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Capitalism.

Who is to own the printing-press? The danger of
handing them all over to the national Socialist authorities
is recognized by Kautsky :

"It is true that the governmental power will cease to
be a class organ, but will it not still be the organ of a
majority ? Can the intellectual life be made dependent
upon the decisions of a majority ?" 1

In this field, at least, he admits that "the people" is
not a homogeneous entity, that the interests of all its
parts are not identical. He would restrict the power of
the national majority by placing a party of the machinery
of printing and publication under the control of munic-
ipalities and of cooperative associations. But the cities
would likewise be dominated by the majority, while the
cooperative societies would require every worker to be
also a partial owner.

No individual could own or publish a newspaper, be-
cause he would not be permitted to "exploit" the num-
ber of workers necessary to operate the establishment.

l Op. cit., p. 177.



THE SOCIALIST INDUSTRIAL STATE 69

No group of individuals could do so unless they included
a sufficient force of labourer-proprietors. From the view-
point, not of the individuals who might desire to own
newspapers, but of social welfare, these restrictions
would constitute a very dangerous limitation upon the
freedom of printed expression.

While Socialists do not explicitly demand that all edu-
cation should be given in State schools, they would
evidently look with favour upon such an arrangement.
"Compulsory attendance at public national schools,"
which is among the articles of the "Erfurt Programme,"
would seem to leave little scope for private schools of
any sort. 1 When the average Socialist discusses educa-
tion in his future state, he is rarely able to conceal his
intention that there shall be only one kind of school and
one kind of scholastic training. This would be the most
blighting of all State monopolies.

To resume the main contentions and conclusions of
this article : The Socialist Industrial State must be set
down as immoral, inasmuch as it involves the doctrine
that compensation to capitalists is a matter of mere ex-
pediency, and because it would prove economically, polit-
ically, and intellectually injurious to individual and social
welfare.

II. A JUST AND RATIONAL ORDER

BY MORRIS HILLQUIT

It is a pessimistic and uninviting picture which Dr.
Ryan sketches under the title, "The Socialist Industrial

1 Cf . the comments of Liebknecht on this demand in "Socialism:
What It Is and What It Seeks to Accomplish," pp. 56-58.



70 SOCIALISM: PROMISE OR MENACE

State." But does the fault lie with the Socialist plan of
industrial organization, or is it to be found in the glasses
through which my distinguished opponent views it ?

A concise statement of the Socialist industrial pro-
gramme will help to answer that question.

Socialism stands for the collective ownership of the social
tools of work. Let us consider the two adjectives in
this definition in their inverse order.

A social tool is one used in the modern process of whole-
sale production and distribution of commodities. As a
rule, it is bulky, complex, and costly. The individual
tool, on the other hand, is independent and self-sufficient.
It is usually simple and inexpensive.

The distinction is vital, for the main raison d'etre of
the modern Socialist movement rests on the compara-
tively recent change in the character of the tool, from
individual into social.

Factory work and other forms of mass production, as
well as the prevailing system of wholesale distribution
of commodities, are of very modern origin, and they are
all based on the introduction of the social tool. The pre-
capitalist era is one of individual tools, independent
producers, and direct personal dealing.

The mechanic of the eighteenth century plies his trade
in his home or in a small workshop ; alone, or with one
or more apprentices. He owns the tools of his trade
and the raw material. He works for the "customer"
with whom he makes his own bargain ; he goes through
the entire process of manufacture, and his success and
prosperity depend solely on his own skill and industry.

But gradually the modern machine makes its appear-
ance, and the industrial structure of society and the social



THE SOCIALIST INDUSTRIAL STATE 71

relations of men are thoroughly revolutionized. The huge
steam- or electricity-driven machine, the "iron work-
man" of colossal frame, unerring aim, and a hundred
indefatigable arms throws the helpless individual tool
of former generations into the scrap-heap ; it shatters
the private workshop, and destroys the independence
of the worker.

