Demigods and Archangels

Returning to our bourgeois who talked about demigods and archangels, we can easily dispose of the first; no demigods will be required to direct the socialist engine because, as we have seen before, the task to be solved will— once transitional difficulties have been disposed of—be not only no more difficult but easier than the task that faces a captain of industry in the modern world.

The archangels stand for the well-known proposition that the socialist form of existence presupposes an ethical level that men as they are cannot be expected to reach.

Socialists have themselves to blame if arguments of this type ever carried weight with their opponents. They talked about the horrors of capitalist oppression and exploitation which had only to be removed in order to reveal human nature in all its beauty right away or, at all events, in order to start a process of education that would reform human souls so as to lead up to the ethical level required.2

Thus they laid themselves open not only to the charge of flattering the masses to a ridiculous degree but also to the charge of espousing a Rousseauism which should be sufficiently exploded by now. But it is not at all necessary to do that. A good common-sense case can be made out without it.

For this purpose, let us adopt a distinction that proves useful though psychologists may object to it. First, a given set of propensities to feel and to act may be altered by changes in the social environment while the fundamental pattern underlying it (“human nature”) remains what it is. We will call this Change by Reconditioning. Second, still within that fundamental pattern, reconditioning may impinge on propensities to feel and to act which, though ultimately amenable to change by environmental alterations—particularly if these alterations are carried out rationally—yet resist for a time and create trouble as long as they do. This fact we may associate with the term Habits. Third, the fundamental pattern itself may be changed either within the same stock of human material or by means of eliminating refractory elements of it; human nature is certainly malleable to some extent particularly in groups whose composition may be changed. How far this malleability goes is a question for serious research and not one that can be usefully dealt with in the platform style by reckless assertion or equally reckless denial. But we need not commit ourselves either way, because no such fundamental reform of the human soul would now be necessary in order to make socialism work.

Of this we can easily satisfy ourselves. We can first exclude the agrarian sector which could be expected to offer the most serious difficulties. Our socialism would still be socialism if the socialist management confined itself to a kind of agrarian planning that would only in degree differ from the practice that is already developing. Settling a plan of production; rationalizing location (land use); supplying farmers with machinery, seeds, stock for breeding purposes, fertilizers and so on; fixing prices of products and buying them from farmers at these prices—this is all that would be necessary and yet it would leave the agrarian world and its attitudes substantially intact. There are other possible courses. But what matters to us is that there is one which could be followed with very little friction and could be followed indefinitely without impairing the claim of the society to being called socialist.

Second, there is the world of the laborer and of the clerk. No reform of souls, no painful adaptation would be required of them. Their work would remain substantially what it is—and it would, with an important qualification to be added later, turn out similar attitudes and habits. From his work the laborer or clerk would return to a home and to pursuits which socialist fancy may denote as it pleases—he may, for instance, play proletarian football whereas now he is playing bourgeois football—but which would still be the same kind of home and the same kind of pursuits. No great difficulties need arise in that quarter.

