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But a socialist regime, once having assumed the admin-
istration of the trusts, will be bound to change the nature
and to extend the benefits of these institutions still further.
The modern trusts, while social in their methods of work,
are not public, but private institutions, and are operated
entirely for the benefit of their individual owners.

It is not in the interests of the individual trust magnates
to extend production beyond the limits of the present de-
mand; the general purchasing power of the consumers
remaining unchanged, such an increased output could only
result in a decline of prices. The policy of the trusts is,
therefore, on the whole, to limit production. A social-
ist administration, on the other hand, has a vital interest
in extending production in order to enhance the national
wealth and to provide employment for a larger number
of its members. Since it is not producing for profit, the
effect of an increased output on the price of the commodity
will not enter in its calculations, and since the purchasing
power of the population will be increased in proportion
to the growth of productivity, there will be no danger of an
industrial crisis.

The members of a socialist state, furthermore, will be


interested in such trustified industries not only as con-
sumers, but also as employees, and hence they will naturally
introduce such reforms in the management of these indus-
tries as will benefit them in the latter capacity. Under
capitalism the greater productivity of labor in trustified
industries is accompanied by loss of work for large portions
of former employees. Under socialism it will necessarily
lead to a progressive diminution of their hours of labor.
Under capitalism the profits of the trust magnates are the
sole aim and motive of production, and the safety and wel-
fare of their employees are of but secondary importance.
Under socialism production will be carried on principally
for the benefit of the producers themselves, and it is rea-
sonable to expect that every known device will be applied
to make industry safe, pleasant and attractive.

The modern trusts, thus transformed into cooperative
enterprises on a large scale, will in all likelihood become
the starting point of the socialist system of industrial
organization, and the system will be extended from one
industry to the other as fast as the conditions will permit.
But this will probably not be, at least for a long time to
come, the exclusive form of industrial organization. There
are certain industries dependent on purely personal skill,
such as the various arts and crafts, that from their very
nature are not susceptible of socialization, and other indus-
tries, such as small farming, that will, at least for many years
to come, not be proper objects for socialization. These
may continue to exist in a socialist society as individual
enterprises side by side with the larger cooperative works.

On the whole, however, it is safe to assume that by far
the greater and most important part of wealth production
will be conducted by cooperative establishments. In the


countries of the most advanced industrial development,
the large plants employ even to-day the greater part
of the v^age-working population, and there are but few
important industries that are not ripe for concentration
and consolidation. And since the large cooperative
establishments, with their natural economies and advan-
tages, will hold out greater attractions to the workers
than the majority of the small individual enterprises, there
will probably be but few who will choose to remain outside
of the prevalent industrial organization.

The rational organization of labor, the elimination of
duplicate plants, of the "middlemen" in industry and
commerce and of other waste entailed in a system of com-
petition, the disappearance of all workless "incomes" and
of all the purely parasitic types who are to-day maintained
and supported by the competitive system or maintained
for the special interests and comforts of the ruling and
leisure classes, — all these changes necessarily involved in
a system of socialism, will increase the productive forces of
society and augment the national wealth immensely.

How will that wealth be distributed ? With this ques-
tion we have approached what is considered as the cru-
cial point of socialism by the opponents of that philoso-
phy. The impracticability or impossibility of the "social-
ist scheme of wealth distribution" is the burden of most
of the "scientific" refutations of the socialist theory, and
curiously enough most of these criticisms are based on a
careless reading of the great theoretician of modern
socialism, Karl Marx.

In common with Smith, Ricardo and other representa-
tives of the classical school of political economy, Marx
holds that the value of a commodity is determined by the


labor time expended in its production, the labor time in
question being defined as "the labor time socially neces-
sary to produce an article under the normal conditions
of production with the average degree of skill and intensity
prevalent at that time," ^ This simple statement of fact
has been almost uniformly interpreted by the astute critics
of Marx as the socialist "plan of distribution," and many
valuable reams of paper have been consumed in ingenious
objections to that plan.'

In fact, however, Marx occupied himself just as little
with the distribution of wealth in a future socialist state
of society as Darwin occupied himself with the ultimate
physical type of man. As a true man of science, he limited
his researches to the past developments and existing facts
and tendencies. In formulating the labor theory of value,
Marx simply stated a fact, a law applicable to the present
system of producing wealth — nothing else.

"Marx," says Frederick Engels, his foremost inter-
preter, "deals only with the determination of the value
of commodities, that is to say, with the value of
articles which are produced in a society consisting of
private producers, by each private producer for his indi-
vidual account and for the purpose of exchange. This
value in its definite historic meaning is created and meas-
ured by human labor embodied in the separate com-
modities. ... It is this simple fact, daily enacted before
bur own eyes in the modern capitalist society, which Marx
states. . . . Whatever other values may be mentioned,

^ Karl Marx, "Capital," English Edition, Vol. I, p. 11.

