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Collectivist State would be the sole producer, and
every individual would have to take just what it
pleased to produce. At present demand rules supply ;
in the collectivist system supply would rule demand.
The State might have the most capricious views as
to what people should eat or drink, how they should
dress, what books they should read, and the like ;
and being the sole producer and distributor of meat
and drink, the sole manufacturer of cloth and sole
tailoring and dressmaking establishment, the sole
publisher and supplier of books, individuals would
have to submit to all its caprices. The promised
freedom of enjoyment or consumption would thus, in
all probability, be very slight and illusory.

Were all powers concentrated in the State as Col-
lectivism proposes, the temptation to abuse these
powers would be enormous. The mere fact, for
example, that all printing and publishing would be
done by the State could hardly fail to be fatal to the
freedom of the press. Were Secularists in power they
could not consistently encourage the circulation of
works of devotion or of religious proj^agandism. If
Christians held office they would naturally regard
the publication of writings hostile to their religion as

Q



242 SOCIALISM

also contrary to the welfare of the commvinity. The
Collectivist State would not be likely either to im-
port books adverse to Collectivism, or to treat the
production of them by its own subjects as labour
worthy of remuneration. So of all things else. If
production were entirely in the hands of the State,
the liberty of individuals as to consumption could
not fail to be unjustly and injuriously limited in
every direction. Where supply rules demand, not
demand supply, desires must be suppressed or un-
satisfied, freedom unknown, and progress impossible.
The Collectivist, I may add, is bound to justify
his procedure in allowing a right of property in the
objects of consumption and denying it in the instru-
ments of production. It is not enough merely to
draw the distinction ; it is necessary also to show
that the distinction rests on a valid moral principle.
This has not been shown ; and, I believe, cannot be
shown. To affirm that a carriage may legitimately
be private property but that a plough cannot ; that
for an individual to possess the former is right, and
what the State cannot hinder without tyranny,
while to possess the latter is wrong, and what the
State must on no account permit, seems at least to
be a paradox devoid both of reason and justice. Why
do Collectivists not endeavour to vindicate it, yet
expect us to believe it ? They grant a right of pro-
perty to consume, and even to waste, but not to
produce ; not to employ with a view to a return.
Why is the right of property thus restricted and
mutilated ? Would it not be more consistent to
deny and abolish it altogether ?



THE COLLECTIVISATION OF CAPITAL 243

There is another question, and a very important
one, to be answered. Is it probable that in a
collectivist community there would be much to
enjoy, to consume ? Collectivists, of course, assure
us that there would be abundance. But socialist
revolutionists are a remarkably sanguine class of
persons. Many of them have got very near the
length of believing that, if their theories were
carried into practice, men would only require to
sit down to table in order to have roasted pheasants
flying into their plates. It, therefore, need not
greatly astonish us to find that a number of Col-
lectivists have supposed that under the regime of
Collectivism three or four hours of work daily will
secure to every labourer an adequate supply of the
means of sustenance and comfort. But it is to be
feared that they are much mistaken ; that the
means of sustenance and comfort are far from so
abundant and easily procured as they imagine ; and
that men of average abilities, not placed in excep-
tionally favourable circumstances, who work merely
three or four hours a day, will be as sure speedily to
come to poverty and wretchedness in the future as
such men have done in the past.

It is chiefly by the suppression of luxury that
Collectivists hope to economise labour so immensely.
And it must be admitted that the administrators
of the Collectivist State would have greater power
of suppressing luxury than those who have hitherto
engaged in the task with such scant success. The
extreme difficulty of directly superintending con-
sumption has been the chief cause of the failure of



244 SOCIALISM

attempts to enforce sumptuary laws ; but Col-
lectivism would act through the regulation of pro-
duction, through refraining from ministering to any
desire for what it deemed luxury. Its greater
power in this respect, however, would probably turn
out to be simply a greater power for mischief.

