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The modern state in relation to society and the individual; online

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intensity, with which it exists for the enterprises
undertaken by individuals or by free associations.

We have now enumerated the chief failings of the
State generally, and of the Modern State in par-
ticular. Here are sufficient causes for modesty on its
part. If the State could examine its conscience
every night, in the absence of all flatterers, and in
that privacy which is unfortunately denied to it,
surely it would become conscious of the fact that it
has many defects, that its nature is full of contradic-
tions and incoherences, that its paramount duty is to
cultivate prudence and reserve, and to limit its action


to what is strictly indispensable. So far from this,
however, the Modern State is as full of presumption
as children are, or conquerors ; those by whom it is
manned wage ever a desperate struggle, which is
constantly renewing itself ; they have all the pride
and consciousness of triumph, and all the impassioned
eagerness of men who feel that they have only a pre-
carious tenure of power.


Comparison between the Modern State and Limited
Joint Stock Companies.

ALLEGATION that the vices of the Modern State are the same as
those of the Limited Joint Stock Companies which are to-day
gradually monopolising the whole of production First answer
to this proposition : personal enterprises or so-called collec-
tive and limited liability companies have a large place in the
contemporary organisation of society Joint Stock Companies
are singularly different in constitution from the Modern
State : they are not democracies with a variable personate :
the only suffrage is that of the shareholders Joint Stock
Companies, if they prosper, transform themselves into aristo-
cracies or moderate monarchies Right and facility of seces-
sion for discontented members The bureaucracy of Joint Stock
Companies is more flexible and more efficient than that of the
State The Modern State in the choice of its functionaries
rarely takes the purely technical point of view The Modern
State claims that its functionary should belong to it entirely,
in political opinions, in intelligence, everything The em-
ployds of Joint Stock Companies are allowed full liberty
outside the professional sphere In the long run the personate
of modern State functionaries must be inferior to that of
well-managed Joint Stock Companies The elasticity of Joint
Stock Companies proved by their action in times of crisis


The organism of the State does not lend itself to such sudden
retrenchments Difference of position between a general
assembly of shareholders and an. elective parliament with
respect to employe's and costs of administration generally
Nepotism in Joint Stock Companies is less dangerous than in
the Modern State, because in the former the highest functions
are more permanent Any private enterprise which becomes
lax in the fulfilment of its work soon becomes compromised,
and drops out of the running ; the reduction of dividends or
the fall of prices on the Exchange is a much more effectual
warning to shareholders than a mere budget deficit is to a
Parliament The consequences of mistakes on the part of
Joint Stock Companies fall only upon those who, if only by
negligence, have some participation in them ; the conse-
quences of mistakes made by the State fall even upon those
who have denounced and combated them The mistakes of
the State are complete mistakes, those of Joint Stock Com-
panies almost always partial ones General rules which re-
sult from these considerations The responsibility of the
State for the faults of its agents is always more difficult to
bring home than that of Joint Stock Companies Instances of
this The necessity of cultivating free collective habits of
action in order to maintain the flexibility of the social body
must never be lost sight of Insidious mode of influence
which the State exercises Instance of this Enormous re-
sponsibility which the State assumes on this head Obliged
to act always on a large scale, the State multiplies the errors
which are necessarily so frequent in human endeavours.

IT will be said that these weaknesses and these
vices are incidental to free associations on a large
scale, to gigantic Joint Stock Companies quite as much

as to the State,



Contemporary Socialism maintains that since pro-
duction is now only possible on a large scale, being
dependent on great masses of capital, which in their
turn belong only to groups of individuals, there can
be no question in the modern world of strictly in-
dividual enterprises placed directly under the eye of
the master, but only of collective enterprises con-
ducted by paid agents who have but little interest in
the general results of their work.

I have shown in my work entitled Collectivism, a
critical examination of the new Socialism, how
exaggerated this reasoning is : it contains a double
fallacy, first in affirming that all production must
henceforth be on a large scale, and next by the com-
parison, which is mainly factitious, of State methods
and processes to those of Joint Stock Companies. 1

I shall not dwell here upon the first of these points,

1 See my work Collectivism, a critical examination of tJie new
Socialism. Second Edition, pub. by Guillanmin, especially
pp. 347-358. Also my work, Essay on the Distribution of Wealth
and the tendency toioards less ineqiiality of conditions (3rd Ed. ,
Guillanmin) especially chapter xii., which deals with Joint Stock
Companies, pp. 314-339,


the maintenance of small and medium-sized industries
side by side with the large industry, in almost every
sphere of human enterprise : in agriculture, in whole-
sale and retail trade, in the manufacture of all pro-
ducts which do not demand motors of an enormous
power ; to do so would lead me far beyond the limits
of my subject. On the other hand it is indispensable
for me to show wherein the methods and procedure
of Joint Stock Companies, however vast, differ from
the methods which the State necessarily follows.

