Socialism: An Economic and Sociological Analysis

It is the aim of Socialism to transfer the means of production from private ownership to the ownership of organized society, to the State.
*20 The socialistic State owns all material factors of production and thus directs it. This transfer need not be carried out with due observance of the formalities elaborated for property transfers according to the law set up in the historical epoch which is based on private property in the means of production. Still less important in such a process of transfer is the traditional terminology of Law. Ownership is power of disposal, and when this power of disposal is divorced from its traditional name and handed over to a legal institution which bears a new name, the old terminology is essentially unimportant in the matter. Not the word but the thing must be considered. Limitation of the rights of owners as well as formal transference is a means of socialization. If the State takes the power of disposal from the owner piecemeal, by extending its influence over production; if its power to determine what direction production shall take and what kind of production there shall be, is increased, then the owner is left at last with nothing except the empty name of ownership, and property has passed into the hands of the State.

People often fail to perceive the fundamental difference between the liberal and the anarchistic idea. Anarchism rejects all coercive social organizations, and repudiates coercion as a social technique. It wishes in fact to abolish the State and the legal order, because it believes that society could do better without them. It does not fear anarchical disorder because it believes that without compulsion men would unite for social co-operation and would behave in the manner that social life demands. Anarchism as such is neither liberal nor socialistic: it moves on a different plane from either. Whoever denies the basic idea of Anarchism, whoever denies that it is or ever will be possible to unite men without coercion under a binding legal order for peaceful co-operation, will, whether liberal or socialist, repudiate anarchistic ideals. All liberal and socialist theories based on a strict logical connection of ideas have constructed their systems with due regard to coercion, utterly rejecting Anarchism. Both recognize the necessity of the legal order, though for neither is it the same in content and extent. Liberalism does not contest the need of a legal order when it restricts the field of State activity, and certainly does not regard the State as an evil, or as a necessary evil. Its attitude to the problem of ownership and not its dislike of the “person” of the State is the characteristic of the liberal view of the problem of the State. Since it desires private ownership in the means of production it must, logically, reject all that conflicts with this ideal. As for Socialism, as soon as it has turned fundamentally from Anarchism, it must necessarily try to extend the field controlled by the compulsory order of the State, for its explicit aim is to abolish the “anarchy of production.” Far from abolishing State and compulsion it seeks to extend governmental action to a field which Liberalism would leave free. Socialistic writers, especially those who recommend Socialism for ethical reasons, like to say that in a socialistic society public welfare would be the foremost aim of the State, whereas Liberalism considers only the interests of a particular class. Now one can only judge of the value of a social form of organization, liberal or socialistic, when a thorough investigation has provided a clear picture of what it achieves. But that Socialism alone has the public welfare in view can at once be denied. Liberalism champions private property in the means of production because it expects a higher standard of living from such an economic organization, not because it wishes to help the owners. In the liberal economic system more would be produced than in the socialistic. The surplus would not benefit only the owners. According to Liberalism therefore, to combat the errors of Socialism is by no means the particular interest of the rich. It concerns even the poorest, who would be injured just as much by Socialism. Whether or not one accepts this, to impute a narrow class interest to Liberalism is erroneous. The systems, in fact, differ not in their aims but in the means by which they wish to pursue them.

2 The “Fundamental Rights” of Socialist Theory

The programme of the liberal philosophy of the State was summarized in a number of points which were put forward as the demands of natural law. These are the Rights of Man and of Citizens, which formed the subject of the wars of liberation in the eighteenth and nineteenth centuries. They are written in brass in the constitutional laws composed under the influence of the political movements of this time. Even supporters of Liberalism might well ask themselves whether this is their appropriate place, for in form and diction they are not so much legal principles—fit subject matter for a law of practical life—as a political programme to be followed in legislation and administration. At any rate it is obviously insufficient to include them ceremoniously in the fundamental laws of states and constitutions; their spirit must permeate the whole State. Little benefit the citizen of Austria has had from the fact that the Fundamental Law of the State gave him the right “to express his opinion freely by word, writing, print, or pictorial representation within the legal limits.” These legal limits prevented the free expression of opinion as much as if that Fundamental Law had never been laid down. England has no Fundamental Right of the free expression of opinion; nevertheless in England speech and press are really free because the spirit which expresses itself in the principle of the freedom of thought permeates all English legislation.

