The Failure of Past Socialistic Experiments
When we are discussing on a priori hypotheses the practical operation of the elemental motives of average men and women, it is wise to learn what experience has to teach us. There have been at least seventy attempts to carry secular Socialism into effect, of which five only survived their fourth year of life. There was the new Harmony Community of Equality, financed and founded in America in 1825 by Robert Owen. One of its articles of constitution provided that “every member shall render his or her services for the good of the whole.” It was a disastrous failure. Owen had supplied lands, houses and the use of capital, giving to some persons leases of large tracts of land for 2,000 years at a nominal rent and for moral considerations only. Addressing the settlers in 1827, he said: “I find that the habits of the individualistic system are so powerful that these leases have been, with few exceptions, applied for individual purposes and individual gain.” There was also the Brook Farm Phalanx, established in 1842, with which Emerson was associated; the Wisconsin Phalanx, established in 1844, and the North American Phalanx, a few years later.
The leading facts and the history of these Socialistic adventures ought to be read in Mr. W. H. Mallock’s the Limits of Pure Democracy, Book IV, chap. 2, p. 201, where they are set out with much acute criticism. The last of these great experiments was in 1893, when William Lane established his “New Australia” in Paraguay. In Lane’s constitution the workers were controlled and directed by officials of their own choosing. The colony came to sad grief and ultimately decided by vote that every man should be entitled to dispose of the fruits of his own industry. A new grant of land was made by the Government to a large number of the original colonists; they retrieved their failure and became, under the stimulus of each working for himself, successful farmers. The causes of the unhappy end of those great adventures are summed up thus by Mr. Mallock (p. 216):—“To speak broadly they may be reduced to two, one of them inhering in the nature of all collective industry, the other inhering in the nature of human beings with the sole exception of small and essentially select minorities. The first of these causes was a want of ability in industrial direction. The second was a want of any general sentiment sufficiently strong and persistent to ensure that directions, if given, should be accepted with submission on the one hand and carried out with a diligence punctual and sustained on the other, under a social system the essential object of which was to render the conditions of the worst worker equal to the conditions of the best.”
Limits within which Nationalization is Practicable
Labour, of course, will say that these small experiments have no bearing on the question of the nationalization and control of great industries. To some extent they are right. There are, however, certain definite limits to successful nationalization. An industry which is confined to rendering services is a totally different thing to an industry whose business it is to produce commodities. There is nothing like the same severe restrictions on efficiency in the former case as in the latter. The services may indeed be of such a character that they can only be efficiently carried out under the State or under a municipality If the service is one the successful provision of which depends upon a monopoly being preserved, there may be a case for nationalization; as illustrative of this, one may take the case of the Post Office. Again, a comprehensive service may be necessary, in parts of the country where it has to be provided at a loss, in other parts where it can be provided at a profit-the loss in the former case being made good out of the profit in the latter. Under such conditions nationalization may be the only possible procedure. Sometimes continental analogies for nationalization are adduced, but the continental temperament and tradition have been entirely different from those prevailing in this country. There was never in Latin countries the same spirit of private enterprise as with us; in the former, public opinion relied on the State to provide all services in the nature of public utilities. Where there has been an opportunity of comparing the efficiency of services provided by the State with those provided by private enterprise, the comparison is always against the State. One has only to read German v. British Railways, by Edwin A. Pratt (P. S. King & Son, 1907), Historical Sketch of State Railway Ownership, by Sir William Acworth, K.C.I.E. (John Murray, 1920), to realize some of the drawbacks of nationalization. The Socialist in this country invariably falls back upon the Post Office as a convincing case of the success of State management, but the business community will hardly be prepared to accept the Post Office as a conclusive argument of the efficiency of nationalization.
The Different Schemes of Land Nationalization
What the Labour Party means by “public ownership” of land is not clear. The term “nationalization” is equally vague. In reference to land, it is commonly used to mean some form of “communization,” that is to say, acquisition and ownership either by the whole community or a section of the community. The former is true nationalization, i.e. ownership by the nation; the latter is “municipalization,” i.e. ownership by a local authority. Municipalization of land has, however, rather disappeared as a proposition.
All land nationalizers assume that ownership embraces two fundamental rights. (1) The right to draw a revenue from the use of the land, i.e. to receive the rent. (2) The right to control the way in which the land shall be used. They describe these two rights as the “right to rent,” and the “right of control” respectively. Where land is held in fee-simple the right to rent and the right of control are usually vested in one and the same person, namely the owner. Where, however, the relation of landlord and tenant has been created by a contract of tenancy, the right to rent, when it exists, is usually vested in the landlord. The right of control is vested partly in the landlord and partly in the tenant. The landlord’s powers, partial or otherwise according to circumstances, of controlling the uses to which the tenant may put the land, depend upon the contract of tenancy.
Schemes of land nationalization fall into one of three classes according to their effect on the right to rent and the right of control. First, where the whole revenue of the land is ultimately to go to the State, but possession and the right of control of the land is to remain as it is under private ownership. There, transference of land revenues to the State is to be effected by growing national taxation of land values. This is the scheme of the school of land nationalizers who follow Mr. Henry George, and are mainly represented by the English League for the Taxation of Land Values. It is fully explained in Mr. George’s book, Progress and Poverty, and will be called the “George scheme” or “taxing-out scheme,” Second, where the right of control of the land is to be taken from private owners and vested in the State by State purchase, but the owners are to suffer no substantial loss of revenue. They are to receive Government Bonds of such capital value as will produce an annual interest equal to the net rent of the land in question. This is the plan of the Land Nationalization Society, of which the late Dr. Alfred R. Wallace, F.R.S., O.M., was the Chairman. It will be called the “Nationalization Society’s scheme” or the “state purchase scheme.” Third, where the present owners are to be expropriated, and deprived of the right to rent, and the right of control, and so lose all or a very considerable portion of their income so far as derived from land. Socialists other than the State Socialists who subscribe to the programme of the Land Nationalization Society advocate this policy. Some of them would allow the owners compensation, but nothing like sufficient to maintain their present income. For example, the National Guildists would pay trifling compensation in State Bonds equal in nominal value to the capitalized value of an annuity for two to three years of the same annual amount as the net rent. The Syndicalists, on the other hand, would confiscate the entire private property in land without any compensation whatsoever. These various schemes described under “third” will be called the “socialistic schemes.”