Third, there is the problem of the groups that not unnaturally expect to be the victims of the socialist arrangement—the problem, roughly speaking, of the upper or leading stratum. It cannot be settled according to that hallowed doctrine which has become an article of faith much beyond the socialist camp, viz., the doctrine that this stratum consists of nothing but overfed beasts of prey whose presence in their economic and social positions is explicable only by luck and ruthlessness and who fill no other “function” than to withhold from the working masses—or the consumers, as the case may be—the fruits of their toil; that these beasts of prey, moreover, bungle their own game by incompetence and (to add a more modern touch) produce depressions by their habit of hoarding the greater part of their loot; and that the socialist community need not bother about them beyond seeing to it that they are promptly ousted from those positions and prevented from committing acts of sabotage. Whatever the political and, in the case of the subnormal, the psychotherapeutic virtues of this doctrine, it is not even good socialism. For any civilized socialist will, when on his good behavior and intending to be taken seriously by serious people, admit many facts about the quality and the achievements of the bourgeois stratum which are incompatible with such a doctrine, and go on to argue that its upper ranks are not going to be victimized at all but that, on the contrary, they too are to be freed from the shackles of the system which oppresses them morally no less than it oppresses the masses economically. From this standpoint which agrees with the teaching of Karl Marx, the way is not so very far to the conclusion that a cooperation of the bourgeois elements may make all the difference between success and failure for the socialist order. The problem, then, posits itself like this. Here is a class which, by virtue of the selective process of which it is the result, harbors human material of supernormal quality3 and hence is a national asset which it is rational for any social organization to use. This alone implies more than refraining from exterminating it. Moreover, this class is fulfilling vital functions that will 3 See ch. vi. More precisely, the modal individual in the bourgeois class is superior as to intellectual and volitional aptitudes to the modal individual in any other of the classes of industrial society. This has never been established statistically, and hardly ever can be, but it follows from an analysis of that process of social selection in capitalist society. The nature of the process also determines the sense in which the term superiority is to be understood. By similar analysis of other social environments, it can be shown that the same holds true for all ruling classes about which we have historical information. That is to say, it can be shown in all cases, first, that human molecules rise and fall within the class into which they are born, in a manner which fits the hypothesis that they do so because of their relative aptitudes; and it can also be shown, second, that they rise and fall across the boundary lines of their class in the same manner. This rise and fall into higher and lower classes as a rule takes more than one generation. These molecules are therefore families rather than individuals. And this explains why observers who focus attention on individuals so frequently fail to find any relation between ability and class position and are inclined to go so far as to contrast them. For individuals do start so differently handicapped that, excepting cases of unusual personal achievement, that relation, which moreover refers to a mode only and leaves room for many exceptions, reveals itself much less clearly if we neglect to survey the whole chain of which each individual is a link. These indications do not of course establish my point but only suggest how I should go about establishing it if it were possible to do so within the frame of this book. I may however refer the reader to my “Theorie der sozialen Klassen im ethnisch homogenen Milieu,” Archiv für Sozialwissenichaft, 1927. The Human Element 205 have to be fulfilled also in socialist society. We have seen that it has been and is causally associated with practically all the cultural achievements of the capitalistic epoch and with as much of its economic achievements as is not accounted for by the growth of the laboring population—with all the increase, that is, in what is usually called the productivity of labor (product per man-hour). 4 And this achievement has been in turn causally associated with a system of prizes and penalties of unique efficiency that socialism is bound to abolish. Therefore the question is, on the one hand, whether the bourgeois stock can be harnessed into the service of socialist society and, on the other hand, whether those of the functions discharged by the bourgeoisie which socialism must take away from it can be discharged by other agents or by other than bourgeois methods, or by both. III. T HE P ROBLEM O F B UREAUCRATIC M ANAGEMENT Rational exploitation of the bourgeois stock is doubtless the problem which a socialist regime will find the most difficult of all, and it would take some optimism to aver that it will be successfully solved. This however is due not primarily to the difficulties inherent in it but rather to the difficulty socialists will experience in recognizing its importance and in facing it in a reasonable frame of mind. The doctrine about the nature and the functions of the capitalist class that has been alluded to above is in itself a symptom of a strong aversion to doing so and may be looked upon as a psycho-technic preparation for refusing to do so. Nor is this surprising. Whether a free lance or a party executive or a civil servant, the individual socialist looks upon the advent of socialism, naïvely but naturally, as synonymous with his advent to power. Socialization means to him that “we” are going to take over. Displacement of existing managements is an important, perhaps the most important, part of the show. And I confess that in conversing with militant socialists I have often felt some doubt as to whether some or even most of them would care for a socialist regime, however perfect in other respects, if it were to be run by other people. I must add at once that the attitude of others was irreproachable. 5 In itself, successful solution of the problem requires above all that the bourgeois stock be allowed to do the work it is qualified to do by aptitude and tradition, and hence that a method of selection for managerial positions be adopted which is based upon fitness and does not differentiate against the ex-bourgeois. Such methods are conceivable and some of them may even 4 As pointed out in the first Part, this has been recognized by Marx himself, in a locus classicus of the Communist Manifesto. 5 On this, see the comments on the deliberations of the German Committee on Socialization, ch. xxiii, p. 200. Can Socialism Survive?206 compare favorably with the capitalist method as it works in the era of the big corporation. However, to be allowed to do one’s work involves more than appointment to an appropriate place. When so appointed, one must also be given freedom to act under one’s own responsibility. And this raises the question of that Bureaucratization of Economic Life which constitutes the theme of so many anti-socialist homilies. I for one cannot visualize, in the conditions of modern society, a socialist organization in any form other than that of a huge and all-embracing bureaucratic apparatus. Every other possibility I can conceive would spell failure and breakdown. But surely this should not horrify anyone who realizes how far the bureaucratization of economic life—of life in general even—has gone already and who knows how to cut through the underbrush of phrases that has grown up around the subject. As in the case of “monopoly” these phrases derive much of their hold on our minds from their historical source. In the epoch of rising capitalism the bourgeoisie asserted itself primarily through a struggle with territorial powers represented by, and acting through, a monarchist bureaucracy. And most of what the merchant and the manufacturer felt to be irksome or silly interference associated itself in the collective mind of the capitalist class with this bureaucracy or civil service. Such an association is an extremely durable thing; this particular one proved so durable that even socialists themselves are afraid of the bugbear and often go out of their way to assure us that nothing is further removed from their plans than the idea of a bureaucratic regime. 6 We shall see in the next part that bureaucracy is not an obstacle to democracy but an inevitable complement to it. Similarly it is an inevitable complement to modern economic development and it will be more than ever essential in a socialist commonwealth. But recognition of the inevitability of comprehensive bureaucratization does not solve the problems that arise out of it, and it is just as well to use this opportunity to state what they consist of. The elimination of the profit and loss motive that is often exclusively stressed is not the essential point. Moreover, responsibility in the sense of having to pay for one’s mistakes with one’s own money is passing anyhow (though not as quickly as wishful thinking would have us believe) and the kind of responsibility that exists in the large-scale corporation could no doubt be reproduced in a socialist society (see below). Nor is the method of selecting leading executives which is peculiar to a bureaucracy or civil service necessarily so inefficient as it is often made out to be. Civil service 6 In Russia there is an additional reason for such professions. The bugbear became a scapegoat which all the leaders, but especially Trotsky, knew how to use. Rightly banking on the thoughtlessness of both the domestic and the foreign public, they simply laid at the door of “bureaucracy” anything in Russia that they felt to be short of admirable. The Human Element 207 rules of appointment and promotion are not without an appreciable measure of rationality. Also they sometimes work better in practice than they appear on paper: in particular, the element of the corporate opinion of the service about a given man may, if given adequate weight, do much toward favoring ability—at least ability of a certain type. 7 Much more important is another point. The bureaucratic method of transacting business and the moral atmosphere it spreads doubtless often exert a depressing influence on the most active minds. Mainly, this is due to the difficulty, inherent in the bureaucratic machine, of reconciling individual initiative with the mechanics of its working. Often the machine gives little scope for initiative and much scope for vicious attempts at smothering it. From this a sense of frustration and of futility may result which in turn induces a habit of mind that revels in blighting criticism of the efforts of others. This need not be so; many bureaucracies gain on closer acquaintance with their work. But it is difficult to avoid and there is no simple recipe for doing so. It is not difficult however to insert the stock of bourgeois extraction into its proper place within that machine and to reshape its habits of work. We shall see later that, at least in the case of socialization in the fullness of time, the conditions for moral acceptance of the socialist order of things and for a transfer of loyalties to it are likely to be met, and that there need be no commissars to thwart and to insult. Rational treatment of the ex-bourgeois elements with a view to securing a maximum of performance from them will then not require anything that is not just as necessary in the case of managerial personnel of any other extraction. The question what this rational treatment implies has been so reasonably and so undemagogically answered by some socialist authorities that a very brief survey of the important points will suffice. We had better recognize from the start that exclusive reliance on a purely altruistic sense of duty is as unrealistic as would be a wholesale denial of its importance and its possibilities. Even if full allowance be made for the various elements that are cognate to sense of duty, such as the satisfaction derived from working and directing, some system of rewards at least in the form of social recognition and prestige would presumably prove advantageous. On the one hand, common experience teaches that it is difficult to find a man or woman, however high-minded, whose altruism or sense of duty functions in complete independence of at least that kind of self- interest or, if you prefer, of his or her vanity or desire for self-assertion. On the other hand, it is clear that the attitude which underlies this often pathetically obvious fact is more deeply rooted than the capitalist system and belongs to the logic of life within any social group. 7 See below, ch. xxiv. Can Socialism Survive?208 Hence it cannot be disposed of by phrases about the pest of capitalism that infects souls and distorts their “natural” propensities. It is however quite easy to deal with this type of individual egotism so as to exploit it for the service of society. And a socialist community is in a particularly favorable position to do this. In capitalist society, social recognition of performance or social prestige carries a strongly economic connotation both because pecuniary gain is the typical index of success, according to capitalist standards, and because most of the paraphernalia of social prestige—in particular, that most subtle of all economic goods, Social Distance—have to be bought. This prestige or distinction value of private wealth has of course always been recognized by economists. John Stuart Mill, no wizard in foresight or insight, saw it. And it is clear that among the incentives to supernormal performance this is one of the most important. It has been shown in Part II that capitalist evolution itself tends to weaken that motive for desiring wealth along with all the others. Socialism will hence require not nearly as great a revaluation of the values of life in what now forms the uppermost stratum as it would have done a hundred years ago. Moreover the prestige motive, more than any other, can be molded by simple reconditioning: successful performers may conceivably be satisfied nearly as well with the privilege—if granted with judicious economy—of being allowed to stick a penny stamp on their trousers as they are by receiving a million a year. Nor would that be irrational. For, assuming that the penny stamp will impress the environment sufficiently to induce it to behave deferentially toward the wearer, it will give him many of the advantages for the sake of which he at present prizes the million a year. This argument loses nothing by the fact that such a practice would only revive a device which in the past has been widely used with excellent results. Why not? Trotsky himself accepted the Order of the Red Flag.

As regards preferential treatment in terms of real income it should be observed first of all that to a certain extent it is a matter of rational behavior toward the existing stock of social resources quite independently of the stimulus aspect. Just as race horses and prize bulls are the grateful recipients of attentions which it would be neither rational nor possible to bestow on every horse and bull, so the supernormal human performer has to be accorded preferential treatment if the rules of economic rationality are to prevail. Of course they need not. The community may elect to give effect to ideals that preclude this and to refuse to look upon men as they would upon machines. And all that an economist is entitled to say about it is that the community should not act in ignorance of the fact that those ideals cost something. The point is of considerable importance.

Many incomes high enough to evoke adverse comment do not give their receivers more than the conditions of life and work—distance and freedom from minor worries included—that are sufficient to keep them fit for the kind of thing they are doing.