In imitation of these political Fundamental Rights some antiliberal writers have tried to establish basic economic rights. Here their aim is twofold: on the one hand they wish to show the insufficiency of a social order which does not guarantee even these alleged natural Rights of Man; on the other hand they wish to create a few easily remembered, effective slogans to serve as propaganda for their ideas. The view that it might be sufficient to establish these basic rights legally in order to establish a social order corresponding to the ideals they express, is usually far from the minds of their authors. The majority indeed, especially in recent years, are convinced that they can get what they want only by the socialization of the means of production. The economic basic rights were elaborated only to show what requirements a social order had to satisfy, a critique rather than a programme. Considered from this point of view they give us an insight into what, according to the opinion of its advocates, Socialism should achieve.

According to Anton Menger, Socialism usually assumes three economic basic rights—the right to the full produce of labour, the right to existence, and the right to work.
*21

All production demands the co-operation of the material and personal factors of production: it is the purposeful union of land, capital, and labour. How much each of these has contributed physically to the result of production cannot be ascertained. How much of the value of the product is to be attributed to the separate factors is a question which is answered daily and hourly by buyers and sellers on the market, though the scientific explanation of this process has achieved satisfactory results only in very recent years, and these results are still far from final. The formation of market prices for all factors of production attributes to each a weight that corresponds to its part in production. Each factor receives in the price the yield of its collaboration. The labourer receives in wages the full produce of his labour. In the light of the subjective theory of value therefore that particular demand of Socialism appears quite absurd. But to the layman it is not so. The habit of speech with which it is expressed derives from the view that value comes from labour alone. Whoever takes this view of value will see in the demand for the abolition of private ownership in the means of production a demand for the full produce of labour for the labourer. At first it is a negative demand—exclusion of all income not based on labour. But as soon as one proceeds to construct a system on this principle insurmountable obstacles arise, difficulties which are the consequence of the untenable theories of the formation of value which have established the principle of the right to the full produce of labour. All such systems have been wrecked on this. Their authors have had to confess finally that what they wanted was nothing else than the abolition of the income of individuals not based on labour, and that only socialization of the means of production could achieve this. Of the right to the full produce of labour, which had occupied minds for decades, nothing remains but the slogan—effective for propaganda, of course—demanding that “unearned” non-labour income should be abolished.

The Right to Existence can be defined in various ways. If one understands by this the claim of people, without means and unfit for work and with no relation to provide for them, to subsistence, then the Right to Existence is a harmless institution which was realized in most communities centuries ago. Certainly the manner in which the principle has been carried into practice may leave something to be desired, as for reasons that arise from its origin in charitable care of the poor, it gives to the necessitous no title recoverable by law. By “Right to Existence,” however, the socialists do not mean this. Their definition is: “that each member of society may claim that the goods and services necessary to the maintenance of his existence shall be assigned to him, according to the measure of existing means, before the less urgent needs of others are satisfied.”
*22 The vagueness of the concept, “maintenance of existence,” and the impossibility of recognizing and comparing how urgent are the needs of different persons from any objective standpoint, make this finally a demand for the utmost possible equal distribution of consumption goods. The form which the concept sometimes takes—that no one should starve while others have more than enough—expresses that intention even more clearly. Plainly, this claim for equality can be satisfied, on its negative side, only when all the means of production have been socialized and the yield of production is distributed by the State. Whether on its positive side it can be satisfied at all is another problem with which the advocates of the Right to Existence have scarcely concerned themselves. They have argued that Nature herself affords to all men a sufficient existence and only because of unjust social institutions is the provisioning of a great part of humanity insufficient; and that if the rich were deprived of all they are allowed to consume over and above what is “necessary,” everyone would be able to live decently. Only under the influence of the criticism based on the Malthusian Law of Population
*23 has socialist doctrine been amended. Socialists admit that under non-socialist production not enough is produced to supply all in abundance, but argue that Socialism would so enormously increase the productivity of labour that it would be possible to create an earthly paradise for an unlimited number of persons. Even Marx, otherwise so discreet, says that the socialist society would make the wants of each individual the standard measure of distribution.
*24

This much is certain, however: the recognition of the Right to Existence, in the sense demanded by the socialist theorists, could be achieved only by the socialization of the means of production. Anton Menger has, it is true, expressed the opinion that private property and the Right to Existence might well exist side by side. In this case claims of citizens of the State to what was necessary for existence would have to be considered a mortgage on the national income, and these claims would have to be met before favoured individuals received an unearned income. But even he has to confess that were the Right to Existence admitted completely, it would absorb such an important part of the unearned income and would strip so much benefit from private ownership that all property would soon be collectively owned.
*25 If Menger had seen that the Right to Existence necessarily involved a right to the equal distribution of consumption goods, he would not have asserted that it was fundamentally compatible with private ownership in the means of production.

