of self-government in industry which rejected the system of command and creation of policy for all spheres of life by uncriticisable central institutions. This sense of essential freedom arising out of the perception that, after all, the best judges in certain matters relating to the government of industry were the vocational organisations, was certain to lead to a revolt against the authority of the central Parliament, and to make for an attempted separation of politics from industry, and that in terms of actual institutions.1 These institutions would need to be so constituted that on the one hand the vocational organisations should not, as often up till the present, stand contrary to the demands of the community, while on the other hand the State should be made clearly conscious that it ought not, as far as possible, today public duties on the organisations in the rigid form of commands.2 The implication was public consultation.

Altogether, then, we find a growing independent spirit on the part of vocational organisation-or rather, functional organisation, because the vocation was not alone the basis of the structure of organisation. And one can already begin to visualise a system in which new estates shall talk over their relations with one another in an assembly dedicated to the affairs which were the very pith of their everyday life, bowing perhaps to an assembly representative of majority will, because that is the ultimate force in society, but discussing, thinking, reconciling, creating, in order that the legal imperative might have a basis of science to support its authority.

Nor was this all that could be discerned in the pre-war situation. The meaning of State and local government areas, with boundaries set up decades before the Great

1 Goebel, Selbstverwaltung in Technik und Wirtschaft, p. 97 et seq. (Berlin, 1921). The book is concerned with a review of the various vocational organisations, their functions, status and future in the State. And the very able comment appearing in Archiv für Sozialwissenschaft, 1921 (III.), p. 761, by Dr. Hans Schäffer, called Neue Tendenzen in den wirtschaftlichen Organisationen der Gegenwart.

2 Goebel, op. cit. p. 100.

Industry came to spread its tentacles of communication, mining and commerce across them was being rapidly destroyed in Germany as in France, the U.S.A., and England. New groupings of population and industry denied any economic significance to these old frontiers : indeed, asserted their positive defectiveness in many cases.1 The effective reorganisation of the central institutions, to suit an age when the economic interests of nations were so important as a basis of better civilisation, was to depend, too, upon a rectification of areas and authorities and duties, on a territorial basis, within the Great State equally with the new empowering of those other elements of State structure, the functional elements.2

Yet again came the cry of the worker in Germany, as elsewhere, for emancipation, in some way or other, from the small process upon which he was everlastingly engaged, and his elevation to an oversight of the whole process of production, which would, it was thought, make his daily toil a thing of more significance and greater contentment. There was a desire, shared by a number of thinkers, to get back to the workers' "comprehensive "3 situation in relation to his work. "To this end," ran the theory, “it is much more necessary that the worker, who, with modern methods, can no longer be actually the creator of the whole final article produced, shall be made the more so in the spirit. This purpose is to be accomplished by his own surveyal of the whole process, his perception of his own work as a necessary constituent part of this process, and in his acceptance of the responsibility for the final result by executing his own special task. Labour thereby becomes an ethical factor and ceases to be a mere instrument of gain. This can only happen when the workers educate themselves in increasingly

1 Cf. Cole, Social Theory, chap. iv.

2 Cf. Chapter VII., post.

3 Cf. Wallas, Our Social Heritage, pp. 112-13, on the "integration of labour," in contradistinction to Adam Smith's division of labour."

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great measure as producers, and thus also determine the course of production in an increasingly decisive fashion. This again is only to be attained collectively. And in this collective work is the real idea of the council system to be found." That is, there ought to be a system of works and producers' councils leading up to a central Chamber of Industry, having as one of its reasons for existence the broadening of outlook and interest of the worker.

Her

So stood Germany at the outbreak of war. political scheme was authoritarian, her parties challenged by traditional forms and new developments; her citizens were strongly grouped in associations discontented with a government not based on consultation; her workmen suffered from the mechanisation of the industrial process and craved a wider interest in a new system of production which should not reproduce in the private employers the authoritarian element to be found in the political sphere. "The Revolution" (of 1918-19), said one observer 2 later, "is in truth also a revolt of the people against the spiritually coercive structure of the State and the economic system, a revolt of men against the depersonalisation, the materialisation, of their souls." And another said, "The subject in industry must be transformed into the citizen in industry." 3

The necessities of war took Germany one step nearer to the establishment of a central Economic Council, for war meant a union of social forces. That step is now to be described.

1 Max Cohen, Sozialistische Monatshefte, November 1919, p. 1043 et seq.; Der Rätegedanke im ersten Revolutionsjahr.

2 Feiler, "Der Ruf nach den Räten," Flugschriften der Frankfurter Zeitung, 1919, p. 27.

3 Erkelenz (German Democratic Party) in Der deutsche National-Versammlung im Jahre 1919, p. 4330.

CHAPTER II

THE WAR AND NEW IDEAS

Spirit of the Pities:

They are shapes that bleed, mere mannikins or no,
And each has parcel in the total Will.

HARDY, The Dynasts, Part First.

THE war defined a single national purpose, and the forces of the people were united. The antagonism of workers and employers was largely eliminated, and the advice of associations valued and used by the Departments of State.

Raw materials, clothing, food, all that could help the armies to victory and keep the civilians contented, came under the regulation of the Departments.1 The regular form of war industry organisation was the “war · company," sometimes with ramifications over the whole Empire, a private company in whose direction the State took a part, either by the force of a veto or a permanent representation on the board of directors; or the State even held part of the capital. Often they were divided into two divisions—the administrative, concerned with the governmental relations and the issue of decrees, etc.; and the business side, dealing with provision of raw material, warehousing, distribution, etc. There were, further, war committees, standing generally as advisory

1 Cf. Handbuch der Politik, vol. iv. p. 132; Arthur Dix, Die gebundene Volkswirtschaft bei und nach Kriegsende.

2 Cf. particularly "Die Kriegsunternehmung," Prof. W. Bruck in Archiv für Sozialwissenschaft, Tübingen, Dec. 1921.

councils of interested persons by the side of the military industrial organisation, which was itself contractor in certain spheres of industry. Then came a number of concerns, on the model of the old bank consortiums of pre-war days and run by interest-associations and the Ministry for War. Common regulations issued by the State determined the service obligations (e.g. the penalties for betraying official secrets) of the people employed in the various war industry organisations, and gave the State control over the property and activity of the different companies. Industries were forced to syndicate, others were compelled to cease work. "On the whole," says one writer, “the compulsory syndicalisation of war time exhibited a decidedly bureaucratic character, and the compulsory syndicates were not permeated with life from their core outwards, but they served the all-powerful Imperial Departments as machines with no will of their own. The country was run on communal-economical 2 lines.

All industry was one, and was consulted by the State

on account of the special necessity for the most intimate connection between industry, legislation and administration" 3-in many advisory councils and expert commissions. And the effect of the memory of that time of bureaucratic direction of industry for the common-weal was threefold: the industrial associations became restive, and, when war necessity no longer pressed, demanded freedom of industry from State control and political manipulation; at least they demanded to be consulted; and communal regulation of the nation's forces became · in the minds of many men a more potent rival than hitherto of the system of industry based upon private

1 Nussbaum, Das neue deutsche Wirtschaftsrecht, p. 51, Eerlin, 1922.

2 This term, translating the German gemeinwirtschaftlich, will be met with often. It appeared as the saviour of the State in war-time, and the conception it embodied, as a substitution for private industry, became the ideal towards which strove many thinkers related to the movement for an Economic Council.

3 Report of the Committee for Economic Matters, No. 2794 (already cited), P. II.