So far as that point is taken account of, it will simultaneously solve, at least in part, the problem of providing purely economic stimuli. But I think that, again as a matter of rationality, the socialist community stands to gain considerably by going much beyond the limits that are imposed by the race horse or machine aspect. Once more the reason for this flows, on the one hand, from observation of behavior and, on the other, from analysis of the economy and civilization of capitalism which fails to support the view that the urge which society may exploit by preferential treatment is a product of capitalist conditions. This urge is a propeller of socially valuable effort. If it is denied all chance of satisfaction, results will be somewhat smaller than they could be although it is impossible to say by how much and although the importance of this element will be the smaller the more stationary the economic process when socialism takes over. This does not mean that in order to do justice to the possibilities of stimulation of this kind, nominal incomes would have to go to anything like their present heights. At present, they include taxes, savings and so on. The elimination of these items would in itself suffice to reduce drastically the figures that are so offensive to the petty-bourgeois mentality of our time. Moreover, as we have seen before, the people in the upper income brackets are being increasingly trained to more modest ideas and in fact are losing most of the motives—other than the prestige motive—for desiring those levels of income that used to support expenditure on the seignorial scale; their ideas will be still more modest by the time socialism can be expected to be a success. Naturally, economic pharisees would still throw up their hands in holy horror. For their benefit, I beg to point out that devices are ready at hand to placate their scruples. These devices have emerged in the capitalist world but have been greatly developed in Russia. Essentially they amount to a combination of payments in kind with a liberal provision in money for what are supposed to be expenses of the proper discharging of certain duties. In most countries the higher ranks of the civil service are no doubt very modestly paid, often irrationally so, and the great political offices mostly carry decorously small money salaries. But at least in many cases this is partly, in some cases very amply, compensated not only by honors but also by official residences staffed at the public expense, allowances for “official” hospitality, the use of admiralty and other yachts, special Can Socialism Survive?210 provisions for service on international commissions or in the headquarters of an army and so on.

