Contemporary Socialism

by John Rae

Such is the social doctrine of Adam Smith, and it is manifestly no doctrine of rigid individualism, calling out for freedom at any price, or banning all interference with the natural play of self-interest and competition. The natural liberty for which the great English economist contended was not the mere ghost of liberty worshipped by Mr. Spencer. An ignorant man might be free, as an imprisoned man was free, within limits, but he was not free within normal human limits. He had not the use of his mind; he was wanting in an essential part of his manhood. First make him a man—a whole, complete, competent man, fit for man's vocation—then make him free. There is a common metaphysical distinction between the formal freedom of the will and the material freedom of the will. The drunkard, the lunatic, is formally free, for he exerts his choice, but he is materially enslaved. The difference between liberty according to Mr. Spencer and liberty according to Adam Smith is something analogous. The liberty Smith desires is a substantial liberty; it is clothed with a body—a definite body of universal human rights—which the State is bound to realize as it would realize liberty itself. The reason of his difference from the laissez-faire theory of Mr. Spencer, which is so often erroneously attributed to him, is that he takes a much broader and more practical view of the original moral rights of individuals than such ultra-individualists are accustomed to do. While they hold that the State is there only to secure to individuals reality and equality of freedom, he holds it is there to secure them reality and equality of all moral rights. He would supply all alike, therefore, with certain material securities—the material conditions necessary to secure their moral rights with equal completeness,—and he would protect them in the enjoyment of those conditions against the assaults of poverty and misfortune no less than the assaults of murderers and thieves. But beyond this line he would refuse to go; if he stands clearly out in advance of the laissez-faire position of equality of legal freedom, he stands equally clearly far short of the socialistic position of equality of material conditions.

Now this doctrine of the great founder of English political economy has been substantially the doctrine of his successors as well. It would be beyond my present scope to trace the history of the doctrine of social politics through the writings of the whole succession of English economists, nor is it necessary. I shall choose a representative economist from the group who are generally reckoned the most narrow and unsympathetic, who are accused of having shifted political economy off the broader lines on which it had been launched by Smith, who are counted the great idolaters of self-interest and natural law, and the scientific associates of the much-abused Manchester school—viz., the disciples of Ricardo. Ricardo himself touches only incidentally on the functions of the State, but he then does so to defend interventions, such as minting money, marking plate, testing drugs, examining medical candidates, and the like, which are meant to guard people against deceptions they are themselves incompetent to detect. Moreover, he was a strong advocate for at least one important extension of the State's industrial rôle—he would establish a National Bank of issue with exclusive privileges; and it is not uninteresting to remember that in his place in Parliament he brought forward the suggestion of a system of Government annuities for the accommodation of working men, which was introduced by Mr. Gladstone half a century later, and has been denounced in certain quarters as that statesman's first step in socialism, and that he was one of a very small minority who voted for a Parliamentary inquiry into the social system of Robert Owen.

But if Ricardo is comparatively silent on the subject, we fortunately possess a very ample discussion of it by one of his leading disciples, J. E. McCulloch. When Ricardo died, James Mill wrote to McCulloch, "As you and I are his two and only genuine disciples, his memory must be a point of connection between us;" and it was on McCulloch that the mantle of the master descended. His "Principles of Political Economy," which may be said to be an exposition of the system of economics according to Ricardo, was for many years the principal textbook of the science, and will still be admitted to be the best and most complete statement of what, in the cant of the present day, is called orthodox political economy. McCulloch, indeed, is more than merely the expositor of that system; he is really one of its founders, the author of one of its most famous dogmas, at least in its current form, the now exploded doctrine of the Wages fund; and of all the adherents of this orthodox tradition, McCulloch is commonly considered the hardest and most narrow. There are economists who are supposed to show a native generous warmth which all the severities of their science are unable to quell. John Stuart Mill is known to have come under St. Simonian influences in his younger days, and to have been fond ever afterwards of calling himself a socialist; and Professor Sidgwick, in our own day, is often credited—and not unjustly—with a like breadth of heart, and in publishing his views of Government interference, he gives them the name of "Economic Socialism." But in selecting McCulloch, I select an economist the rigour of whose principles has never been suspected, and yet so striking is the uniformity of the English tradition on this subject, that in reality neither Mill nor Mr. Sidgwick professes a broader doctrine of social politics, or goes a step further, or more heartily on the road to socialism than that accredited champion of individualism, John Ramsay McCulloch.

McCulloch's "Principles" contains—from the second edition in 1830 onward to the last author's edition in 1849—a special chapter on the limits of Government interference; and the chapter starts with an explicit repudiation of the doctrine of laissez-faire, which was then apparently only beginning to come into vogue in England.

"An idea," says McCulloch, "seems however to have been recently gaining ground that the duty of the Government with regard to the domestic policy of the country is almost entirely of a negative kind, and that it has merely to maintain the security of property and the freedom of industry. But its duty is by no means so simple and easily defined as those who support this opinion would have us to believe. It is certainly true that its interference with the pursuits of individuals has been, in very many instances, exerted in a wrong direction, and carried to a ruinous excess. Still, however, it is easy to see that we should fall into a very great error if we supposed that it might be entirely dispensed with. Freedom is not, as some appear to think, the end of government; the advancement of the public prosperity and happiness is its end; and freedom is valuable in so far only as it contributes to bring it about. In laying it down, for example, that individuals should be permitted, without let or hindrance, to engage in any business or profession they may prefer, the condition that it is not injurious to others is always understood. No one doubts the propriety of a Government interfering to suppress what is or might otherwise become a public nuisance; nor does any one doubt that it may advantageously interfere to give facilities to commerce by negotiating treaties with foreign powers, and by removing such obstacles as cannot be removed by individuals. But the interference of Government cannot be limited to cases of this sort. However disinclined, it is obliged to interfere in an infinite variety of ways and for an infinite variety of purposes. It must, to notice only one or two of the classes of objects requiring its interference, decide as to the species of contract to which it will lend its sanction, and the means to be adopted to enforce true performance; it must decide in regard to the distribution of the property of those who die intestate, and the effect to be given to the directions in wills and testaments; and it must frequently engage itself, or authorize individuals or associations to engage, in various sorts of undertakings deeply affecting the rights and interests of others and of society. The furnishing of elementary instruction in the ordinary branches of education for all classes of persons and the establishment of a compulsory provision for the support of the destitute poor are generally also included, and apparently with the greatest propriety, among the duties incumbent on administration" (p. 262).

