Contemporary Socialism

by John Rae

But while England has lagged behind other nations in this particular class of Government intervention, there is another class in which she has undoubtedly run far before them all. If we have not been multiplying State industries, we have been very active in extending and establishing popular rights, by means of new laws, new administrative regulations, or new systems of industrial police. In fact, the greater part of our recent social legislation has been of this order, and it is of that legislation M. de Laveleye is thinking when he says England is taking the lead of the nations in the career of State socialism. But that is nothing new; if we are in advance of other nations in establishing popular rights to-day, we have been in advance of them in that work for centuries already. That peculiarity also has its roots in our national history and character, and is no upstart fashion of the hour. Now, without raising the question whether the rights which our recent social legislation has seen fit to establish, are in all cases and respects rights that ought to have been established, it is sufficient for our present purpose to observe that at least this is obviously a very different class of intervention from the last, because if it does not belong to, it is certainly closely allied with, those primary duties which are everywhere included among the necessary functions of all government, the protection of the citizen from force and fraud. To protect a right, you must first establish it; you must first recognise it, define its scope, and invest it with the sanction of authority. With the progress of society fresh perils emerge and fresh protections must be devised; the old legal right needs to be reconstructed to meet the new situation, or a new right must be created hitherto unknown perhaps, unless by analogy, to the law. But even here the novelty lies, not in the principle—for all right is a protection of the weak, or ought to be so—but in the situation alone; in the rise of the factory system, which called for the Factory Acts; in the growth of large towns, which called for Health and Dwellings Acts; in the extension of joint-stock companies, which called for the Limited Liability Acts; in the monopoly of railway transportation, which called for the regulation of rates; or in the spread of scientific agriculture, which required the constitution of a new sort of property, the property of a tenant-farmer in his own unexhausted improvements.

This peculiarity of the industrial and social legislation of England has not escaped the acute intelligence of Mr. Goschen. Mistrustful as he is of Government intervention, Mr. Goschen observes with satisfaction that the great majority of recent Government interventions in England have been undertaken for moral rather than economic ends. After quoting Mr. Thorold Rogers' remark, that these interventions generally had the good economic aim of preventing the waste of national resources, he says: "But I believe that certainly in the case of the Factory Acts, and to a great extent in the case of the Education Acts, it was a moral rather than an economic influence—the conscientious feeling of what was right rather than the intellectual feeling of ultimate material gain—it was the public imagination touched by obligations of our higher nature—which supplied the tremendous motive-power for passing laws which put the State and its inspectors in the place of father or mother as guardians of a child's education, labour, and health." ("Addresses," p. 62.)

The State interfered not because the child had a certain capital value as an instrument of future production which it would be imprudent to lose, but because the child had certain rights—certain broad moral claims—as a human being which the parents' natural authority must not be suffered to violate or endanger, and which the State, as the supreme protector of all rights, really lay under a simple moral obligation to secure. Reforms of this character are naturally inspired by moral influences, by sentiments of justice or of humanity, by a feeling that wrong is being done to a class of the community who are placed in a situation of comparative weakness, inasmuch as they are deprived—whether through the force of circumstances or the selfish neglect of their superiors—of what public opinion recognises to be essential conditions of normal human existence. Now, most of the legislation which has led Mr. Goschen to declare that universal State action is now enthroned in England has belonged to this order. It has been guided by ethical and not by economic considerations. It has been employed mainly in readjusting rights, in establishing fresh securities for just dealing and humane living; but it has been very chary of following Continental countries in nationalizing industries. When therefore Mr. Spencer tells M. de Laveleye that the reason why England is extending the functions of her Government so much more than other nations "is obviously because there is great scope for the further extension of them here, while abroad there is little scope for the further extension of them," his explanation is singularly inappropriate. England has not been extending the functions of Government all round, but she has moved in the direction where she had less scope to move, and has stood still in the direction where she had more scope to move than other countries. And it is important to keep this distinction in mind when we hear it so often stated in too general terms that we have discarded our old belief in individual liberty and set up "universal State action" in its place.

But those who complain of England having broken off from her old moorings, not only exaggerate her leanings to authority in the present, but they also ignore her concessions to authority in the past. English statesmen and economists have never entertained the rigid aversion to Government interference that is vulgarly attributed to them, but with all their profound belief in individual liberty they have always reserved for the Government a concurrent sphere of social and economic activity—what may even be designated a specific social and economic mission. A few words may be usefully devoted to this English doctrine of social politics here, not merely because they may serve to dispel a prevailing error, but because they will furnish a good vantage-ground for seizing and judging of a principle of government which is to-day in every mouth, but unfortunately bears in every mouth a different meaning—the principle of State socialism.