IV. SAVING AND DISCIPLINE

Finally, what about the functions at present discharged by the bourgeoisie that the socialist regime is bound to take away from it? Under this heading we shall discuss Saving and Discipline. As regards the first—a function almost entirely discharged by the bourgeoisie and especially its higher ranks—I am not going to argue that saving is unnecessary or anti-social. Nor am I going to ask the reader to rely on the individual comrades’ propensity to save. Their contribution need not be neglected but it would be inadequate unless the socialist economy is to be thought of as quasi-stationary. Much more effectively, as we have seen, the central authority can do all that is now being done through private saving by directly allocating part of the national resources to the production of new plant and equipment. The Russian experience may be inconclusive on many points, but it is conclusive on this. Hardships and “abstinence” have been imposed such as no capitalist society could ever have enforced. In a more advanced stage of economic development it would not, in order to secure progress at the capitalist rate, be necessary to impose nearly as much. When a quasi-stationary stage has been reached by the capitalist predecessor, even voluntary saving may be sufficient. The problem, though always solvable, again shows that different situations require different socialisms and that the idyllic type can be successful only if economic progress is held to be of no account, in which case the economic criterion ceases to be relevant, or if economic progress though appreciated for the past is held to have gone far enough to be of no account for the future. As regards discipline: there is an obvious relation between the efficiency of the economic engine and the authority over employees which, by means of the institutions of private property and “free” contracting, commercial society vests with the bourgeois employer. This is not simply a privilege conferred upon Haves in order to enable them to exploit Have-nots. Behind the private interest immediately concerned there is the social interest in the smooth running of the productive apparatus. Opinions may differ fairly as to how far in a given situation the latter is actually served by the former and as to the extent of functionless hardship which the method of entrusting the social interest to the self-interest of employers used to inflict on the underdog. But historically there cannot be any difference of opinion either as to the existence of that social interest or as to the general effectiveness of that method which moreover, during the epoch of intact capitalism, was evidently the only possible one. Hence we have two questions to answer. Will The Human Element 211 that social interest persist in the socialist environment? If so, can the socialist plan supply the required amount of authority whatever it may be? It will be convenient to replace the term authority by its complement, authoritarian discipline, which is taken to mean the habit, inculcated by agents other than the disciplined individuals themselves, of obeying orders and of accepting supervision and criticism. From this we distinguish self-discipline—noting that, in part at least, it is due to previous, even ancestral, exposure to the disciplining influence of authority—and group discipline which is the result of the pressure of group opinion on every member of the group and similarly due, in part, to authoritarian training undergone in the past. Now there are two facts that may be expected to make for stricter self- discipline and group discipline in the socialist order. The case has, like so many others, been all but spoiled by foolish idealizations—the absurd picture of workers who are supposed to arrive by means of intelligent discussion (when resting from pleasant games) at decisions which they then arise to carry out in joyful emulation. But things of this sort should not blind us to facts and inferences from facts that lend support to favorable expectations of a more reasonable nature. First, the socialist order presumably will command that moral allegiance which is being increasingly refused to capitalism. This, it need hardly be emphasized, will give the workman a healthier attitude toward his duties than he possibly can have under a system he has come to disapprove. Moreover his disapproval is largely the result of the influences to which he is exposed. He disapproves because he is told to do so. His loyalty and his pride in good performance are being systematically talked out of him. His whole outlook on life is being warped by the class-war complex. But what on a previous occasion I have called the vested interest in social unrest will to a large extent disappear—or be made to disappear as we shall presently see—along with all other vested interests. Of course, against this must be set the removal of the disciplining influence exerted by the responsibility for one’s own economic fate. Second, one of the chief merits of the socialist order consists in the fact that it shows up the nature of economic phenomena with unmistakable clearness whereas in the capitalist order their faces are covered by the mask of the profit interest. We may think as we please about the crimes and follies which socialists hold are perpetrated behind that mask but we cannot deny the importance of the mask itself. For instance, in a socialist society nobody could possibly doubt that what a nation gets out of international trade is the imports and that the exports are the sacrifice which must be undergone in order to procure the imports, whereas in commercial society this common- Can Socialism Survive?212 sense view is as a rule completely hidden from the man in the street who therefore cheerfully supports policies that are to his disadvantage. Or whatever else the socialist management may bungle, it certainly will not pay any premium to anybody for the express purpose of inducing him not to produce. Or nobody will be able to get away with nonsense about saving. Far beyond the matter in hand, economic policy will therefore be rationalized and some of the worst sources of waste will be avoided simply because the economic significance of measures and processes will be patent to every comrade. Among other things, every comrade will realize the true significance of restiveness at work and especially of strikes. It does not matter in the least that he will not on that account ex post facto condemn the strikes of the capitalist period, provided he comes to the conclusion that strikes would “now” be nothing else but anti-social attacks upon the nation’s welfare. If he struck all the same, he would do so with a bad conscience and meet public disapproval. There would no longer be, in particular, any well- meaning bourgeois of both sexes who think it frightfully exciting to applaud strikers and strike leaders. V. A UTHORITARIAN D ISCIPLINE I N S OCIALISM ; A L ESSON F ROM R USSIA But those two facts carry us beyond an inference to the effect that as far as they go there might be more self-discipline and more group discipline in socialist society, hence less need for authoritarian discipline than there is in the society of fettered capitalism. They also suggest that, whenever needed, authoritarian enforcement of discipline will prove an easier task. 8 Before giving the reasons for believing this I must give the reasons for believing that socialist society will not be able to dispense with authoritarian discipline. First of all, so far as self-discipline and group discipline are, at least to a considerable extent, the result of previous, possibly ancestral, training provided by authoritarian discipline, they will wear away if that training is discontinued for a sufficient length of time, quite irrespective of whether or not the socialist order provides additional reasons for conserving the required type of behavior that may appeal to the rational consideration or the moral allegiance of individuals or groups. Such reasons and their acceptance are important factors in inducing people to submit to the training and to a system 8 The importance of this, if it can be established as a reasonable expectation to entertain at least for some types of the socialist pattern, can hardly be exaggerated. It is not only that discipline improves the quality and, if required, the quantity of the labor hours. Irrespective of this, discipline is an economizing factor of the first order. It lubricates the wheels of the economic engine and greatly reduces waste and total effort per unit of performance. The efficiency of planning as well as of current management in particular may be raised to a level far above anything that is feasible under present conditions. The Human Element 213 of sanctions rather than in enabling them to keep up to the mark of themselves. This aspect gains weight if we reflect that we are considering discipline in the drab routine of everyday life, unglorified by enthusiasm, irksome in some if not in all details, and that the socialist order will remove, to say the least, some of the pressure of the survival motive which largely motivates self-discipline in capitalist society. Second, closely allied to the necessity of incessant training of the normal is the necessity of dealing with the subnormal performer. This term does not refer to isolated pathological cases but to a broad fringe of perhaps 25 per cent of the population. So far as subnormal performance is due to moral or volitional defects, it is perfectly unrealistic to expect that it will vanish with capitalism. The great problem and the great enemy of humanity, the subnormal, will be as much with us as he is now. He can hardly be dealt with by unaided group discipline alone—although of course the machinery of authoritarian discipline can be so constructed as to work, partly at least, through the group of which the subnormal is an element. Third, though the vested interest in social unrest may be expected to disappear in part, there is reason to believe that it will not disappear entirely. Stirring up trouble and putting monkey wrenches into the works will still mean a career or the short cut to a career; it will no less than now be the natural reaction of both idealists and self-seekers displeased with their position or with things in general. Moreover there will be plenty to fight about in socialist society. After all, only one of all the great sources of controversy will be eliminated. Beyond the obvious likelihood of the partial survival of sectional interests—geographical and industrial—there may be clashes of opinion for instance about the relative weight to be attributed to immediate enjoyment versus the welfare of future generations, and a management that espouses the cause of the latter might well be faced by an attitude not entirely dissimilar to the present attitude of labor and of the public in general toward big business and its policy of accumulation. Last but not least, recalling what has been said on the subject of the cultural indeterminateness of socialism, we shall have to realize that many of the great issues of national life will be as open as ever and that there is little reason to expect that men will cease to fight over them. Now, in appraising the ability of socialist management to cope with the difficulties that may arise under these three heads, we must bear in mind that the comparison is with capitalism as it is today or even with capitalism as it may be expected to function in a still more advanced stage of disintegration. When discussing the importance, so completely overlooked by many economists since the time of Jeremy Bentham, of unquestioning Can Socialism Survive?214 subordination within the individual firm, 9 we saw that capitalist evolution tends to wear away its socio-psychological bases. The workman’s readiness to obey orders was never due to a rational conviction of the virtues of capitalist society or to a rational perception of any advantages accruing to him personally. It was due to discipline inculcated by the feudal predecessor of his bourgeois master. To this master the proletariat transferred part of that respect—by no means all of it—that their ancestors in all normal cases bore to their feudal lords, whose descendants also made things a lot easier for the bourgeoisie by staying in political power for the greater part of capitalist history. By fighting the protecting stratum, by accepting equality in the political sphere, by teaching the laborers that they were just as valuable citizens as anyone else, the bourgeoisie forfeited that advantage. For a time, enough authority remained to veil the gradual but incessant change that was bound to dissolve the discipline in the factory. By now, most of it is gone. Gone are most of the means of maintaining discipline, and, even more, the power to use them. Gone is the moral support of the community that used to be extended to the employer struggling with infractions of discipline. Gone finally is—largely in consequence of the withdrawal of that support—the old attitude of governmental agencies; step by step we can trace the way that led from backing the master to neutrality, through the various nuances of neutrality to backing the workman’s right to being considered an equal partner in a bargain, and from this to backing the trade union against both employers and individual workmen. 10 The picture is completed by the attitude of the hired business executive who, knowing that if he claimed to be fighting for a public interest he would not even rouse indignation but only hilarity, concludes that it is more pleasant to be commended for progressiveness— or to go on holiday—than to incur obloquy or danger by doing what nobody admits to be his duty. Considering this state of things, we need not project the tendencies 9 See ch. xi, p. 127. 10 Toleration amounting to encouragement of such practices as picketing may serve as a useful landmark in a process that has not run a straight-line course. Legislation, still more administrative practice, in this country is particularly interesting because the problems involved have been brought out with unequaled emphasis owing to the fact that change, after having been long delayed, has been crowded into so short a time. The absence of any awareness that there may be other social interests for government to take care of in its attitude to labor problems than the short-run interest of the working class is as characteristic as is the half-hearted but significant adoption of class-war tactics. Much of this can be explained by a peculiar political configuration and by the peculiarly American impossibility of corralling the proletariat into an effective organization in any other way. But the illustrative value of the American labor situation is not substantially impaired thereby. The Human Element 215 inherent in it very far ahead in order to visualize situations in which socialism might be the only means of restoring social discipline. But it is clear in any case that the advantages which a socialist management will command in this respect are so considerable as to weigh heavily in the balance of productive efficiencies. First, the socialist management will have at its disposal many more tools of authoritarian discipline than any capitalist management can ever have again. The threat of dismissal is practically the only one that is left—agreeable to the Benthamite idea of a contract to be rationally entered into and dissolved by social equals—and the handle of even that tool is so framed as to cut the hand that attempts to use it. But threat of dismissal by the socialist management may mean the threat of withholding sustenance that cannot be secured by an alternative employment. Moreover, whereas in capitalist society it must as a rule be dismissal or nothing—because public opinion on principle disapproves of the very idea of one party to a contract disciplining the other—the socialist management may be able to apply that threat to any degree that may seem rational and to apply other sanctions as well. Among the less drastic of the latter are some which a capitalist management cannot use because of its lack of moral authority. In a new social atmosphere, mere admonition may have an effect which it could not possibly have now. Second, the socialist management will find it much easier to use whatever tools of authoritarian discipline it may have. There will be no government to interfere. Intellectuals as a group will no longer be hostile and those individuals who are will be restrained by a society that once more believes in its own standards. Such a society will in particular be firm in its guidance of the young. And, to repeat, public opinion will no longer countenance what it will consider semi-criminal practice. A strike would be mutiny. Third, there will be infinitely more motive for the managing group to uphold authority than there is for government in capitalist democracy. At present the attitude of governments toward business is akin to the attitude which in political life we associate with opposition: it is critical, checking and fundamentally irresponsible. That could not be so in socialism. The ministry of production will be responsible for the functioning of the engine. To be sure that responsibility would be political only and good oratory might possibly cover many sins. Nevertheless the opposition interest of government will of necessity be eliminated, and a strong motive for successful operation will be substituted for it. Economic necessities will no longer be a laughing matter. Attempts at paralyzing operations and at setting people against their work will amount to attacking the government. And it can reasonably be expected to react to this. Again, as in the case of saving, the various objections that may be raised Can Socialism Survive?216 against generalizations from Russian experience do not impair the value of its lessons in a matter which in a more mature or otherwise more nearly normal socialist society should present less and not more difficulties. On the contrary, we can hardly hope for a better illustration of the main points of the above argument. The Bolshevik Revolution of 1917 completed the disorganization of the small but highly concentrated industrial proletariat of Russia. The masses got out of hand entirely and gave effect to their conception of the new order of things by innumerable strikes of the holiday-making type and by taking possession of the factories. 