Problems of Poverty: An Inquiry into the Industrial Condition of the Poor

by J. A. Hobson

In some cases these public works exist side by side in competition with private enterprise; as, for example, in the carriage of parcels, life insurance, banking, and the various minor branches of post-office work, in medical attendance, and the maintenance of national education, and of places of amusement and recreation. In other cases it claims an absolute monopoly, and shuts off entirely private enterprise, as in the conveyance of letters and telegrams, and the local industries connected with the production and distribution of gas and water. The extent and complexity of that portion of our State and municipal machinery which is engaged in productive work will be understood from the following description--

"Besides our international relations, and the army, navy, police, and the courts of justice, the community now carries on for itself, in some part or another of these islands, the post-office, telegraphs, carriage of small commodities, coinage, surveys the regulation of the currency and note issue, the provision of weights and measures, the making, sweeping, lighting, and repairing of streets, roads, and bridges, life insurance, the grant of annuities, shipbuilding, stockbroking, banking, farming, and money-lending. It provides for many of us from birth to burial--midwifery, nursery, education, board and lodging, vaccination, medical attendance, medicine, public worship, amusements, and interment. It furnishes and maintains its own museums, parks, art galleries, libraries, concert-halls, roads, bridges, markets, slaughterhouses, fire-engines, lighthouses, pilots, ferries, surf-boats, steam-tugs, life-boats, cemeteries, public baths, washhouses, pounds, harbours, piers, wharves, hospitals, dispensaries, gas-works, water-works, tramways, telegraph-cables, allotments, cow-meadows, artisans' dwellings, schools, churches, and reading-rooms. It carries on and publishes its own researches in geology, meteorology, statistics, zoology, geography, and even theology. In our colonies the English Government further allows and encourages the communities to provide for themselves railways, canals, pawnbroking, theatres, forestry, cinchona farms, irrigation, leper villages, casinos, bathing establishments, and immigration, and to deal in ballast, guano, quinine, opium, salt, and what not. Every one of these functions, with those of the army, navy, police, and courts of justice, were at one time left to private enterprise, and were a source of legitimate individual investment of capital."[[37]]

Some of the utilities and conveniences thus supplied by public capital and public labour are old-established wants, but many are new wants, and the marked tendency of public bodies to undertake the provision of the new necessaries and conveniences which grow up with civilization is a phenomenon which deserves close attention.

§ 5. Motives of "Socialistic Legislation."--Stated in general terms, this socialistic tendency may be described as a movement for the control and administration by the public of all works engaged in satisfying common general needs of life, which are liable, if trusted to private enterprise, to become monopolies.

Articles which everybody needs, the consumption or use of which is fairly regular, and where there is danger of insufficient or injurious competition, if the provision be left to private firms, are constantly passing, and will pass more and more quickly, under public control. The work of protection against direct injuries to person and property has in all civilized countries been recognized as a dangerous monoply if left to private enterprise. Hence military, naval, police, and judicial work is first "socialized," and in modern life a large number of subsidiary works for the protection of the life and wealth of the community are added to these first public duties. Roads, bridges, and a large part of the machinery of communication or conveyance are soon found to be capable of abuse if left to private ownership; hence the post and telegraph is generally State-owned, and in most countries the railways. There is for the same reason a strong movement towards the municipal ownership of tramways, gas-and water-works, and all such works as are associated with monopoly of land, and are not open to adequate competition. In England everywhere these works are subject to public control, and the tendency is for this control, which implies part ownership, to develop into full ownership. Nearly half the gas-consumers in this country are already supplied by public works. One hundred and two municipalities own electric plant, forty-five own their tramway systems, one hundred and ninety-three their water supplies, at the close of 1902.

The receipts of local authorities from rates and other sources, including productive undertakings, had increased from seventy millions sterling to one hundred and forty-five millions between 1890-1 and 1901-2. Art galleries, free libraries, schools of technical education, are beginning to spring up on all sides. Municipal lodging-houses are in working at London, Glasgow, and several other large towns.

In every one of these cases, two forces are at work together, the pressure of an urgent public need, and the perception that private enterprise cannot be trusted to satisfy their need on account of the danger of monopoly. How far or how fast this State or municipal limitation of private enterprise and assumption of public enterprise will proceed, it is not possible to predict. Everything depends on the two following considerations--

First, the tendency of present private industries concerned with the supply of common wants of life to develop into dangerous monopolies by the decay of effective competition. If the forces at work in the United States for the establishment of syndicates, trusts, and other forms of monopoly, show themselves equally strong in England, the inevitable result will be an acceleration of State and municipal socialism.

Secondly, the capacity shown by our municipal and other public bodies for the effective management of such commercial enterprises as they are at present engaged in.

Reviewing then the mass of restrictive, regulative, and prohibitive legislation, largely the growth of the last half century, and the application of the State and municipal machinery to various kinds of commercial undertakings in the interest of the community, we find it implies a considerable and growing restriction of the sphere of private enterprise.