Socialists are, of course, quite determined that either the vested interests of all persons dependent on small unearned incomes and unable otherwise to earn their living shall be protected, or that they shall be equally well provided for by other means. No practical Socialist has ever proposed, during this transitional period, to interfere in any way either with savings bank accounts or with life insurance policies on a reasonable scale, or with widows and orphans who are using incomes from very small pieces of property for identical purposes.
As to the compensation of the wealthier classes, this becomes entirely a secondary question, a matter of pure expediency. The great British scientist and Socialist, Alfred Russell Wallace, and the moderate Socialist, Professor Anton Menger of Vienna, propose almost identical plans of compromise with the wealthy classes,—compromises which would perhaps result in a saving to a Socialist government and might therefore be advisable, aside from any sentimental question of protecting or abolishing vested "rights." Professor Wallace, objects to "continuing any payments of interests beyond the lives of the present receivers and their direct heirs [now living], who may have been brought up to expect such inheritance." For if we were to compensate any others, Wallace points out that we would be "actually robbing the present generation to the enrichment and supposed advantage of certain unborn individuals, who in most instances, as we now know, are much more likely to be injured than benefited."[293] Professor Menger proposes that, in exchange for property taken by the government from owners of large fortunes, there should be allotted to them, and their descendants now living, a modest annuity "sufficient to satisfy their legitimate needs," as being more reasonable than Wallace's plan of such an income as they were "brought up to expect."[294] But in the long run the difference between the two methods would be immaterial—and the one chosen would doubtless depend on the social or anti-social attitude assumed by the wealthy. In either case there would be no unearned incomes in any generation not yet born. On the other hand, it is perfectly possible that a Socialist Party which had seized the reins of political power might, through motives of caution and self-protection, use greater severity against those of the capitalists whom they thought had played an unfair part in the welfare against the installation of the new government. It is scarcely to be doubted, for instance, that those capitalists who tried to embroil us in foreign wars in order to prevent the establishment of social democracy would probably be exiled and their property confiscated. Certainly these measures would be employed against all such persons as had counseled or participated in the suspension of civil government or other violent measures.
But where will the money come from even for the payment of such limited compensation as the Socialists decide upon? Assuming that the stocks and bonds of the railways and other large businesses were paid for at the cost of reproduction, or, let us say, at 50 per cent their present market value, a vast amount would still be required. The Socialist answer to this question is very brightly given by America's most popular and influential Socialist organ, the Appeal to Reason. It reminds us that the Socialists, once having the reins of political power, will then be the possessors of all the credit of the government.
"How much money," asks the Appeal, "did Morgan need in order to buy up all the independent steel companies for the steel trust?" And it answers: "Not a penny. Rather than needing money, he issued stock in the new concern in payment for the old independent mills, and after all was done proceeded to almost double his stock! In other words, instead of needing money, he acquired a vast sum in the transaction. One who is familiar with the way the railroads have been built and the vast fortunes erected understands that there was almost no investment. It all came through a series of tricks. Those tricks, as honest in the reversal as when the capitalist played them, can be reversed. Hardly a corporation but has forfeited its charter. With the charter cancelled stocks would tumble and the water would speedily go. Socialists are not fools that they should merely fall into the hands of men who think that they can unload on them in such a manner as to saddle a perpetual debt on the people. If the steel trust, after organizing and buying up smaller concerns, could still issue vast series of stocks and bonds, why could not the Socialists issue all the money they needed to accomplish the same things? And would not the money based on lands and mills be as good security as the money we now have based on nothing under the sun but inflated railroad and trust stocks [securities]?"
Undoubtedly some such method will be followed—with those essential industries that will not already have become collective property under capitalism.
In so far as "State Socialism" or collectivist capitalism will have paved the way, by extensive government ownership, the problem of confiscation or compensation becomes much simplified. Kautsky has very ably summarized the prevailing Socialist plan for dealing with it at this point:—
"As soon as all capitalist wealth had taken the form of (government) bonds, it would be possible to raise a progressive income, property and inheritance tax, to a height which until then was impossible.