The modern machine creates the factory, and the
factory assembles under its roof the toolless artisans
and mechanics, stripping them of their economic indi-
viduality and drilling them into an industrial army of
uniform rank and collective functions. And what the
factory does in the field of production, the railroad and
steamboat accomplish with equal thoroughness in the
sphere of distribution.

Henceforward the worker is separated from the tool. He
cannot pay the high cost of modern machinery and equip-
ment, and it would avail him little if he could, because
machine industry is not adapted to individual operation.
The logical solution of this predicament would seem to
be the joint ownership of all such machinery by all of the
workers, or, what amounts to the same, by the entire
nation organized for the management and control of
social production.

As the countless individual tools have gradually be-
come merged in the one great system of modern social
machinery, so should the tool-ownership of the individual
workers converge in the collective ownership by the en-
tire working fraternity. In other words, the ownership
and control of modern machinery should be socialized,
just as its use and operation have been socialized by the
inherent forces of industrial development.



72 SOCIALISM: PROMISE OR MENACE

This is the claim of Socialism.

It is a claim based entirely on the social character of
the modern tool, and by parity of reasoning it extends
only so far as the tools are social in character. Socialism
demands the collective ownership and social operation of
such industries as depend on the use of social tools and
are organized on the basis of collective work ; it is not
concerned with purely individual pursuits or vocations.

The Socialist programme does not involve a centralized
national organization for the management of the indus-
trial processes of the country. The plan of collective
ownership and operation is quite consistent with a system
of graded authority and divided functions in accordance
with the peculiar situation and requirements of each in-
dustry. Thus the national government might well own
and operate all means of interstate transportation and
communication, such as railroad systems and telegraph
and telephone lines; all sources of general national
wealth, such as mines, forests, and oil wells; and all
monopolized or trustified industries already organized on
a basis of national operation.

Similarly, the state government might assume the few
industries confined within state limits ; while the munic-
ipal government would logically undertake the manage-
ment of the much wider range of peculiarly local busi-
ness, such as street transportation and the supply of
water, light, heat, and power.

Still other local industries, too insignificant or un-
organized even for municipal operation, might be left
to voluntary cooperative enterprises under proper regu-
lations for the protection of the cooperators and the con-
sumers, while, as Dr. Ryan quite properly states, a large



THE SOCIALIST INDUSTRIAL STATE 73

number of purely individual trades and callings might
continue to be exercised by private individuals or con-
cerns in competition with each other so long as their
operation does not involve the exploitation of labour.

Nor does the Socialist plan of industrial organization
contemplate a centralization of plants "under a single
direction" for every great industry. There is nothing in
the Socialist programme or plan of industrial organization
that would prevent the management of any industry
from several independent or coordinate centres, if such
management should prove more profitable and efficient.

And, finally, the proposed socialization of industries
does not necessarily involve the method of confiscation.
The people could well afford to compensate the capi-
talists to the full extent of the actual value of their in-
dustrial properties. The national indebtedness created
by such payment would be extinguished within a very
short time from the increased returns of the industries
themselves, and the nation left unencumbered and un-
shackled, free to work out its own destinies.

With this brief amplification of Dr. Ryan's outline of
the Socialist plan of industrial organization, let us pro-
ceed to the examination of his objections to it.

The first ground of Dr. Ryan's opposition to the So-
cialist programme relates to the methods by which the
collective ownership of the industries is to be acquired.

As I have stated above, and as Dr. Ryan admits, the
Socialists are not committed to the method of confisca-
tion. They advocate to-day, and under normal condi-
tions will continue to advocate, full compensation to the
expropriated capitalists. But the Socialists refuse to



74 SOCIALISM: PROMISE OR MENACE

make bargains with the future, and point to the well-
known historical fact that some of the greatest advances
in human progress and popular liberty have been accom-
panied by summary confiscation of privileges and
property. Thus the sublimest act in American history,
the emancipation of the negro slaves, was accomplished
by the undisguised method of confiscation.