^ See William Graham, "Socialism New and Old"; Victor Cathrein,
"Socialism: Its Theoretical Basis and Practical Application"; Schaeffle,
"Quintessence of Socialism."


this much is certain, that Marx is not concerned with these
things, but only with the value of commodities ; and that in
the whole chapter on Value in his 'Capital' there is not the
slightest hint whether and to what extent this theory of
value is applicable to other forms of society.'" ^

And Karl Kautsky adds : — •

"There could be no greater error than to consider that
one of the tasks of a socialist society is to see to it that
the law of value is brought into perfect operation, and that
only equivalent values are exchanged. The law of value
is rather a law peculiar to a society of producers for ex-

But what then, may be asked, is the socialist plan of
distribution of wealth?

The plain answer to this inquiry is: The socialists
do not offer a cut and dried plan of wealth distribution.

As a proposition of abstract justice and fairness there
is no reason why any discrimination at all should be made
in the distribution of the necessaries and material comforts
of life between the members of the community. The in-
creased productivity of labor and the consequent augmenta-
tion of wealth are due to the concerted efforts of men in all
fields of endeavor, physical and mental, in generations
past as well as present, and the precise share of each in-
dividual in the general wealth of the nation is altogether
insusceptible of measurement.

It must be granted that some individuals are stronger,
wiser, more gifted and skillful than others. But what of
that? Is there any moral ground for punishing the

1 "Herrn Eugen Diihring's Umwalzung der Wissenschaften," pp. 209,

^ Karl Kautsky, "The Social Revolution," Chicago, 1903, p. 129.


cripple, the invalid, the decrepit, the imbecile, the un-
fortunate step-children of nature, by reducing their
rations of food or clothing? Is there any moral sanc-
tion for rewarding the man of physical strength or mental
gifts by special allowances from the storehouse of human
society ? Do humane parents discriminate in that manner
between their strong and weak, their fortunate and un-
fortunate children ? Is the title of the stronger and "abler"
to greater material reward based on equity, or is it rather
a survival of the barbaric " fist right " of the dark ages?

To the socialists the old communistic motto: "From
each according to his ability, to each according to his
needs," generally appears as the ideal rule of distribution
in an enlightened human society, and quite likely the time
will come when that high standard will be generally
adopted by civilized communities.

The productivity of labor is increasing with such
phenomenal rapidity that we may well foresee a time when
society will, with comparative ease, produce enough to
afford to all its members, without distinction, all neces-
saries and even luxuries of life, and when there will be
just as little justification for a quarrel over the method of
distribution of material wealth as there is to-day for a
quarrel over the use of air or water. To the wise skeptics
the statement may seem extravagant, but when we com-
pare the wealth and productivity of modern countries to-
day with those of half a century ago, we shall easily realize
that we are by no means dealing with pure Utopian dreams.

But just and feasible as this ideal method of distribu-
tion may be, it is to-day nevertheless a mere ideal, a hope
to be realized in the more or less distant future. It is not
a part of the present program of the socialist movement.


Modern socialists recognize that the methods of distribu-
tion under the new order of things must take for their
starting point the present methods, i.e., payments of vary-
ing wages or salaries for services rendered.

Here again we run counter to a deep-rooted popular con-
ception or rather misconception of the socialist program.
One of the pet schemes of the early socialist experimenters
was the substitution of "labor certificates" or "time certifi-
cates" for money. By this means they expected to fix the
value of each commodity with reference to the labor time
contained in it as it were automatically, to eliminate the
" unearned increment" of the capitalist and the profit of the
middleman and to give to each producer the full equivalent
of his labor. The scheme was on a par with that of the
"equitable labor exchange banks," the communistic
societies and the other social experiments of the Utopian
socialists. They all proceeded from the belief that a
small group of men could dissociate themselves from the
rest of society, establish a miniature socialist common-
wealth, and induce their fellow-men to follow their ex-
ample by the practical demonstration of its excellence.
Modern socialists have long discarded all miniature social
experimentations and arbitrary social devices as Utopian
and puerile, and the continued dissertations of many dis-
tinguished critics of socialism about the "socialist plan"
of the suppression of money and the abolition of money
payments for services, only go to demonstrate how little
they are abreast with the developments of socialist thought.

Money and wages are both the products of a certain
phase of economic development. Neither was known
before the rise of private property, and in all likelihood
both will at some time in the distant future lose their use-


fulness and disappear. But these reflections again belong
to the sphere of dreams of the golden future, — they have
no room in a sober and realistic program of social reform.

