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which the present economic system still exists becomes more
and more like a madhouse.

. . j If you look at the world as a whole, all
America and ,. . , , . ,, , '

L TW u this 1S clear and undeniable enough. But if
the World. . . .

you are accustomed to looking only at con-
ditions in America (or in Britain for that matter), all this
may seem very much exaggerated,, It is perfectly true that
the evil consequences of keeping the present economic system



in existence have not yet appeared in America and in Britain
to the same extent that they have elsewhere.

Taking the capitalist world as a whole, there is no doubt
that conditions for the mass of the people are getting worse
and worse. That is what we mean when we say that the
present economic system is in decay. Social progress of any
sort has become impossible under it. Hours, wages, working
conditions, living conditions, for the mass of the population
of the majority of the capitalist countries of the world are
getting worse. Everything is being sacrificed to the supreme
necessity of war making. But this is not yet true in America
or in Britain. In America it is true that life for the mass of
the population has become increasingly insecure, owing to
the ever more dizzy fluctuations of the economic system.
But on the other hand the American people have undoubtedly
made real gains by way of better social services and increased
trade-union organizations, especially in the last two or three
years. Moreover they have embarked, as we have seen, on
the attempt to solve the economic problem in the progressive
way, by distributing additional purchasing power to the

Are Thines * n ^ r * tam ' ^ ecause f ver 7 special circum-

j . p stances (of which the principal one is the pos-

session by the British employing class of the
biggest and richest empire in the world), a certain amount
of social progress is still possible. That progress takes place
only when the mass of us manage to put tremendously
strong pressure on our rulers. But when we do, it is some-



times still possible for us to get improved conditions, better
wages, shorter hours of work, etc. etc. Again it is still some-
times possible, in some parts of Britain, to get new and better
schools built, local housing conditions improved, etc. etc.

The result of all this is that some people sincerely believe
that the conditions of the mass of the American and British
peoples are still steadily improving. I think they forget that,
against the undoubted elements of progress which still exist,
they have to balance factors in which there has been very
grave deterioration. Against shorter hours and improved
social services you have to balance an immense growth in
unemployment, and the gigantic increase of insecurity which
that means, not only to the unemployed themselves, but to
the whole working population.
,, This mixture of progress and regression

~ , really means that the strong and persistent

Downthrust J . 7 _ . . f

, , struggle of the American and British peoples

for improved conditions of life has now come
up against the steady downthrust of an economic system
which is fundamentally unsound. The two forces may be
about balanced today. We may still manage to make an
advance here and there; but we are forced to give ground
at some other place. There is no particular point in trying
to estimate exactly whether, on balance, we are now advanc-
ing, holding our ground, or being forced into retreat.

The thing to realize is that the downthrust which we are
now meeting is no accident, that it is caused by the funda-
mental rottenness of the economic system under which both
peoples live. The thing to realize is that this downthrust must



become stronger and stronger so long as we leave our present
system in existence.

If we leave the present system in existence too long, we
have only to look abroad in order to see a picture of what
will happen to us. For in the final analysis there is for us
no way out while the land, mines and factories of our
countries are left in the hands of the present small class
which today owns them. There is no way out while the ninety
million American wage and salary earners, and their de-
pendents, are excluded from independent access to those
means of production without which they cannot work and
live. As long as we go on running our economic system in
this crazy way, so long will the world more and more come
to resemble a madhouse. We have not yet gone so far down
the slope as our neighbors. But if we leave our present social
system in existence too long, we are bound to be dragged
into the wars which our masters will have to make us wage;
we are bound to be crushed by the tyranny which they will
have to impose on us in order to get us to fight.

/TTT TTI+' It is our fate to live in one of those epochs

Lhe Ultimate . r

QJ . . in history when a whole way 01 human life

(a "civilization," as they call it) is going to
destruction. History teaches us that once that process has
begun there is no way of saving the dying civilization. The
only way out is to put a new one in its place. That is what we
must, can, and will do. That is why it is necessary that at any
rate the most active and thoughtful of those who are engaged
in the immediate struggle of the mass of the population
against the conditions of life imposed on them by present-day



capitalism should get a grasp of the ultimate objective of
that struggle.

As we have seen, the type of progressive measures which
Mr. Roosevelt is attempting to apply in America today can-
not themselves provide any permanent solution to the prob-
lem. That is no reason for not giving those measures the
fullest possible support, nor for failing to press for their in-
tensification and extension. For these measures are genuinely
progressive; they point in the right direction.