Luxury is so essentially relative and so extremely
variable in its character and effects, that it is not a
proper or safe subject for legislation. Attempts to
suppress it by law are likely to do more harm than
good by destroying stimuli to economic exertion and
progress with which society cannot dispense. Even
if it were suppressed the saving effected would be
much less than Collectivists hope for, as far less
labour is spent in the production of objects of
luxury than they obviously fancy to be the case.
In Britain it is only about a thirtieth part of the
labour employed in production. In France it is
more, about a twentieth. But then France makes
objects of luxury for all the world ; and she does so
very much to her own advantage. A Parisian
producer of articles de luxe indirectly acquires for
France twice as much wheat as he would raise if he
actually cultivated French soil. There would be
more of the means of sustenance in Ireland if fewer
of her inhabitants were occupied in cultivating
potatoes and more in producing objects of luxury.

Two strong reasons can be given for holding that
were the system of Collectivism adopted the day of
labour in this country would not be a short one,
and that our production would be insufficient to
supply even the primary and most urgent wants of



THE COLLECTIVISATION OF CAPITAL 245

our population. The first is, that under this system
individuals Avould have no sufficient personal interest
to labour energetically or to economise prudently,
to increase production or to moderate poj^ulation.
It is true that Collectivism does not propose,
like Communism, to remunerate all labourers alike ;
but in all other respects it would preclude to a
much greater extent the operation of personal mo-
tives to industry and carefulness. It does not, like
Communism, take account of the characters and
limit the number of its members, but undertakes to
provide for all the inhabitants of a nation, while
making the remuneration of each individual de-
pendent on the energy, faithfulness, and competency
of every other. Is it conceivable that under such a
system ordinary men employed in the common
branches of industry will labour as efficiently as at
present, or, indeed, otherwise than most ineffi-
ciently ? What motives will such a man have to
•exert himself? The sense of duty and the feeling
of responsibility to God ? Yes, if he be a conscien-
tious and religious man, but not more than now
Avhen he has his private interests in addition.
Fame ? No fame is within the reach of the vast
majority of men, and especially not in the common
departments of labour. The advantage of the
nation ? Very few men can in the ordinary avoca-
tions of life do almost any perceptible good to a
nation ; but any man can obviously do good to him-
self, and to his wife and children, by industry and
economy. Every individual ought to look to
general ends beyond his individual ends, but few



246 SOCIALISM

individuals are so fond of labour, and so given to
prudence and temperance, that a regard for their
own interests is a superfluous motive to them.

The second reason to which I have referred is
that by accepting Collectivism we must be almost
entirely deprived of the benefits of foreign trade.
Collectivists do not deny this, for they are conscious
of their inability to show how international trade
could be carried on without prices, profits, interest,
currency, the transactions of individuals, and, in a
word, without involving the destruction of the
whole collectivist system. While not denying it,
however, they maintain a " conspiracy of silence "
as to its inevitable consequences. One most obvious
consequence is that half of our present population
would have to emigrate or starve. Another is that
the population, after having been thus reduced,
must continue, on pain of starvation, not to
increase. How men can know what the population
of Britain is, and what its agricultural acreage is,
yet calmly contemplate the loss of foreign trade,
and coolly promise their fellow-countrymen short
days of labour and a plentiful supply of the good
things of life, passeth comprehension.

Collectivism could not fail to find the mere keep-
ing up or maintenance of its capital to be a most
difficult problem. It starts by appropriating the
capital which individuals have formed, and it
promises to divide the whole produce of labour
among the labourers. But if this promise be
honestly kept, the largest portion of" the capital, all
the circulating capital, will, in the course of a year,



