Contemporary Socialism

by John Rae

The favourite theory on which the German State socialists proceed seems to be that men are entitled to an equalization of opportunities, to an immunity, as far as human power can secure it, from the interposition of chance and change. That at least is the view of Professor Adolph Wagner, whose position on the subject is of considerable consequence, because he is the economist-in-ordinary to the German Government, and has been Prince Bismarck's principal adviser in connection with all his recent social legislation. Professor Wagner may be taken as the most eminent and most authoritative exponent of the theory of State socialism, and he recently developed his views on the subject afresh in some articles in the Tübingen Zeitschrift für die Gesammten Staatswissenschaften for 1887, on "Finanz-politik und Staatsozialismus." According to Wagner, the chief aim of the State at present—in taxation and in every other form of its activity—ought to be to alter the national distribution of wealth to the advantage of the working class. All politics must become social politics; the State must turn workman's friend. For we have arrived at a new historical period; and just as the feudal period gave way to the absolutist period, and the absolutist period to the constitutional, so now the constitutional period is merging in what ought to be called the social period, because social ideas are very properly coming more and more to influence and control everything, alike in the region of production, in the region of distribution, and in the region of consumption. Now, according to Wagner, the business of the State socialist is simply to facilitate the development of this change—to work out the transition from the constitutional to the social epoch in the best, wisest, and most wholesome way for all parties concerned. He rejects the so-called "scientific socialism" of Marx and Rodbertus and Lassalle, and the practical policy of the social democratic agitation; and he will not believe either that a false theory like theirs can obtain a lasting influence, or that a party that builds itself on such a theory can ever become a real power. But, at the same time, he cannot set down the socialistic theory as a mere philosophical speculation, or the socialistic movement as merely an artificial product of agitation. The evils of both lie in the actual situation of things; they are products—necessary products, he says—of our modern social development; and they will never be effectually quieted till that development is put on more salutary lines. They have a soul of truth in them, and that soul of truth in the doctrines and demands of radical socialism is what State socialism seeks to disengage, to formulate, to realize. It is quite true, for example, that the present distribution of wealth, with its startling inequalities of accumulation and want, is historically the effect, first, of class legislation and class administration of law; and second, of mere blind chance operating on a legal régime of private property and industrial freedom, and a state of the arts which gave the large scale of production decided technical advantages. In one of his former writings, Professor Wagner contended that German peasants lived to this day in mean thatched huts, simply because their ancestors had been impoverished by feudal exactions and ruined by wars which they had no voice in declaring; and he seems to be now as profoundly impressed with the belief that the present liberty allowed to unscrupulous speculators to utilize the chances and opportunities of trade at the cost of others is producing evils in no way less serious, which ought to be checked effectively while there is yet time. So long as such tendencies are left at work, he says it is idle trying to treat socialism with any cunning admixture of cakes and blows, or charging State socialists with heating the oven of social democracy. State socialists, he continues, comprehend the disease which Radical socialists only feel wildly and call down fire to cure, and they are as much opposed to the purely working-class State of the latter, as they are to the purely constitutional State of our modern Liberalismus vulgaris, as Wagner calls it.

The true Social State lies, in his opinion, between the two. What the new social era demands—the era which is already, he thinks, well in course of development, but which it is the business of State socialism to help Providence to develop aright—is the effective participation of poor and rich alike in the civilization which the increased productive resources of society afford the means of enjoying; and this is to be brought about in two ways: first, by a systematic education of the whole people according to a well-planned ideal of culture, and second, by a better distribution of the income of society among the masses. Now, to carry out these requirements, the idea of liberty proper to the constitutional era must naturally be finally discarded, and a very large hand must be allowed to the public authority in every department of human activity, whether relating to the production, distribution, or consumption of wealth. In the first place, in order to destroy the effect of chance and of the utilization of chances in creating the present accumulations in private hands, it is necessary to divert into the public treasury as far as possible the whole of that part of the national income which goes now, in the form of rent, interest, or profit, into the pockets of the owners of land and capital, and the conductors of business enterprises. Wagner would accordingly nationalize (or municipalize) gradually so much of the land, capital, and industrial undertakings of the country as could be efficiently managed as public property or public enterprises, and that would include all undertakings which tend to become monopolies even in private hands, or which, being conducted best on the large scale, are already managed under a form of organization which, in his opinion, has most of the faults and most of the merits of State management—viz., the form of joint-stock companies. He would in this way throw on the Government all the great means of communication and transport, railways and canals, telegraphs and post, and all banking and insurance; and on the municipalities all such things as the gas, light, and water supply. Although he recognises the suitability of Government management as a consideration to be weighed in nationalizing an industry, he states explicitly that the reason for the change he proposes is not in the least the fiscal or economic one that the industry can be more advantageously conducted by the Government, but is a theory of social politics which requires that the whole economic work of the people ought to be more and more converted from the form of private into the form of public organization, so that every working man might be a public servant and enjoy the same assured existence that other public servants at present possess.

In the next place, since many industries must remain in private hands, the State is bound to see the existence of the labourers engaged in private works guaranteed as securely as those engaged in public works. It must take steps to provide them with both an absolute and a relative increase of wages by instituting a compulsory system of paying wages as a percentage of the gross produce; it must guarantee them a certain continuity of employment; must limit the hours of their labour to the length prescribed by the present state of the arts in the several trades; and supply a system of public insurance against accidents, sickness, infirmity, and age, together with a provision for widows and orphans.

