CHAPTER XLVI

SOCIALISM

Socialism and communism have shifted meanings. The term socialism has a variety of meanings, though there are certain elements common to every definition. During the last seventyfive years the meanings attached to socialism and communism have been shifted. That which is now known as socialism was formerly known as communism. Karl Marx, who is regarded as the great apostle of modern socialism, called himself a communist. On the other hand, socialism was applied to general schemes for social amelioration which did not involve any fundamental change in the organization of society. Communism, however, fell into disrepute, and its followers discarded the name and began calling themselves socialists.

There is a tendency on the part of partisans of any program or movement to define their program in the most favorable terms possible. This applies to socialists as well as to other propagandists. Sometimes this tendency leads to a definition of socialism which does not define, but which includes the opponents as well as the proponents of socialism. When it is said, for example, that socialism teaches the doctrine that only he who produces shall consume, it may be replied, "So also does individualism," and practically every other ism that has anything to do with the production and distribution of wealth. When it is said that socialism teaches the doctrine of equality of opportunity, it may be replied, "So also does individualism," and all the other isms.

The difference between a socialist and a nonsocialist. In order to define socialism we must find something which will completely distinguish the socialist from the nonsocialist. The

only definition that will do this is the following: A socialist is one who believes that the community, the public, or the government should own and operate the means of production, leaving to individuals the ownership of most articles of consumption. By the means of production are meant practically all that is included under the names land and capital,- farms, factories, railroads, mercantile houses, and office buildings would all be included; under the program of socialism all these things would be owned and operated by the community, the public, or the government. This would mean that almost every individual would be in the employ of the government in one way or another. Since there would be no private enterprise, no one could start a farm, a factory, a store, or any business enterprise of his own. Since no one could start any such enterprise, no one could be employed by a private employer. Since no one could be either in his own employ or in the employ of any private organization, almost everyone would have to be in the employ of the government.

There is some difference of opinion among socialists as to how far this principle of government ownership and operation should extend. Some are willing to stop with trusts and monopolies. This, however, is populism rather than socialism. It is based not on a theory of capital but on a theory of monopoly. Many people who favor the private ownership of capital are opposed to monopoly and believe that the best way to curb monopoly is to turn all monopolistic enterprises over to the state. Such a person might utterly reject all socialistic theories respecting capital. Moreover, every thoroughgoing socialist really bases his conclusions on his theory of capital. The work of Karl Marx, on Capital," has been called the Bible of the modern socialist. This book pays very little attention to the question of monopoly; it consists almost entirely of an analysis of capital and capitalistic production. From Marx's point of view it is not monopolized capital, but capital as such, that gives its owner the power to exploit and defraud other

people. The capital belonging to a farmer as well as that belonging to a great trust, to a small manufacturer as well as to a large manufacturer, to the driver of a jitney bus as well as to a street-car company, is to be owned and operated by the public.

Socialism is not populism. On the other hand, the slogan "Let the nation own the trusts" has nothing to do with capital as such. Such a program is based entirely on a theory of monopoly, which is the essence of populism rather than of socialism. Those who hold to this doctrine may quite consistently hold to the idea that capital which is not monopolized is a help rather than a hindrance to labor, that he who accumulates capital by consuming less than his income is benefiting rather than injuring labor, and that therefore everybody ought to be encouraged to accumulate capital and invest it in productive enterprises. From this point of view the individual who has accumulated capital and invested it in a productive enterprise has not only increased the productivity of the community but is entitled to some reward for that service which he has performed. This reward would be called interest. The populist, therefore, would approve of the receipt of interest on the part of the owner of unmonopolized capital.

All the great authoritative books on socialism are fundamentally opposed to interest or to anyone's receiving any income in the form of interest. If labor is the only producer of wealth, the saver and accumulator is not a producer and is therefore not entitled to any share in the product. Since interest is the share which goes to the accumulator and investor, it cannot be justified under the socialistic philosophy.

Difference between a socialist and a liberalist. The definition of a socialist as one who believes in the common, public, or government ownership of all the means of production separates the socialist not only from the populist and the communist but from the liberalist as well. Moreover, this is the only definition which will at all distinguish the socialist from the

liberalist. The liberalist is quite as desirous of economic justice and of equality of opportunity as the socialist is, but he believes that the liberalistic program is better adapted to the securing of those ends than the socialistic program. The liberalistic program permits the private ownership of capital, and it also permits the receipt of interest as a private reward, on the ground that the accumulation of capital is a productive service, — not that it is philanthropic, but that it is useful to society.

In order to becloud the issue it is sometimes stated that the socialist believes that men should be paid for doing things and the liberalist that men should be paid for owning things. The liberalist does not believe that men should be paid for owning things, unless the ownership is a symptom of their having done something which was useful. If two men, A and B, have been doing equally good work with their hands and their heads, and have earned equal incomes, they should be paid the same, according to the liberalist as well as the socialist. If, however, A consumes all his income, but B invests a part of his in the tools of production, the liberalist believes that B has done better than A. If everybody did as A does, the nation's stock of tools would never increase; if everybody did as B does, the nation's stock of tools would increase rapidly. The more citizens it has of the B type, the more prosperous will the nation become; the more it has of the A type, the less prosperous it will become. It is very important that men should be encouraged to join the ranks of the B's rather than of the A's. The liberalist therefore holds that there should be some inducement to men to do what B has done; namely, to invest a part of their income rather than to consume it.

In the smartness of debate one might still say that B was thereafter being paid for owning something, whereas A was paid only for doing something; but as a matter of fact that which B appears to be paid for owning is only a deferred payment for that which he did before. When he refrained from using up his income in riotous living and devoted it to a useful

purpose he postponed the day of his enjoyment of his income. It is virtually, therefore, deferred payment for his work. The money which he received for his work was not final payment; the final reward of every individual is that which he consumes. When B decided to defer consumption, he was really deferring the receipt of his wages.

There is no other definition of socialist or socialism which will separate the socialist from the nonsocialist, or which will particularly separate him from the liberalist. The term liberalist is justified because the liberalist believes that, as far as possible, each individual should be at liberty to start his own enterprise if he is so disposed or to work for someone else if he prefers, - that he should be at liberty to work for private individuals or to work for the government, according as he can make the most satisfactory voluntary agreements. In short, the liberalist is willing to trust men with the power of free contract, whereas the socialist relies mainly on the government's power of compulsion.

Socialism involves more use of the government's power of of compulsion than liberalism does. It has been said that the power to tax is the only capital the government needs. But the power to tax is compulsion. In order to carry out a socialist program the public would have to use its power of compulsion in many ways. It would have to prohibit competition by private individuals against the state as it now forbids private individuals to compete with the post office in the carrying of first-class mail. It would have to use its taxing power to compel the payment of deficits whenever deficits occurred. The liberalist, on the other hand, proposes to reduce to a minimum the compulsion of the government over the individual. An industry which cannot be carried on without any compulsion whatsoever had probably better be left to die, unless it be one which is necessary for military protection. If an individual who desires to manufacture shoes cannot manufacture them successfully without the power of