Joint Stock Companies do no doubt in varying
measures partake of the inevitable defects of collec-
tive action ; they have not always the absolute unity
of direction which characterises individual enter-
prises ; but this is not, in any case, their chief and
most general vice, for prosperous Joint Stock Com-
panies are almost always very much concentrated ;
they are, however, usually lacking in flexibility, and
in the rapidity of conception and execution which
characterises all good personal enterprises ; they are
more liable to embark in useless expenditure, more
subject to leakage, as it is called. Nevertheless, we


shall see on examining them that their mode of action
is singularly different from that of the State.

In the first place Joint Stock Companies are not
democracies with a variable personate; they rest
upon the suffrages of shareholders ; for in order to
possess a single vote at their meetings one must hold
many hundred pounds' worth of shares ; and inas-
much as it is rare for a person to have all his funds
in the same business, we may say that, with the
exception of a few small local or popular enterprises,
the members of Joint Stock Companies who enjoy the
right of suffrage are all persons possessed of consider-
able means and imbued with all those weighty ideas,
all those habits of patience and orderliness, which
competency generally confers. Further, votes in
these assemblies are not counted by the head, but up
to a certain limit, which is a tolerably high one, they
are reckoned in proportion to the interest possessed
by each associate in the enterprise.

From this and other circumstances such as the
prestige which accrues to the founders in any pros-
perous enterprise of associated capitals, the confidence


which is generally placed in them by shareholders,
who, as a rule, have other matters to occupy them,
and who are free from the influence of passion
which is not the case in political elections it results
that successful Joint Stock Companies are in the long
run transformed as a matter of fact into aristocracies
or limited monarchies.

A glance at the great associations of capital in
France, in England, and elsewhere, is enough to con-
vince us that most of them have an aristocratic, and
some an almost monarchic organisation. By this
means, the larger Joint Stock Companies, those which
specially merit our attention, are protected from the
risks of sudden changes ; they preserve a respect for
tradition, for established rules, for continuity of
action, which stands in singularly strong contrast
with the contrary tendencies which animate the
Modern State.

One of the factors which contribute to this per-
manence of persons and regulations in large associa-
tions of capital is the right of members to quit them
at any time, if they are not satisfied with their con-


duct. Thanks to the stock-markets or exchanges,
they can at any moment divest themselves of their
titles, and become strangers to an enterprise which
no longer seems to them to be adhering to sound
principles. The right of secession is thus very easy
of application in free collective enterprises in the
form of Limited Joint Stock Companies, while it is
exceedingly difficult of exercise for the individual as
member of the State.

The bureaucracy of these companies in the hands
of good directors is a much more flexible and much
more efficient one than that of the State. This is
incontestable, and arises from several causes. Exist-
ing only for one special end, and being thus dis-
engaged from all political and religious considera-
tions, having no popular electorate to fear, assured,
moreover, of the support of their shareholders every
time they propose an economy, Joint Stock Com-
panies enjoy an independence of action which the
State does not and cannot possess.

It is easy to cry down a bureaucracy: none the
less is it indispensable; and they are none the less


foolish, however numerous they may be, who demand
at one and the same time the extension of the State's
prerogatives and suppression, or at any rate reduction,
of the bureaucracy. That of Joint Stock Companies is
at once more coherent, more prompt, and more agile
than that of the State.

These companies are in no wise hampered in the
choice of directors and chiefs : the State on the con-
trary is hampered ; first, by considerations of policy
which dictate or forbid certain kinds of choice, and
next by stringent rules which it has been forced to
lay down regarding the admission to certain public
functions by examinations, grades, etc., and which
were designed to prevent the possibility of a too
shameless favouritism.

Has there not been a great clamour raised in
France since 1880, because a Minister, and that one
of the most popular men in the country, placed at the
head of the Ministry for Foreign Affairs a man who
had recently rallied to the dominant ideas of the day,
but who was known to have formerly held contrary
opinions ? In the same way, when a major-general


is to be nominated to the Ministry of War, and the
name is brought forward of an officer reputed to be
of the highest professional capacity, but who is said
to hold political opinions different from those which
are in vogue, is there not at once an outburst of
menace and invective which prevents the nomina-
tion ?

From the highest to the lowest, with varying
degrees of intensity, the same thing occurs at every
stage in the administrative organisation of the
modern elective State. Very rarely does the State
in its selections place itself at the purely technical
point of view ; it is always more or less influenced
by party considerations.