But in order to know, even, that they point in the right
direction, we must know what that direction is. And that
implies that we must know the kind of economic and social
system which we can put in the place of the present one, when
we have come to the limit of what can be accomplished by
such measures as the distribution of purchasing power. The
next three chapters of this book are accordingly devoted to
an attempt briefly to define the kind of economic system which
can alone finally and completely answer our original ques-
tion: "Who is to buy the goods?" For it is evident that only
such a system as can do that will be able to provide us with
a firm, permanent basis upon which we can build up decent,
happy, civilized lives.

In these chapters we shall be ignoring immediate, practical
political issues, such as those which were discussed in Chapters
VII, VIII and IX above. Then in the last chapters we shall
come back to the question of practical politics, and discuss
the burning question of how to get there.


Chapter XI

What Can We Put in Its Place?

I recently had a debate with a distinguished Roman Catho-
lic priest, Father McNab, O.P. After it, Father McNab told
me that he thought that I had scored only one point during
the whole affair. And I, though I did not tell him so, did not
think that he had scored any points at all! So it was a very
satisfactory debate for both of us.

p . But that one point of mine arose over the

p question of property. He said he was in favor

i TO D6J"t y f*ii'i* T "ii

of individual, private property. I said that
so was I.

How could that be, said he, seeing that I was in favor of
socialism? I said that I was in favor of socialism, just be-
cause I was in favor of individual, private property. I said
that my main complaint against capitalism was that it had
deprived by far the greater part of both the American and the
British peoples of any individual, private property worth
talking about. And I quoted him some of those figures which
I gave in Chapter II.

But, he objected, he had always thought that socialism
meant taking people's private property away from them.



"Ah," said I, "that's what you've been taught. What socialism
really means is giving nine-tenths of us a chance to get at
least ten times as much individual, private, property ten
times as much clothing, houses, gardens, motorcars, supplies
of food, furniture, and the like as we ever get today."

But, he insisted, surely socialism does mean taking private
property away from some people? "So it does," said I. "It
means taking property in the means of production, as we call
it, out of private hands. But we propose to do so precisely
because that is the only way to put a decent amount of private
property of the other sort into people's hands."

rrj rr c The point is that there are two quite differ-

The Two Sorts r _ _,

, D ent sorts of private property. Ine one sort is

of Property. -IP i

private property in the means 01 production

private property in a factory, or a mine, or in the land. And
the other sort is private property in consumers' goods in
food and clothes and furniture, in motorcars, in gardens, in
labor-saving devices, in access to amusements, in every sort
of thing which we actually use and consume.

Now it was my contention to Father McNab, and it is my
contention to the readers of this book, that endless confusion
arises from a failure to distinguish between these two kinds
of private property. Yet it ought to be impossible to mix them
up. For there is a sound, working rule for distinguishing be-
tween them. Private property of the first sort, private property
in the means of production, carries an income with it; private
property of the second sort, private property in consumers'
goods, does not carry an income with it.



For instance: if you own 1,500 dollars worth of stock in
the General Motors Corporation's factories in Flint, Detroit
and elsewhere, you will get an income from this stock. (Unless
there is a slump, in which case you will be unlucky!) But if
you own, say, a Buick motorcar, priced at 1,500 dollars, no
one will dream of paying you anything because you own that
motorcar. On the contrary, you will have to pay quite a lot
in taxation, upkeep and the like for the privilege of owning
it. There you have the distinction.

Now you get paid an income if you own stock in the Gen-
eral Motors Corporation factories because they are part of
the means of production of the country. You do not get paid
an income if you own a Buick motorcar because a motorcar
is not part of the means of production. It is a consumers'

Now the economic system which is commonly called so-
cialism and this is the system which we can put in the place
of capitalism involves abolishing the first sort of private
property in order to increase vastly the second sort of private

It involves taking the means of production, or capital, of
the country out of the hands of the small class (about five
million persons) which owns them today, and putting them
into the hands of the whole of the people. And the object of
doing so is that then, and then only, the American people will
get, in one way or another, the entire product of these means
of production. For that, as you can see from the whole argu-
ment of this book, is the one genuine solution of our troubles.



All Owned by ^ ne ^ ^ ^ rst < I ues ^ ons which will natu-
th St t ? rally occur to you in regard to socialism is this :
What is to be done with the means of produc-
tion, the factories, mines and land of the country, when they
have been taken out of the hands of their present owners?
Are they all to be put into the hands of the state and run by
state officials? That is one of the ideas which a great many
people hold about socialism. And the number of different
and baseless ideas (and some of them are held by socialists
themselves) which exist about socialism is gigantic.

No, socialism involves the public ownership of all the means
of production; but that does not mean that they would all be
owned by the state. The very big industries of the country,
the railways for example, would no doubt be owned, directly
or indirectly, by the state. There are huge economies to be
made by the centralized running of these great national serv-
ices, of which the distribution of electric power is another
good example. But even in these cases, the actual industry
would be run by setting up particular bodies, commissions,
"authorities," or public corporations, as long as the whole of
their capital is publicly owned, for running the industry.