Dr. Ryan admits that in some supreme national
crisis, when no other course is "physically possible,"
confiscation may be "morally legitimate"; but he as-
sumes that the Socialists would be ready to resort to
that process before the crisis should become sufficiently
acute, not as a matter of "physical" necessity, but as a
measure of social expediency. This view he brands as
"immoral." Is it?

The term confiscation may be defined as the legal
appropriation of a person's property without adequate
compensation. It may be accomplished by means of a
summary decree, or legislative enactment, or by a slow
and gradual process. In this, the only proper sense of
the term, the capitalist system owes its existence to a
series of continuous, wholesale, and unscrupulous acts of
confiscation, and the individual capitalists are expert
and habitual confiscators. Our landed aristocracy has
confiscated the land of the people by acts of fraud, vio-
lence, and corruption familiar to every student of Ameri-
can economic history, and our great manufacturers and
railroad magnates have similarly, though less obviously,
confiscated the national instruments of wealth produc-
tion and distribution.

In an effort to prove that the majority of the capi-
talists hold their wealth legitimately, Dr. Ryan men-



THE SOCIALIST INDUSTRIAL STATE 75

tions and attempts to justify four "main sources" of
capital.

Let us briefly examine these alleged sources.

The item of interest may be disposed of without much
argument, since the mention of interest as a source of
capital is obviously putting the cart before the horse.
Interest can only be drawn on previously acquired capi-
tal. It is the fruit of capital, not its source.

As to the modern fortunes made through "wages and
salaries," they figure very large in Sunday-school ser-
mons and conventional text-books of political economy,
but hardly ever in Dun's or Bradstreet's. Capitalist
wealth is made not by earning wages, but by paying
wages, and the greater the pay-roll of the capitalist, the
larger are his profits. In other words, the "wages and
salaries" which the capitalist saves are not his own, but
those of his employees.

The large manufacturer who does not owe his profits
to an artificial monopoly, an iniquitous protective tariff,
or corrupt government contracts is probably Dr. Ryan's
ideal type of the "honest" business man, and his profits
are legitimate "business gains resulting from exceptional
directive and inventive ability in conditions of full and
fair competition." But if such manufacturer should re-
turn to his employees the equivalent of all they produce,
he would soon go bankrupt. The only way by which
he can amass wealth is to pay to his workers a wage
amounting to less than the value of their product and
to retain the difference as profits.

Thus the honest capitalist confiscates part of the
product of the worker's toil. And this process of con-
fiscation is still at work among us ; it goes on uninter-



76 SOCIALISM: PROMISE OR MENACE

ruptedly day by day, and is directed against the most
needy and helpless. It robs the working man of the
comforts of life, the working woman of her home and
fireside, and the working child of youth and joy it is
the meanest of all methods of confiscation.

Another source of capital mentioned by Dr. Ryan is
"natural resources and opportunities, such as land,
mines, forests, and franchises, which the State conceded
to individuals and corporations through the medium of
free and honest contracts." My adversary defends all
wealth derived through that source as "valid in morals"
in the hands of the present owners, even though the
original grants may have been "socially unwise."

Thus, if an irresponsible ruler or an improvident legis-
lature several generations ago has seen fit to "give
away" the earth and its treasures to a few favoured in-
dividuals, we, who have come into this world a century
or more after the "grantors" have turned into dust,
must continue paying tribute to a new generation of men
who happen to descend from the fortunate original
"grantees." We must accept as "valid in morals" the
theory that the sources of life of the whole human race
and of all generations to come may be mortgaged to a
few chosen individuals and their offspring forever, and
that the people have no right to free themselves from this
most subtle form of indirect slavery except upon the pay-
ment of a heavy ransom.

And, finally, Dr. Ryan claims full compensation as a
right even for the majority of capitalists, whose wealth
has originated "through various forms of injustice, such
as physical force, fraudulent contracts, oppression of
labourers, and extortion upon consumers," on the ground



THE SOCIALIST INDUSTRIAL STATE 77

that property thus "acquired" has become legal and
valid in the hands of the present owners either because
they are "innocent" third parties or through prescription.