11 Management by workmen’s councils or by trade unions was the order of the day and was accepted by many leaders as a matter of course. A minimum of influence was with difficulty secured for engineers and for the Supreme Council by a compromise arrived at early in 1918, the thoroughly unsatisfactory working of which was one of the major motives for embarking upon the New Economic Policy in 1921. Trade unions then for a time relapsed into something like the functions and attitudes they have in a severely fettered capitalism. But the first Five-Year Plan (1928) changed all that; by 1932 the industrial proletariat was more in hand than it had been under the last Tsar. Whatever else the bolsheviks may have failed in, they have certainly succeeded in this respect ever since. The way in which this was done is highly instructive. The trade unions were not suppressed. On the contrary they were fostered by the government: membership increased by leaps and bounds and was nearly 17 millions as early as 1932. But from exponents of group interests and obstacles to discipline and performance they developed into exponents of the social interests and into tools of discipline and performance, acquiring an attitude so completely different from that which is associated with trade unions in capitalist countries that some western laborites refused to recognize them as trade unions at all. They no longer opposed the hardships incident to the pace of industrialization. They readily stood for extension of the working day without additional remuneration. They dropped the principle of equal wages and espoused a system of premiums and other inducements to effort, Stakhanovism and the rest of it. They recognized—or submitted to— the manager’s right to dismiss workmen at will, discouraged “democratic meetingism”—the practice of the workmen’s discussing the orders received and executing them only after approval—and, cooperating with “comrades’ courts” and “purge commissions,” adopted rather strong lines against the 11 Such breakdowns of discipline so far have occurred in most historical cases. For instance, they were the immediate cause of the failure of the quasi-socialist experiments tried in Paris during the revolution of 1848. The Human Element 217 slacker and the subnormal. Nothing was heard any more of the right to strike and to control production. Now ideologically there was no difficulty at all about this. We may smile at the quaint terminology which labeled as counterrevolutionary and contrary to Marx’s teaching everything that did not quite agree with the government’s interest in the full utilization of labor. But there is in fact nothing anti- socialist in that attitude: it is only logical that with class warfare the obstructionist practices should pass away and the character of collective agreements should change. Critics are wrong to overlook the amount of self- discipline and group discipline which the system was able to release and which fully bears out the expectations we have formed on the subject. At the same time it is no less wrong to overlook the part played in the achievement, such as it is, by the authoritarian kind of discipline which powerfully supports and no less powerfully supplements the other kinds. The individual trade unions as well as their central organ, the General Council, have been subjected to the control of the government and of the Communist party. What used to be described as the labor opposition in the latter has been suppressed, and labor leaders who persisted in recognizing a distinct interest of the workmen have been removed from their positions. Thus, ever since the governmental reorganization in 1921, certainly since 1929, trade unions have hardly been in a position to say or do anything that might run counter to the wishes of the ruling set. They have become organs of authoritarian discipline—which fact well illustrates a point made before. Again, inasmuch as the modern workman’s unhealthy attitude to his work is due to the influences to which he is exposed, it is essential to notice the tremendous difference it makes if sense of duty and pride in performance are incessantly being talked into him instead of being incessantly talked out of him. The fact that the Russian state, unlike the capitalist state, is in a position to enforce, in the teaching and guiding of the young, conformity with its ends and structural ideas immeasurably increases its ability to create an atmosphere favorable to factory discipline. Intellectuals are evidently not at liberty to tamper with it. And there is no public opinion to encourage infractions. Finally, dismissal spelling privation, shifts amounting to deportation, “visits” by shock brigades and occasionally also by comrades of the Red Army are, whatever their legal construction, practically independent means in the hands of the government by which to safeguard performance. There is motive to use them and, as a matter of universally admitted fact, they have been unflinchingly used. Sanctions which no capitalist employer would think of applying even if he had the power frown sternly from behind all gentler psycho-technics. The sinister connotations of all this are not essential to our argument. Can Socialism Survive?218 There is nothing sinister in what I am trying to convey. The cruelties to individuals and whole groups are largely attributable to the unripeness of the situation, to the circumstances of the country and to the quality of its ruling personnel. In other circumstances, in other stages of development and with other ruling personnel they will not be necessary. If it should prove unnecessary to apply any sanctions at all, so much the better. The point is that at least one socialist regime has actually been able to foster group discipline and to impose authoritarian discipline. It is the principle that matters and not the particular forms in which it was turned into practice. Thus, even apart from the merits or demerits of blueprints, comparison with fettered capitalism does not turn out unfavorably for the socialist alternative. It must be emphasized again that we have been talking—though in a sense different from that which was relevant to our discussion of the blueprint—of possibilities only. Many assumptions are necessary in order to turn them into certainties or even practical likelihoods, and it is no doubt just as legitimate to adopt other assumptions that would yield different results. In fact, we need only assume that the ideas prevail which constitute what I have termed idyllic socialism in order to convince ourselves of the likelihood of complete and even ludicrous failure. This would not even be the worst possible outcome. Failure so patent as to be ludicrous could be remedied. Much more insidious as well as likely is failure not so complete which political psycho-technics could make people believe to be a success. Moreover, deviations from the blueprint of the engine and from the principles of running the system are of course no less likely than they are in commercial society but they may prove to be more serious and less self- corrective. But if the reader glances once more over the steps of our argument he will, I think, be able to satisfy himself that the objections which have their roots in this class of considerations do not substantially impair our case—or that, more precisely, they are objections not to socialism per se, as defined for our purpose, but to the features particular types of socialism may present. It does not follow from them that it is nonsense or wickedness to fight for socialism. It only follows that fighting for socialism means no determinate thing unless it is coupled with a perception of what kind of socialism will work. Whether such a socialism is compatible with what we usually mean by democracy is another question. 219 CHAPTER XIX TRANSITION I. T WO D IFFERENT P ROBLEMS D ISTINGUISHED I T IS, I believe, recognized by everybody and in particular by all orthodox socialists that the transition from the capitalist to the socialist order will always raise problems sui generis whatever the conditions under which it may take place. But the nature and extent of the difficulties to be expected differ so greatly according to the stage of the capitalist evolution at which the transition is to be made and according to the methods which the socializing group is able and willing to use that it will be convenient to construct two different cases in order to typify two different sets of circumstances. This device is all the more easy to apply because there is an obvious connection between the When and the How. Nevertheless both cases will be dealt with in reference to fully developed and “fettered” capitalism only—I shall not waste space on the possibilities or impossibilities presented by any earlier stages. Bearing this in mind, we shall call them the cases of mature and premature socialization. Most of the argument of Part II may be summed up in the Marxian proposition that the economic process tends to socialize itself—and also the human soul. By this we mean that the technological, organizational, commercial, administrative and psychological prerequisites of socialism tend to be fulfilled more and more. Let us again visualize the state of things which looms in the future if that trend be projected. Business, excepting the agrarian sector, is controlled by a small number of bureaucratized corporations. Progress has slackened and become mechanized and planned. The rate of interest converges toward zero, not temporarily only or under the pressure of governmental policy, but permanently owing to the dwindling of investment opportunities. Industrial property and management have become depersonalized—ownership having degenerated to stock and bond holding, the executives having acquired habits of mind similar to those of civil servants. Capitalist motivation and standards have all but wilted away. The inference as to the transition to a socialist regime in such fullness of time is obvious. But two points deserve to be mentioned. First, different people—different socialists even—will differ from one another both in the degree of approximation to that state which will be Can Socialism Survive?220 satisfactory to them and in their diagnosis of the degree of approximation which has been actually reached at any given time. This is quite natural because the progress toward socialism which is inherent in the capitalist process goes on by slow degrees and will never pass any traffic light that, recognizable to all, would show beyond the possibility of doubt exactly when the road is open. Room for honest difference of opinion is greatly increased by the additional fact that the required conditions of success do not necessarily evolve pari passu. For instance, it might be plausibly argued that in 1913 the industrial structure of this country, taken by itself, was more nearly “ripe” than that of Germany. Yet few people will doubt that, had the experiment been made in both countries, the chances of success would have been infinitely greater with the state-broken Germans, led and disciplined as they were by the best bureaucracy the world has ever seen and by her excellent trade unions. But beyond honest differences of opinion—including those that are explainable on differences of temperament similar to those which will make equally competent and honest doctors differ as to the advisability of an operation—there will always be a suspicion, often but too well founded, that the one party to the discussion does not and will never want to admit maturity because it does not really want socialism and that the other party will, for reasons that may or may not spring from idealistic bases, assume maturity under any circumstances whatsoever. Second, even supposing that an unmistakable state of maturity be reached, transition will still require distinct action and still present a number of problems. The capitalist process shapes things and souls for socialism. In the limiting case it might do this so completely that the final step would not be more than a formality. But even then the capitalist order would not of itself turn into the socialist order; such a final step, the official adoption of socialism as the community’s law of life, would still have to be taken, say, in the form of a constitutional amendment. In practice however people will not wait for the limiting case to emerge. Nor would it be rational for them to do so, for maturity may to all intents and purposes be reached at a time when capitalist interests and attitudes have not yet completely vanished from every nook and cranny of the social structure. And then the passing of the constitutional amendment would be more than a formality. There would be some resistance and some difficulties to overcome. Before considering these, let us introduce another distinction. Fundamentally, things and souls shape themselves for socialism automatically, i.e., independently of anyone’s volition and of any measures taken to that effect. But among other things that process also produces such volition and hence such measures—enactments, administrative actions and so on. The sum total of these measures is part of the policy of socialization Transition 221 which therefore must be thought of as covering a long stretch of time, at all events many decades. But its history naturally divides into two segments separated by the act of adopting and organizing the socialist regime. Before that act, the policy of socialization is—no matter whether intentionally or unintentionally—preparatory, after that act it is constitutive. The former segment will come in for only a short discussion at the end of this chapter. Now we are going to concentrate on the latter. II. S OCIALIZATION I N A S TATE O F M ATURITY In the case of mature socialization the difficulties with which it will be the first task of “socialization after the act” to deal are not only not insurmountable but not even very serious. Maturity implies that resistance will be weak and that cooperation will be forthcoming from the greater part of all classes—one symptom of which will be precisely the possibility of carrying adoption by a constitutional amendment, i.e., in a peaceful way without a break in legal continuity. Ex hypothesi people will understand the nature of the step and even most of those who do not like it will give it a tolerari posse. Nobody will be bewildered or feel that the world is crashing about his ears. Even so, of course, it is not entirely off the cards that there might be revolution. But there is not much danger of this. Not only will complete or approximate absence of organized resistance on the one hand and of violent excitement on the other reduce the opportunity for a revolutionary drive, but also there will be a group of experienced and responsible men ready to put their hands to the helm, both able and willing to keep up discipline and to use rational methods that will minimize the shock. They will be assisted by well-trained public and business bureaucracies which are in the habit of accepting orders from the legal authority whatever it is and who are not very partial to capitalist interests anyway. To begin with, we will simplify the transitional problems before the new ministry or central board in the same way in which we have already simplified their permanent problems, i.e., by assuming that they will leave farmers substantially alone. This will not only eliminate a difficulty that might well prove fatal—for nowhere else is the property interest so alive as it is among farmers or peasants; the agrarian world is not everywhere peopled by Russian peasants—but also bring additional support, for nobody hates large-scale industry and the specifically capitalist interest as much as the farmer does. The board may also be expected to conciliate small men of other types: around the socialized industries the small craftsman might, for a time at least, be allowed to do his jobs for profit, and the small independent retailer to sell as the tobacconist does today in countries where tobacco and tobacco products are monopolized by the state. On the other end of the scale, the personal interests Can Socialism Survive?222 of the man whose work counts individually—the executive type, let us say— could easily be taken care of, on the lines indicated before, so as to avoid any serious hitch in the running of the economic engine. Drastic assertion of equalitarian ideals of course might spoil everything. What about the capitalist interest? In the fullness of time, as indicated above, we may roughly equate it to the interest of stock and bond holders— the latter standing also for holders of mortgages and insurance policies. For the socialist who knows nothing except the Holy Writ and who thinks of this group as composed of a small number of immensely rich idlers there would be a surprise in store: at maturity this group might possibly comprise a majority of the electorate which then would look with little favor on proposals for the confiscation of their claims however small individually. But never mind whether or not the socialist regime could or “should” expropriate them without indemnity. All that matters to us is that it would be under no economic necessity to do so and that, if it should decide for confiscation, this would be the community’s free choice, in obedience, say, to the ethical principles it might adopt, and not because there is no other way. For payment of the interest on bonds and mortgages as far as owned by individuals plus payment of claims from insurance contracts plus payment, in lieu of dividends, of interest on bonds to be issued to former stockholders by the central board—so that these stockholders while losing their voting power would still retain an income roughly equal to a suitably chosen average of past dividends—would not, as a glance at the relevant statistics will show, constitute an unbearable burden. So far as the socialist commonwealth continues to make use of private savings it obviously might be policy to shoulder it. Limitation in time could be achieved either by turning all these payments into terminable annuities or else by an appropriate use of income and inheritance taxes that might thus render their last service before disappearing forever. This, I think, sufficiently characterizes a feasible method of “socialization after the act” that, under the circumstances envisaged, might be expected to perform the task of transition firmly, safely and gently with a minimum of loss of energy and of injury to cultural and economic values. The managements of large-scale concerns would be replaced only in cases in which there are specific reasons for replacement. If at the moment of transition there are still private partnerships among the firms to be socialized, they would be first transformed into companies and then socialized in the same way as others. Foundation of new firms would of course be prohibited. The structure of intercorporate relations—holding companies in particular— would be rationalized, i.e., reduced to those relations that serve administrative efficiency. Banks would all be turned into branch offices of the central institution and in this form might still retain not only some of Transition 223 their mechanical functions—part at least of the social bookkeeping would almost necessarily devolve upon them—but possibly also some power over industrial managements that might take the form of power to grant and to refuse “credits”; if so, the central bank might be left independent of the ministry of production itself and become a sort of general supervisor. Thus, the central board going slowly at first and gradually taking up the reins without a jerk, the economic system would have time to settle down and find its bearings while the minor problems incident to transition could be solved one by one. Little adjustment of production would be necessary at the beginning—a matter of 5 per cent of total output at the outside. For unless equalitarian ideas assert themselves much more strongly than I have assumed, the structure of demand will not be very materially affected. Transfer of men, lawyers for instance, to other employments would, it is true, be on a somewhat larger scale because there are functions to be served in capitalist industry which will no longer have to be served in the socialist economy. But this too would not create any serious difficulty. The larger problems of the elimination of subnormal units of production, of further concentration on the best opportunities, of locational rationalization with the incidental redistribution of the population, of standardization of consumers’ and producers’ goods and so on would or, at all events, need not emerge before the system has digested the organic change and is running smoothly on the old lines. Of socialism of this type it may without absurdity be expected that it would in time realize all the possibilities of superior performance inherent in its blueprint. III. S OCIALIZATION I N A S TATE O F I MMATURITY