But there are many other industries, of a smaller and more
local character, which would be run by the more local au-
thorities, such as, in America, the state governments, the
municipalities, the county councils, and the like. Then again
there is a vast sphere for co-operation. There is an enormous
field, of which a large part at least of retail distribution is



the chief example, which would be run by consumers' co-
operative societies.

Moreover, as recent experience shows, in a socialist society
there is scope for producers' co-operation also. There is a vast
field for voluntarily formed groups or associations of work-
ers, who will, as groups, own their means of production and
themselves do the work. Agriculture seems to be the main
predestined field for this form of organization.

In a word, there are just as many forms there is just as
much variety of industrial and social organization under
socialism as under capitalism. Moreover, the forms of public
ownership sketched above are really only those under which
a socialist community starts out. As the socialist community
develops, other and higher forms of public ownership will be
developed also. The one essential thing is that all the various
forms of socialist organization should involve the public own-
ership of the means of production.

IT j j This throws light on one of the old familiar

Ofli ' I ? objections to socialism, namely, that it would
mean overrunning the country with a horde
of officials. If one means by officials, administrators, man-
agers, foremen, and the like, then, of course, a socialist so-
ciety has to have such people. But, and this is the point, there
are not more, but far fewer of them under socialism than at
present. Anybody who is the least familiar with one of the
vast American, or British, capitalist trusts knows that they
are run by a huge bureaucracy of administrators, clerks,
managers, under-managers, sales-managers, publicity-man-



agers, personnel-managers, and the like. We are not accus-
tomed to call these people officials, because they are employed
by the United States Steel Corporation or the American Tele-
phone and Telegraph Company or some other great firm, in-
stead of by the State. All the same they are, to all intents and
purposes, officials. They are officials working on behalf of a
group of rich men, instead of working on behalf of the

Now socialism, because it brings order into, and thus ac-
tually immensely simplifies, industrial and economic organi-
zation, needs far fewer of these administrators than do the
great capitalist trusts. The great trusts are often competing
with each other, and above all, are desperately trying to
sell their products in an already overstocked market. So they
have to spend, literally, more time and energy, and employ
(directly and indirectly) more officials (sales-managers, ad-
vertising men, copy writers, canvassers, etc., etc.) in trying to
sell their stuff than in producing it. As there is not, and never
can be, any market problem under socialism, as there can be
no difficulty whatever in selling everything you can produce,
the whole of this vast sales staff of officials can be done away
with, and the men and women who compose it put on to use-
ful, productive work.

n r One of the familiar catch phrases of the

Profit or i . T

n1 . moment is to say that under capitalism pro-

Plannmg. . . * r

duction is carried on lor profit, while under

socialism it is carried on for use that socialism is planned
production for use. What is meant by this phrase?



Well, we all know what production for profit means. We
saw that the way in which wages are bound to be fixed under
capitalism means that an ever-growing surplus of wealth goes
to the employers and their associates. But what we did not
notice was the fact that production is carried on under the
existing system only if and when such a surplus does go to the

Under socialism, on the contrary, profit ceases to be the
regulator of the system. Therefore you have got to arrange
some other principle on which to decide what to produce.
This alternative principle of regulation we call planning.
There must exist in every socialist society something, which
is usually called a planning commission, which will decide
year by year what kinds of things shall be produced, and in
what proportions. It has, as it were, to make an estimate of
the total needs of the population and then another estimate
of the country's total productive resources. Then it must see
how best to fit the one to the other; how best to allot skill,
labor, machines, buildings, raw materials and the rest be-
tween different possible uses.

Is not this a very difficult job, you may say? Yes, indeed
it is; but the point is that it is a job which has to be done, and
that it doesn't make it any easier to make no attempt to do it.
For, under our present system we simply leave the whole
thing to chance. Hence the frightful chaos into which our
economic system periodically gets. However badly your plan-
ning system works to begin with, it can hardly work as badly
as no planning does at present.



n .T Socialism implies, then, the recovery of

jut the means of production by that great majority

of us who are today deprived of any substan-
tial ownership in them. I use the term "recovery" because, as
we saw in Chapter I, there was a time when many more of
us, at any rate, had some ownership of means of production
when, for example, four out of five, instead of one out of
five, American citizens had enough of such ownership to be
able to work for themselves.

