The writers who have hitherto engaged our attention were all of them individualists. They had no quarrel with the institution of private property as such, nor were they hostile to the existence of capital or to the personal advantage which may accrue from the possession of exceptional talent or ability. The orthodox socialist, on the other hand, is distinguished by an aversion to both interest and rent, and some of them even go the length of denying the individual’s claim to any special benefit accruing from personal ability if it has the effect of increasing his income beyond the mere remuneration of labour.
Between the two conceptions is a veritable abyss, and the question arises as to whether it can ever be bridged. Some writers confidently reply in the affirmative. “It is the easiest thing in the world. Just treat your interest on capital and the revenue derived from exceptional capacity as rent, and the theory of rent will supply a justification not only for the appropriation of land, but also for universal collectivism.” It was in England that this idea was first mooted.
England, the true home of socialism, the England of Godwin and Hall, of Thompson and Owen, after the first outburst of socialist activity over seventy years before, had not given birth to a single socialist scheme. With the exception of John Stuart Mill, who was impressed by the French socialists, English writers had remained quite indifferent to the ideas that were agitating Europe. Karl Marx toiled at the production of his masterpiece, Das Kapital, in the very heart of London without arousing the curiosity of a single English economist. The formation of socialist parties in Germany and France after 1870 had to intervene before the ideas of the great collectivist aroused any real enthusiasm in Great Britain, and it was not until 1880 that a small Marxian party was formed in England.[1228] Just about the same time another group of writers known as the Fabian Socialists began to preach an original and characteristically English kind of socialism.[1229]
The Fabian Society at first consisted of a small group of young men, for the most part belonging to the middle classes, and holding themselves aloof from the older political parties. The object was “the prompt reconstruction of society in accordance with the highest moral possibilities.” Success appearing somewhat remote, and being anxious for more immediate results, they allowed themselves to be led astray by ideas borrowed from the Marxian and anarchist doctrines of the Continent. But they very soon renounced the revolutionary spirit, which has so little in common with the English temperament; and in order to emphasise the difference between themselves and the advocates of brute force and the believers in a sensational historical crisis[1230] they adopted the name Fabian, which is derived from Fabius Cunctator, the famous adversary of Hannibal. The school has always been very critical both of itself and of others, somewhat afraid of public ridicule, but possessing none of the enthusiasm of apostles. Always ready to banter one another,[1231] to destroy their ancient idols, and to dispense with every social or definitely political creed, the Fabians rapidly became transformed into a society of students and propagandists whose interests are exclusively intellectual, and who believe that “in the natural philosophy of socialism light is a more important factor than heat.”[1232]
Such an attitude is hardly conducive to success in a socialist crusade, but the Fabians have left a deep impression—not so much upon working men, perhaps, as upon members of the bourgeois or middle class. Several of their members are persons of great literary distinction, such as Mr. Bernard Shaw, the dramatist and critic, Mr. and Mrs. Webb, the historians of Industrial Democracy, and Mr. H. G. Wells, the novelist. By throwing themselves into the study of social conditions of different kinds, by collaborating in the publication of reviews and newspapers without distinction of party, by publishing pamphlets and calling conferences, they have managed to stimulate interest in their ideas. A résumé of these ideas is given in a curious collection of articles entitled the Fabian Essays, published in 1889. These essays represent the opinions of the more prominent Fabians rather than of the Fabian Society, for the society as such has only a practical policy, but no theoretical doctrine which it holds in common. It calls itself socialist,[1233] and would welcome the transformation of individual into collective property. On the other hand, it declares that it has “no distinctive opinions on the marriage question, religion, art, abstract economics, historic evolution, currency, or any other subject than its own special business of practical democracy and socialism.”[1234] The economic theories which immediately interest us here are peculiar to certain members of the society. The society as a whole was doubtless inspired by these ideas, but they have not all received official recognition at its hands, and they are not even accepted by some adherents of the school.[1235]
It is Sidney Webb more especially who has essayed the task of finding a new theoretical basis for Fabian collectivism. Having rejected the Marxian theory of labour-value, and conscious of the charm possessed by the modern theories of Jevons, of Marshall, and the Austrians, he felt the need of some new justification for the collective ownership of the means of production. Unable to free himself from the fascination which Ricardo has always exercised over his fellow-countrymen, he turns to the theory of rent of that great economist, and that theory, in his opinion, is “the very corner-stone of collectivist economy.”[1236]
It is perfectly obvious that this theory of rent affords ample justification for the appropriation of the revenue of land by proving that this revenue is purely supplementary, produced as it is only on the best lands and not on the worst, where the worker only produces the exact equivalent of his wages. There is nothing very new in this, however.
Equally valid is its justification of confiscated interest. Different kinds of capital, different machines, implements, and buildings, all of which are employed for purposes of production, show the same variety of quality, and consequently produce different quantities of material goods, just as different lands do. The employee who works with “marginal capital,” if we may so put it, or, in other words, has to make shift with the minimum of tools and machinery, without which no work at all would be possible, barely produces the equivalent of his wages. Everything that exceeds this minimum may be claimed by the capitalist as payment for the superior yield of the capital which he has supplied. Interest, accordingly, is a differential revenue—a rent which ought to be expressed as a definite quantity of produce, for such it really is, and not as so much per cent.[1237]
Finally, any who possess superior ability as compared with those who work not merely with a minimum of capital and labour, but with a minimum of intelligence and ability, produce a surplus, which they generally retain for themselves. This surplus is of the nature of a differential rent—the rent of ability. Generally it is the result of the better education received by the children of proprietors and capitalists, and it is thus the indirect outcome of private property.[1238]
This ingenious argument is not very convincing. Even though we admit that interest and possibly the greater portion of wages may only be differential revenues, their confiscation would require special justification. The attributes of capital, unlike those of land as defined in the Ricardian theory, are not natural, but have been conferred upon it by the efforts of human beings. And as to the rent of ability, it still remains to be seen whether society would benefit by the confiscation of this rent. As a scientific explanation of distribution it does not seem to us a particularly attractive one. The distribution of incomes is effected by means of exchange and depends upon prices, but Webb makes an abstraction of prices in order to concentrate upon the material product. We do not deny the existence of rent derived from fixed capital, such rent being approximately measured by comparison with the current rate of interest. But after the labours of Böhm-Bawerk and Fisher it would seem impossible to explain this rate itself by reference to the material productivity of capital, which seems to be the essence of Webb’s theory.