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more or less substantial success in all modern countries
except the United States.

From the fact that socialism advocates the public owner-
ship of all means of production, and that its political pro-
gram demands the national ownership of railways and
telegraphs, and the municipal ownership of street cars
and gas and water works, the inference is often drawn that
the growth of government ownership as here described is a
direct or indirect achievement of the socialist movement.
This notion is as erroneous as it is widespread and popu-
lar. The socialists do not claim any credit for the pres-
ent-day institutions of government ownership, nor have
they any illusions as to their significance and benefits.
Government ownership under the present regime does not
represent an advanced phase of industrial development
or the climax of industrial concentration. It is in no sense
an installment of the socialist cooperative republic.

National ownership of railroads, telegraphs and tele-
phones has been in most cases introduced by the govern-
ments for reasons of military expediency or for the sake
of revenue. In other cases it was brought about as a con-
cession to the interests of the middle classes.

Similarly, municipal ownership, where not brought
about by a socialist administration, is as a rule but a de-
vice for municipal revenue. Government ownership, both
national and municipal, has some very decided advantages
over private ownership, and on the whole, it assures better
service to the public and better treatment of the employees.
But these advantages are to a large extent offset by the
fact that government ownership tends to strengthen the
powers of the modern class state, and to curtail the freedom
of combination and coalition on the part of the employees.



ADMINISTRATIVE REFORMS 28/

What the socialists demand is not government owner-
ship, but public ownership, and the distinction is very
material under present conditions, as pointed out by
Professor Parsons, who says : —

^^ Public ownership and government ownership are by
no means synonymous. Where legislative power is per-
verted to private purposes — where the spoils system
prevails and the oflfices are treated as private property —
where government is managed in the interests of a few
individuals or of a class, anything that is in the control of
the government is really private property, although it
may be called public property. If councils and legisla-
tures are masters instead of the people, they are likely to
use the streets and franchises for private gain instead of the
public good. If the government is a private monopoly,
everything in the hands of the government is a private
monopoly." *

In fact, the movement for the national or municipal
ownership of public utilities is the most striking illustra-
tion of a reform movement which may be revolutionary
or retrogressive according to the source from which it
emanates.

The socialists of all countries favor the municipaliza-
tion or nationalization of public utilities, but that only as
a measure to be carried out by an administration controlled
or at least strongly influenced by the working class.
Their demand for municipal or national ownership of the
industries mentioned is coupled with the further demand
for the democratic administration of those industries, and
for their management in the interests of the employees
and the public. On the other hand, the most reactionary

' "The City for the People," p. 17.



288 SOCIALISM AND REFORM

capitalist governments may utilize it for the purpose of
strengthening their grip on the people, and the middle-class
apostles of municipal or national ownership of the type
of Hearst or Bryan in the United States or the "radical"
bourgeois parties of Europe, see in it primarily a means of
decreasing the taxes of property owners and reducing the
rates of freight, transportation and communication for
the smaller business men.

In Germany, where the socialists have had ample oppor-
tunity to watch the practical workings of government
ownership, they passed judgment on the institution in the
following terse resolution adopted at their annual con-
vention of 1892: —

" State socialism, so-called, inasmuch as it aims at state
ownership for fiscal purposes, seeks to substitute the state
for the private capitalist, and to confer on it the power to
subject the people to the double yoke of economic exploi-
tation and political slavery."

Tax Reforms

The support of the modern state in all its branches, civil
and military, involves the expenditure of immense funds,
and the problem of raising these funds has ever been the
hardest bone of contention between the governments and
the governed. All moneys for the support of the govern-
ment necessarily come from the people in the form of taxes,
and the distribution of the burden of taxation among the
various classes of the population always depends on the
methods employed in its levying.

