arising from capitalist production, which becomes daily more comprehensive and omnipotent, which makes universal uncertainty the normal condition of society, and which furnishes a proof that the forces of production have outgrown the existing social order, and that private ownership of the means of production has become incompatible with their full development and their proper application. 

“Private ownership of the means of production, formerly the means of securing his product to the pro­ducer, has now become the means of expropriating the peasant proprietors, the artisans, and the small tradesmen, and placing the non-producers, the capitalists and large landowners in possession of the products of labour. Nothing but the conversion of capitalist private ownership of the means of production—the earth and its fruits, mines and quarries, raw material, tools, machines, means of exchange—into social ownership, and the substitution of socialist production, carried on by and for society, in the place of the present production of commodities for exchange, can effect such a revolution, that, instead of large industries and the steadily growing capacities of common production being as hitherto a source of misery and oppression to the classes whom they have despoiled, they may become a source of the highest wellbeing and of the most perfect and comprehensive harmony. 

“This social revolution involves the emancipation, not merely of the proletariat but of the whole human race, which is suffering under existing conditions. But this emancipation can be achieved by the working class alone, because all other classes, in spite of their mutual strife of interests, take their stand upon the principle of private ownership of the means of production, and have a common interest in maintaining the existing social order.

“The struggle of the working classes against capitalist exploitation must of necessity e a political struggle. The working classes can neither carry on their economic struggle nor carry on their economic organisation without political rights. They cannot effect the transfer of the means of production to the community without being first invested with political power. 

“It must be the aim of social democracy to give conscious unanimity to this struggle of the working classes, and to indicate the inevitable goal. 

“The interests of the working classes are identical in all lands governed by capitalist methods of production. The extension of the world’s commerce and production for the world’s markets make the position of the workman in any country daily more dependent upon that of the workman in other countries. Therefore, the emancipation of labour is a task in which the workmen of all civilised lands have a share. Recognising this, the Social Democrats of Germany feel and declare themselves at one with the workmen of every land, who are conscious of the destinies of their class. 

“The German Social Democrats are not, therefore, fighting for new class privileges and rights, but for the abolition of class government, and even of classes themselves, and for universal equality in rights and duties, without distinction of sex or rank. Holding these views, they are not merely fighting against the exploitation and oppression of the wage-earners in the existing social order, but against every kind of exploitation and oppression, whether directed against class, party, sex, or race.”[9]

It is not without interest, to compare with the Erfurt Programme that issued by the Social Democratic party of Germany at their previous Convention at Gotha in 1875,—The Gotha Programme. The extract from the same, here republished, deals with both the industrial and distributive proposals. It will be seen that the latter is formulated in definite terms, while the Erfurt Programme, though of later date, is judiciously silent with regard to it :—

“Labour is the source of all wealth and of all culture, and, as useful work in general is possible only through society, so to society—that is to all its members—belongs the entire product of labour by an equal right, to each one according to his reasonable wants, all being bound to work. 

“In the existing society the instruments of labour are a monopoly of the capitalist class; the subjection of the working class thus arising is the cause of misery and servitude in every land. 

“The emancipation of the working class demands the transformation of the instruments of labour into the common property of society and the co-operative control of the total labour, with the application of the product of labour to the common good, and just distribution of the same.” 

The Social Democratic Federation (England) states its objects to be :—

“The socialisation of the means of production, distribution and exchange, to be controlled by a democratic state in the interests of the entire community, and the complete emancipation of labour from the domination of capitalism and landlordism, with the establishment of social and economic equality between the sexes.” 

The following extract is taken from the Manifesto issued by the Joint Committee of Socialist Associations in England. As a united expression of the principles and aims of socialists it has therefore authoritative value :—

“There is a growing feeling at the present time that, in view of the increasing number of socialists in Great Britain, an effort should be made to show that, whatever differences may have arisen between them in the past, all who can fairly be called socialists are agreed in their main principles of thought and action. … 

“On this point all socialists agree. Our aim, one and all, is to obtain for the whole community complete owner­ship and control of the means of transport, the means of manufacture, the mines and the land. Thus we look to put an end for ever to the wage-system, to sweep away all distinctions of class, and eventually to establish national and international communism on a sound basis.” 

The Chicago Convention (1889) of “The Socialist Labour Party of the United States” issued a programme containing the following expression of its aims :—

“With the founders of this republic we hold that the true theory of politics is that the machinery of government must be owned and controlled by the whole people; but in the light of our industrial development we hold, furthermore, that the true theory of economics is that the machinery of production must likewise belong to the people in common.” 

While the Chicago Convention, being mainly representative of foreign socialists in the United States, cannot claim to speak for native American socialists, it is different with the recently organised “Social Democracy of America.” This association, organised by and for Americans, and which, six months after its inception, claimed to already exceed in membership all other socialist bodies in the United States, has formulated its industrial proposals as follows :—

“To conquer capitalism by making use of our political liberty and by taking possession of the public power, so that we may put an end to the present barbarous struggle, by the abolition of capitalism, the restoration of the land, and of all the means of production, transportation, and distribution, to the people as a collective body, and the substitution of the co-operative commonwealth for the present state of planless production, industrial war, and social disorder… The social democracy of America will make democracy ‘the rule of the people’ a truth by ending the economic subjugation of the overwhelmingly great majority of the people.” 

The socialists of France are split up into many parties, differing mainly with regard to the methods—more or less revolutionary—by which their objects are to be attained. There does not, however, seem to exist any difference between them regarding their industrial object, which, as far as can be ascertained, is identical with that of their strongest body, the “Parti Ouvrier Socialiste Revolutionnaire Francais.” The programme of the latter contains the following declaration :—

“To place the producer in possession of all the means of production—land, manufactures, ships, banks, credit, etc., and, as it is impossible to divide these things among individuals, they must be held collectively.” 

In addition to these, the most authoritative declarations, because emanating from organised Socialism, some definitions of like character, supplied by prominent socialists and by one of their most eminent opponents, may also be cited. 

The first of these is the definition supplied by Dr. A. von Schaeffle. Though Dr. Schaeffle is a State socialist, and as such an opponent of organised Socialism, his definition has been received with almost general approval by socialists as well as others. The final part of the definition, which deals with distribution, must however be accepted with caution, inasmuch as it will be shown presently to be incorrect, and that the error has since been recognised by Dr. Schaeffle himself :—

“To replace the system of private capital (i.e. the speculative method of production, regulated on behalf of society only by the free competition of private enterprises) by a system of collective capital—that is, by a method of production which would introduce a unified (social or collective) organisation of national labour, on the basis of collective or common ownership of the means of production by all the members of the society. 

“This collective method of production would remove the present competitive system, by placing under official administration such departments of production as can be managed collectively (socially or co-operatively) as well as the distribution among all of the common produce of all, according to the amount and social utility of the productive labour of each.”[10]

The two following definitions are taken from leading socialist writers :—

W. D. P. Bliss—”Socialism is the fixed principle capable of infinite and changing variety of form, and only gradually to be applied, according to which the community should own land and capital collectively and operate them co-operatively for the equitable good of all.”[11]

William Clarke—”A socialist is one who believes that the necessary instruments of production should be held and organised by the community instead of by individuals, within or outside of the community.”[12]

In spite of the variety of expressions used, it will be manifest that all the preceding declarations concur in describing the industrial proposals of Socialism to be :—

The transfer to the community of both the ownership and management of all the land, and the means of production, without any exception whatsoever. Schaeffle alone makes a limitation, which, however, is meaningless, viz.—” as can be managed collectively.” For it is obvious that every department of production can be managed collectively when the question of relative advantage or consequences is left out of account, as is done by Schaeffle. Even a critic whose sympathies are largely on the side of Socialism—Professor R. T. Ely—makes the following comment on this part of Schaeffle’s definition :—” Perhaps it is defective in the statement that Socialism proposes to place under official administration such departments of production as can be managed collectively, without stating directly that Socialism maintains the possibility of a col­lective management substantially of all production.”[13]Moreover, in so far as the preceding declarations form part of the programmes of organised Socialism, they possess authority exceeding that of minor socialist bodies, or of individual authors, however eminent, and whether they are socialists or not. Nevertheless, in order to obtain a full grasp of this question, it is necessary to consider also declarations and definitions which, in one way or another, seem to place limits upon the state­ownership and management of industries demanded by Socialism. 