This doctrine has been asserted by the Supreme Court
of the United States, and has probably caused greater
social disaster than any other decision of that august
tribunal. What the principle means in effect is this :

If you are robbed of your watch by one highwayman,
of your coat by another, and of your shirt by a third,
you may recover all these articles so long as each of the
.gentlemen of the road retains the identical article of his
original "acquisition"; but if they interchange the
articles between themselves, your claim is extinguished,
because your stolen property has passed into the hands
of " third parties." If no such exchange takes place, and
each thief holds on to the article of his choice long enough,
he acquires "title by prescription," which all future
generations are bound to respect.

The two doctrines which Dr. Ryan thus upholds the
perpetual validity of public grants and title by prescrip-
tion are the doctrines upon which all forms of robbery
and slavery have ever been defended. The Socialists
reject them as shockingly immoral, and against them
they assert the inalienable right of the human race to the
earth and the fulness thereof, and the equal claim to life
and enjoyment of every child born into the world.

If the Socialists nevertheless favour compensation
to the owners of capital, they do so purely for reasons
of social expediency acting on the same principle as
the man who has been robbed of his purse in a street-car,
and who offers a reward to the "honest finder" with the
significant assurance "and no questions asked."



78 SOCIALISM: PROMISE OR MENACE

The other moral ground of Dr. Ryan's objection to the
Socialist programme relates to its scheme of land owner-
ship.

As Dr. Ryan hints, Socialists regard land ownership
in a dual aspect.

Land of reasonable dimensions actually cultivated or
used by the farmer without employment of hired help to
any appreciable extent, is an instrument of labour analo-
gous to the individual tool, and land used for private
dwellings is an article of use rather than an instrument
of production. The Socialists are not opposed to the ex-
clusive private use and occupation of such lands; nor
would they tax them to the full extent of their value, as
Dr. Ryan assumes.

But they condemn utterly the private ownership and
exclusive control of land used for business purposes
rent-producing land and they insist that the ultimate
title to all land remain in the State.

Is this position really so revolting as to shock the
moral sense of good people? It seems to me quite
obvious that of all species of human wealth land is the
most "natural." Whether it was created in the peren-
nial process of cosmic evolution or at the sudden behest
of an Almighty Creator, it can hardly be argued that it
was intended as a special and exclusive gift to the land-
lord class, to be parcelled out by them into city lots and
acreage plots and let to their fellow-men in return for
heavy rents.

"As against other individuals and the State, man has
an inborn right to control and use the bounty of nature
in the way that will best secure the requisites of reason-
able life and self-development," maintains Dr. Ryan in



THE SOCIALIST INDUSTRIAL STATE 79

this connection. With this statement I fully agree, but
my distinguished opponent and I differ in the applica-
tion of the obvious ethical principle.

Dr. Ryan seems to employ the term "man" as synony-
mous with "landlord," while I am inclined to include
also within that designation the non-landed species of
the human. It is because the Socialists believe that all
men have the right "to control and use the bounty of
nature in a way that will best secure the requisites of
their reasonable life and self -development," that they
object to the system of private landownership, which
allows a minority of the population to monopolize that
bounty and to exclude the majority from its enjoyment.

Dr. Ryan's apprehension that a Socialist State would
"turn out the small farmer at any time deemed ex-
pedient," is quite gratuitous. Under a system of gov-
ernmentally owned land the tenure of the bona-fide tiller
of the soil will certainly be more secure than it is to-day,
when the majority of small farmers depend on the mercy
of the mortgagor or landlord.

Passing from moral considerations to practical grounds,
Dr. Ryan asserts that the Socialist plan of industrial
organization would be detrimental to the economic life
of the country.

Socialism advocates not only collective ownership, but
also democratic administration of the industries. In
practical application this principle must be interpreted
to mean that under a Socialist regime the workers in
each industry will have a voice in the selection of the
managing authorities and in the formulation of the main
features of industrial policy, subject to such general laws



80 SOCIALISM: PROMISE OR MENACE

and regulations as will be necessary to safeguard the
interests of the community as a whole.