The two main contending methods of taxation are the
direct and the indirect. A direct tax is a tax imposed on



ADMINISTRATIVE REFORMS 289

the very person of the citizen who is expected to pay it,
and one that cannot be shifted by him; an indirect tax
is a tax on real estate or commodities, formally imposed on
the owner, manufacturer or merchant, but actually borne
by the tenant or consumer. Instances of the first class
are the poll tax, the income tax and the inheritance tax;
instances of the latter class are the real property tax, the
import duties on raw material or manufactured goods of
foreign importation, and the excise duties on articles of
domestic manufacture, such as tobacco, liquors, etc.

The ruling classes and the modern state as a rule favor
the indirect tax, while the socialists have always been
strongly opposed to it.

"The indirect tax is the instrument through which the
bourgeoisie brings about the complete exemption from
taxation of capital, and burdens the poorer classes of
society with all the expenses of the state government,"
asserted Ferdinand Lassalle in his famous "Workingmen's
Program" in 1862, and this conception is still the generally
accepted socialist view on the subject. The socialists have
always consistently advocated the system of direct taxa-
tion, and among the most universal planks of their practical
political programs are the demands for a progressive in-
come tax and a progressive inheritance tax.

A progressive income tax is a direct tax levied upon the
excess income of each citizen above a certain minimum,
and progressively graded according to the size of the in-
come. The tax has the merit of placing the onus of main-
taining the government upon the classes who derive the
greatest benefits from it and who can bear the burden with
the greatest ease.

In England the progressive income tax was first intro-



290 SOCIALISM AND REFORM

duced in the period of tlie Napoleonic wars as a temporary
makeshift, but the system has since established itself in
the country firmly, and the revenue from that source was
almost ;;r36,ooo,ooo in 1902. From England the progres-
sive income tax has spread to Italy, Switzerland, Germany,
Austria, Hungary, Denmark, Holland and Australia.
France at present taxes only the incomes of corporations
and business associations, but a general and rather high
income tax is now proposed by the government. In the
United States a progressive income tax was in force, and
yielded excellent results during the closing years of the
Civil War, and until 1872, when it was repealed. In 1894,
a new income tax law was passed by Congress, but the
law was declared unconstitutional and void by the Supreme
Court, the far-reaching decision having been rendered by
a vote of 5 to 4, after one of the justices had changed his
expressed views on the question. Several states of the
Union, however, levy an income tax on their citizens.

A progressive inheritance tax is a tax on those acquiring
property by inheritance or by will. The tax is sometimes
levied only on collateral heirs, and usually it is progres-
sively graded either in accordance with the size of the in-
heritance or with the degree of remoteness of the relation-
ship between the deceased and the heir, or both.

The progressive inheritance tax, and especially the col-
lateral inheritance tax, furnish large parts of the state
revenues in most of the Australian colonies and in Switzer-
land, where the tax is in some cases as high as twenty per"
cent of the estate. England, Germany, France, Austria,
Italy, Spain, Belgium, Holland, Denmark, Switzerland,
Russia, Roumania, Australia, Canada, and most of the
states of the Union, all have inheritance taxes, but in most



ADMINISTRATIVE REFORMS 29 1

of these countries except France and Australia, the tax
rate is rather insignificant.

Socialism does not consider the direct income and inher-
itance taxes within the frame of modern capitalist society
as a means of equalizing the distribution of wealth, but it
favors them as effective instruments for the abolition of
indirect taxes, which diminish the purchasing power of
the working class and lower its standard of life.

The ''Single Tax"

Another movement of tax reform which has developed
considerable strength within the last quarter of a century,
especially in the English-speaking countries, is that based
on the so-called Single-Tax theory.

The theory was first fully and clearly formulated by
Henry George in his famous work " Progress and Poverty,"
published in 1879, and it has since been elaborated and
restated in numerous books, pamphlets and periodicals.

The principal features of the proposed reform are tersely
stated by the originator of the movement himself in the
following language : —

"We propose to abolish all taxes save one single tax
levied on the value of land, irrespective of the value of
improvements in or on it.