In that sense socialism is merely going back to the condi-
tions which existed before the rise of modern capitalism. But
we go back to a widely diffused ownership of the means of
production in a new way. For, in the meanwhile, during the
century and a half of capitalism, the scale of the means of
production has grown so enormously that it is no longer prac-
tical politics, even if it were desirable, to cut them up again
into individual parcels. They have now got to be owned col-
lectively, or in common. Under socialism what is divided up
among the whole people is not the means of production
themselves, but their product.

in j The first few chapters of this book showed

wages under r .

c . ,. that the secret of our troubles lay in the pay

socialism. J ,

envelope. The trouble lay, we found, in the

way wages must always be fixed under the present economic
system. In a capitalist society wages, as we saw, by and large
and with all the qualifications we noticed, are fixed on what
the worker can live on, so that he is fit to do his job and rear
up a family after him. Therefore the amount of wages has



nothing to do with the amount which the worker can produce,
and does not rise as and when the worker is enabled to pro-
duce more. In a long and elaborate, but quite traceable, chain
of cause and effect we saw that the strong tendency of any
capitalist society to push wages down toward their subsis-
tence level was the thing which produced all our great con-
temporary evils. For it was this that prevented the popula-
tion having enough purchasing power to keep themselves in
employment; it was this that produced the torturing poverty
in the midst of plenty paradox; and it was this which has
driven the ruling class of every capitalist state to turn out-
ward in an aggressive search for markets.

Hence if wages in a socialist society (for there are wages
in a socialist society) were fixed upon the same principle, the
same difficulties would inevitably arise. But in fact wages in
a socialist society are fixed upon an entirely different prin-
ciple. And it is this fact which gives socialist societies the
assurance of being wholly free from unemployment, booms
and slumps, poverty in the midst of plenty and the need to
undertake an aggressive search for markets and empire.

In a socialist society the general level of wages is directly
based on the amount of wealth which the workers can pro-
duce. If this year the socialist country in question can pro-
duce X million dollars worth of wealth, then the total wages
and allowances (pensions, sick benefits, etc., etc.) can be
fixed at Y million. If next year the country can and does
produce X+l million dollars worth of wealth, then that next"
year wages, etc. can be and are raised to Y+l million.



Does this mean, you will ask, that under socialism the
worker gets the full value of what he produces? Yes, it does.
But it does not mean that he will take out all that value in-
dividually by way of his particular wage. The product in a
socialist society is in fact distributed in three ways.

A Th f Id ^ n t ^ ie ^ rst P^ ace ' t ^ ie wor ker gets his indi-
rj . . . vidual share in his pay envelope. In the second

place, he gets what is called a "social wage."
That is to say, a certain proportion of the value of his product
is set aside for creating a supply of those kinds of consumers'
goods which you cannot conveniently distribute individually.
For example, it is set aside for the creation of facilities for
recreation on a vast scale, for the provision of gymnasiums,
playing fields, workers' clubs and reading rooms.

Then again you cannot, or at any rate should not, distribute
that essential consumers' service, medical attention, individu-
ally. So part of the wealth which the worker creates goes into
the financing of vast free medical services, hospital facilities,
sanatoriums, rest homes, and the like. And then again, some-
thing must be set aside for social insurances, for maintenance
payments, if the worker falls ill or is injured, and to give
him an adequate pension in his old age. And finally a whole
class of what are often called "durable goods," such as roads,
for instance, must also be supplied to the people collectively
instead of individually. But, as you can see, all this is merely
an arrangement by which the workers increase their total
receipts of what the economists call "satisfactions" (i.e.,



goods and services) by taking out those which are suitable
collectively rather than individually.

But then a third part of the wealth which the worker creates
has to be set aside for the purpose of making it easier to
create wealth in the future. This part has to be set aside, that
is to say, first for repairing and maintaining the existing
means of production, and secondly for building new and
better means of production. And if the socialist country de-
cides that it wants to industralize itself very rapidly, this may
be a very big part, running up as high as a third of what the
workers produce. This part is, as we should call it, reinvested
in industry.

.7. But what, you will say, is the difference

Socialist ' J . . , ,

r then between this and the capitalist process

Investment. . . _ * ,.

of reinvestment: I here is a huge difference.

In capitalist countries the surplus, over and above what will
keep the worker, goes to the capitalists and their friends as
their unrestricted private property. They may or may not
reinvest some of this surplus in industry.

If they liked and were sufficiently ingenious, they could
spend every penny of it on luxuries, or again simply waste
it by keeping it in dollar bills hoarded in a stocking, for ex-
ample. And no one would have the least right, under capital-
ist laws and moral ideas, to object to what they had done.
They would have only "done what they liked with their own."

In a socialist society every penny which is reserved for re-
investment for the purpose of the maintenance and develop-
ment of the means of production is held in strict trust by the

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