A Critical Examination of Socialism

by W. H. Mallock

We start with assuming—for, as we have seen already, so much is conceded by those who attack interest to-day—that the owners of capital, however their rights may be restricted, still have rights to it of some kind. But a man's rights to his capital will not be rights at all unless they empower him to use it in one way or another as a means of ministering to his own personal desires; and it is possible for him so to use it in one or other of two ways only—either by keeping it in the form of some productive machine or plant, and living on a part of the values which this produces, or by trenching on the substance of the machine or the plant itself in the manner, and with the results, which have just been explained and analysed. If, therefore, capitalists are to be virtually deprived of their interest, either by means of a special tax on "unearned incomes" or otherwise, but are yet permitted to enjoy their capital somehow, no course is open to them but to employ for their private pleasures the men by whom this capital, in such forms as machines or railroads, is at present maintained, renewed, and kept from lapsing into a state in which it would be unable to do or to produce anything. And if any one still thinks that, by such a course of conduct, if ever it became general, as it would do under these conditions, the owners of capital would be injuring themselves alone, he need only reflect a little longer on one of our suggested illustrations, and ask himself whether the gradual deterioration of railroads would have no effect on the world beyond that of impoverishing the shareholders. It would obviously affect the many as much as it affected the few, and the kind of catastrophe that would result from the deterioration of railroads is typical of that which would result from the deterioration of capital generally.

It would, then, be a sufficient answer to those who attack interest, and propose to transfer it from its present recipients to the state, to elucidate, as has here been done, the two following points: firstly, that to interest as a means of enjoying wealth—the right to such enjoyment itself not being here disputed—the only alternative is a system which would thus prove fatal to everybody; and, further, that, conversely, the enjoyment of wealth through interest not only possesses this negative advantage, but is actively implicated in, and is the natural corollary of, that progressive accumulation of force in the form of productive machinery to which all the augmented wealth of the modern world is due. By the identification of the enjoyment of capital with the enjoyment of some portion of the products of it, the good of the individual capitalist is identified with the good of the community; for it will, in that case, be the object of all capitalists to raise the productivity of all capital to a maximum; while a system which would compel the possessor, if he is to enjoy his capital at all, to do so by diminishing its substance and allowing its powers to dwindle, would identify the only advantage he could possibly get for himself with the impoverishment of everybody else, and ultimately of himself also.

But the crucial facts of the case have not been exhausted yet. There are few phenomena of any complex society which are not traceable to more causes than one, or at least to one cause which presents itself under different aspects. Such is the case with interest. Its origin, its functions, and its justification, in the modern world, must be considered under an aspect, at which hitherto we have only glanced.

Throughout the present discussion we have been assuming that the questions at issue turn ultimately on the character of human motive. On both sides it has been assumed that men of exceptional powers will not produce exceptional amounts of wealth, unless they are allowed the right of enjoying some substantial proportion of it. This is a psychological truth which, together with its social consequences, has been dealt with elaborately in two of our earlier chapters. It was there shown that the production of exceptional wealth by those men whose peculiar powers alone enable them to produce it, involves efforts on their part which, unlike labour, cannot be exacted of them by any outside compulsion, but can only be educed by the prospect of a secured reward; and that this reward consists, as has just been said, of the enjoyment of a part of the product proportionate to the magnitude of the whole. But what the proportion should be, and in what manner it should be enjoyed, were questions which were then passed over. They were passed over in order that they might be discussed separately. It was pointed out, however, that the reward, in order to be operative, must be such as will be felt to be sufficient by these men themselves, and that its precise amount and quality can be determined by them alone—just as, if what we desire is to coax an invalid to eat, we can coax him only with food which he himself finds appetising. Let us now take these questions up again, and examine them more minutely, and we shall find that interest is justified from a practical point of view by the fact that the enjoyment of capital by this particular means is not only the sole manner of enjoying it which is consistent with the general welfare, but also constitutes the advantage which, in the eyes of most great producers, gives to capital the larger part of its value, and renders the desire of producing it efficient as a social motive.

The reasons why the right to interest forms, in the eyes of the active producers of capital, the main object of their activity are to be found, firstly, in the facts of family affection, and, secondarily, in those of general social intercourse, which together form the medium of by far the larger part of our satisfactions. In spite of the selfishness which distinguishes so much of human action, a man's desire to secure for his family such wealth as he can is one of the strongest motives of human activity known; and the fact that it operates in the case of many who are notoriously selfish otherwise, shows how deeply it is ingrained in the human character. One of the first uses to which a man who has produced great wealth puts it is in most cases to build a house more or less proportionate to his means; and it is his pride and pleasure to see his wife and children acclimatise themselves to their new environment. But such a house would lose most of its charm and meaning for him if the fortune which enabled him to live in it were to dwindle with each day's expenditure, and his family after his death were to be turned into the street, beggars. If each individual were a unit whose interests ended with himself; if generations were like stratified rocks, superposed one on another but not interconnected; if—to quote a pithy phrase, I do not know from whom—"if all men were born orphans and died bachelors," then the right to draw income from the products of permanently productive capital would for most men lose much of what now makes it desirable.