1. No such prognosis is possible in the second case, the case of premature adoption of the principle of socialism. It may be defined as transition from the capitalist to the socialist order occurring at a time when it has become possible for socialists to gain control of the central organs of the capitalist state while nevertheless both things and souls are as yet unprepared. We are not, let me repeat, going to discuss situations so immature that the hope of success would seem fantastic to any sane person and the attempt at conquering power could not be more than a ridiculous Putsch. Hence I am not going to argue that immature socialization must unavoidably end in complete discomfiture or that the resulting arrangement is bound to break down. I am still envisaging fettered capitalism of the present-day type with reference to which the problem can at least be reasonably raised. In such a setting it is even likely to be raised sooner or later. The long-run situation becomes more and more favorable to socialist ambitions. It is still more important that short-run situations may occur—the German situation in 1918 and 1919 is a good example; some people would also point to the American Can Socialism Survive?224 situation in 1932—in which temporary paralysis of the capitalist strata and their organs offers tempting opportunities.

2. Just what this unpreparedness or immaturity of things and souls means, the reader can easily realize by turning to the picture of a mature situation that has been drawn a few pages back. Nevertheless I wish to add a few touches for the particular case of this country in 1932. A period of vigorous—though, in terms of rates of change, not abnormal— industrial activity had preceded a depression the very violence of which testified to the extent of the necessary adjustments to the results of “progress.” That progress, in the leading lines, was obviously not completed—it is enough to point to the fields of rural electrification, of the electrification of the household, to all the new things in chemistry and to the possibilities opening up in the building industry. Hence considerable loss in entrepreneurial energy, in productive efficiency and in the future welfare of the masses could have been confidently predicted from bureaucratizing socialization. It is amusing to realize that the general opinion which in the hysteria of the depression the intellectuals of socialist leanings were able to impart to the public was exactly the opposite. This however is more germane to the diagnosis of the social psychology of that situation than to its economic interpretation. Immaturity also showed in the industrial and commercial organization. Not only was the number of small and medium-sized firms still very considerable and their cooperation in trade associations and so on far from perfect, but the development of big business itself, though the subject of much uncritical wonder and hostility, had not gone nearly far enough to make it safe and easy to apply our method of socialization. If we draw the line of large-scale business at firms having 50 million dollars of assets, then only 53.3 per cent of the national total was owned by large corporations, only 36.2 per cent if we exclude finance and public utilities and only 46.3 per cent in the division of manufactures. 1 But corporations smaller than this will not in general lend themselves easily to socialization and cannot be expected to work on under it in their existing form. If nevertheless we descend to a 10-million-dollar limit, we still find no more than 67.5, 52.7 and 64.5 per cent, respectively. The mere task of “taking over” an organism structured like this would have been formidable. The still more formidable task of making it function and of improving it would have had to be faced without an experienced bureaucracy and with a labor force so imperfectly organized and, in part, so questionably led as to be likely to get out of hand. Souls were still more unprepared than things. In spite of the shock imparted by the depression, not only business people but a very large part 1 See W.L.Crum, “Concentration of Corporate Control,” Journal of Business, vol. viii, p. 275. Transition 225 of the workmen and farmers thought and felt in the terms of the bourgeois order and did not really have a clear conception of any alternative; for them the conception of socialization and even of much less than this was still “un-American.” There was no efficient socialist party, in fact no quantitatively significant support for any of the official socialist groups excepting the communists of Stalinist persuasion. The farmers disliked socialism, though every trouble was taken to reassure them, only a shade less than they disliked big business in general or railroads in particular. While support would have been weak and much of it either blatantly interested or else lukewarm, resistance would have been strong. It would have been the resistance of people who honestly felt that what they were doing nobody, least of all the state, could do as well and that in resisting they were fighting not for their interests only but also for the common good—for the absolute light against absolute darkness. The American bourgeoisie was losing its vitality but had not lost it completely. It would have resisted with a clear conscience and would have been in a position to refuse both assent and cooperation. One symptom of the situation would have been the necessity to use force not against isolated individuals but against groups and classes; another would have been the impossibility of carrying adoption of the socialist principle by constitutional amendment, i.e., without break in legal continuity: the new order would have had to be established by revolution, more likely than not by a sanguinary one. This particular example of an immature situation may be open to the objection that it comes within the category of absurdly hopeless cases. But the picture combines and illustrates the main features presented by every immature socialization and will hence serve for the purposes of a discussion of the general case. This case is of course the one contemplated by orthodox socialists, most of whom would be unable to put up with anything less fascinating than the spectacular slaying of the capitalist dragon by the proletarian St. George. It is not however because of that unfortunate survival of early bourgeois revolutionary ideology that we are going to survey the consequences which follow from the combination of political opportunity and economic unpreparedness but because the problems characteristic of the act of socialization as usually understood arise only in this case.