"It is one of our demands at the present time that such a tax shall be substituted for all others, especially for the indirect tax.
"But even if we had to-day the power to carry through such a measure with the support of the other parties, which is plainly impossible, because no bourgeois party would go so far, we would at once find ourselves in the presence of great difficulties.
"It is a well-known fact that the higher the tax the greater the efforts at tax dodging.
"But when a condition exists where any concealment of income and property is impossible, even then we would not be in a position to force the income and property tax as high as we wish, because the capitalists, if the tax on their income or property pressed them too closely, would simply leave the State.
"Above a certain measure such taxes cannot rise to-day even if we had the political power.
"The situation is completely changed, however, when capitalist property takes the form of public debts.
"The property to-day that is so hard to find then lies in broad day-light.
"It would then only be necessary to declare that all bonds must be public, and it would be known exactly what was the value of every property and every capitalist income.
"The tax would then be raised as high as desired without the possibility of tax frauds.
"It would then also be impossible to escape taxation by emigration, for the tax could simply be taken from the interest before it was paid out. [A similar tax exists in France to-day.]
"If necessary it might be put so high as to be equivalent, or nearly so, to a confiscation of the great properties.
"It might be well to ask what is the advantage of this round-about way of confiscation over that of taking the direct road?
"The difference between the two methods is not so trifling as at first appears.
"Direct confiscation of all capitalists would strike all, the small and the great, those utterly useless to labor, in the same manner.
"It is difficult, often impossible, in this method to separate the large possession from the small, when these are united in the form of money capital in the same undertaking.
"Direct confiscation would complete this quickly, often at one stroke, while confiscation through taxation permits the disappearance of capitalists' property through a long-drawn-out process, proceeding in the exact degree in which the new order is established and its benevolent influence made perceptible.
"Confiscation in this way loses its harshness and becomes more acceptable and less painful.
"The more peaceable the conquest of political power by the proletariat, and the more firmly organized and enlightened it is, the more we can expect that the primitive forms of confiscation will be softened." (My italics.)[295]
Nor are any of the more influential Socialists anxious to make a clean sweep of private enterprise in industry. It is only the more important and fundamental industries, those which underlie all the processes of manufacturing, or furnish the sheer necessities of the people, that must necessarily be directly controlled by a Socialist society. "It may be granted," says Kautsky, "that small establishments will have a definite position in the future in many branches of industry that produce directly for human consumption, for machines manufacture essentially only products in bulk, while many purchasers desire that their personal taste shall be considered. It is easily possible that under a proletarian régime the number of small businesses may increase as the well-being of the masses increases." Of such industries Kautsky says that they can produce for private customers or even for the open market. As to-day, he insists, so also in the future, it will be open to the working people to employ themselves either in public or private industry.
"A seamstress, for example," he says, "can occupy herself for a time in a national factory, and at another time make dresses for private customers at home, then again she can sew for another customer in her own house, and finally she may, with a few comrades, unite in a coöperative for the manufacture of clothing for sale.
"The most manifold forms of property in the means of production—national, municipal, coöperatives of consumption and production and private industry can exist beside each other in a Socialist society—the most diverse forms of industrial organization, bureaucratic, trades union, coöperative and individual; the most diverse forms of remunerative labor, fixed wages, time wages, piece wages, profit sharing in the economies in raw material, machinery, etc., profit sharing in the results of intensive labor; the most diverse forms of distribution of products, like contract by purchase from the warehouses of the State, from municipalities, from coöperatives of production, from producers themselves, etc., etc. The same manifold character of economic mechanism that exists to-day is possible in a Socialistic society. Only the hunting and the hunted, the struggling and the resisting, the annihilating and being annihilated of the present competitive struggle are excluded, and therewith the contrast between exploiter and exploited." (Italics mine.)[296]