The most important of these is the prospectus of the Fabian Society of Socialists—an association which counts among its members not only the most cultured of English socialists, but many men and women whose character, abilities, and attainments have secured for them distin­guished positions in the world of literature, science, politics, and commerce :—

“The Fabian Society consists of socialists. It therefore aims at the reorganisation of society by the emancipation of land and industrial capital from individual and class ownership, and the vesting of them in the community for the general benefit. In this way only can the natural and acquired advantages of the country be equitably shared by the whole people. The Society accordingly works for the extinction of private property in land, and of the consequent individual appropriation, in the form of rent, of the price paid for permission to use the earth, as well as for the advantages of superior soils and sites. 

“The Society, further, works for the transfer to the community of the administration of such industrial capital as can conveniently be managed socially. For, owing to the monopoly of the means of production in the past, industrial inventions, and the transformation of surplus income into capital, have mainly enriched the proprietary class, the worker being now dependent on that class for leave to earn a living. 

“If these measures be carried out without compensation (though not without such relief to expropriated individuals as may seem fit to the community), rent and interest will be added to the reward of labour, the idle class now living on the labour of others will necessarily disappear, and practical equality of opportunity will be maintained by the spontaneous action of economic forces with much less interference with personal liberty than the present system entails. 

“For the attainment of these ends the Fabian Society looks to the spread of socialist opinions, and the social and political changes consequent thereon. It seeks to promote these by the general dissemination of knowledge as to the relation between the individual and society in its economic, ethical, and political aspects.”[14]

The limitation here insisted upon—“such industrial capital as can conveniently be managed socially”—is an advance, though a slight one, upon Schaeffle, and by no means definite. It receives, however, a further extension at the hands of Mr. Sidney Webb, a prominent member of the Fabian Society, in the following definition :—

“On the economic side, Socialism implies the collective administration of rent and interest, leaving to the individual only the wages of his labour, of hand or brain. On the political side it involves the collective control over, and ultimate administration of, all the main instruments of wealth production. On the ethical side it expresses the real recognition of fraternity, the universal obligation of personal service, and the subordination of individual ends to the common good.”[15]

The definition here given—”the main instruments of wealth production”—is decidedly more definite than that supplied by the prospectus of the Fabian Society, but still errs on the side of ambiguity. Its meaning, however, is explained by another member of the Fabian Society—Mr. Graham Wallas—in an official publication, Fabian Essays on Socialism. He defines it as “all those forms of production, distribution, and consumption which can conveniently be carried on by associations larger than the family group.” As Mr. Wallas’s definition is valuable on other accounts as well, it is cited here in extenso :—

“There would remain, therefore, to be owned by the community the land in the widest sense of the word, and the materials of those forms of production, distribution, and consumption which can conveniently be carried on by associations larger than the family group. … 

“The postal and railway systems, and probably the materials of some of the larger industries, would be owned by the English nation until that distant date when they might pass to the united states of the British Empire or the Federal Republic of Europe. Land is perhaps generally better held by smaller social units. … At the same time, those forms of natural wealth which are the necessities of the whole nation and the monopolies of certain districts—mines for instance, or harbours, or sources of water-supply—must be ‘nationalised.’ … 

“The savings of individuals would consist partly of consumable commodities, or of the means of such industry as had not been socialised, and partly of deferred pay for services rendered to the community, such pay taking the form of a pension due at a certain age, or of a sum of commodities or money payable on demand.”[16]

While Mr. Wallas’s explanation leaves little to be desired in the way of definiteness, it, on the other hand, shows that the limitation advocated by the Fabian Society is a verbal one only. For the industrial activities which cannot be “conveniently carried on by associations larger than the family group” are few and insignificant. The industry of sewing new buttons to an old shirt may conceivably fall under this head; but the mending of the family socks, washing the family linen, and cooking the family dinner may easily be held to fall within this definition, and many socialists regard them as peculiarly the object of State management.[17]  In any case all production, the produce of which exceeds the requirements of the producing family, i.e. all production for exchange, is manifestly covered by this definition. 

Moreover, the Fabian Society has itself repented of the slight limitation introduced in its prospectus. For at a subsequent date to that on which this document was issued, it became one of the signatories to the Manifesto issued by the Joint-Committee of Socialist Associations,[18]and which declares: “On this point all socialists agree. Our aim, one and all, is to obtain for the whole community complete ownership and control of the means of transport, the means of manufacture, the mines, and the land.” 

Similarly, Mr. Sidney Webb has in a later work, Problems of Modern Industry, abandoned the slight limitation on collective ownership and control previously introduced by him, as the following quotation shows :—

“We are trying to satisfy the ordinary man … that the main principle of reform must be the substitution of collective ownership and control for individual private property in the means of production.”[19]

On all these grounds the conclusion is inevitable, that there is no appreciable difference between the aim of the Fabian Society and that of other socialist associations in the direction of State ownership and management, and that these comprise the land and every form of capital. Further inquiry will prove that any limitation of this programme is incompatible with the method of distribution which the Fabian Society or any other socialist body aims at, as also with that “abolition of industrial competition” to which all socialists are pledged. 

Moreover, the continuance of any private industry for exchange, however insignificant the volume of its products may be, is incompatible with the abolition of “Private Interest,” which, as has been shown, is one of the foremost objects of Socialism. The following quotation proves that socialists, even Fabian socialists, fully admit this fact:

“To whatever extent private property is permitted, to that same extent the private taking of rent and interest must be also permitted. If you allow a selfish man to own a picture by Raphael, he will lock it up in his own room unless you let him charge something for the privilege of looking at it. Such a charge is at once interest. If we wish all Raphael’s pictures to be fully accessible to everyone, we must prevent men not only from exhibiting them for payment, but from owning them.”[20]

Whether the charge dealt with in the foregoing quotation is rightly described as interest or not, it is clear that the argument applies with equal force to pictures by living masters. When such a picture is exhibited by its author against an entrance fee, the charge bears the same economic character as that made by a speculator for viewing the work of a dead master. Likewise, if it is desirable that “Raphael’s pictures be fully accessible to everyone,” it is equally desirable with regard to modern pictures of excellence. “Men must be prevented from owning them” also. Therefore, in the opinion of this Fabian essayist, the production of paintings and other works of art for sale or exhibition must be placed under State management. Nor can the logic of this contention be easily disputed by other socialists. 

It is equally certain that professional services cannot be permitted to be performed on private account. Although the industrial proposals of Socialism do not necessarily involve such a change, its distributive proposals do involve it. In order that they may be carried out, all professional men must be employees of the State, rendering their services gratis or against a charge which must be paid, not to them, but into the revenue of local or central governmental bodies. This subject, as well as that of domestic service, literature, and science, can, however, be more conveniently considered when the distributive proposals of Socialism are under examination. 


THE preceding examination has made it manifest that, in spite of the appearance of limitation in some socialist utterances, there exists a practical agreement between all socialists, which will be seen to be dictated by other principles held by them in common, requiring the socialisation of all industries the products of which enter the circle of exchanges. 