The Right to Existence is very closely connected with the Right to Work.
*26 The basis of the idea is not so much a Right to Work as a duty. The laws which allow the unemployable a sort of claim to maintenance exclude the employable from a like favour. He has only a claim to the allotment of work. Naturally the socialist writers and with them the older socialist policy have a different view of this right. They transform it, more or less clearly, into a claim to a task which is agreeable to the inclinations and abilities of the worker, and which yields a wage sufficient for his subsistence needs. Beneath the Right to Work lies the same idea, that engendered the Right to Existence—the idea that in “natural” conditions—which we are to imagine existing before and outside the social order based on private property but which is to be restored by a socialist constitution when private property has been abolished—every man would be able to procure a sufficient income through work. The bourgeois society which has destroyed this satisfactory state of affairs owes to those thus injured the equivalent of what they have lost. This equivalent is supposed to be represented just by the Right to Work. Again we see the old illusion of the means of subsistence which Nature is supposed to provide irrespective of the historical development of society. But the fact is that Nature grants no rights at all, and just because she dispenses only the scantiest means of subsistence and because wants are practically unlimited, man is forced to take economic action. This action begets social collaboration; its origin is due to the realization that it heightens productivity and improves the standard of living. The notion, borrowed from the most naive theories of natural law, that in society the individual is worse off than “in the freer primitive state of Nature” and that society must first, so to speak, buy his toleration with special rights, is the cornerstone of expositions upon the Right to Work as well as upon the Right to Existence.

Where production is perfectly balanced there is no unemployment. Unemployment is a consequence of economic change, and where production is unhindered by the interferences of authorities and trade unions, it is always only a phenomenon of transition, which the alteration of wage rates tends to remove. By means of appropriate institutions, by the extension, for example, of labour exchanges, which would evolve out of the economic mechanism in the unimpeded market—i.e. where the individual is free to choose and to change his profession and the place where he works—the duration of separate cases of unemployment could be so much shortened that it would no longer be considered a serious evil.
*27 But the demand that every citizen should have a right to work in his accustomed profession at a wage not inferior to the wage rates of other labour more in demand is utterly unsound. The organization of production cannot dispense with a means of forcing a change of profession. In the form demanded by the socialist, the Right to Work is absolutely impracticable, and this is not only the case in a society based on private ownership in the means of production. For even the socialist community could not grant the worker the right to be active only in his wonted profession; it, also, would need the power to move labour to the places where it was most needed.

The three basic economic rights—whose number incidentally could easily be increased—belong to a past epoch of social reform movements. Their importance today is merely, though effectively, propagandistic. Socialization of the means of production has replaced them all.

3 Collectivism and Socialism

The contrast between realism and nominalism which runs through the history of human thought since Plato and Aristotle is revealed also in social philosophy.
*28 The difference between the attitude of Collectivism and Individualism to the problem of social associations, is not different from the attitude of Universalism and Nominalism to the problem of the concept of species. But in the sphere of social science this contrast—to which in philosophy the attitude towards the idea of God has given a significance which extends far beyond the limits of scientific research—has the highest importance. The powers which are in existence and which do not want to succumb, find in the philosophy of Collectivism weapons for the defence of their rights. But even here Nominalism is a restless force seeking always to advance. Just as in the sphere of philosophy it dissolves the old concepts of metaphysical speculation, so here it breaks up the metaphysics of sociological Collectivism.

The political misuse of the contrast is clearly visible in the teleological form which it assumes in Ethics and Politics. The problem here is stated otherwise than in Pure Philosophy. The question is whether the individual or the community shall be the purpose.
*29 This presupposes a contrast between the purposes of individuals and those of the social whole, a contrast which only the sacrifice of the one in favour of the other can overcome. A quarrel over the reality or nominality of the concepts becomes a quarrel over the precedence of purposes. Here there arises a new difficulty for Collectivism. As there are various social
collectiva, whose purposes seem to conflict just as much as those of the individuals contrast with those of the
collectiva, the conflict of their interests must be fought out. As a matter of fact, practical Collectivism does not worry much about this. It feels itself to be only the apologist of the ruling classes and serves, as it were, as scientific policeman, on all fours with political police, for the protection of those who happen to be in power.