He allows State ownership and State management of industrial works, wherever State ownership and management are more efficient for the purpose than private enterprise—in other words, where they are more economical—as in the cases of the coinage, roads, harbours, postal communication, etc. He would expropriate land for railway purposes, grant a monopoly to the railway company, and then subject it to Government control in the public interest; he would impose many sorts of restrictions on freedom of contract, freedom of industry, freedom of trade, freedom of property, and freedom of bequest; and, what is more important, he recognises clearly that with the growth of society fresh interferences of a serious character will be constantly called for, which may in some cases involve the application of entirely new principles, or throw on the Government work of an entirely new character.

For example, he is profoundly impressed with the dangers of the manufacturing system, which he saw growing and multiplying all around him, and so far from dreaming that the course of industry should remain uncontrolled, he even ventures, in a remarkable passage, to express the doubt whether it may not "in the end be found that it was unwise to allow the manufacturing system to gain so great an ascendancy as it has done in this country, and that measures should have been early adopted to check and moderate its growth" (p. 191). He admits that a decisive answer to this question could only be given by the economists of a future generation, after a longer experience of the system than was possible when he wrote, but he cannot conceal the gravest apprehension at the preponderance which manufactures were rapidly gaining in our industrial economy. And his reasons are worthy of attention. The first is the destruction of the old moral ties that knit masters and men together.

"But we doubt whether any country, how wealthy soever, should be looked upon as in a healthy, sound state, where the leading interest consists of a small number of great capitalists, and of vast numbers of workpeople in their employment, but unconnected with them by any ties of gratitude, sympathy, or affection. This estrangement is occasioned by the great scale on which labour is now carried on in most businesses; and by the consequent impossibility of the masters becoming acquainted, even if they desired it, with the great bulk of their workpeople.... The kindlier feelings have no share in an intercourse of this sort; speaking generally, everything is regulated on both sides by the narrowest and most selfish views and considerations; a man and a machine being treated with about the same sympathy and regard" (p. 193).

The second reason is the suppression of the facilities of advancement enjoyed by labourers under the previous régime. "Owing to the greater scale on which employments are now mostly carried on, workmen have less chance than formerly of advancing themselves or their families to any higher situation, or of exchanging the character of labourers for that of masters" (p. 188). For the majority of the working-class to be thus, as he expresses it, "condemned as it were to perpetual helotism," is not conducive to the health of a nation. The third reason is the comparative instability of manufacturing business. It becomes a matter of the most serious concern for a State, "when a very large proportion of the population has been, through their agency, rendered dependent on foreign demand, and on the caprices and mutations of fashion" (p. 192). That also is a state of things fraught with danger to the health of a community. McCulloch always treats political economy as if he defined it—and the definition would be better than his own—as the science of the working of industrial society in health and disease; and he always throws on the State a considerable responsibility in the business of social hygiene; going so far, we have seen in the passages just quoted, as to suggest whether a legal check ought not to have been imposed on the free growth of the factory system, on account of its bad effects on the economic position of the labouring class. We had suffered the system to advance too far to impose that check now, but there were other measures which, in his opinion, the Legislature might judiciously take in the same interest. It is of course impossible, by Act of Parliament, to infuse higher views of duty or warmer feelings of ordinary human regard into the relations between manufacturers and their workmen; but the State might, according to McCulloch, do something to mitigate the modern plague of commercial crises, by a policy of free trade, by adopting a sound monetary system, by securing a continuance of peace, and by "such a scheme of public charity as might fully relieve the distresses without insulting the feelings or lessening the industry of the labouring classes" (p. 192).

As with commercial crises, so with other features of the modern industrial system; wherever they tend to the deterioration of the labouring class, McCulloch always holds the State bound to intervene, if it can, to prevent such a result. He would stop the immigration of what is sometimes called pauper labour—of bodies of workpeople brought up in an inferior standard of life—because their example and their competition tend to pull down the native population to their own level. The example he chooses is not the Jewish element in the East End of London, but the much more important case of the Irish immigration into Liverpool and Glasgow; and while he would prefer to see Government taking steps to improve the Irish people in Ireland itself, he declares that, if that is not practicable, then "justice to our own people requires that measures should be adopted to hinder Great Britain from being overrun with the outpourings of this officina pauperum, to hinder Ireland from dragging us down to the same hopeless abyss of pauperism and wretchedness in which she is sunk" (p. 422). This policy may be wise, or it may not, but it shows very plainly—what appears so often in his writings—how deeply McCulloch's mind was penetrated with the conviction that one of the greatest of all the dangers from which the State ought to do what it well can to preserve the people, was the danger of falling to a lower standard of tastes and requirements, and thereby losing ambition and industry, and the very possibility of rising again.