The industries thus excluded are, however, so trivial that they may conveniently be disregarded in any definition. There remain, however, some direct consequences of the above proposals to be considered before such a definition can be made. 

The first of these is the method by which Socialism proposes to acquire the ownership of land and capital. The prospectus of the Fabian Society states :—

“If these measures be carried out without compensation (though not without such relief to expropriated individuals as may seem fit to the community), rent and interest will be added to the reward of labour.”[21]

The Fabian Essays supply even more definite information, viz.—”The progressive socialisation of land and capital must proceed by direct transference of them to the community through taxation of rent and interest and public organisation of labour with the capital thus obtained.”[22]

The above statements are the more valuable because the exponents of Socialism are generally more than reluctant to give clear expression to their intention on this subject. Taken by themselves the context in no way alters their meaning—they would, however, lead to the conclusion that Socialism relied upon taxation alone for the establishment of its industrial system. That, however, is impossible. For if the State appropriates by taxation more than its current expenditure requires, it cannot keep the ever-increasing fund idly locked up in some vault. “The public organisation of labour with the capital so obtained” must proceed pari passu with its acquisition, in order that the gradual transformation from private to public industry may be realised. There are only two ways in which this can be done, viz. by the creation of new establishments through the purchase of land, machinery, and material, or through the purchase of already existing private establishments. 

At first, no doubt, the former process would be largely employed. As, however, increasing taxation results in a reduction of private profit, of rent, and of the value of land, and as the competition of untaxed State establishments reduces still further the value of fixed capital engaged in private enterprises, private industrial establishments could be purchased so cheaply that the second method would prevail. Such land as the State required would of course always be acquired by purchase at rates constantly falling with the increase of taxation. In this way the land and the capital would become the property of the community apparently without confiscation. In reality, however, no compensation would have been paid. For the owners themselves would furnish the compensation fund; and the amount received by them as compensation could not exceed the amount paid by them in special taxation. Some of them would receive more than their contributions, but only on condition that others received less than theirs. 

Another method of transference is suggested by Mr. Laurence Gronlund in the following terms :—”We shall here make a digression to state definitely our position in regard to compensation to the dispossessed owners of property which we left somewhat unsettled in the last chapter. 

“We suggested there that if the final change were accomplished by force, the State would possibly expropriate our men of wealth without compensation whatever. Their existing rights are such which the law gives, and what the law gives the law can take away. That would be done without any compunction of conscience, seeing that much of that wealth is obtained by questionable methods, and very much of it by the trickery of buying and selling, which never can create value. … But as a matter of policy the State may see fit to give the proprietors a fair compensation for that property which Society takes under its control, i.e. for its realand not its speculativevalue. … But there are two important ‘buts’ to note. They will not receive any interest on the sums allowed them. When all interest has ceased to be legitimate throughout society, society will hardly charge itself with that burden. 

They will not be paid in money, but in goods, in articles of enjoyment furnished in annuities to those whose claim is sufficiently large.”[23]This statement shows that Gronlund is a catastrophic socialist, a survival of the past. Nevertheless, his proposal is worthy of examination, as being the only alternative to that of the Fabian Society, if the transfer is to be made gradually. For, though Gronlund considers it under the supposition of a sudden transformation of the existing into a full-blown socialistic system, it might be applied to a gradual transmutation. 

The State might establish new or purchase existing industrial enterprises with bonds, and might gradually extend this process till all land and private industrial capital had passed into its possession. If the bonds were made interest-bearing and if the profit from State-conducted industries were sufficient to pay the interest, the compensation would so far be real. If, however, the profit were insufficient, a contingency which cannot be disregarded, taxation of land and capital would have to be resorted to, to the extent of the deficiency. In such case the owners of land and capital would, to the same extent, provide their own compensation as in the plan advocated by the Fabian Society. 

In either case, however, the payment of interest could not be continued beyond the close of the transition period without a denial of the fundamental principles of Socialism. The bonds would then be repaid in the manner described by Gronlund, in annual installments of consumption-goods, till the whole of the debt was extinguished. The prospective cessation of interest payments would, however, result in a gradual depreciation of the bonds, which would reach its maximum at the actual termination of the former. 

On the other hand, it is also possible to make the bonds non-interest-bearing from the first, and still subject to gradual extinction by delivery of consumption-goods. In this case the bonds would be at a great discount from the beginning. 

Whichever of these two systems were adopted, it is certain that many if not all the bonds would change hands during the period of their currency. The question would therefore be raised, whether the State should pay in full for bonds which had been acquired by their actual possessors at much reduced values; nor can there be any doubt how it would be answered. 

Gronlund’s plan, therefore, while some improvement on that of the Fabian Society from the point of view of landowners and capitalists, is no very great improvement even if it were practicable. The probability, however, is greatly in favour of a mixed system being adopted at the dictates of political expediency. If the socialists are strong enough to induce the State to enter upon the conduct of competitive industries, they will also have sufficient influence to impose special taxation upon land and capital. They may, however, easily be induced to extend the system of State-industry beyond the limits of the capital which such taxation would place at their disposal, and this could only be done by the issue of interest-bearing bonds. It is, however, inconceivable that these bonds would be made exempt from the taxation imposed on all other forms of wealth, and the bond­holders would therefore furnish their own interest to an extent which, ultimately, would amount to the whole interest. Whichever plan, therefore, may be adopted, the compensation paid would fall far short of the value of the property appropriated, even short of that greatly reduced value caused by State-competition or by State­competition combined with special taxation. Socialism, therefore, has no choice; it must rely mainly on confiscation for the gradual transformation of private industry into collective industry. 

Attention must now be directed to some of the consequential changes in the existing industrial and financial organization, which are implied in the socialisation of land and capital. 

It involves the abolition of all indirect sources of private income and of the entire system of public and private credit as we know it. The taxation of incomes, gradually increasing, would ultimately absorb the interest of all state and municipal indebtedness, which then might be extinguished in the manner already described. Private credits, the interest from which would be taxable in the same manner, could not continue under a system in which the State would borrow and lend without interest, as will be described presently. 

Private exchange, both wholesale and retail, would equally disappear, giving way to State-conducted warehouses. These indirect consequences involved in the realisation of the industrial proposals of Socialism are aptly described by Dr. Schaeffle in the following terms :—

“The principle of Socialism is thus opposed to the continuance not only of private property in directly managed means of production (that is, in private business and joint-stock and other associations of capital), but also of individual ownership in indirect sources of income; i.e. to the entire arrangement of private credit, loan, hire, and lease—not only to private productive capital, but also to private loan-capital. State credit and private credit, interest-bearing capital and loan-capital, are incompatible with the socialistic state. Socialism will entirely put an end to national debts, private debts, tenancy, leases, and all stocks and shares negotiable at the bourse. … Socialism, from its premises, can no longer allow trading and markets, and it would be necessary even for coinage eventually to cease to exist and for labour-money (certificates of labour) to take its place. … If we suppose the production by private capitalists to be removed, and a unified, organised common-production in its place, buying and selling, competition and markets, prices and payment by money are at once superfluous. Within the socialised economic organisation they are even impossible.”[24]

With a slight limitation, regarding public credit, which will be dealt with presently, this passage exhibits with much acumen some of the indirect consequences which necessarily must flow from the public assumption of ownership and management of land and capital. 