This, of course, does not imply that the workers will
elect each shop foreman or factory superintendent, or
that the managing authorities will fix in advance a uni-
form scale of wages or a uniform labour day for each
group of employees. It is not at all unlikely that in its
practical workings the Socialist industrial democracy
will be somewhat similar to the forms of our present
political democracy. The workers in each industry may
periodically select the managing authority with power to
make appointments and to fix rules. Such elected board
or body may consist of shop representatives, and these
would be better judges of the qualifications of the chief
manager or executive committee of the industry than
the bankers who now control the directorates of the great
corporations.

Dr. Ryan assures us that under such a system of
democratic administration the worker would "loaf on
the job," since he would have neither the hope of better
wages nor the fear of discharge to spur him on to the
proper performance of his duties ; the management would
be lax and inefficient, since the "directors of industry"
would have no direct, personal interest in its prosperity
and would be unduly subservient to the whims of the
working "rank and file"; the men of inventive genius
would not exert their talents for the advance of industrial
progress, since they would have no pecuniary incentive
to do so ; production would become stagnant in quality
and curtailed in quantity, since it would lack the vitaliz-
ing element of private ownership and competition.

The reasoning is based, on the one hand, upon the



THE SOCIALIST INDUSTRIAL STATE 8l

theological conception that the sole human incentive to
do right is the fear of punishment or hope of reward, and
the materialistic notion that the most stimulating reward
is a straight money compensation right here and now,
and, on the other, upon the assumption that a Socialist
order could offer no adequate reward for special efforts.

The Socialists maintain that the converse of both
propositions is true. Under the present system the
worker does not share in the benefits of increased or im-
proved production of labour. Such benefits go exclusively
to the capitalist in the shape of larger profits, and the
worker has nothing but his scant wage, his taxing, often
perilous, work, and his unattractive factory surroundings.
Under those conditions the sheer instinct of self-preserva-
tion necessarily impels him to "loaf on the job."

Under a system of Socialism each worker will be a
partner in the industrial enterprise in which he will be
employed, sharing in its prosperity and losses alike;
and, since he will have a voice in the management, he
will certainly see to it that his work is surrounded by
reasonable safeguards and sanitary and attractive
conditions.

Nor is there any reason why the individual employee
under Socialism should not be compensated in accord-
ance with his skill, diligence, and general merit. The
worker will thus have a direct pecuniary incentive as
well as a moral stimulus to put forth his best efforts.
The manager and the inventor will have the greatest of
all stimuli public honour and recognition, and there is
no reason why they should not also be rewarded by special
pecuniary compensations under a Socialist system.

It is thus as easy for the Socialist to draw an optimis-



82 SOCIALISM: PROMISE OR MENACE

tic picture of the Socialist Industrial State as it is for
the anti-Socialist to paint it in lurid colours. But while
the latter is only a cheerful guess, the former is based on
experience and proved examples.

The Socialist State has, of course, never been "tried" ;
but cooperative production under democratic manage-
ment, very much along the lines advocated by the Social-
ists for all industries, has been tested and has amply
demonstrated its superiority over capitalist enterprises.

The famous Belgian cooperative societies, the "Maison
du Peuple," the "Vooruit," and the "Progres," are
among the largest and most successful business concerns
of their country. They have been built up by working-
men from ridiculously small beginnings, and are still
managed by thousands of workers, their members and
employees, in the most efficient manner. The "Zentral
Verein" of Germany, a cooperative distributive society,
with an annual business of more than 300,000,000 marks,
is successfully managed by its more than 1,000,000
working-men members ; and the same tale may be told
of the English "Cooperative Wholesale Society," which
represents an accumulated capital of $37,000,000 and
employs 21,000 members; and of numerous cooperative
working-men's enterprises in many other countries of
Europe.

Dr. Ryan's retort that the workers have been more


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