"What we propose is not a tax on real estate, for real
estate includes improvements. Nor is it a tax on land, for
we would not tax all land, but only land having a value
irrespective of its improvements, and would tax that in
proportion to that value.

"Our tax involves the imposition of no new tax, since
we already tax land values in taxing real estate. To carry



292 SOCIALISM AND REFORM

it out we have only to abolish all taxes save the tax on real
estate and to abolish all of that which now falls on build-
ings or improvements, leaving only that part of it which
now falls on the value of the bare land. This we would
increase so as to take as nearly as may be the whole of the
economic rent, or what is sometimes styled the ' unearned
increment of land values.' " *

This single tax on land values is proposed by Mr. George
and his followers not merely as an improvement on the pre-
vailing methods of taxation, but as a cure of all social
evils of our times.

The root and source of all human poverty and misery,
according to the conception of the single taxers, lies in the
fact that the valuable land in all civilized countries is
monopolized by a comparatively small class of landowners,
who appropriate all benefits derived from it, and impose a
high tax for its use and occupation in the form of rent.

This system makes it possible for a number of men to
hold large areas of land for speculative purposes, thus with-
drawing it from actual use. And as land is in the last
analysis the source of all wealth, the withholding of any
part of it results in the curtailment of wealth production
for the nation.

Furthermore, so long as land was free to all, everybody
could gain his subsistence by agriculture or by industrial
pursuits on a small scale, but so soon as land becomes
private property, it is only the man who can afford to pay
a high rent — the capitalist — who can engage in any
industry, while the poor man is compelled to sell his labor
for the best price obtainable.

[* Henry George in "Financial Reform Almanach" of England for the
year 1891.



ADMINISTRATIVE REFORMS 293

And lastly, rent being an arbitrary tax on production,
it draws from the profits of capital and wages of labor
alike, impoverishes both, gives rise to industrial crises,
and produces an unjust distribution of wealth which is
building up immense fortunes in the hands of a few while
the masses grow relatively poorer and poorer.

"The taxation of the processes and products of labor
on the one hand," says Mr. George, in the article already
mentioned, " and the insufficient taxation of land values
on the other, produces an unjust distribution of wealth
which is building up, in the hands of a few, fortunes more
monstrous than the world has ever before seen, while the
masses of our people are steadily becoming relatively
poorer. These taxes necessarily fall on the poor more
heavily than on the rich ; by increasing prices, they neces-
sitate larger capital in all business, and consequently give
an advantage to large capitals ; and they give, and in some
cases are designed to give, special advantages and mo-
nopolies to combinations and trusts. On the other hand,
the insufficient taxation of land values enables men to
make large fortunes by land speculation and the increase
in ground values — fortunes which do not represent any
addition by them to the general wealth of the community,
but merely the appropriation by some of what the labor
of others creates.

"This unjust distribution of wealth develops on the one
hand a class idle and wasteful, because they are too rich,
and on the other hand a class idle and wasteful, because
they are too poor — it deprives men of capital and oppor-
tunities which would make them more efficient producers."

It is the conviction of the disciples of Henry George
that a single tax on land values as advocated by them would



294



SOCIALISM AND REFORM



gradually lead to the abolition of private ownership in
land.

The only country in which some general application of
the tax on land values has been attempted is New Zealand,
and while it is claimed by the friends of the reform that the
system has on the whole had a stimulating and beneficial
effect on the industries of the country and has succeeded
in curbing wild land speculation, predicted benefits of a
fundamental character have so far failed to materialize.
It must be added, however, in justice to the advocates of
the measures, that the New Zealand system of land taxa-
tion is by no means a full application of the single-tax
theory. On the other hand, at least one of its principles,
that of taxing vacant and unused land most heavily, has
of late found direct or indirect recognition in the systems
of taxation of several countries, states and municipalities.

The socialists have but little sympathy for the single-
tax theory. They do not agree with the economic premises
on which it is based, and they consider the proposed reform
as entirely impotent to cope with the evils which it seeks
to combat, and in some respects even as distinctly reac-
tionary.