"Money," says Kautsky, "is the simplest means known
up to the present time which makes it possible in as com-
plicated a mechanism as that of the modern productive
process, with its tremendous far-reaching division of labor,
to secure the circulation of products and their distribution
to the individual members of society. It is the means
which make it possible for each one to satisfy his neces-
sities according to his individual inclination (to be sure
within the bounds of his economic power). As a means to
such circulation, money will be found indispensable until
something better is discovered." *


Incentive Under Socialism

Next to the assertion that it would curtail individual
liberty, the most popular objection to the proposed system
of socialism is that every such system is bound to paralyze
social progress by depriving the individual initiative of
the incentive to exert itself usefully in behalf of society.

This argument assumes: first, that individual initiative
is the chief lever of human progress, and second, that the
love of material gain is the principal, if not the only,
motive which impels men to strive for the highest degree
of excellence in the various fields of private and public
endeavor. Since socialism is based on a system of more
or less equal and secured incomes, and excludes the pos-
sibility of large pecuniary rewards, it is argued that under
such a system the man of genius will have no inducement

* "The Social Revolution," p. 129.


to exert his utmost skill, the common mortal will work
reluctantly and indifferently, and social stagnation will
inevitably result. Let us examine this argument.

What constitutes modern civilization is the sum total of
all our achievements in industry, in science, in the arts, and
in the various organs and institutions of public life and
activities which are comprised under the general designa-
tion of politics.

There is no doubt that a large share of these achieve-
ments is due to the individual initiative and the creative
genius of exceptional men. But let us not overestimate
the importance of this factor in social progress. Our
civilization owes on the whole much more to the collective
endeavors of man than to the individual genius of men,
and the general improvement in our culture, refinement of
work, and mode of life, is vastly more the result of a process
of social growth to which the large multitudes of human
beings have for many generations contributed their un-
known and imperceptible mites, than the merit of the
great individual inventors, discoverers or leaders. "So-
cial achievement," says Professor Ward, "has consisted
in the establishment of a social order under and within
which individual achievement can go on and civilization
is made possible."*

The art of book printing, the use of gunpowder, and the
application of steam and electricity have all been invented
or perfected by individual geniuses, but the more substan-
tial arts of plowing, cooking, tailoring and housebuilding
have been invented, developed and perfected by the human
race as a whole. What is still more significant, however, is
this, that while the collective inventions belong to an ear-

* Lester F. Ward, "Applied Sociology," Boston, 1906, p. 38.


Her age and the individual inventions to a later age, we have
undoubtedly reached a period which is characterized by the
process of the gradual passing of the individual inventor,
initiator or hero, and of the return to a system of social
progress through collective effort.

And nowhere is this process more distinctly noticeable
than in the most vital sphere of human activity, industry.
Industrial development depends almost entirely upon the
efficient organization of the mechanism of production (which
includes a proper division of labor, organization of manage-
ment, and use of effective machinery), and of transporta-
tion and exchange, and in all these domains collective
achievements are rapidly supplanting individual enter-
prise. The modern mass production based on the factory
system forces the organization and division of labor along
lines practically indicated by the machine; and while
there is still much room left for the exercise of human in-
genuity in the arrangement and rearrangement of details,
such arrangements and rearrangements are in most cases
the result of simple experience, almost of mathematical cal-
culation, and not the work of an exceptional genius. Nor
are the other modern industrial categories, the cor-
porations and trusts, the stock exchanges and banks,
the system of credit and the national and international
markets, the individual invention of an industrial genius.
They are the products and forms of gradual industrial
development ; the entire industrial community, employers
and employees, have imperceptibly built them up in the
course of centuries, and they are still busily engaged in the
process of developing and perfecting these institutions
without marked individual initiative or leadership. And
in the domain of the invention and perfection of machinery,


this peculiar territory of the individual genius, the element
of personal initiative is gradually and steadily receding
to the background.

The laws of mechanics are being explored with ever in-
creasing accuracy and planfulness for the practical re-
quirements of industry, and the new improvements in the
tools of production are now but rarely in the nature of
great and unexpected inventions; more often they are
merely the successful solutions of preconceived problems
by means of well-defined scientific methods. The hustling,
up-to-date experimental laboratory is rapidly crowding
out the dreamy inventive genius. Wliat we call '' Edison"
to-day is not the Thomas A. Edison who early in life made
the astounding inventions in telegraphy, but the well-
equipped, well-organized electrical laboratory at West
Orange, New Jersey, with the number of trained scientific
workers engaged in it.