Its claim is, that the man who occupies one of the
posts in its employ belongs to him body and soul ;
it requires not only his professional labours, but his
support in every possible direction : it exacts from
its functionaries on all subjects a general conformity
to the views which are professed for the moment by
the State : it will scarcely consent to allow him his
liberty of judgment in questions of letters and of fine


arts : but it intrudes itself upon his opinions in
religious matters, on philosophy and on education.
In large centres of population functionaries, lost in
the crowd, often escape this yoke, but in small towns
and in country places they are rivetted to it. 1

1 It is well known that in France for the last twelve years
the yoke which the State forces upon its employe's is of the
severest description possible. In many parts the removal of
small functionaries is demanded on the ground that their wives
go to mass, and with a still stronger presumption of reason, if
they go themselves. Almost everywhere they are forced to
send their children to the public secular schools, and denied the
liberty of sending them to private denominational schools.
They are often forbidden to frequent such and such a club, or
such and such a cafe\ or to belong to such and such a band, or
choral society.

Worse even than this, they are commanded to make an
ostentatious show of delight at such and such a circumstance.
Witness the following notice taken from Le Temps for the 12th
July, 1888 :

" The Minister of Agriculture has just addressed the following
circular to the various functionaries in his department

' ' ' Sir, The functionaries of the various administrations which
are subordinate to the Minister of Agriculture are well aware
that it is their duty never to neglect any opportunity of testi-
fying their absolute devotion to the Republic.

"'I count on their participating largely in all the manifesta-
tions whose common object is to give the greatest possible
splendour to the national fete of the 14th July, and I beg that
you will bring this letter to their notice. Accept, etc.,

" ' The Minister of Agriculture, NLETTE. ' "


It may, perhaps, be admitted that this kind of
usurpation by the State of the liberty of the
functionary, outside the professional sphere, is
carried much further to-day than it will be after
a time : even this is a pure supposition ; but even
supposing the State, which has not only a technical
end to attain, but which never entirely divests itself
of its ideas and prejudices, political and other, should
relax the bonds with which it ties down its
personate, it could never secure to him the same
plenitude of liberty, outside the professional sphere,
which private societies allow to theirs. The latter
are usually managed by business men, that is to
say, by men who have naturally little inclination

This might have been written by Louis XIV. It recalls a
sentence in a well-known comedy, L'Ours et le Pacha (The Bear
and the Pacha) : " The first man who will not amuse himself,"
said the Pacha, " I will have his head cut off." Thus the
functionary, even the technical functionary, must belong alike
in body, mind, and soul, to the "Government which pays him."
No Joint Stock Company would ever have the audacity to assert
such pretensions, or it would soon find it impossible to recruit
its personate. The company therefore safeguards for more than
does the State, the individual liberty of its employes. The
ultimate result is that it is able to secure a far superior class for
its personate.


for fanaticism, and who would not care to com-
plicate their task by interfering with the private
life and habits of their subordinates.

In the long run, since no one likes to be held in
leash and to submit to degradation of this kind, it
results that the personate of free societies is re-
cruited from better elements, and consists of more
competent men, and men better suited to their
functions, than does the personale of the State.

Again, by no means the least of the advantages
enjoyed by free societies, and one which the State
can scarcely share, is the power of selecting for
prominent positions the men who appear most
capable, without regard to any conditions of age,
rank, or diploma. The Suez Canal was only saved
by M. Lavalley's removable dredging-machine ; but
M. Laval'ey, being only a civil engineer, could
never have been placed by the State at the head
of a departmental service, or in charge of a harbour ;
and as for his patent dredging-machine, it would
have taken him years and years to secure its adop-
tion by the various councils of bridges and causeways.


But it is in times of crisis that the elasticity
of free associations is thrown into strongest relief.
It is then necessary to strike sail, and to curtail
expenses. Joint Stock Companies can and do rise
to this necessity, and they do so both rapidly and
safely. But the organism of the State scarcely lends
itself to reductions of this kind.

From 1882-3 to 1888, for instance, the large
railway companies, disturbed by the diminution in
their receipts, spent all their ingenuity in making
economies, and succeeded in curtailing their ex-
penses ; one to the amount of from two to three
hundred thousand pounds, another of one to two
hundred thousand, altogether to the amount of
1,600,000. They did not take on a single fresh
employe', they lowered mechanics to the level of
stokers, and stokers to that of simple auxiliaries.
The loan societies do the same ; many of them
suppress a large number of useless branch offices,
reducing by one half the places they occupy.

Thus the waste of the force becomes less, and
crises only produced for Joint Stock Companies a


salutary effect (for they have a salutary effect) : that
of bringing about a general revision of the entire
administration, and the pruning away of all that
is superfluous, parasitic, and morbid.

The State, especially the elective State, is ab-
solutely precluded from acting in this way. A
theory has been started with reference to the
budget of the State that is incompressible. It is
at any rate true that it is only with very great
difficulty that it can be compressed. All those who
gain a living by it, being themselves electors, em-
ploy all their electoral force to prevent this reduction
and this force is often very considerable, seeing that
differences may have to be paid for very heavily.
Thus we find deputies, even in times of deficit,
demanding an increase of salary for employe's of
different kinds: for signalmen, postmen, school-
teachers, custom-house officers, etc. At a general
meeting of shareholders, you would never find the
members making proposals of this kind.