THE COLLECTIVISATION OF CAPITAL 247

have disappeared, without being replaced, and the
only capital remaining will be machines and build-
ings, the worse for the wear. In other words, if
Collectivism keep its promise to workmen, a speedy
national bankruptcy is inevitable. Let us suppose,
then, that it will not keep its promise. How will
it replace and maintain, not to say augment, its
capital ? It has deliberately stopped and choked up
all the existent sources of capitalisation, all the
motives and inducements to economy and invest-
ment on the part of individuals. It will not allow
individuals even if they save to use their savings as
capital. It can only, therefore, find capital for
itself by some process of the nature of taxation.
But this must be a poor and shallow source com-
pared with those which contribute to the formation
of capital at present. Men who have the means
and opportunity of forming capital are generally
anxious to capitalise as much as possible ; but those
who have the means and opportunity of paying
taxes are as generally anxious to pay as little as
possible. If a State meets its own necessary ex-
penses by taxation it does well ; for it to raise by
taxation the whole capital needed by the nation
from year to year cannot be rationally considered as
a hopeful enterprise.

The task of maintaining the national capital by
taxation would be all the harder, seeing that the
Collectivist State would not contain many rich
people or people who save. Some Collectivists
propose to allow the rich people whose capital they
appropriate to retain during their lifetime a con-



248 SOCIALISM

siderable portion of* their wealth for consumption,
for enjoyment, but not for production, not to use as
capital. But even if expropriated capitalists be
found content to settle down on these terms into
collectivist citizens, their wealth must be lost, so
far as the Collectivist State is concerned, to produc-
tion, to capital. It is much more probable, however,
that they would not be thus content, but would
transfer themselves and their wealth to some more
hospitable shore, where they could again start as
capitalists, and have scope for a free and energetic
life. It is obvious that it would be to the interest
of all individuals who economised in a nation where
Collectivism was established to send their savings
abroad. The State could not prevent this without
having recourse to arts of espionage and acts of
tyranny degrading both to rulers and ruled, and
tending to the foolish end of isolating the nation
from the rest of the world, of withdrawing the
current of its life from the general movement of
history. In all probability it would fail, whatever
means it employed. In all probability, under Col-
lectivism there would be a continuous decrease of
capital at home, and a continuous flow of individual
savings to swell the capital employed in foreign
industry and enterprise.

My general conclusion, then, is that a Collectivist
State can neither establish itself nor maintain
itself; that Collectivism is incapable of any solid
and stable realisation.

Nor is it desirable that it should be realised ; for
it is Socialism in the proper sense of the term —



THE COLLECTIVISATION OF CAPITAL 249

Socialism as essentially exclusive of liberty and
inclusive of slavery. It would make the State
enormously strong as compared with individuals,
and individuals excessively weak as compared with
!the State. It would place every man in a position
: of absolute dependence on Government, with no real
security for any kind of freedom. It is a system
which could only be carried out through the agency
of a vast host of officials and inspectors ; and this is
of itself a very serious objection. Official work is
seldom equal to the work which individuals do for
themselves ; State inspectors themselves need to be
inspected, and the highest inspector may be the
least trustworthy of all ; and where officials are
numerous seekers of office are far more numerous,
which is a grievous source of corruption both to
rulers and ruled, especially in a democracy. If a
democracy would preserve and develop its liberties,
it must keep the State within its due limits ; guard
against encouraging the multiplication of State
officials ; and, wherever it can, organise itself freely
from within by voluntary associations, instead of
allowing itself to be organised compulsorily, from
without through the State. With the natural de-
velopment of the national life there will, indeed, be
also a certain natural and legitimate expansion of
the sphere of State activity ; yet none the less
every unnecessary law, every unnecessary class of
State officials, involves an unnecessary limitation of
popular liberty, is a danger to, or a drag on, popular
liberty. There is no cruder or more harmful conceit
current than the notion that since votes are now so



2 50 SOCIALISM

common the State cannot be too powerful, or legisla-
tion too extended. The State ouofht to be strona:
only for the performance of its strictly appropriate
functions ; every further increase or extension of its
power must be an encroachment on freedom and
justice. The omnipotence of the State, it has been
justly said, is the utter helplessness of the indi-
vidual.

SUPPLEMENTARY NOTE.