It is commonly believed that the English doctrine of social politics is the doctrine of laissez-faire, and our economists are continually reviled as if they sought to leave the world to the play of self-interest and competition, unchecked by any ideas of social justice or individual human right. But in truth the doctrine of laissez-faire has never been held by any English thinker, unless, perhaps, Mr. Herbert Spencer. Mr. Spencer's first work, "Social Statics," was an exposition of the theory that the end of all government was the liberty of the individual, the realization for every citizen of the greatest amount of liberty it was possible for him to enjoy without interfering with the corresponding claims of his fellow-citizens. The individual had only one right—the right to equal freedom with everybody else, and the State had only one duty—the duty of protecting that right against violence and fraud. It could not stir beyond that task without treading on the right of some one, and therefore it ought not to stir at all. It had nothing to do with health, or religion, or morals, or education, or relief of distress, or public convenience of any sort, except to leave them sternly alone. It must, of course, renounce the thought of bounties and protective duties, but it must also give up marking plate, minting coin, and stamping butter; it must take no part in building harbours or lighthouses or roads or canals; and even a town council cannot without offence undertake to pave or clean or light the streets under its jurisdiction. It is only fair to say that Mr. Spencer refuses to be bound now by every detail of his youthful theory, but he has repeated the substance of it in his recent work, "The Man versus The State," which is written to prove that the only thing we want from the State is protection, and that the protection we want most of late is protection against our protector.

This theory is certainly about as extreme a development of individualism as could well be entertained; and though it has been even distanced in one or two points by Wilhelm von Humboldt—who objected, for example, to marriage laws[7]—no important English writer has ventured near it. The description of the State's business as the business of protecting the citizens from force and fraud, has indeed been familiar in our literature since the days of Locke, and isolated passages may be cited from the works of various political thinkers, which, if taken by themselves, would seem to deny to the State any right to act except for purposes of self-protection. John Stuart Mill himself speaks sometimes in that way, although we know, from the chapter he devotes to the subject of Government interference in his "Principles of Political Economy," that he really assigned to the State much wider functions. When we examine the writings of English economists and statesmen, and the principles they employ in the discussion of the social and industrial questions of their time, it seems truly strange how they ever came to be credited with any scruple on ground of principle to invoke the power of the State for the solution of such questions when that seemed to them likely to prove of effectual assistance.

The social doctrine which has prevailed in England for the last century is "the simple and obvious system of natural liberty" taught by Adam Smith; but the simple and obvious system of natural liberty is a very different thing from the system of laissez-faire with which it is so commonly confounded. Its main principle, it is true, is this: "Every man," says Smith, "as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man or order of men. The Sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient: the duty of superintending the industry of private people and of directing it towards the employments most suitable to the interests of the society." ("Wealth of Nations," book iv., chap. ix.) But while the Sovereign is discharged from an industrial duty which he is incapable of performing satisfactorily, he is far from being discharged from all industrial responsibility whatsoever, for Smith immediately proceeds to map out the limits of his functions as follows: "According to the system of natural liberty, the Sovereign has only three duties to attend to—three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from the violence or invasion of other independent societies; second, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and thirdly, the duty of erecting and maintaining certain works and certain public institutions which it can never be for the interest of any individual or small number of individuals to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society."

The State is required to protect us from other evils besides the evils of force and fraud—infectious diseases, for example, are in the context mentioned expressly—and to supply us with many other advantages besides the advantage of protection. Some of these advantages are of a material or economic order, and others of an intellectual or moral. The material advantages consist for the most part of provisions for facilitating the general commerce of the country—such things as roads, canals, harbours, the post, the mint—or provisions for facilitating particular branches of commerce; and among these he instances the incorporation of joint-stock companies endowed by charter with exclusive trading privileges; and the reason which, according to Smith, entitles the State to intervene in this class of cases, and which at the same time prescribes the length to which its intervention may legitimately go, is that individuals are unable to do the work satisfactorily themselves, or that the State has from its nature superior qualifications for the task. The intellectual or moral advantages which Smith asks from the State are mostly provisions for sustaining the national manhood and character, such as a system of compulsory military training or a system of compulsory—and if not gratuitous, still cheap—education; and it is important to mark that he asks for these measures, not on the ground of their political or military expediency, but on the broad ground that cowardice and ignorance are in themselves public evils, from which the State is as much bound, if it can, to save the people, as it is bound to save them from violence or fraud. Of military training he observes: "To prevent that sort of mental mutilation, deformity, and wretchedness which cowardice necessarily involves in it from spreading themselves through the great body of the people, would deserve the serious attention of Government, in the same manner as it would deserve its most serious attention to prevent a leprosy or any other loathsome and offensive disease, though neither mortal nor dangerous, from spreading itself among them, though perhaps no other public good might result from such attention besides the prevention of so great a public evil." ("Wealth of Nations," book v., chap. i.) And he proceeds to speak of education: "The same thing may be said of the gross ignorance and stupidity which in a civilized society seems so frequently to benumb the understanding of all the inferior ranks of people. A man without the proper use of the intellectual faculties of a man is, if possible, more contemptible than even a coward, and seems to be mutilated and deformed in a still more essential part of the character of human nature. Though the State was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed." Compulsory military training and a system of national education would no doubt be conducive to the stricter ends of all government; the one would strengthen the defences of the nation against foreign enemies and the other would tend to the diminution of crime at home; but Smith, it will be seen, explicitly refuses to take that ground. The State's duty in the case would be the same, though no such results were to follow, for the State has other duties to perform besides the maintenance of peace and the repression of crime. It would probably be admitted, he thinks, that it was as incumbent on the State to take steps to arrest the progress of a "mortal and dangerous" disease as it was to stop a foreign invasion; but he goes further, and contends that it was equally incumbent on the State to arrest the progress of a merely "loathsome and offensive" disease, for the simple reason that such a disease was a mutilation or deformity of our physical manhood. And just as the State ought to prevent the mutilation and deformity of our physical manhood, so the State ought to prevent the mutilation and deformity of our moral and intellectual manhood, and was bound accordingly to provide a system of military training and a system of popular education, to prevent people growing up ignorant and cowardly, because the ignorant man and the coward were men without the proper use of the faculties of a man, and were mutilated and deformed in essential parts of the character of human nature. At bottom Smith's principle is this—that men have an original claim—a claim as original as the claim to safety of life and property—to all the essential conditions of an unmutilated and undeformed manhood, and that is really only another expression for the principle that lies at the foundation of all civil and human right, that men have a right to the essential conditions of a normal humanity, to the presuppositions of all humane living, to the indispensable securities for the proper realization of our common vocation as human beings. The right to personal liberty—to the power of working for ends of our own prescribing, and the right to property—to the power of retaining what we have made, to be the instrument of further activities for the ends we have prescribed for ourselves—rest really on no other ground than that the privileges claimed are essential conditions of a normal, an unmutilated and undeformed manhood, and it is on this broad ground that Adam Smith justifies the State's intervention to stop disease and supply education.