3. Suppose then that the Revolutionary People—in the Bolshevist Revolution this became a sort of official title like Most Christian King—have conquered the central offices of the government, the non-socialist parties, the non-socialist press, etc., and installed their men. The personnel of these offices as well as the personnel of the industrial and commercial concerns is partly goaded into—ex hypothesi—unwilling cooperation and partly

replaced by the labor leaders and by the intellectuals who rush from the café to these offices. To the new central board we shall concede two things: a red army strong enough to quell open resistance and to repress excesses—wild socializations in particular 2 —by firing impartially to right and left, and sense enough to leave peasants or farmers alone in the way indicated above. No assumption is made as to the degree of rationality or humanity in the treatment dealt out to the members of what had been the ruling strata. In fact, it is difficult to see how any but the most ruthless treatment could be possible under the circumstances. People who know that their action is felt to be nothing else but vicious aggression by their opponents and that they are in danger of meeting the fate of Karl Liebknecht and Rosa Luxemburg will soon be driven to courses violent beyond any original intention. They will hardly be able to help behaving with criminal ferocity toward opponents whom they will look upon as ferocious criminals—those opponents that still stand for the old order and those opponents that form the new leftist party which cannot fail to emerge. Neither violence nor sadism will solve problems however. What is the central board to do except complain about sabotage and call for additional powers in order to deal with conspirators and wreckers? The first thing which must be done is to bring about inflation. The banks must be seized and combined or coordinated with the treasury, and the board or ministry must create deposits and banknotes using traditional methods as much as possible. I believe inflation to be unavoidable because I have still to meet the socialist who denies that in the case under discussion the socialist revolution would at least temporarily paralyze the economic process or that in consequence the treasury and the financial centers would for the moment be short of ready means. The socialist system of bookkeeping and income units not being as yet in working order, nothing remains except a policy analogous to that of Germany during and after the First World War or that of France during and after the revolution of 1789, notwithstanding the fact that in those cases it was precisely the unwillingness to break with the system of private property and with the methods of commercial society that enforced inflation for so considerable a time; for “the day after the socialist revolution” when nothing would be in shape, this difference does not matter. It should be added however that besides necessity there is another motive to embark upon this course. Inflation is in itself an excellent means of smoothing certain transitional difficulties and of effecting partial expropriation. As regards the first, it is for instance evident that a drastic 2 Wild socializations—a term that has acquired official standing—are attempts by the workmen of each plant to supersede the management and to take matters into their own hands. They are the nightmare of every responsible socialist.

increase in money wage rates will for a time avail to ward off possible outbreaks of rage at the fall in real wage rates that, temporarily at least, would have to be imposed. As regards the second, inflation expropriates the holder of claims in terms of money in a delightfully simple way. The board might even make matters easier for itself by paying owners of real capital— factories and so on—any amount of indemnities if it resolves at the same time that these shall become valueless before long. Finally, it must not be forgotten that inflation would powerfully ram such blocks of private business as may have to be left standing for the moment. For, as Lenin has pointed out, nothing disorganizes like inflation: “in order to destroy bourgeois society you must debauch its money.”

4. The second thing to do is of course to socialize. Discussion of transitional problems starts from the old controversy waged among socialists themselves—more precisely between socialists and what are more properly called laborites—on full or one-stroke versus partial or gradual socialization. Many socialists seem to think it due to the purity of the Faith and the true belief in the efficacy of the socialist grace to champion the former under any circumstances and to despise weak-kneed laborites who on this point as on others are much hampered by most inconvenient traces of a sense of responsibility. But I am going to vote for the true believers. 3 We are not now discussing transitional policy in a capitalist system; that is another problem to be touched upon presently when we shall see that gradual socialization within the framework of capitalism is not only possible but even the most obvious thing to expect. We are discussing the completely different transitional policy which is to be pursued after a socialist regime has been set up by a political revolution.