Dr. Schaffle, in Letter 1 1 of his " Impossibility of Social
Democracy," has forcibly presented the chief valid objections to
Democratic Collectivism. I shall hei-e briefly summarise his
statement of them.

1. Collectivist production is impossible on a democratic basis.
It could only be maintained and directed by a stable self-sufficient
authority and a powerful and carefully graduated administrative
system, of a non-democratic character, and without any charms
for the proletariat. '* But then where would be your democratic
republic from top to bottom and from centre to circumference ?
Where would be your freedom and equality ? Where would be
your security against misuse of power and against exploitation ?"

2. Collectivism proposes "to eliminate nature and property,
two out of the three factors of production ; to transfer the owner-
ship of the means of production entirely to the community ; and
to weld all businesses of the same kind— however unequal the
natural efficiency of the instruments may be in the various
sections — into one great ' social ' department of industry worked
on the principle of equal remuneration for equal contributions of
labour-time." ..." But under a purely democratic organisation,
a materialistic and greedy host of individuals, puffed up by
popular sovereignty, and fed with constant flattery, would not
easily submit to the sacrifices required by the immense savings
necessary to multiplying the means of production. Still less
would the members of such productive sections as are equipped
with the instruments of production of highest natural efficiency



THE COLLECTIVISATION OF CAPITAL 251

be inclined to cast in the surplus product of their labour with
the deficient production of others. Strife and confusion without
end would be the result of attempting it."

3. " Social Democracy promises an impossibility in under-
taking, without danger to the efficiency of production, to unite
all branches of it, and in each branch all the separate firms and
business-companies into one single body with uniform labour-
credit and uniform estimation of labour-time. Herein it goes
upon the supposition that the whole tendency of production is
toward business on a large scale with local self-complete branches
on factory lines. Yet this is a most arbitrary assumption."
Agriculture tends in the direction of small or moderately large
farms. Even in trade there will always remain over, a mass of
small scattered pursuits that entirely escape control.

4. " Social Democracy promises to the industrial proletariat a
fabulous increase in the net result of national production, hence
an increase of dividends of the national revenue, and a general
rise of labour-returns all round. This increased productivity of
industry would perhaps be conceivable if a firm administration
could be set over the collective production, and if it were also
possible to inspire all the producers with the highest interest
alike in diminishing the cost, and in increasing the producti\-ity
of labour. But Social Democracy as such refuses to vest the
necessary authority in the administration, and does not know
how to introduce an adequate system of rewards and punish-
ments for the group as a whole, and for the individuals in each
productive group, however necessary a condition this may be of a
really high level of production. Therefore, on the side of pro-
ductivity again, all these delusive representations as to the
capacity and possibility of democratic collective production are
groundless. Without giving both every employer and every one
employed the highest individual interest in the work, and
involving them in profits or losses as the case may be, both ideal
and material, it would be vitterly impossible to attain even such a
measure of productivity for the national labour as the capitalist
system manages to extract. . . . Without a sufficiently strong
and attractive reward for individual or corporate pre-eminence,
without strongly deterrent drawbacks and compensatory obliga-
tions for bad and unproductive woi-k, a collective system of pro-



252 SOCIALISM

duction is inconceivable, or at least any system that would even
distantly approach in efficiency the capitalistic system of to-day.
But democratic equality cannot tolerate such strong rewards and
punishments. The scale of remuneration in the existing civil
and militaiy systems would be among the very first things Social
Democracy would overthrow, and rightly, according to its prin-
ciples. So long as men are not incipient angels — and that will
be for a good while yet — democratic collective production can
never make good its promises, because it will not tolerate the
methods of reward and ]mnish7nent for the achievements of indi-
viduals and of groups, which under its system would need to be
specially and peculiarly strong."