The socialisation of land and capital further implies their being vested in and managed by some constituted authority or authorities. Socialism proposes to vest such authority, as far as possible, in local governmental bodies, i.e. municipalities, county councils, etc., and to confide to the direction of the central government as few of the socialised industries as possible. It must, however, be recognised that the limits of total control are drawn in a narrow circle by the nature of industries. Purely local industries, i.e. industries the products of which are destined for local consumption alone, may be so managed with safety, as supply of water, gas, electricity, hydraulic and pneumatic power, as also local means of transport, as cabs, omnibuses, and tramways. Villages and very small towns might also undertake the local production and distribution of bread, meat, milk, and some other quickly perishable articles, though even in these instances complications from the overlapping of authorities could scarcely be avoided. Large towns and cities, which draw their supplies, even of these quickly perishable articles, from wide areas, could not possibly undertake even these limited functions. On the other hand, all those industries which produce easily transportable goods, as well as those means of transport, which extend beyond local limits, must, by their very nature, be managed by one central authority, as agriculture, mining, manufactures, and the wholesale distribution of their products, as well as railways, rivers, canals, and shipping. The reason is obvious. The production of such industries must be kept in harmony with the requirements of the community. In the absence of the competitive organisation this object can only be attained through an administration embracing and controlling the whole field of their production. These considerations make it clear that, with few and comparatively unimportant exceptions, the management of socialised industries must be vested in the central government. 

The authority, which manages any industry must also control the labour employed in it. The conduct of all industries by the State further imposes upon the State the duty to either find full employment for all its members at all times, or to provide full incomes, without any return in labour, during such times, if any, when employment can­not be found for all. Therefore the managing authority must possess power to appoint for each citizen the kind of labour to which he is to devote himself, as well as the locality where his labour will be of the greatest service. Only by rigorously shifting labourers from an occupation and a place in which they have become superfluous, to occupations and places where their labour is required, can the requirements of the community be harmoniously supplied, and the simultaneous over-production of some goods and under-production of other goods be prevented. 

Stress must once more be laid on the fact that Socialism does not contemplate the abolition of all private property, but only of private property in land and capital. That part of the annual product of the national labour and industry which is not required for the replacement, improvement, and extension of national capital, would be distributed among individuals in the shape of consumption­goods, and would become private property. Private ownership in consumption-goods would, therefore, continue in the socialised State. Nor is there any compulsion on individuals to abstain from saving. They could do so either by collecting durable consumption-goods in their own homes, or by withdrawing from the common fund a smaller amount of goods than they are entitled to, so as to accumulate a reserve on which they could draw at future times. Similarly, the State might advance consumption­goods to citizens on the security of their future labour contributions. The State, and this is the slight limitation on Dr. Schaeffle’s pronouncement already alluded to, could thus, consistently with the principles of Socialism, become the debtor and creditor of individuals, provided no interest were paid or charged, though such a course, as will be shown in Part 11., would give all the advantages of interest to the borrowers. Private loans, except in so far as they were prompted by charity, would absolutely cease because it would be safer to allow savings to accumulate with the Government, than, in the absence of interest, to entrust them to some individual whose credit with the Government was exhausted. 

Rent of building sites would be paid, but would be payable to the Government. For it would be manifestly unjust to allot to some persons the best and most convenient building sites, while others must be satisfied with inferior ones, without the exaction of an equivalent for the enjoyment of the superior advantage. The equality at which Socialism aims, therefore, requires the continuance of such rent-payments-a fact admitted by some.[25]On the other hand, rent for agricultural land, mines, factory sites, and other natural opportunities of industry, would apparently disappear, the State being, with regard to them, tenant as well as landlord. 

The foregoing examination enables us to formulate a definition, perhaps not absolutely comprehensive, yet sufficient for all practical purposes, of what is implied in the industrial proposals of Socialism, viz.:  —

Socialism aims at the gradual abolition of private property in and private control of the instruments and materials of production, land,[26]transportation, trade, loan­capital, and public debts; such abolition to take place without compensation, or through partial compensation only, of present proprietors as a whole. For these private rights it would substitute the collective ownership and management by the community, acting through local or central governmental bodies, of the instruments and materials of production, land, transportation, trade, and loans, continuing private property in and private control of all consumption-goods awarded to individuals as their share of the industrial product.) 


THE conception which Socialism has formed with regard to the relations existing between individuals and the social entity to which they belong, is totally opposed to that formed by Liberalism and Democratic Radicalism, and is practically identical with that prevailing under the despotism of the post-reformation period.[27]Apart from socialists, it is, at the present time, to be found only among the belated survivals of that period, who march in the rear of English Toryism, or compose the junker-parties of Germany and Austria.[28]

It consists in the denial of the existence of abstract or natural human rights, and its converse, the assertion that all individual rights are derived from the State, as well as in the logical deduction from these premises, that any and all such rights may justly be cancelled by the State, if the latter is of opinion that its interests will be served thereby. 

Thus Sidney Webb, in Socialism in England, states, p. 79: “A wide divergence of thought is here apparent between England and the United States. In England the old a priori individualism is universally abandoned. No professor ever founds any argument, whether in defence of the rights of property or otherwise, upon the inherent right of the individual to his own physical freedom and to the possession of such raw material as he has made his own by expending personal effort upon. The first step must be to rid our minds of the idea that there are any such things in social matters as abstract rights” (The State in Relation to Labour, chap. i. p. 6, by the late W. Stanley Jevons). … “The whole case on both sides is now made to turn exclusively on the balance of social advantages.” Laurence Gronlund formulates the theory as follows, in The Co-operative Commonwealth, pp. 82, 83, and 85 :—

“It” (the conception of the State as an organism), “together with the modern doctrine of evolution as applied to all organisms, deals a mortal blow to the theory of ‘man’s natural rights,’ the theory of man’s inalienable right to life, liberty, property, happiness, etc. … These socalled ‘natural rights’ and an equally fictitious ‘law of nature’ were invented by Jean Jacques Rousseau. Philosophic socialists repudiate that theory of ‘natural rights.’ It is Society, organised Society, the State, that gives us all the rights we have. … As against the State, the organised Society, even Labour does not give us a particle of title to what our hands and brain produce.” 

In addition to these socialist authorities, an opponent of authority may also be cited, Professor Robert Flint, who states in Socialism, p. 373 :—”It” (Socialism) “denies to the individual any rights ( independent of Society; and assigns to Society authority to do whatever it deems for its own good with the persons, faculties, and possessions of individuals.” This denial of individual rights within the Society and independent of that Society, naturally has, as correlative, the conception, that the State does not exist for the benefit of the individuals composing it, at any given time; that it is an independent organism, possessing an entity and purpose of its own, and that therefore the will, not only of anyone individual, but of all individuals, is subordinate to the will of the State. Thus, again quoting from Socialism in England, pp. 82, 83, Sidney Webb states :—

“The lesson of Evolution, at first thought to be the apotheosis of anarchic individual competition, is now recognised to be quite the contrary. … Even the Political Economists are learning this lesson, and the fundamental idea of a social organism paramount over and prior to the individual of each generation is penetrating to their minds and appearing in their lectures.” 

Laurence Gronlund’s exposition of the theory is too lengthy for quotation in full; the concluding sentences (The Co-operative Commonwealth, p. 81) read :—

“We therefore insist that the State is a living organism, differing from other organisms in no essential respect. This is not to be understood in a simply metaphorical sense; it is not that the State merely resembles an organism, but that it—including with the people, the land and all that the land produces—literally is an organism, personal and territorial. 

“It follows that the relations of the State, the body politic, to us, its citizens, is actually that of a tree to its cells, and not that of a heap of sand to its grains, to which it is entirely indifferent how many other grains of sand are scattered and trodden underfoot. 

“This is a conception of far-reaching consequence.” 

