Socialism as it is

by William English Walling

No doubt Mr. Churchill's failure to mention shippers was inadvertent.

It was a practical application of these business principles and chiefly in the interest of the employers, manufacturers, investors, and shippers, that the State decided, as a first step, to take 20 per cent of all the increase in land values from the present date and to levy an annual tax of one fifth of one per cent on all land held for speculation, i.e. used neither for agricultural nor for industrial nor building purposes.

The collectivist policy, that governments should undertake to reorganize industry and to develop the industrial efficiency of the population, is a relatively new one, however, and where non-Socialist Liberals and Radicals are adopting it, they do so as a rule with apologies. For while such reforms can be considered as investments which in the long run repay not only the community as a whole, but also the business interests, they involve a considerable initial cost, even beyond what can be raised by the gradual expropriation of city land rents, and the question at once arises as to who is to pay the rest of the bill. The supporter of the new reforms answers that the business interests should do so, since the development of industry, which is the object of this expenditure, is more profitable to them than to other classes. While Mr. Churchill declares that Liberalism attacks landlordism and monopoly only, and not capital itself, as Socialism does, he is at great pains to show that the cost of the elaborate program of social reform is borne not by monopolist alone, but by that larger section of the business interests vaguely known as those possessing "Special Privileges." In distributing the new taxes in the House of Commons, the question to be asked of each class of wealth is, he says, "By what process was it got?" and a distinction is to be made, not between monopoly and competitive business, but "between wealth which is the fruit of productive enterprise and industry or of individual skill, and wealth which represents the capture by individuals of socially created values."[17]

"A special burden," says Mr. Churchill, "is to be laid upon certain forms of wealth which are clearly social in their origin and have not at any point been derived from a useful or productive process on the part of their possessors."[18] And since all income "derived from dividends, rent, or interest," is, according to Mr. Churchill, unearned increment, it is evident that nearly every business, all being beneficiaries, ought to share the burden of the new reforms.[19] At the same time he hastens to reassure his wealthy supporters, especially among merchants and shippers, on grounds explained below by Mr. Lloyd George that the new taxes will not rise faster than the new profits they will bring in, that they "will not appreciably affect, have not appreciably affected, the comfort, the status, or even the style of living of any class in the United Kingdom."[20]

Mr. Lloyd George in proposing the so-called Socialistic Budget of 1910 reminded the representatives of the propertied interests [he might have added "in proportion to their wealth">[ that the State, in which they all owned a share, should not be looked upon so narrowly as a capitalistic enterprise. They could afford to allow the State to wait longer for its returns.

"A State can and ought to take a longer and a wider view of its investments," said Mr. Lloyd George, "than individuals. The resettlement of deserted and impoverished parts of its own territories may not bring to its coffers a direct return which would reimburse it fully for its expenditure; but the indirect enrichment of its resources more than compensate it for any apparent and immediate loss. The individual can rarely afford to wait; a State can; the individual must judge of the success of his enterprise by the testimony given for it by his bank book; a State keeps many ledgers, not all in ink, and when we wish to judge of the advantage derived by a country from a costly experiment, we must examine all those books before we venture to pronounce judgment....

"We want to do more in the way of developing the resources of our own country....

"The State can help by instruction, by experiment, by organization, by direction, and even, in certain cases which are outside the legitimate sphere of individual enterprise, by incurring direct responsibility. I doubt whether there is a great industrial country in the world which spends less money on work directly connected with the development of its resources than we do. Take, if you like, and purely as an illustration, one industry alone,—agriculture,—of all industries the most important for the permanent well-being of any land. Examine the budgets of foreign lands,—we have the advantage in other directions,—but examine and compare them with our own, and Honorable Members will be rather ashamed at the contrasts between the wise and lavish generosity of countries much poorer than ours and the short-sighted and niggardly parsimony with which we dole out small sums of money for the encouragement of agriculture in our country....

"We are not getting out of the land anything like what it is capable of endowing us with. Of the enormous quantity of agricultural and dairy produce, and fruit, and the timber imported into this country, a considerable portion could be raised on our own lands."[21]

The proposed industrial advance is to be secured largely at the expense of capital, but for its ultimate profit. The capitalists are to pay the initial cost. Mr. Lloyd George is very careful to remind them that even if the present income tax were doubled, five years of the phenomenal yet steady growth of the income of the rich and well-to-do who pay this tax, would leave them as well off as they were before. He proposes to leave the total capital in private hands intact on the pretext that it is needed as "an available reserve for national emergencies." And as an evidence of this he refused to increase the existing rate of inheritance tax levied against the very largest estates (15 per cent on estates of more than £3,000,000). Though up to this point he graduated this tax more steeply than before, and nothing could be more widely popular than a special attack on such colossal estates, Mr. Lloyd George draws the line at 15 per cent, on the ground that a large part of the income from such estates goes into investments, and more confiscatory legislation might seriously affect the normal increase of the capital and "the available reserves of taxation" of the country.[22]

Mr. Lloyd George does not fail to guarantee to capital as a whole, "honest capital," that it will suffer no loss from his reforms. "I am not one of those who advocate confiscation," he said several years ago, "and at any rate as far as I am concerned honest capital, capital put in honest industries for the development of the industry, the trade, the commerce, of this country will have nothing to fear from any proposal I shall ever be responsible for submitting to the Parliament of this realm." (My italics.)[23]

Mr. Lloyd George is well justified, then, in ridiculing the idea that he is waging war against industry or property or trying to destroy riches. He not only disproves this accusation by pointing to the capitalist character of his collectivist program, but boasts that the richest men in the House of Commons are on the Liberal side, together with hundreds of thousands of the men who are building up trade and business.

And the attitude of the Radicals of the present British government is the same as that of capitalist collectivists elsewhere. However certain vested interests may suffer, there is nowhere any tendency to weaken capitalism as a whole. Capitalism is to be the chief beneficiary of the new movement.