In the third place, all public works are to be managed on the socialistic principle of supplying manual labourers with commodities at a cheaper rate than their social superiors. They are to have advantages in the matters of gas and water supply, railway fares, school fees, and everything else that is provided by the public authority.

In the fourth place, taxation is to be employed directly to mitigate the inequalities of wealth resulting from the present commercial system, and to save and even increase the labourer's income at the expense of the income of other classes. This is to be done by the progressive income-tax, and by the application of the product of indirect taxation on certain articles of working-class consumption to special working-class ends. For example, he thinks Prince Bismarck's proposed tobacco monopoly might be made "the patrimony of the disinherited."

In the fifth place, the State ought to take measures to wean the people not only from noxious forms of expenditure, like the expenditure on strong drink, but from useless and wasteful expenditure, and to guide them into a more economic, far-going, and beneficial employment of the earnings they make.

Now for all this work, involving as it does so large an amount of interference with the natural liberty of things, Wagner not unreasonably thinks that a strong Government is absolutely indispensable—a Government that knows its own mind, and has the power and the will to carry it out; a Government whose authority is established on the history and opinion of the nation, and stands high above all the contending political factions of the hour. And in Germany, such an executive can only be found in the present Empire, which is merely following "Frederician and Josephine traditions" in coming forward, as it did in the Imperial message of November, 1881, as a genuine "social monarchy."

In this doctrine of Professor Wagner we find the same general features we have already seen in the doctrine of Rodbertus. It is true he would not nationalize all industries whatsoever; he would only nationalize such industries as the State is really fit to manage successfully. He admits that uneconomic management can never contribute to the public good, and so far he accepts a very sound principle of limitation. But then he applies the principle with too great laxity. He has an excessive idea of the State's capacities. He thinks that every business now conducted by a joint-stock company could be just as well conducted by the Government, and ought therefore to be nationalized; but experience shows—railway experience, for example—that joint-stock management, when it is good, is better than Government management at its best. Then Professor Wagner thinks every industry which has a natural tendency to become in any case a practical monopoly would be better in the hands of the Government; but Government might interfere enough to restrain the mischiefs of monopoly—as it does in the case of railways in this country, for example—without incurring the liabilities of complete management. Professor Wagner would in these ways throw a great deal of work on Government which Government is not very fit to accomplish successfully, and he would like to throw everything on it, if he could overcome his scruples about its capabilities, because he thinks industrial nationalization would facilitate the realization of his particular views of the equitable distribution of wealth. It is true, again, that Wagner's theory of equitable distribution is not the theory of Rodbertus—he rejects the right of labour to the whole product; but his theory, if less definite, is not less unjustifiable. It is virtually the theory of equality of conditions which considers all inequalities of fortune wrong, because they are held to come either from chance, or—what is worse—from an unjust utilization of chance, and which, on that account, takes comparative poverty to constitute of itself a righteous claim for compensation as against comparative wealth. Now, a state of enforced equality of conditions would probably be found neither possible nor desirable, but it is in its very conception unjust. It may be well, as far as it can be done, to check refined methods of deceit, or cruel utilizations of an advantageous position, but it can never be right to deprive energy, talent, and character of the natural reward and incentive of their exertions. The world would soon be poor if it discouraged the skill of the skilful, as it would soon cease to be virtuous if it ostracized those who were pre-eminently honest or just. The idea of equality has been a great factor in human progress, but it requires no such outcome as this. Equality is but the respect we owe to human dignity, and that very respect for human dignity demands security for the fruits of industry to the successful, and security against the loss of the spirit of personal independence in the mass of the people. But while that is so, there is one broad requirement of that same fundamental respect for human dignity which must be admitted to be wholly just and reasonable—the requirement which we have seen to have been recognised by the English economists—that the citizens be, as far as possible, secured, if necessary by public compulsion and public money, in the elementary conditions of all humane living. The State might not be right if it gave the aged a comfortable superannuation allowance, or the unemployed agreeable work at good wages; but it is only doing its duty when, with the English law, it gives them enough to keep them, without taking away from the one the motives for making a voluntary provision against age, or from the other the spur to look out for work for themselves.

It will be said that this is a standard that is subject to a certain variability; that a house may be considered unfit for habitation now that our fathers would have been fain to occupy; that shoes seem an indispensable element of humane living now, though, as Adam Smith informs us, they were still only an optional decency in some parts of Scotland in his time. But differences of this nature lead to no practical difficulty, and the standard is fixity of measure itself when compared with the indefinite claims that may be made in the name of historical compensation, or wild theories of distributive justice, and it makes a wholesome appeal to recognised obligations of humanity instead of feeding a violent sense of unbounded hereditary wrong. At all events, it presents the true equality—equality of moral rights—over against the false equality of State socialism—equality of material conditions; and it is able to present a better face against that system, because it recognises a certain measure of material conditions among the original moral rights. For this reason the English theory of social politics is the best practical criterion for discriminating between socialistic legislation and wholesome social reforms. The State socialistic position cannot be advantageously attacked from the ground of Mr. Spencer and the adherents of laissez-faire, who merely say, Let misfortune and poverty alone; whether remediable or irremediable, they are not the State's affairs. The two theories nowhere come within range; but the English theory meets State socialism at every point, almost hand to hand, for it admits the State's competency to deal with poverty and misfortune, and to alter men's material conditions to the extent needed for the practical realization of their full moral rights.

III. State Socialism and Social Reform.