The consequences which Gronlund draws from this conception are exhibited in the preceding quotation from his work. That they are far reaching cannot be denied. It would be inopportune, at this stage of our inquiry, to examine them or to criticise these conceptions themselves. All that can conveniently be done here, is to show that these ideas form part of the “scientific” synthesis which Socialism claims as its foundation. 

It is, however, necessary to point out that this conception of the relations between the State and the individuals composing the State is not adopted arbitrarily by the authorities which have been quoted. It is a necessary consequence of the basic conceptions as well as of the industrial and distributive proposals of Socialism. For the admission of individual rights, prior to and independent of the State, would stamp these proposals as in the highest degree unjust and despotic. Their defence, on the ethical side, cannot, therefore, be undertaken except on the supposition that no such rights exist, and that all human rights emanate from and are dependent upon the arbitrary will of the State. 

To the labourer belongs the fruit of his toil, is generally regarded as the only ethical standard of economic justice. Socialism utterly denies the truth of this proposition, and teaches that the fruits of individual labour belong, (not to the labourer, but to the society of which he forms part, to be used by it in such manner as may, in its opinion, promise the best social results. Citing again Laurence Gronlund, we find the following clear and emphatic statement of this conception on p. 145 of The Co-operative Commonwealth:—

“A man is entitled to the full proceeds of his labour against any other individual, but not against society. Society is not bound to reward a man either in proportion to his services, nor yet to his wants, but according to expediency; according to the behests of her own welfare. Man’s work is not a quid pro quo, but a trust.” 

This doctrine is based on several different and complementary lines of reasoning. One, mechanical, derives communistic proprietary rights from the far-reaching co-operative processes of modern industry, rendering it impossible to discover which part of any finished product and what share in its value owes its existence to the labour of any individual co-operator, and posits that it is equally impossible to assign to any of them equitable proprietary rights in any part, or in the value of such product. Thus W. D. P. Bliss, in A Handbook of Socialism, p. 188, states :—

“Nor can the principle that capital should be private property, because it is the work of man, be allowed in equity, since it is practically impossible to say what man produced any given portion of capital. All successful production today, mental and manual alike, is the result of social processes so intricate that it is impossible to measure the share in the production taken by anyone man.” Says Edward Bellamy: “Nine hundred and ninety­nine parts out of the thousand of every man’s produce are the result of his social inheritance and environment.” 

While this argument is mainly directed to prove the impossibility of allotting to each labourer the fruits of his toil, another boldly asserts its inequity. Taking the theories of evolution and of value for its basis, it asserts that individual capacity and industry are the result of heredity, arising from the ancestral struggle for existence. Being thus the result of social causes, their product belongs to Society, and not to the individual who accidentally possesses them. Allied to this is the further conception, that the value of any labour product, arising not from the act of the producer, but from the desires of the consumers, i.e. from a social cause, such value cannot equitably belong to the producer, but only to Society as a whole. 

Still another line of reasoning deduces social ownership of labour products from the influence of the social environment, both on the labourer and the produce of his labour. 

The following quotations show examples of these several  and  cognate  arguments. Sir  Henry  Wrixon attributes  to  Sidney  Webb  the  following statement (Socialism, p. 83) :—

“The socialists would nationalise both rent and interest, by the State becoming the sole landowner and capitalist. … Such an arrangement would, however, leave untouched the third monopoly, the largest of the all, the monopoly of business ability. The more recent socialists strike, therefore, at this monopoly also, by allotting to every worker an equal wage whatever the nature of the work. This equality has an abstract justification, as the special ability or energy with which some persons are born is an unearned increment due to the struggle for existence upon their ancestors, and consequently having been produced by Society, is as much due to Society as the unearned increment of rent.’ “In the Fabian Essays, p. 127, the following opinion is expressed :—

“For now, for the first time since the dissolution of the early tribal communisms, and over areas a hundred times wider than theirs, the individual worker earns his living, fulfils his most elementary desires, not by direct personal production, but by an intricate co-operation in which the effect and value of his personal efforts are almost indistinguishable. The apology for individualistic appropriation is exploded by the logic of the facts of communist production; no man can pretend to claim the fruits of his own labour, for his whole ability and opportunity for working are plainly a vast inheritance and contribution of which he is but a transient and accidental beneficiary and steward, and his power of turning them to his own account depends entirely upon the desires and needs of other people for his services. The factory system, the machine industry, the world commerce, have abolished individualistic production.” 

In Equality, Edward Bellamy’s latest work, the following argument occurs :—

“All human beings are equal in rights and dignity, and only such a system of wealth distribution can therefore be defensible as respects and secures those equalities. The main factor in the production of wealth among civilised men is the social organism, the machinery of associated labour and exchange by which hundreds of millions of individuals provide the demand for one another’s product and mutually complement one another’s labours, thereby making the productive and distributive systems of a nation and of the world one great machine. … 

“The element in the total industrial product, which is due to the social organism, is represented by the difference between the value of what one man produces as a worker in connection with the social organisation and what he could produce in a condition of isolation. … It is estimated that the average daily product of a worker in America is to-day some fifty dollars. The product of the same man working in isolation would probably be highly estimated on the same basis by calculation if put at a quarter of a dollar. To whom belongs the social organism, this vast machinery of human association, which enhances some two hundredfold the product of everyone’s labour? … Society collectively can be the only heir to the social inheritance of intellect and discovery, and it is Society collectively which furnishes the continuous daily concourse by which alone that inheritance is made effective.”[29]

On these grounds, Socialism boldly pronounces judgment against the older standard of industrial ethics, and declares, that not to the labourer who produces it, but to Society collectively, belongs the wealth which any man’s labour produces, and that Society has absolute and exclusive proprietary rights in all the produce of individual labour. 


THE ethical conceptions which Socialism entertains, i.e. that of the non-existence of natural rights, and that of the inequity of the labourer possessing the fruits of his exertion, are, as has already been stated, a necessary outcome of its industrial and distributive proposals. The original object of Socialism was no doubt the achievement of justice in distribution—to supplant the undoubtedly unjust distribution prevailing now by a just and equitable apportionment of the products of labour among those who, by their individual exertions, have given it existence.[30]So far, however, socialists have been unable to arrive at an agreement among themselves as to what would constitute a just system of distribution. Moreover, nearly all the proposals of distribution which have been advocated, and all the proposals which are open to Socialism, offend against the conception of justice embodied in the teaching that man possesses inalienable natural rights, and that one of these consists in the right of every individual to the possession and enjoyment of the fruits of his own toil. 

Professor Ely enumerates four standards of distributive justice possible under Socialism:—

  1. Absolute mechanical equality, i.e. allotting to each an equal quantity and quality of the various consumption­goods available for distribution. 
  2. Hierarchical distribution, i.e. allotting to each a general command over consumption-goods, equal in value to the services rendered by him, lessened by a proportional deduction to supply the values required for the renewal, improvement, and extension of the social capital.
  3. Distribution according to needs, i.e. allotting to each sufficient to satisfy his reasonable needs, regardless of the value of the services rendered. 
  4. Equality of income in value, i.e. allotting to each an equal general command over consumption-goods, regardless of the value of the services rendered, but leaving the selection of the goods within the allotted value to the varying individual desires. 

The first of these four possible methods of distribution may be disregarded here, as it is not now advocated by any school of socialists, and is obviously impossible in any large community. 

The second standard—that of distribution according to service rendered—is the one, which naturally would present itself as most nearly in accordance with the generally accepted conception of justice. It has been advocated accordingly by many socialists, and is still presented as their ideal by many when addressing popular audiences.[31]Another section, leaning more to Communism, and accordingly looking to beneficence more than to justice as a social regulator, has advocated, and in some measure still advocates, the third standard, i.e. distribution according to needs. The Gotha platform of the Social Democratic Party of Germany (1875)[32]lays it down that “to Society—that is, to all its members—belongs the entire product of labour by an equal right, to each one according to his reasonable wants, all being bound to work.”