The single-tax philosophy was evolved by Henry George
a generation ago in the then little developed far West,
and it is entirely adapted to the industrial conditions
which surrounded him at the time. It presupposes a
system of industry based mainly on agriculture and small
manufacture, and is sadly out of place in a system of
gigantic factories.

Land values occupy but a secondary position in modern
industrial wealth. If the up-to-date large capitalist were
to be taxed on the value of his factory site to the full extent



ADMINISTRATIVE REFORMS 295

of its rental income, but be relieved from all taxes on the
factory buildings, implements, stock and other property
and income, he would practically escape taxation. On
the other hand, an accessible or even free factory site would
not enable the propertyless wage worker to equip a costly
modern plant and to set up in business on his own account
in competition with his present employer. It is the private
ownership of the machine, even more than the private
ownership of land, that holds the working class in bondage.

The single taxer recognizes but one form of economic
exploitation — rent. The socialist, on the other hand,
asserts that the source of all exploitation is the "surplus
value" (the unpaid part of the workingman's labor) from
which all rent as well as interest and profit are derived.

The single taxer would abolish the landlord, the monop-
olist of "land values," but continue the existence of the
capitalist and wage worker ; the socialist strives to wipe
out all class distinction and to introduce complete economic
equality. The single-tax theory professes to be an ab-
solute and scientific truth applicable to all ages and con-
ditions alike, while socialism professes to be a theory grow-
ing out of modern economic conditions, and expecting its
realization from the steadily growing concentration and
socialization of industry. The single taxer, lastly, is an
earnest supporter of the competitive system of industry,
while the socialist is as ardent a collectivist.

Thus the two social theories differ very materially in
their views, aims, and methods.*

* Compare, Morris Hillquit, "History of Socialism in the United
States," 4th Edition, New York, 1906, pp. 272, etc.; also A. M. Simons,
"Single Tax vs. Socialism," Chicago, 1899.



296 SOCIALISM AND REFORM

Abolition of Standing Armies

One of the greatest evils of the modern state is the
standing army. Cay)italist society cannot be maintained
without a host of soldiers. In their world-wide competi-
tive struggles, the capitalists of each country strive not
only to preserve and extend their own markets, but also
to invade those of the rival nations and to conquer new
markets. This feature of the modern capitalist system
of production and exchange inevitably leads to clashes
between competing nations, and the specter of war is ever
hovering among them. The modern capitalist state is
powcx-less without a strong army or navy. It must always
be ready for offensive and defensive military action, and it
must always make a display of military strength to curb
the bellicose designs of its neighbors. It must prepare for
war, if it wants war ; it must prepare for war, if it wants
peace.

A strong army moreover has within recent times become
essential to the maintenance of capitalist government for
another reason and for another purpose. With the in-
creasing intensity of capitalist exploitation, the outbreaks
of revolt on the part of the working masses tend to become
more violent and frequent, and where these outbreaks are
of such a character that the local authorities are either
powerless to cope with them, or disinclined to interfere
with them, the army is the most effective instrument for
their suppression. To the capitalist government the army
is an organization for the protection of the ruling classes
from "all enemies, foreign and domestic," and the pro-
tection from "the domestic enemy" is often its more im-
portant function.



ADMINISTRATIVE REFORMS



297



The vast dimensions of the standing armies of the most
powerful countries of Europe are shown by the following
figures : —



Russia . . . .


. 1,500,000


France . . . ,


746,000


Germany . . . .


650,000


Great Britain


550,000


Austria . . . .


470,000


Italy ....

,1 TT •. 1 r^. 1 1 •


290,000
1 <



And even in the United States, which up to recent times
has been practically free from the curse of militarism, the
development of industry and foreign commerce and the
growth of the class struggles have of late years given rise
to a movement on the part of the ruling classes to increase
and strengthen the army and navy. The recent military
law of the United States Congress aims to consolidate the
federal troops and the various state militia organizations
into a standing army of 250,000 soldiers, while the agita-
tion for a huge navy is steadily increasing.