But the individualist social philosophy of the epoch of enlightenment disposed of the conflict between Individualism and Collectivism. It is called individualistic because its first task was to clear the way for subsequent social philosophy by breaking down the ideas of the ruling Collectivism. But it has not in any way replaced the shattered idols of Collectivism with a cult of the individual. By making the doctrine of the harmony of interests the starting point of sociological thought, it founded modem social science and showed that the conflict of purposes upon which the quarrel turned did not exist in reality. For society is only possible on these terms, that the individual finds therein a strengthening of his own ego and his own will.

The collectivist movement of the present day derives its strength not from an inner want on the part of modern scientific thought but from the political will of an epoch which yearns after Romanticism and Mysticism. Spiritual movements are revolts of thought against inertia, of the few against the many; of those who because they are strong in spirit are strongest alone against those who can express themselves only in the mass and the mob, and who are significant only because they are numerous. Collectivism is the opposite of all this, the weapon of those who wish to kill mind and thought. Thus it begets the “New Idol,” “the coldest of all cold monsters,” the State.
*30 By exalting this mysterious being into a sort of idol, decking it out in the extravagance of fantasy with every excellence and purifying it of all dross,
*31 and by expressing a readiness to sacrifice everything on its altar, Collectivism seeks consciously to cut every tie that unites sociological with scientific thought. This is most clearly discernible in those thinkers who exerted the keenest criticism to free scientific thought from all teleological elements, whilst in the field of social cognition they not only retained traditional ideas and teleological ways of thinking but even, by endeavouring to justify this, barred the way by which sociology could have won for itself the liberty of thought already achieved by natural science. No god and no ruler of Nature lives for Kant’s theory of cognition of nature, but history he regards “as the execution of a hidden plan of nature in order to bring about a state-constitution perfect inwardly—and, for this purpose, outwardly as well—as the only condition in which she can develop all her abilities in humanity.”
*32 In the words of Kant we can see with especial clearness the fact that modern Collectivism has nothing more to do with the old realism of concepts but rather, having arisen from political and not from philosophical needs, occupies a special position outside science which cannot be shaken by attacks based on the theory of cognition. In the second part of his
Ideen zu einer Philosophie der Geschichte der Menschheit (Ideas to a Philosophy of the History of Humanity) Herder violently attacked the critical philosophy of Kant, which appeared to him as “Averroic” hypostasization of the general. Anyone who sought to maintain that the race, and not the individual, was the subject of education and civilization, would be speaking incomprehensibly, “as race and species are only general concepts, except in so far as they exist in the individual being.” Even if one attributed to this general concept all the perfections of humanity—culture and highest enlightenment—which an ideal concept permits, one would have “said just as little about the true history of our race, as I would if, speaking of animality, stoneness, metalness, in general, I were to ascribe to them the most glorious, but in single individuals self-conflicting, attributes.”
*33 In his reply to this Kant completes the divorce of ethical-political Collectivism from the philosophical concept-realism. “Whoever said that no single horse has horns but the species of horses is nevertheless horned would be stating a downright absurdity. For then species means nothing more than the characteristic in which all individuals must agree. But if the meaning of the expression ‘the human species’ is—and this is generally the case—the
whole of a series of generations going into the infinite (indefinable), and it is assumed that this series is continuously nearing the line of its destiny, which runs alongside of it, then it is no contradiction to say, that in all its parts it is asymptotic to it, yet on the whole meets it-in other words, that no link of all the generations of the human race but only the species attains its destiny completely. Mathematicians can elucidate this. The philosopher would say: the destiny of the human race as a whole is continuous progress, and the completion of this is a mere idea—but in all intention a useful idea—of the aim towards which we, according to the plan of Providence, have to direct our exertions.”
*34 Here the teleological character of Collectivism is frankly admitted, and there opens up an unbridgeable chasm between it and the way of thought of pure cognition. The cognition of the hidden intentions of Nature lies beyond all experience and our own thought gives us nothing upon which to form a conclusion as to whether it exists or what it contains. Such behaviour of individual man and of social systems as we are able to observe provides no basis for a hypothesis. No logical connection can be forged between experience and that which we shall or may suppose. We are to believe—because it cannot be proved—that against his will man does that which is ordained by Nature, who knows better; that he does what profits the race, not the individual.
*35 This is not the customary technique of science.