It is this passage which has caused Dr. Schaeffle to alter his opinion with regard to the distributive proposals of Socialism[33], and to state: 

“Communism had already, in 1875, become the programme of the German Social Democrats, and since then has become more and more their widespread conviction;”[34]and he defines Communism as (a) universal obligation to equal labour; (b) distribution by the community according to socially recognized “reasonable needs” of each. 

The silence of the Erfurt Programme on this subject seems, however, to indicate that Dr. Schaeffle may be in error in the latter part of his statement. English socialists, moreover, have but rarely advocated this method, and they as well as others seem to have arrived at the conclusion that the only possible standard under Socialism is the fourth, i.e. equal distribution in value, regardless of the value of service.[35]

An examination of these rival systems inevitably leads to the conclusion that English socialists are right, that the method which they advocate is the only one not obviously impossible under Socialism. 

Apart from the manifest impossibility of determining the ” reasonable needs” of anyone, in the absence of any universal standard for the measurement of needs, distri­bution according to socially recognised needs, if honestly administered, would generally allot smaller incomes to the young and able workers than to feeble and old members of the society. For though the former contribute more to the social income, their needs are few and simple; whereas the latter, who contribute less, possess, by reason of their infirmity, greater and more varied needs. Moreover, the needs of every person would have to be estimated either by himself or by some distributer or distributing body. If the estimate of the claimants were accepted, the utmost resources of the State would probably be insufficient to satisfy all the needs of all of them. If the determination were left with some distributers, their decisions, even if arrived at with the utmost care and impartiality, would, nevertheless, provoke general discontent. Such impartiality cannot, however, be expected. Inevitably the needs of influential and favoured persons would be overestimated and those of powerless persons underestimated; jobbery and corruption would undermine the system, and return to a method less exposed to corrupt partiality and more in accord with the interests of the great body of workers would become inevitable. 

Distribution according to the value of services rendered is even more impracticable under Socialism. As already pointed out, socialists justly observe—though they base upon it conclusions not warranted by the facts—that the co-operative processes of modern industry obscure the individual origin of the final product, and make it impossible to determine which part of the whole, or of its value, is due to the labour of anyone of the co-operators. No one can determine the respective contributions of managers, clerks, bookkeepers, spinners, weavers, and carters, to the value of a bale of cotton cloth, which their joint labour has produced. Still less possible is it for the socialised State to find a common denominator for the value of services rendered in different occupations. How many hours’ work of a weaver equal an attendance by a great physician? How much flannel will equal the value of a great picture? How many hours of a navvy’s work will equal one hour’s work by a specially skilled mechanic? Competition settles these questions; in the absence of the self-regulating action of competition, which Socialism posits, it is impossible to ascertain the value of any man’s services, or the value of any labour product, and, therefore, equally impossible to reward anyone in accordance with his services. The attempt to adopt this standard of distributive justice would, therefore, result in an absolutely arbitrary distribution of the social product, and, as the Fabian essayist rightly admits, in friction, jealousy, favouritism, jobbery, and corruption. 

There remains, as the last of the theoretically possible systems of distribution under Socialism, that of equal reward in value, regardless of the differing value of services rendered. This reward would probably be ascertained by taking the value of last year’s total production, deducting from the same the amount required for the replacement and extension of national capital, and dividing the remainder by the total number of claimants, and placing the resultant amount to the credit of each, to be drawn against—by the selection of consumption-goods—at such times and places and in such variety as individual preference would dictate. 

This method, offering fewer difficulties than distribution according to service, is, however, not free from objection. The latter method, as has been shown, is impossible, because it leaves to the distributing agency the arbitrary determination of the value of each person’s services and of the value of every commodity. Equality of distribution in value, while eliminating the former difficulty, leaves the latter in full force. Which is the standard of measurement by which, in the absence of competition, the value of all the various labour-products can be determined? The reply of socialists is, that labour-time furnishes such a standard. One hour of any person’s labour will be regarded as conferring the same value on the resulting product as one hour of any other person’s labour. Even if it be admitted that, under Socialism, purchasers will value the result of a year’s work by a talented painter no higher than that of a year’s work by an ordinary sempstress, or that people will be no more anxious to live in well-constructed houses than in those badly constructed, great inequality of reward would arise in respect of ordinary consumption-goods. 

Take boots as an example. Even under Socialism boots will largely vary in quality, though made within the same labour-time. Not only are there wide differences in quality between various kinds of leather, but the skin from one part of an animal’s body yields inferior leather to that from another part. These differences are supplemented by variations in the more or less skilful treatment of skins and by differences of skill in manufacturing boots. Yet, if labour-time determines value, no notice can be taken of the resulting variations in quality, and boots differing widely in durability, sightliness, and comfort, must be valued alike and must be sold at the same price. In other articles, such as furniture, ornaments, feminine apparel, and others, where artistic merit and fashion largely determine value, labour-time as the measure of value must lead to still greater inequality of benefit. 

Seeing that labour-time is not a possible standard of value; seeing that no other has ever been suggested as a substitute for competition, it follows that values must be arbitrarily determined by the action of State officials, with all the consequences of inequality of treatment, jobbery, and corruption. As, however, all possible methods of distribution under Socialism are open to the same objection; as equal distribution in value confines such arbitrary interference within narrower limits than any other, it must be regarded as the least injurious method. 

Equality of reward, however, as an inevitable consequence, entails compulsory labour for all who are not physically or mentally incapable. For it would be unjust, demoralising, and, in the end, impracticable, to award to idlers, capable of work, the same reward as to industrious workers. Some system of compelling idlers and malingerers to work, is, therefore, a necessary consequence of the system of equal distribution. The following statement, therefore, seems fully justified by the ethical conceptions of Socialism, by actual proposals made by large sections of socialists, and by general considerations :—

No system of distribution is possible under Socialism, which does not necessitate the arbitrary, and, therefore, corruptive interference of State officials. The one which confines such arbitrary interference within the narrowest limits is the allotment to each of an equal share, measured by value, in that part of the total social income which is available for distribution, accompanied by some system of compulsion to honestly assist in the production of the social income or render other service to the community.

This, the only method of distribution open to Socialism, involves, however, further consequences. Equality of distribution cannot stop at any arbitrary line, but must include all workers, whatever the nature of their work. Lawyers, doctors, actors, musicians, painters, journalists, litterateurs, and scientists can no more be placed apart and allowed to earn any income they can than can architects, surveyors, engineers, and exceptionally skilful mechanics. The difficulties, which beset the distribution of wealth in the socialistic State, therefore, enforce the subjection of all these classes of workers to the directive and controlling superintendence of the State. As they are paid by the State, so they must work under the control of its officials, and these officials must determine the number of those who shall exercise their talents in these professions, and their respective locations; while those who by them may be deemed superfluous must be directed into other avenues of employment. Such control, therefore, implies the selection, by State officials, of the men who shall act as lawyers, doctors, actors, musicians, painters, and sculptors, journalists, litterateurs, and scientists. Any men not so selected would have to abstain from such pursuits, unless they carry them on after ordinary working hours. Even if they do so, they cannot sell their pictures and statues, but must give them away, and if they publish the results of their labours, they must do so at their own expense, unless they can induce the proper officials to do it at the expense of the State. In neither case would they receive any payment for their books. 