The military and naval organizations of the modern
states are an intolerable economic drain upon the nation.
The "Nouveau Manuel du Soldat," taking the statistics
of the year 1899 as the basis of calculation, figures the
loss of productive value caused by militarism in Europe
as follows : —

The total military expenses of the European powers for
1899 were $1,436,864,218. In the same year those coun-
tries had in the field 4,169,321 men, who, if employed
at productive work, would produce every day, at an
average of only 60 cents per day per man, a total of
$2,501,592.60. Europe had in its armies 710,342 horses



298 SOCIALISM AND REFORM

which could produce $284,136.80 per day at an average
production of 40 cents per day. The expenditures and
wasted productive values of the army upon that basis thus
amounted to $2,272,523,038 per year on the basis of 300
working days !

This burden has vastly grown since 1899. In Germany
alone the military budget has increased from about
920,000,000 marks in 1899 to 1,300,000,000 in 1906-1907.
Karl Liebknecht estimates the present total military cost of
Europe at 13,000,000,000 marks, or about $3,250,000,000
per year.^

The standing armies and the navies are besides a pro-
lific source of general brutalization and demoralization of
the people.

By drafting the young men of the nation into the army,
the state withdraws from the productive ranks of the pop-
ulation its most vigorous and useful members, compels the
rest of the people to support them in useless idleness during
their protracted term of service, and at the expiration of the
term it sets them adrift, often with crippled minds, cor-
rupted morals and impaired social usefulness.

"When, after a satisfactory test, the young man becomes
a soldier in the standing army," observes Vaillant, "he
ceases to be a citizen. In order that he may become a
passive instrument in the hands of his superior, he is de-
prived of all civil functions and political rights upon enter-
ing the military life. For him there is no right and no
law. He is merely a thing of the military state. It is the
rule without exception, the rule established in order that it
may not be tempered by the possible humaneness of the

* Dr. Karl Liebknecht, "Militarismus und Antimilitarismus," Zurich,
1908, p. 43.



ADMINISTRATIVE REFORMS 299

superior officer. The military rule takes possession of the
young man and arbitrarily disposes of his actions, his
liberty, his life. If the brutality and arrogance of the
officer do not break his resistance and will, he is tried, con-
victed, sent to prison or to death by a court martial. This
is 'justice' for him, these are the tribunals where his
superiors, constituting themselves his judges and exe-
cutioners, take their revenge for his lack of discipline. In
fact, it is necessary that the army be entirely separated from
the people, so that it may serve against it, against the work-
ing class, as the police force and bodyguards of the capi-
talist class and the government. For this purpose, es-
pecially in an army through which all the children of the
working class pass, it is necessary that a discipline of terror
and of death steady the arm of the soldier in civil as well
as in foreign war." ^

The rapid tempo of technical progress in all matters of
military organization and equipments leads to constant
revolutions in the system of armament and forces upon the
nations burdens which exhaust their material strength.
The governments of the principal countries of Europe
seem almost to have the sole function of securing and feed-
ing their soldiers, and the tremendous growth of the national
debts and indirect taxes necessitated by the standing armies
has brought many countries to the verge of national
bankruptcy. It was this state of affairs which compelled
the youthful czar of Russia in 1898 to emit his desperate
cry for universal limitation of armament, which was eu-
phemistically styled a "peace message," and it is this con-
dition of things which accounts for the modern "peace
conferences" of the governments.
* Edouard Vaillant, "Suppression de rArmee Permanente," Paris, p. 12.



300 SOCIALISM AND REFORM

The working class, which furnishes the large bulk of the
army and contributes the greater part of the funds for its
support, is naturally opposed to all wars and standing
armies, and the socialists, as the political spokesmen of
that class, have always carried on a strenuous propaganda
against wars and standing armies. But socialists have
but little enthusiasm for the official "peace conferences"
held under the auspices of the present governments.


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