5. Social Democracy is utterly unable to fulfil its promise of
strictly apportioning to each person the exact value of the
product of his social labour. It has discovered no principle or
method of determining what a " fair wage " is. So far from
preventing exploitation it could not fail to do injustice to those
whose average productiveness is higher than that of their neigh-
bours. " The fanaticism with which the gospel of Marx's theory
of value was at one time preached rests upon superstition, and
upon a wholly superficial misconception of facts. ... It i^ not
only not proved, it is absolutely vinprovable, that a distribution
measured by the quantum of social labour-time given by each
would represent distribution in proportion to the measure of
product value contiibuted by each."

6. It is indispensable alike in the interests of the individual
and of society that each person should be remunerated in propor-
tion to the social value of his work. Social Democracy fully
acknowledges this, and promises to accomplish it, but necessarily
fails to keep its promise. For, however socially useful this pro-
portional remuneration be, and however little any continuous
advance in civilisation can be made without its enforcements, the
principle is still undeniably aristocratic, and totally incompatible
with a one-sided democratic equality. " A Social Democracy
which once admitted this principle would no longer be a demo-
cracy at all after the heart of the masses."

7. Collectivist Socialism further promises the distribution of
the product in a brotherly fashion according to needs. But this
is not consistent with the promise of distribution according to



THE COLLECTIVISATION OF CAPITAL 253

the value of the labour contribution. It is besides impracticable.
*' If in a Democratic Collectivism it were to be attempted from the
outset to apportion men's share, not according to their contribu-
tion of work, but accoi'ding to their needs, the result wotdd be
that shortly every portion of the ' sovereign people ' would
appear to be, and would even be, in a great state of need and
destitution. Everything would get out of hand, and a hopeless
confusion ensue, the only way out of the difficulty being to
declare a universal equaUty of need, a solution most unjust, most
wearisome, and most conducive to idleness."

8. Democratic Collectivism undertakes to suppress all " exploi-
tation." It can, however, do nothing of the kind, inasmuch as
the real value contributed by labour to the product cannot be
determined. It would even, by suppressing all individual home-
production, make impossible in any case a distribution of the
entire product of labour or of its full realised value. It would
thus open a far wider field for exploitation than any hitherto
known system of production. " The private capitalist of course
could no longer exploit the wage-labourer, since all private capital
would be over and done with. But labourer could very really
exploit labourer, the administrators could exploit those under
them, the lazy could exploit the industrious, the impudent their
moie modest fellow- workers, and the demagogue those who
opposed him. Under such a system above all others it would be
impossible to set any Umits to this. It would be the very system
to lend itself most freely to exploitation, as it would have no
means of defending itself from practical demagogy and the dis-
couraging of the more productive and more useful class of labour.
With the quantitative reckoning of labour-time, with the setting
up of a ' normal performance of work,' with the mei-ging of in-
tensive and extensive measurement of labour, things might reach
such a pitch that Marx's vampire, ' the Capitalist,' would show up
as a highly respectable figure compared with the Social Demo-
cratic parasites, hoodwinkers of the people, a majority of idlers
and sluggards. The State would be the arch-vampire, the new
State, whose function it would be to provide pleasure for the
people and to fill up for each and all the highest measure of
earthly bliss."

9. Another very attractive promise of Social Democracy is that



254 SOCIALISM

under the collectivist system there will be no paralyses of trade.
It professes that, unlike capitalistic society, it will not labour at
hazard, but so accurately estimate demands and needs as to hold
in constant equilibrium every kind of supply with every kind of
requii-ement ; and that by securing for the labourers a larger
remuneration it will render them more competent throughout
the whole range of production to purchase and consume. But
this is only vain boasting. It has in nowise shown that it will
be able to do either of these things. Besides, crises in trad e are
largely due to natural causes, and to conjunctures or overpower-
ing chains or combinations of circumstances, many of which men
can neither foresee nor conti'ol. And even could they be so far
mastered by means of a strenuous regulation of needs and com-
pulsion of individual tastes, Democratic Collectivism would be, in
virtue of its extremely democratic character, of all systems the



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