Economics Volume II: Modern Economic Problems

by Frank A. Fetter

§ 14. #Socialism in action.# Active socialism is group action in economic affairs. This may be by private voluntary groups, as a club, church, or trade union, or by a public group, or political unit of government, which has therefore a compulsory character. The radical kind of active socialism would be the ownership by government of all the means of production and the conduct of all business, assigning men, by authority, to particular work and granting them such incomes as the established authority thought they deserved. This kind exists nowhere. A moderate kind of active socialism is represented by each separate case of public ownership or industry. Even public regulation by authority, of the many kinds described in this volume, is touched with a quality of active socialism. In this sense there can be more or less of active socialism in a community; a state may be more or less socialized in its economic aspects. An English Chancellor of the Exchequer declared in the last decade of the nineteenth century, "We are all socialists now." The ever-increasing sphere of the state[16] gives to that statement to-day a larger, fuller meaning than when it was uttered.

Socialism in action is of course always the expression of a more or less socialistic philosophy shared by a majority of the people. This great recent movement of socialization in industry is the expression not of a radical but of a moderate social philosophy. It does not look to the abolition, but only to the modification and limitation in some directions, of private property and of competitive industry. The spirit of this movement is opportunist, or experimental. It is ready to try public action, but recognizes that it has difficulties and limitations. The ultra-radical and the ultra-conservative alike declare that these measures "logically" lead on to the complete destruction of private property. But men find that they can warm their hands without being "logically" compelled to thrust them into the fire, and that they can quench their thirst without a growing resolution to drink the well dry. When this governmental activity has proceeded somewhat extensively and systematically in cities, as in Great Britain, it is called municipal socialism; and in states, as in Germany, it is called state socialism.

§ 15. #Origin of the radical socialist party.# Socialism in the partizan sense is an actual political organization. Both in Europe and in America such organizations have been designated as "social-democratic," "socialist labor," or "labor" parties. Socialism in this sense of a party organization, or movement, is very different from a social philosophy. In its partizan phase socialism exhibits all of the baffling variability and elusiveness that it does in its other aspects. However, in its printed program the socialist party sets forth both a socialist philosophy and an ideal of active socialism in their most radical forms.

Modern political socialism traces its origin directly to the most radical of German social philosophers, Marx, Engels, and Lassalle. Karl Marx (1818-1883), preeminently the philosophic leader of the movement, sought to give a solider foundation of reason to the somewhat romantic socialist philosophy current in his day. His own doctrine, first set forth connectedly[17] in the Communist Manifesto in 1848, he called Communism. This has come to be called by his followers, "scientific socialism." "Scientific" was meant to emphasize the contrast with "Utopian" socialism, as Marx and Engels somewhat scornfully characterized the older communist philosophy, romances of the ideal state, and attempts to found and conduct small communistic states.

§ 16. #The two pillars of "scientific" socialism.# Scientific communism was to be based upon two immovable pillars. The one was "the labor theory of value," by which all profits and incomes from investment were shown to be robbery of the wage-workers.[18] "Capital," that is, the ownership of the means of production, was declared to be the instrument of this "exploitation." The other foundation stone was "the materialistic philosophy of history," that is, the explanation of all the intellectual, cultural, and political changes of mankind from the side of the material economic conditions as causes. As Engels expressed it, "The pervading thought … that the economic production with the social organization of each historical epoch necessarily resulting therefrom forms the basis of the political and intellectual history of this epoch." This doctrine denies that, in an equally valid sense, biological changes in brain, and cultural changes in science, arts, and education, cause the mechanical inventions and improved processes and thus alter the form bf economic production.

§ 17. #Aspects of the materialistic philosophy of history#. Marx's general formula of economic materialism had three minor propositions or corollaries: (a) The doctrine of the class conflict; all history is a record of the class struggle between those who have property, the ruling classes within the nations, and those who have not, the oppressed working class, (a conception of history blind to most of the great international conflicts). The class conflict was declared to be more sharply marked and bitter than ever before; "the entire human society more and more divides itself into two great hostile camps, into two great conflicting classes, bourgeoisie and proletariate." (b) The doctrine of increasing misery; the conditions before described must cause the steadily increasing degradation of the masses. (c) The catastrophic theory; the final and inevitable result of this movement must be a revolution, when the downtrodden workers will throw off their chains and expropriate the expropriators. There is no doubt that Marx, when he first formulated this philosophy, believed that such a revolution, most violent in nature, would occur within a few years.

§ 18. #Utopian nature of "scientific" socialism#. The term "scientific" set in contrast with "utopian" was meant to imply that the doctrine of Marx was not "utopian" (a word which had come to mean fanciful and impracticable). Marx had a contempt for the romances of the ideal state and for what he deemed to be the unfounded speculations of earlier prophets of communism. But utopian (from utopia, Greek for no place) means nonexistent, and Marxian socialism surely was that. "Experimental" or "actually at work" would have been a more logical contrast with "utopian." Marx and his followers likewise had a contempt for the communistic experiments, or settlements and colonies, which by the scores had been started and had failed, bringing discredit upon all communistic proposals. The beauty of "scientific" socialism was that it never could be tried on a small scale—or tried at all until a whole nation adopted it.

The old time "scientific" socialist had a lofty scorn for any less dogmatic philosophy than his own or for any less sweeping social change than that he expected. Moderate social reform to him was but temporizing; indeed, it was evil, inasmuch as it helped to postpone the inevitable, but in the end, beneficent catastrophe of the social revolution. A step-by-step movement toward socialism, state socialism,[19] even of a pretty sweeping character, was, to the old-time Marxians, not really socialism at all. A valid reason for this attitude was found in the extremely limited manhood suffrage and in the aristocratic class government of most European countries, especially of Germany; so that, as the party socialists saw it, multiplying state enterprises but increased the power of the ruling, and eventually of the militarist, class. The social-democratic leaders felt that until they themselves were in power, the growth of "state socialism" would be a calamity for the nation. The events of 1914 may make our judgment tolerant toward their feeling.

§ 19. #Its unreal and negative character.# The so-called "scientific" socialism had, therefore, a peculiarly unscientific spirit; for, in a modern sense, science implies a patient search for truth, not a sudden revelation; a constant testing of opinions by observation and experiment, not a dogmatic conviction that refuses the test of reality. "Scientific" socialists talked much (and still talk much) of the "evolution" of social institutions; but they refused to admit the essential condition for institutional evolution, the competitive trial on a small scale, of a new form of economic organization to prove its fitness to survive. Indeed, it had been tried on a small scale many times, and had always failed in a brief time.

Lincoln said that a man's legs ought to be long enough to reach to the ground; but "scientific" socialism was not built on that plan. To be sure it contained many elements of truth, but these were so distorted that the result was a caricature of history, of philosophy, of economics, and of prophecy. The most important influence of radical socialism has been exerted through negative criticism. It has performed the function of a party in opposition, relentlessly hunting out and pointing out the defects of existing institutions, arousing the smugly contented, and, by its very recklessness and bitterness, inspiring at times a wholesome fear of more revolutionary evils. This has been a real service to the cause of moderate and constructive reform.