But since individuals and generations are not thus separated actually, but are, on the contrary, not merely as a scientific fact, but as a fact which is vivid to every one within the limits of his daily consciousness dovetailed into one another, and could not exist otherwise, a man's own fortune, with the kind of life that is dependent on it, is similarly dovetailed into fortunes of other people, and his present and theirs is dovetailed into a general future.

We have seen how this is the case with regard to his own family; but the matter does not end there. Individual households do not live in isolation; and there are for this fact two closely allied reasons. If they did there could be no marriage; there could also be nothing like social intercourse. It is social intercourse of a more or less extended kind that alone makes possible, not only love and marriage, but most of the pleasures that give colour to life. We see this in all ranks and in all stages of civilisation. Savages meet together in numerous groups to dance, like civilised men and women in New York or in London. The feast, or the meal eaten by a large gathering, is one of the most universal of all human enjoyments. But in all such cases the enjoyment involves one thing—namely, a certain similarity, underlying individual differences, between those persons who take part in it. Intimate social intercourse is, as a rule, possible only between those who are similar in their tastes and ideas with regard to the minute details which for most of us make up the tesseræ of life's daily mosaic—similar in their manners, in their standards of beauty and comfort, in their memories, their prospects, or (to be brief) in what we may call their class habituations. This is true of all men, be their social position what it may. It is true, of course, that the quality of a man's life, as a whole, depends on other things also, of a wider kind than these. It depends not only on the fact, but also on his consciousness of the fact, that he is a citizen of a certain state or country, though with most of its inhabitants he will never exchange a word; or that he is a member of a certain church; or that, being a man and not a monkey, his destiny is identified with that of the human species. But, so far as his enjoyment of private wealth is concerned, each man as a rule, though to this there are individual exceptions, enjoys it mainly through the life of his own de facto class—the people whose manners and habits are more or less similar to his own, because they result from the possession of more or less similar means. He is, therefore, not interested in the permanence of his own wealth only. He is equally interested in the permanence of the wealth of a body of men, the life of which must, like that of all corporations, be continuous.

There is in this fact much more than at first appears. Let us go back to a point insisted on in the previous chapter. It was there shown, in connection with the question of abstract justice, that those who attack interest on the ground that it is essentially income for which its recipients give nothing in return, fall into the error of ignoring the element of time, without reference to which the whole process of life is unintelligible. It was shown, by various examples, that in a large number of cases the efforts which ultimately result in the production of great wealth do not produce it till after, often till long after, the original effort has come altogether to an end. Let us now take this point in connection, not with abstract theories, but with the concrete facts of conduct. Here again those who attack interest fall into the same error. For example, in answer to arguments used by me when speaking in America, one socialistic critic eagerly following another called my attention by name to persons notoriously wealthy, some of whom had never engaged in active business at all, while others had ceased to do so for many years; and demanded of me whether I contended that idlers such as these are doing anything whatever to produce the incomes which they are now enjoying. If they are, said the critics, let this wonderful fact be demonstrated. If they are not, then it must stand to reason that the community will gain, and cannot possibly suffer, by gradually taking the incomes of these persons away from them, and rendering it impossible that incomes of a similar kind shall in the future be ever enjoyed by anybody.

The general nature of the error involved in this class of argument can be shown by a very simple illustration. In many countries the government year by year makes a large sum by state lotteries. This may be a vicious procedure, but let us assume for the moment that it is legitimate, and that everybody is interested in its perpetuation. The largest of the prizes drawn in such lotteries is considerable—often amounting to more than twenty thousand pounds. Now, as soon as the drawing on any one occasion had been accomplished, it might be argued with perfect truth, in respect of that occasion only, that, the man who had won such fortune having done nothing to produce it, the community would be so much richer if the government, having paid the money to him, were to take it all back again by a special tax on winnings. This would be true with respect to that one occasion; but if any government were to follow such a procedure systematically, no one would ever buy a lottery ticket again, and the whole lottery system would thenceforth come to an end.

What is true of wealth won in lotteries is true of wealth in general. If the desire of possessing wealth is in any way a stimulus to the production of it, those who are motived to produce it by this desire to-day are motived by the desire of a something which they see to be desirable and attainable because they see it around them, embodied in the position of others, as the final result of the efforts of a long-past yesterday. If this result were never to be seen realised, no human being would make any effort to achieve it.