And what has been said of the industrial process applies
with almost equal force to the domain of science : the fac-
tory system with its specialization, division of labor, and
collective production, is the recognized form of modern
scientific research almost as much as it is the form of the
modern manufacture of market commodities. Scientific
work is, as a rule, not done by individuals but by groups
of workers ; not at home, but in laboratories, clinics and
libraries, and scientific discoveries like mechanical inven-
tions are most often the results of planned and collective
labor. Left to his own individual resources, the modern
scientist would be almost helpless.

Nor does our public life form an exception to this
general tendency of our times. The great individual leg-
islators, as Moses, Solon, Lycurgus, and even Napoleon,


have been superseded by the many-headed bodies of popu-
lar representatives in the legislative chambers; the great
free-lance statesmen have made room for the chosen leaders
of strong political parties, and the success of a modern
battle depends not so much on the military genius of the
individual commander as on the proper organization and
equipment of his army. In the recent Russo-Japanese
war the demoralized Russian army and navy did not
produce a single military or naval "genius," whereas in the
well-organized and well-equipped Japanese army and navy
every general and admiral was a "hero." In one domain
after the other the individual genius and arbiter of human
destiny, the "hero" of Carlyle is being dethroned and
subordinated to the collective human fraternity. The
domain of the arts is to-day practically the last resting
place of the " superman."

Individual initiative and talent thus by no means play
such a determining part in the world's progress as the
critics of socialism claim. But on the other hand the so-
cialists readily admit that they play some part. There
always were and probably always will be persons of ex-
traordinary gifts and abilities who may contribute vastly
more to the store of human welfare and happiness than the
average man. Without them the world would probably
not relapse into a state of barbarism, but it will fare much
better with them and their services. But what of it?
Is there any real danger that under a system of socialism
these superior individuals would disappear or refuse to
give the benefit of their special talents to society ? Is the
striving for wealth actually the most powerful incentive of
the creative genius? The theory seems plausible enough
as regards the leader in industry, the business man, but


how about the scientist, the artist, the statesman? This
is a fruitful source for reflection and comparison.

The manufacturer, banker or other active capitalist
undoubtedly strives for material wealth. But wealth is
for him only secondarily, if at all, a means of procuring
physical or intellectual enjoyment. To him wealth rep-
resents power, and above all, it is the test of his success in
his chosen vocation. To say of a man engaged in industry
or commerce that he has made a large fortune is to say
that he has proved himself efficient and successful in his
career; to say of him that he has lost his fortune is
equivalent to asserting that he has proved himself the
inferior of his rivals, that he is inefficient, and that his
life work has been a failure.

The man of science, on the other hand, would gain or
lose but little in the esteem of his contemporaries and in his
own self-respect by the gain or loss of a fortune. The test
of his success is not the amount of money he has made, but
the extent of the recognition accorded to him and his work
by the learned fraternity. Scholastic honors and aca-
demic titles are to him what money is to the business man ;
his incentive is not the love of money but the desire of

Again, the reward of the artist is neither money nor
academic titles. As an artist he strives primarily for pub-
lic applause and glory, for these are the true tests of his
success and efficiency in the side of his existence which
he values most, his art.

So likewise, the statesman cares most for influence and
authority, the soldier for mihtary honors and preferment,
and the priest for the respect and reverence of his fellow-


Of course, it may well happen, and no doubt often does
happen, that the scientist, the artist, the statesman, the
soldier and the priest are anything but indifferent to
material wealth. They may prefer an easy and com-
fortable existence, they may sometimes be goaded on to
create by sheer poverty and want, and they may even
occasionally be grasping and greedy. But these will
then be features entirely independent of their respective
gifts and talents, and by no means a stimulus to their
best application. ''It is not true," again observes Ward,
"that men of genius depend upon adversity and dire
necessity as a spur to activity. This is all a popular illu-
sion which the entire history of human achievement dis-
proves and should dispel. The instinct of workmanship,
if it be in no other form than fear of the hell of ennui, is
the great and unremitting spur that drives and goads all
men to action." ^

The real incentive moving all men to bring forth the
best that is in them is just that best that is in them : their
desire is to excel and to earn the recognition of their fellow-
men in such a form in which such recognition is most fitly
expressed. And the business man, whose apparently
sole motive is money making, forms no exception to this
rule. To-day, when industries are conducted for private
gain and in competition between the individual capitalists,
accumulated individual wealth is, as we have seen, the
only measure of the business man's efficiency and suc-
cess. But when the industrial organization passes into
the hands of society and becomes a part of its general
administration, the distinction between service in that
branch of the government and any other branch of it

Online LibraryMorris HillquitSocialism in theory and practice → online text (page 9 of 26)