Domestic servants could no more be allowed to bargain for their reward than other classes of labour. Equality of distribution would, however, cause domestic service to become so rare an occurrence that it would take a new form, probably one, which would resemble the existing organisation of professional nursing. The professional servants would, however, be paid by the State, who might deduct fees for their service from the credit of those who occasionally employ them. 


MANY socialist writers advocate changes in the existing marital relation, equally extravagant and repulsive. Disregarding all such advocacy, as possibly the mere outcome of individual idiosyncrasy, we shall inquire here what are the changes in the constitution of the family which the adoption of Socialism must produce. 

Equality of reward, rendering women economically independent, must powerfully affect the relation of the sexes to each other. Women will no longer be driven into loveless marriages by fear of destitution or desire for wealth; nor will such considerations prevent them from seeking the dissolution of unions which have grown distasteful. 

The compulsion, accompanying the right to equal reward, to render industrial labour equally with men, must lead to further modifications. Women whose energy is expended in industrial work cannot preserve the comfort or even decency of an individual household. Even if they were able to undertake the additional work required it would be done perfunctorily, their interests lying elsewhere. That this distaste for and inability to perform the duties of the household is a necessary outcome of the industrial occupations of women is shown by present-day experience. An experienced observer, himself a socialist, remarks :—

“The growth of factory work among women has brought with it inevitably a weakening of home interests and a neglect of home duties … Home work is consciously slighted as secondary in importance and inferior because it brings no wages, and if not neglected is performed in a perfunctory manner, which robs it of its grace and value. This narrowing of the home as a place of hurried meals and sleep is, on the whole, the worst injury modern industry has inflicted on our lives, and it is difficult to see how it can be compensated by any increase of material products. Factory life for women, save in extremely rare cases, saps the physical and moral health of the family. The exigencies of factory life are inconsistent with the position of a good mother, a good wife, or the maker of a home.”[36]

This lessening of home interests and neglect of home duties must inevitably lead to the disappearance of separate family homes under Socialism. Married couples, as well as adult single persons, would occupy one or two rooms in what may best be described as boarding-houses, the service in which would be performed exclusively by professional attendants.

The industrial services demanded of mothers must prevent due care being given to children, especially during their earlier years, nor could such care be given under the conditions imposed by residence in boarding-houses. Children would therefore be handed over to the care of the State at as early a period after birth as is practicable. 

These, then, are immediate and obviously inevitable results of Socialism :—

Economic independence of women, abandonment of separate family homes, early separation of children and parents, and transference of the former to the care of the State. 

The life of the family as it now exists, therefore, would disappear, and the new life must profoundly affect the relation of the sexes as well as the propagation of the race. The probable nature of these consequential changes will form the subject of subsequent inquiry. 


SOCIALISM contemplates a state of society in which the incomes of all citizens are equal, and in which all citizens earn their incomes in the service of the State. Equality is one of its principal aims; merit the only claim for promotion to influential though not better paid positions. It follows that the socialistic State must aim at political equality as much as at economic equality, and that it cannot recognise any political privileges outside its own bureaucratic (superintending and organizing) circle. Socialism, therefore, is democratic in the sense that it demands the abolition of political privileges and the extension of equality in the franchise to all adult persons of both sexes. 

Practical considerations would have forced this attitude upon Socialism, even if it were not a necessary outcome of its distributive proposals. 

The fundamental proposals of Socialism involve the expropriation of the possessing classes, who are also the incumbents of political privileges. Among these classes it cannot, therefore, expect to make more than an occasional convert. The nature of their proposals, there­fore, compels socialists to rely mainly on the masses of the people who possess little or no property, and some of whom are as yet excluded from any or from an equal participation in the franchise. 

The equalising tendency of Socialism also makes its existence incompatible with that of a hereditary aristocracy and of a monarchy. The abolition of private property in land puts an end to hereditary aristocracy, and the equal distribution of the social income is irreconcilable with monarchical institutions. Hence Socialists are Republicans as well as Democrats. 

Out of the industrial proposals of Socialism there arises also a tendency towards the decentralisation of the functions of government. The conduct of localised industries by local bodies presupposes the existence of such local bodies, and would considerably increase their functions and power. Moreover, while proposing to add enormously to the power and functions of the central government, socialists seem nevertheless to recognise to some slight extent that this extension of power and functions may foster despotic tendencies. They are, therefore, anxious to limit the power of the central government as far as is compatible with the due exercise of its industrial functions, and pari passu to extend the power of local governments. 

The narrow limits within which the industrial functions of local governments are confined by the nature of industries has already been indicated. It is less easy to indicate the limit to their regulative functions outside of industrial matters. That some extension in this direction is possible may be granted, but in countries of advanced democratic type like the United Kingdom, the United States, and several British colonies, this extension cannot be far­reaching. Nay, it may even be that, in one respect, Socialism may prove a bar to the development of local government. 

The local administration of schools and of education is everywhere one of the claims of democratic parties, and there can be little doubt that considerable progress in this direction will be made in the near future. But such local administration must, and is intended to, result in diversity. It may, therefore, lead to considerable difference in the educational advantages offered in different localities, an inequality of opportunity incompatible with the fundamental principles of Socialism. While it must be admitted that the desire for decentralisation exists among socialists, and that it is not opposed to the principles of Socialism, it nevertheless appears that the decentralisation possible in the socialistic State will by no means be of sufficient importance to counteract the additional power which the assumption of industrial and distributive control will confer upon the central government. 

On the other hand, Socialism necessarily tends to a further centralisation, that of internationalism. The ramifications of modern industry extend far beyond the limits of any State. No nation is or ever can again be industrially self-contained. The problem of achieving a balance between production and consumption cannot, therefore, be successfully solved by an authority, which is confined to the limits of a single State. Hence, socialists aim, more or less consciously, at some international industrial federation, the executive of which shall regulate the conduct of all industries of international character. 


ONE of the claims most frequently and passionately urged by modern socialists is, that their system has emerged from the empirical stage and has become scientific. Nevertheless, this claim appears to be unfounded. Knowledge becomes science through the systematic arrangement of the natural laws by which a group or groups of related facts or phenomena are governed, and in their interpretation through causal connection, so that from that which is observable conclusions can be formed with regard to that which is not observable. The essential condition through which a mere collection of facts becomes a science is, therefore, the discovery and tabulation of the invariable, natural laws, which govern their appearance. Any system which applies such natural laws to man’s needs, is a system based on science, i.e. scientific. Thus navigation is scientific, inasmuch as it is based on the sciences of mathematics and astronomy; a scientific system of medicine is based on the natural laws tabulated by the sciences of biology and chemistry; a scientific system of mining is based on geology, etc. Likewise any system of politics will be scientific, if it is based on well-ascertained natural laws governing the conduct of man in society. But if any political system is not based on such natural laws, still more if it is based on the express denial of the existence of such laws, it cannot be scientific; it is a mere empirical conception. 

This is the position of Socialism. The most prominent of the conceptions on which it is based is, that there are no natural laws which govern the distribution of wealth; that distribution may be governed by municipal enactments alone, and that, therefore, its arbitrary regulation is a necessary function of the State, and the only means by which justice in distribution can be achieved. Whether this conception is true or not does not concern us here. If true, then Socialism is not scientific, because there is no science on which it can be based; if untrue, then Socialism is unscientific, because it disregards the science on which the economic part of politics must be based. This denial of natural law, therefore, whether in itself it is true or not, destroys the claim of Socialism to be; considered scientific, and proves that it is based on unverified or unverifiable interpretations of facts, the causal connection of which is either unknown or disregarded. 