If it were proposed to suppress a costly and useless
establishment, a tribunal that had no cases, a school


without pupils, a post-office without customers, the
proposals would meet with the most lively opposition.
This is because the State, or rather those who speak
in its name, never see things from the purely technical
point of view : hence its inferiority in the perform-
ance of those professional duties which may be fulfilled
by it and by free societies at the same time.

It may be objected that these latter also have the
defects of their qualities; being, as we have said,
constituted more or less as aristocracies or as limited
monarchies, they may be guilty of favouritism or of

Nepotism is certainly not foreign to free societies,
but its results are generally less pernicious there than
in the administration of the State. Just because
there is more permanence in the administration and
management of large associations of capital, because
its chiefs are at once less numerous and more per-
manent, we do not find there these different layers of
favourites superposed one upon another which we see
in the administrative arrangements of the State at
every change of ministry or of parliamentary direc-


tion. Nepotism is in some sort more hemmed in,
because it is not constantly renewable through the
rapid succession of those who are able to exercise it.

As for negligence and carelessness, they are to be
found, no doubt, in Joint Stock Companies as much as
elsewhere. But here we may note two important
considerations. The first is that the Joint Stock Com-
panies have to face incessant competition.

Every private enterprise which relaxes its energies
unless it constitutes a monopoly enters at once on
the highroad to ruin, a fact which very soon becomes
patent both to the directors and to the public. The
yearly balance-sheets, the diminution or disappear-
ance of dividends, the fluctuating value of securities,
all these are so many accurate advertisements of the
state of affairs. Competition does not allow a
moment's rest to most private enterprises. Bagehot,
in his admirable work called " Lombard Street," has
shown in the most striking manner the advantages
that from certain points of view, especially in the
matter of the boldness of their operations, accrue to
young banking-houses relatively to larger and more


ancient houses. The warnings afforded to negligent
administrators by the various symptoms we have just
indicated is far more energetic and more precise than
the vague embarrassment caused by the State-budget ;
the feeling to which it gives rise among the share-
holders is very much stronger than is ever felt by the
taxpayers over the State's deficits.

It may happen, however, that a private administra-
tion or management is incapable, and does not answer
sufficiently to the stimulus of competition. The enter-
prise being ill-conducted is finally eliminated alto-
gether. It is only a matter of time.

Absolute routine, no less than persistent wasteful-
ness, is impossible for any length of time in a free
enterprise. It means speedy death to the enterprise,
and severe loss to those associated with it. But, at
least, this loss can fall only upon those who have had
faith in its success, and not upon the general public.
Such and such a working enterprise has been started
with a great deal of noisy publicity. Many clear-
sighted or prudent men have considered it too risky ;
they have not much confidence in the management;


they abstain from it. Its ultimate ruin does not
touch them, and this is justice. Those who suffer
from its ruin are foolish or avaricious persons who,
not content with placing their money simply and
securely, have cast themselves upon chance, without
having sufficient discernment to judge of the merits of
an affair of chance. They are to be pitied, but they
have committed an imprudence.

Suppose, on the other hand, the State undertakes
an extravagant scheme of public works, contrary to
all good sense. I may see the folly of it, I may de-
nounce it beforehand, countless others may do the
same, but not enough to form a majority. Millions
are thus wasted on unproductive works, while we, the
wise, the foreseeing, we see our private budgets
burdened with an increased tax of tens, hundreds, or
thousands of francs yearly, according to our means, all
for the sake of enterprises against which we have
actively protested, knowing them to be senseless. It
will be said that this is purely the result of the
principle of national solidarity, but it is quite easy to
avoid the severe and unjust incidence of this principle


by leaving these contested undertakings, as to which
public opinion is so much divided, to the accomplish-
ment of free enterprise.

When the State makes a mistake, it is a universal
one, by which I mean that the action of the State
being extended by means of legal and fiscal constraint
over the whole of its territory and over all its in-
habitants, nothing can escape the results of whatever
mistakes it makes. The errors of companies, on the
contrary, are but partial, or have only partial effects.
The direct consequences are only borne by those
who are associated with them ; prudent and far-see-
ing men suffer little or nothing from them.

Consider, further, that usually there are several
companies contesting the same field of action in every
branch of industry, and that thus it is very rare for
them all to make the same mistake at once ; the very
rivalry by which they are animated urges them not to
pursue exactly the same methods, or to practice at the
same moment the same course of procedure.

The State, on the contrary, can only act in one
uniform manner, which necessarily intensifies, and

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Online LibraryPaul Leroy-BeaulieuThe modern state in relation to society and the individual; → online text (page 7 of 11)