Smith held but a poor opinion of the capacities of Government management, and especially of English Government management, which, he asserted, was characterized in times of peace by "the slothful and negligent profusion that was natural to monarchies," and in times of war by "all the thoughtless extravagance" that was peculiar to democracies; but nevertheless he had no hesitation in asking Government to undertake a considerable number of industrial enterprises, because he believed that these were enterprises which Government with all its faults was better fitted to conduct successfully than private adventurers were. On the other hand, Smith entertained the highest possible belief in individual liberty, but he had never any scruple about sacrificing liberty of contract where the sacrifice was demanded by the great moral end of Government—the maintenance of just and humane dealing between man and man. For example, the suppression of the truck system, which is sometimes condemned as an undue interference with freedom of contract, was strongly supported by Smith, who declared it to be "quite just and equitable," inasmuch as it merely secured to the workmen the pay they were entitled to receive and "imposed no real hardship on the masters—it only obliged them to pay that value in money which they pretended to pay, but did not really pay, in goods." It was only a just and necessary protection of the weaker party to a contract against an oppressive exaction to which, like the apothecary in "Romeo and Juliet," his poverty might have consented, but not his will. Precisely analogous is Smith's position concerning usury laws. Usury laws are seldom defended now; for one thing, money has become so abundant that the competition of lender with lender may be trusted to as a better security for fair and reasonable treatment of borrowers than a Government enactment could provide. But Smith in his day was strongly in favour of fixing a legal rate of interest, because he thought it was necessary to prevent the practice of extortion by unscrupulous dealers on necessitous clients. His views on truck and usury show that he had no sympathy with those who contend that the State must on no account interfere with grown-up people in the bargains they may make, inasmuch as grown-up people may be expected to be quite capable of looking effectively after their own interest. Smith recognised that grown-up people were often in natural circumstances where it was practically impossible for them to assert effectively not their interests merely, but even their essential claims as fellow-citizens; and that therefore it was the State's duty to come to the aid of those whose own economic position was weak, and to force upon the strong certain responsibilities—or at least secure for the weak certain broad, positive conditions—which just and humane dealing might demand.

Now, in these ideas about truck and usury, as in the proposals previously touched upon for checking the growth of disease or cowardice or ignorance, is not the principle of social politics that is applied by Smith precisely the principle that runs through our whole recent social legislation—factory, sanitary, and educational—the principle of the State's obligation to secure the people in the essential conditions of all normal manhood? German writers often take Smith for an exponent, if not for the founder, of what they call the Rechtstaat theory—the theory that the State is mainly the protector of right; but in reality Smith's doctrine corresponded pretty closely with their own Kultur-und-Wohlfahrtstaat theory—the theory that the State is a promoter of culture and welfare; and if further proof were wanted, it might be found in the fact that in his doctrine of taxation he departs altogether from the economic principle, which is popularly associated with the Rechtstaat idea, and is supposed to be a corollary of it, that a tax is a quid pro quo, a price paid for a service rendered, and ought therefore to be imposed on individuals in proportion to the service they respectively receive from the State; and instead of this economic principle he lays down the broad ethical one, that a tax is a public obligation which individuals ought to be called upon to discharge in proportion to their respective abilities. The rich cannot fairly be said to get more good from the State than the poor; they probably get less, because they are better capable of providing for their own defence; but the rich are able to do more good to the State than the poor, and because they are able, they are bound.