The fact is that Collectivism is not to be explained as a scientific necessity. Only the needs of politics can account for it. Therefore it does not stop, as conceptual realism stopped, at affirming the real existence of social associations—calling them organisms and living beings in the proper sense of the words—but idealizes them and makes them Gods. Gierke explains quite openly and unequivocally that one must hold fast to the “idea of the real unity of the community,” because this alone makes possible the demand that the individual should stake strength and life for Nation and State.
*36 Lessing has said that Collectivism is nothing less than “the cloak of tyranny.”
*37

If the conflict between the common interests of the whole and the particular interests of the individual really existed, men would be quite incapable of collaborating in society. The natural intercourse between human beings would be the war of all against all. There could be no peace or mutual sufferance, but only temporary truce, which lasted no longer than the weariness of one or all the parts made necessary. The individual would, at least potentially, be in constant revolt against each and all, in the same way as he finds himself in unceasing war with beasts of prey and bacilli. The collective view of history, which is thoroughly asocial, cannot therefore conceive that social institutions could have arisen in any way except through the intervention of a “world shaper” of the Platonic
(one who works for the people). This operates in history through its instruments, the heroes, who lead resistant man to where it wants him. Thus the will of the individual is broken. He who wants to live for himself alone is forced by the representatives of God on earth to obey the moral law, which demands that he shall sacrifice his well-being in the interests of the Whole and its future development.

The science of society begins by disposing of this dualism. Perceiving that the interests of separate individuals within society are compatible and that these individuals and the community are not in conflict, it is able to understand social institutions without calling gods and heroes to its aid. We can dispense with the Demiurge, which forces the individual into the Collectivism against his will, as soon as we realize that social union gives him more than it takes away. Even without assuming a “hidden plan of nature” we can understand the development to a more closely-knit form of society when we see that every step on this way benefits those who take it, and not only their distant great-grandchildren.

Collectivism had nothing to oppose to the new social theory. Its continually reiterated accusation, that this theory does not apprehend the importance of the collectiva, especially those of State and Nation, only shows that it has not observed how the influence of liberal sociology has changed the setting of the problem. Collectivism no longer attempts to construct a complete theory of social life; the best it can produce against its opponents is witty aphorism, nothing more. In economics as well as in general sociology it has proved itself utterly barren. It is no accident that the German mind, dominated by the social theories of classical philosophy from Kant to Hegel, for a long time produced nothing important in economics, and that those who have broken the spell, first Thünen and Gossen, then the Austrians Carl Menger, Böhm-Bawerk, and Wieser, were free from any influence of the collectivist philosophy of the State.

How little Collectivism was able to surmount the difficulties in the way of amplifying its doctrine is best shown by the manner in which it has treated the problem of social will. To refer again and again to the Will of the State, to the Will of the People, and to the Convictions of the People is not in any way to explain how the collective will of the social associations comes into being. As it is not merely different from the will of separate individuals but, in decisive points, is quite opposed to the latter, the collective will cannot originate as the sum or resultant of individual wills. Every collectivist assumes a different source for the collective will, according to his own political, religious and national convictions. Fundamentally it is all the same whether one interprets it as the supernatural powers of a king or priest or whether one views it as the quality of a chosen class or people. Friedrich Wilhelm IV and Wilhelm II were quite convinced that God had invested them with special authority, and this faith doubtless served to stimulate their conscientious efforts and the development of their strength. Many contemporaries believed alike and were ready to spend their last drop of blood in the service of the king sent to them by God. But science is as little able to prove the truth of this belief as to prove the truth of a religion. Collectivism is political, not scientific. What it teaches are judgments of value.

Collectivism is generally in favour of the socialization of the means of production because this lies nearer to its world philosophy. But there are collectivists who advocate private ownership in the means of production because they believe that the well-being of the social whole is better served by this system.
*38 On the other hand, even without being influenced by collectivist ideas it is possible to believe that private ownership in the means of production is less able than common ownership to accomplish the purposes of humanity.