In this case, even if there be no more than the inevitable minimum of excesses and if a strong hand impose comparatively orderly procedure, it is difficult to imagine a stage in which some of the great industries are socialized whereas others are expected to work on as if nothing had happened. Under a revolutionary government which would have to live up to at least some of the ideas propagated in the days of irresponsibility, any remaining private industries may well cease to function. I am not thinking primarily of the obstruction that might be expected from the entrepreneurs and from capitalist interests in general. Their power is being exaggerated now and would largely cease to exist under the eyes of commissars. And it is not the bourgeois way to refuse to fulfill current duties; the bourgeois way is to cling to them. Resistance there would be, but it would be resistance in 3 Scripture does not support them clearly however. If the reader will look up the Communist Manifesto he will find a most disconcerting “by degrees” planted right in the most relevant passage.

the political sphere and outside of the factory rather than resistance within it. Unsocialized industries would cease to function simply because they would be prevented from functioning in their own way—the only one in which capitalist industry can function—by the supervising commissars and by the humor of both their workmen and the public. But this argument covers only the cases of large-scale industries and of those sectors which can be easily molded into large-scale units of control. It does not completely cover all the ground between the agrarian sphere which we have excluded and the large-scale industries. On that ground, consisting mainly of small or medium-sized business, the central board could presumably maneuver as expediency might dictate and in particular advance and retire according to changing conditions. This would still be full socialization within our meaning of the term.

One point remains to be added. It should be obvious that socialization in any situation immature enough to require revolution not only in the sense of a break in legal continuity but also in the sense of a subsequent reign of terror cannot benefit, either in the short or in the long run, anyone except those who engineer it. To work up enthusiasm about it and to glorify the courage of risking all that it might entail may be one of the less edifying duties of the professional agitator. But as regards the academic intellectual, the only courage that can possibly reflect any credit on him is the courage to criticize, to caution and to restrain.

IV. S OCIALIST P OLICY B EFORE T HE A CT ; T HE E NGLISH E XAMPLE

But must we really conclude that, now and for another fifty or one and wait? Well, the fact that this is more than can be expected of any party that wants to keep any members, and all the arguments—and sneers—that flow from this all-too-human source, should not be allowed to blot out the other fact that there is a weighty argument for this conclusion. It might even be argued quite logically that socialists have an interest to further the development that works for them, hence to unfetter capitalism rather than to fetter it still more. I do not think however that this means there is nothing for socialists to do, at all events under the conditions of our own time. Though attempts to establish socialism now would, for most of the great nations and many small ones, undoubtedly amount to courting failure—failure of socialism as such perhaps, but certainly failure of the socialist groups responsible for the plunge, while another group not necessarily socialist in the usual sense might then easily walk away with their clothes—and though in consequence a policy of socialization after the act probably is a very doubtful matter, a policy of socialization before the act offers much better chances. Like other parties, but with a clearer perception of the goal, socialists can take a hand

in it without compromising ultimate success. All that I wish to say on this question will stand out best in the garb of a particular example. All the features we could wish our example to display are presented by modern England. On the one hand, her industrial and commercial structure is obviously not ripe for successful one-stroke socialization, in particular because concentration of corporate control has not gone far enough. In conformity with this, neither managements nor capitalists nor workmen are ready to accept it—there is a lot of vital “individualism” left, enough at any rate to put up a fight and to refuse cooperation. On the other hand there has been, roughly since the beginning of the century, a perceptible slackening of entrepreneurial effort which among other things produced the result that state leadership and state control in important lines, production of electric power for instance, have been not only approved but demanded by all parties. With more justice than anywhere else it might be argued that capitalism has done by far the greater part of its work. Moreover, English people on the whole have become state-broken by now. English workmen are well organized and as a rule responsibly led. An experienced bureaucracy of irreproachable cultural and moral standards could be trusted to assimilate the new elements required for an extension of the sphere of the state. The unrivaled integrity of the English politician and the presence of a ruling class that is uniquely able and civilized make many things easy that would be impossible elsewhere. In particular this ruling group unites in the most workable proportions adherence to formal tradition with extreme adaptability to new principles, situations and persons. It wants to rule but it is quite ready to rule on behalf of changing interests. It manages industrial England as well as it managed agrarian England, protectionist England as well as freetrade England. And it possesses an altogether unrivaled talent for appropriating not only the programs of oppositions but also their brains. It assimilated Disraeli who elsewhere would have become another Lassalle. It would have, if necessary, assimilated Trotsky himself or rather, as in that case he would assuredly have been, the Earl of Prinkipo K.G. In such conditions a policy of socialization is conceivable that, by carrying out an extensive program of nationalization, might on the one hand accomplish a big step toward socialism and, on the other hand, make it possible to leave untouched and undisturbed for an indefinite time all interests and activities not included in that program. In fact, these could be freed from many fetters and burdens, fiscal and other, which hamper them now. The following departments of business activity could be socialized without serious loss of efficiency or serious repercussions on the departments that are to be left to private management. The question of indemnities could be settled on the lines suggested in our discussion of

mature socialization; with modern rates of income tax and death duties this would not be a serious matter.

1. The banking apparatus of England is no doubt quite ripe for socialization.

The Bank of England is little more than a treasury department, in fact less independent than a well-ordered socialist community may well wish its financial organ to be. In commercial banking, concentration and bureaucratization seem to have done full work. The big concerns could be made to absorb as much of independent banking as there is left to absorb and then be merged with the Bank of England into the National Banking Administration, which could also absorb savings banks, building societies and so on without any customer becoming aware of the change except from his newspaper. The gain from rationalizing coordination of services might be substantial. From the socialist standpoint, there would also be a gain in the shape of an increase in the government’s influence on non-nationalized sectors.

2. The insurance business is an old candidate for nationalization and has to a large extent become mechanized by now. Integration with at least some of the branches of social insurance may prove feasible; selling costs of policies could be considerably reduced and socialists might again rejoice in the access of power that control over the funds of insurance companies would give to the state.

3. Few people would be disposed to make great difficulties over railroads or even over trucking. Inland transportation is in fact the most obvious field for successful state management.

4. Nationalization of mining, in particular coal mining, and of the coal and tar products down to and including benzol, and also of the trade in coal and in those products might even result in an immediate gain in efficiency and prove a great success if labor problems can be dealt with satisfactorily.

From the technological and commercial standpoint, the case seems clear. But it seems equally clear that, private enterprise having been active in the chemical industry, no such success can with equal confidence be expected from an attempt to go beyond the limit indicated.

5. The nationalization of the production, transmission and distribution of electric current being substantially completed already, all that remains to be said under this head is that the electro-technical industry is a typical instance of what may still be expected from private enterprise—which shows how little sense, economically speaking, there is in standing either for general socialization or against any. But the case of power production also shows the difficulty of working a socialized industry for profit which nevertheless would be an essential condition of success if the state is to absorb so great a part of the nation’s economic life and still fulfill all the tasks of the modern state.

6. Socialization of the iron and steel industry will be felt to be a much more controversial proposition than any made so far. But this industry has certainly sown its wild oats and can be “administered” henceforth—the administration including, of course, a huge research department. Some gains would result from coordination. And there is hardly much danger of losing the fruits of any entrepreneurial impulses.

7. With the possible exception of the architects’ share in the matter, the building and building material industries could, I believe, be successfully run by a public body of the right kind. So much of it already is regulated, subsidized and controlled in one way or another that there even might be a gain in efficiency—more than enough, perhaps, to compensate for the sources of loss that might be opened up.

This is not necessarily all. But any step beyond this program would have to justify itself by special, mostly non-economic reasons—the armament or key industries, movies, shipbuilding, trade in foodstuffs being possible instances.

At any rate, those seven items are enough to digest for quite a time to come, enough also to make a responsible socialist, if he gets so much done, bless his work and accept the concessions that it would at the same time be rational to make outside of the nationalized sector. If he insists also on nationalizing land—leaving, I suppose, the farmer’s status as it is—i.e., transferring to the state all that remains of ground rents and royalties, I have no objection to make as an economist. 4

The present war will of course alter the social, political and economic data of our problem. Many things will become possible, many others impossible, that were not so before. A few pages at the end of this book will briefly deal with this aspect. But it seems to me essential, for the sake of clarity of political thought, to visualize the problem irrespective of the effects of the war. Otherwise its nature can never stand out as it should. Therefore I leave this chapter, both in form and in content, exactly as I wrote it in the summer of 1938.