The ethical conceptions on which Socialism is based are equally empirical and equally deny the possibility of any moral science. For the conception of a right includes that of a duty to respect that right. The denial of natural rights, therefore, involves the denial of natural duties. If all rights are granted by the State, all duties are imposed by the State. Moral conduct, therefore, is conduct according to law; there is no standard by which the morality of any law may be determined, for the existence of the law constitutes its morality. Morality, therefore, has no existence; it is merely a secondary term for legality. 

As in the case of economics, therefore, Socialism is unscientific, whether this denial of ethics, and, consequently, of ethical science, is true or untrue; if true, because there is no ethical science on which its proposals can be based; if untrue, because its proposals disregard the laws which that science has established. 


THE foregoing examination enables us to give a comprehensive definition of Socialism, as follows :—

Socialism is an empiric system of organisation of social life, based on certain ethical and economic conceptions. Its ethical conceptions consist, generally, of the denial of individual natural rights and the assertion of the omnipotence of the State; specially, of the denial of the right of the individual to the possession of the products of his labour, and the assertion of the right of the State to the possession of the products of the labour of all individuals. 

Its economic conceptions are, that competition and private property in land and capital, and the consequent exaction of rent, interest and profit, i.e. surplus value, by private persons, are social evils, responsible for the material and mental destitution of vast masses of the people. 

On these conceptions are based its industrial, distributive, and political proposals. They are: The gradual abolition of private property in and private control of the instruments and materials of production, land, transportation, trade, loan-capital, and public debts; such abolition to take place without compensation, or through partial compensation only, of present proprietors as a whole. For these private rights it would substitute the collective ownership and management by the community acting through local and central governmental bodies, of the instruments and materials of production, land, transportation, trade, and loans, continuing private property in and private control of all consumption-goods awarded to individuals as their share of the products of the national industry. 

The only arrangement possible under Socialism, for awarding to individuals a share in the products of the national industries, is, to allot to each an equal share, measured by value, in that part of the national income which remains, after due deduction has been made for the replacement and extension of national capital. The only possible standard of value, labour-time, however, would lead to inequality in the share of the national income obtained by each, and must, therefore, be supplemented or superseded by the arbitrary determination of the value of all products by State officials. 

The political proposals of Socialism are: equal political rights for all adult individuals of both sexes; extension of the powers and functions of local governmental bodies, and international control of international production and trade. 

These proposals entail certain consequential changes in social organisation. 

The management by the State of all production and trade involves a numerous graduated body of officials for the control of the individuals employed, and the determination of the kinds, qualities, and quantities of goods to be produced. These officials must determine the occupation and place of employment of all individuals of both sexes. 

The distributive proposal involves some system of compulsion to honestly assist in the production of the national income, or to render other service to the community; as also, the control of all literary, journalistic, artistic, and scientific production, and the selection of those who shall engage in such production. It also involves the following changes in the constitution of the family :—Economic independence of women; abandonment of separate family homes; early separation of children and parents, and transference of the former to the care of the State. 


Go to Part II: Economics

[6]This and subsequent quotations from Capitalare taken from the stereotyped edition, Swan Sonnenschein and Co. London, 1889.  
[7]Fabian Essays in Socialismis a complete exposition of modern English Socialism in its latest and most mature phase (Sidney Webb, Socialism in England, p. 38).
[8]Report of Pan-Anglica. Conference. London, 1888; Society for Promoting Christian Knowledge.
[9]Professor Ely’s translation, Socialism.
[10]The quintessence of Socialism, p.3.
[11]A Handbook of Socialism, p. 9.
[12]Political Science Quarterly, December 1888. 
[13]Socialism, p. 20. 
[14]Sidney Webb, Socialism in England, pp. 12, 13.  
[15]Socialism in England, p. 10.
[16]Fabian Essayp. 135. 
[17]Vide Looking Backwards, etc. 
[18]Ante, p. 15. 
[19]  S. and B. Webb, Problems of Modern Industry, p. 259 (1898). 
[20]Fabian Essays, p. 139. 
[21]See ante, p. 19. 
[22]P. 140. 
[23]A Co-operative Commonwealth, pp 135, 136.
[24]The Quintessence of Socalism, pp. 64, 69, 70. 
[25]“A Socialist State or municipality will charge the full economic rent for the use of its land and dwellings, and apply that rent for the purposes of the community.”—S. B. Webb, Problems of Modern Industry, p. 278. The necessity or even consistency of charging rent of “dwellings,” i.e. interest, is not apparent.
[26]The term “land” as used here and subsequently includes agricultural land. Building-sites, mines, waterfalls, and all other natural opportunities. 
[27]“All that is found within the limits of our State belongs to us by the same title. You may rest assured that kings have the right of full and absolute disposition over all the property possessed by the clergy as well as the laity, to use it at all times with wise economy, that is, according to the general necessity of the State.”—”Memoires de Louis XIV. pour l’instruction du Dauphin,” Yves Guyot, La Propriété.
“The Liberty of the subject lieth, therefore, in those things which, in regulating their action, the sovereign hath prætermitted. … Nevertheless, we are not to understand that by such liberty, the sovereign power of life and death is either abolished, or limited. For it hath already been shown that nothing the sovereign representative can do to a subject on what pretence soever can properly be called injustice or injury; … and the same holdeth also in a sovereign prince that putteth to death an innocent subject. For though the action be against the law of nature, as being contrary to equity, as was the killing of Uriah, by David, yet it was not an injury to Uriah, but to God.”—”The English Works of Thomas Hobbes,” by Sir William Molesworth, Bart., vol. iii. Leviathan, pp. 99, 100. 
[28]“Be it that there are natural rights—that is, in a state of nature, where there is nothing artificial. But men have formed themselves into a social state; all is artificial and nothing merely natural. In such a state no rights ought to exist but what are for the general good—all that are should.”—Lord Bramwell, Land and CapitalThe Pseudo-Scientific Theory of Men’s Natural Rights. W. H. Mallock, Studies of Contemporary Superstitions. 
[29]Pp. 79, 80. 
[30]“We might define the final aim of Socialism to be an equitable system of distributing the fruits of labour.”—Kirkup, An Inquiry into Socialism, p. 105. 
“Socialists wish to secure justice in distribution, but they have not yet been able to agree upon a standard of distributive justice, although they now generally seem disposed to regard equality in distribution as desirable:”—Ely, Socialism.
[31]“Men come greatly to desire that these capricious gifts of nature might be intercepted by some agency having the power and the goodwill to distribute them justly according to the labour done by each in the collective search for them. This desire is Socialism.”—Fabian Essays, p. 4. 
“In the Commonwealth the men will be rewarded according to results, whether they are mechanics or chiefs of industry, or transporters or salesmen… But in regard to the work of the chiefs of industry and professionals, they, undoubtedly, will institute a new graduation of labour. There will be no more £10,000 or £5,000, or even £2,000 salaries paid… When ‘business’ is done away with, then their services will be compared with manual work, as they ought to be, and paid for accordingly.”—Gronlund, Co-operative Commonwealth, pp. 143, 144, and 145.
[32]Ante, p. 15. 
[33]Ante, p. 17.
[34]The Impossibility of Social Democracy, p. 54.
[35]“The fourth idea of distributive justice, and that which seems now to prevail generally among socialists, is equality of income—not a mechanical equality, but equality in value.”—Ely, Socialism, p. 16.
“The impossibility of estimating the separate value of each man’s labour with any really valid result, the friction which would arise, the jealousies which would be pro­voked, the inevitable discontent, favouritism, and jobbery that would prevail—all these things will drive the Communal Council into the right path, equal remuneration of all workers.”—Fabian Essays, pp. 163, 164. 
[36]Hobson, Evolution of Modern Capitalism, p. 320.