The Case for the SUPERIORITY Of the SOCIALIST BLUEPRINT

Thus our criterion of superiority or inferiority after all covers more ground than it seems to. But if we stand by it, what is that strong case for the superiority of the socialist blueprint of which I spoke before? The reader who has perused the analysis in Chapter VIII may well wonder.

Most of the arguments usually advanced in support of the socialist and against the capitalist regi2me, as we have seen, fail as soon as proper account is taken of the conditions created for business by a rapid rate of progress. Some of those arguments, on closer inspection, even turn out to cut the other way. Much of what is being considered pathological is seen to be physiological—to fulfill important functions in the process of creative destruction. Many wastes carry compensations that sometimes completely, in other cases partly, invalidate the inference. Socially irrational allocation of resources is not nearly as frequent or important as it is made out to be. In some cases, moreover, it is no less likely to occur in a socialist economy. Excess capacity, also partly inevitable in a socialist economy, will often bear an interpretation which rebuts criticism. And even unrelieved blemishes are after all but incidents of an achievement that is great enough to cover a multitude of sins.

9 It should however be noted that an income consisting exclusively of returns on investments is no indication of the economic idleness of its receiver, because his work may be embodied in his investments. The classroom illustration of this will serve as well as a longer argument could: suppose a man reclaims a piece of land by the work of his hands; the return he will thereafter receive is a “return on an appliance made by man” or, as economists call it, a quasi-rent.

If the improvement is permanent, it will become undistinguishable from the rent of land proper and hence look like the very incarnation of unearned income whereas in reality it is a form of wages if we define wages as returns attributable to personal productive exertions. Generalizing, we may say that effort may be undergone in order to secure revenues which may, but need not, take the form of wages.

The answer so our question follows from the last paragraph of the preceding chapter. It might be of doubtful validity as long as capitalist evolution is in full swing but it will be decisive as soon as it permanently slackens down, whether from reasons inherent in or external to its economic mechanism. There are cases in which capitalist industries are so circumstanced that prices and output become theoretically indeterminate. They may occur, though they do not always occur, whenever there is oligopoly. In a socialist economy everything—limiting cases without practical importance alone excepted—is uniquely determined. But even when there exists a theoretically determined state it is much more difficult and expensive to reach in the capitalist economy than it would be in the socialist economy. In the former endless moves and counter moves are necessary and decisions have to be taken in an atmosphere of uncertainty that blunts the edge of action, whereas that strategy and that uncertainty would be absent from the latter. That this applies not only to “monopolistic” capitalism but, though for other reasons, still more to the competitive species is shown by the hogcycle case 10 and by the behavior of more or less perfectly competitive industries in general depressions or in vicissitudes of their own.

But this means more than it seems to mean at first sight. Those determinate solutions of the problems of production are rational or optimal from the standpoint of given data, and anything that shortens, smoothens or safeguards the road that leads to them is bound to save human energy and material resources, and to reduce the costs at which a given result is attained. Unless the resources thus saved are completely wasted, efficiency in our sense must necessarily increase.

Under this heading some of the sweeping indictments of the capitalist system which have been glanced at above acquire a qualified justification. As an instance, take excess capacity. It is not true that it would be entirely absent in socialism; it would be absurd for the central board to insist on full utilization of a new railroad through as yet unsettled country. Nor is it true that excess capacity spells loss in all cases. But there are types of excess capacity which do spell loss and can be avoided by a socialist management, the chief case being that of reserve capacity for the purpose of economic warfare.

Whatever the importance of the particular case—I do not think it is very considerable—it shows up a point to which I have already adverted: there are things which within the conditions of capitalist evolution are, or may be, perfectly rational and even necessary and therefore need not, ex visu of the capitalist order, constitute blemishes at all; nor need they constitute weaknesses of “monopolistic” as against competitive capitalism if they are associated, as conditions, with achievements of the former that are out of the reach of the latter; but even if that be so they may yet constitute weaknesses as against the socialist blueprint.

This is particularly true of most of the phenomena that make up the mechanism of trade cycles. Capitalist enterprise does not lack regulators, some of which may well be met with again in the practice of the ministry of production. But the planning of progress, in particular the systematic coordination and orderly distribution in time of new ventures in all lines, would be incomparably more effective in preventing bursts at some times and depressive reactions at others than any automatic or manipulative variations of the rate of interest or the supply of credit can be.

In fact, it would eliminate the cause of the cyclical ups and downs whereas in the capitalist order it is only possible to mitigate them. And the process of discarding the obsolete that in capitalism—especially in competitive capitalism—means temporary paralysis and losses that are in part functionless, could be reduced to what “discarding the obsolete” actually conveys to the layman’s mind within a comprehensive plan providing in advance for the shifting to other uses of the non-obsolete complements of the obsolete plants or pieces of equipment. Concretely: a crisis centering in the cotton industry may in the capitalist order put a stop to residential construction; in the socialist order it may of course also happen that the production of cotton goods has to be drastically curtailed at short notice, though it is not so likely to happen; but this would be a reason to speed up residential construction instead of stopping it.

Whatever the economic goals desired by whoever is in the position to give effect to his desires, socialist management could attain them with less disturbance and loss without necessarily incurring the disadvantages that would attend attempts at planning progress within the framework of capitalist institutions. One aspect of this might be expressed by saying that the socialist management could steer a course approximating the long-run trend of output, thus developing a tendency which as we have seen is not foreign to big-business policy. And the whole of our argument might be put in a nutshell by saying that socialization means a stride beyond big business on the way that has been chalked out by it or, what amounts to the same thing, that socialist management may conceivably prove as superior to big-business capitalism as big-business capitalism has proved to be to the kind of competitive capitalism of which the English industry of a hundred years ago was the prototype. It is quite possible that future generations will look upon arguments about the inferiority of the socialist plan as we look upon Adam Smith’s arguments about joint-stock companies which, also, were not simply false.