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PREFACE TO THE SECOND GERMAN EDITION
It is a matter of dispute whether, prior to the middle of the nineteenth 15 century,
there existed any clear conception of the socialist idea—by which is understood
the socialization of the means of production with its corollary, the centralized
control of the whole of production by one social or, more accurately, state organ.
The answer depends primarily upon whether we regard the demand for a centralized
administration of the means of production throughout the world as an essential feature
in a considered socialist plan. The older socialists looked upon the autarky of
small territories as 'natural' and on any exchange of goods beyond their frontiers
as at once 'artificial' and harmful. Only after the English Free-Traders had proved
the advantages of an international division of labour, and popularized their views
through the Cobden movement, did the socialists begin to expand the ideas of village
and district Socialism into a national and, eventually, a world Socialism. Apart
from this one point, however, the basic conception of Socialism had been quite clearly
worked out in the course of the second quarter of the nineteenth century by those
writers designated by Marxism as "Utopian Socialists." Schemes for a socialist order
of society were extensively discussed at that time, but the discussion did not go
in their favour. The Utopians had not succeeded in planning social structures that
would withstand the criticisms of economists and sociologists. It was easy to pick
holes in their schemes; to prove that a society constructed on such principles must
lack efficiency and vitality, and that it certainly would not come up to expectations.
Thus, about the middle of the nineteenth century, it seemed that the ideal of Socialism
had been disposed of. Science had demonstrated its worthlessness by means of strict
logic and its supporters were unable to produce a single effective counter-argument.
It was at this moment that Marx appeared. Adept as he was in Hegelian dialectic—a
system easy of abuse by those who seek to dominate thought by arbitrary flights
of fancy and metaphysical verbosity—he was not slow in finding a way out of the
dilemma in which socialists found themselves. Since Science and Logic had argued
against Socialism, it was imperative to devise a system which could be relied on
to defend it against such unpalatable criticism. This was the task which Marxism
undertook to perform. It had three lines of procedure. First, it denied that Logic
is universally valid for all mankind and for all ages. Thought, it stated, was determined
by the class of the thinkers; was in fact an "ideological superstructure" of their
class interests. The type of reasoning which had refuted the socialist idea was
"revealed" as "bourgeois" reasoning, an apology for Capitalism. Secondly, it laid
it down that the dialectical development led of necessity to Socialism; that the
aim and end of all history was the socialization of the means of production by the
expropriation of the expropriators—the negation of negation. Finally, it was ruled
that no one should be allowed to put forward, as the Utopians had done, any definite
proposals for the construction of the Socialist Promised Land. Since the coming
of Socialism was inevitable, Science would best renounce all attempt to determine
At no point in history has a doctrine found such immediate and
complete acceptance as that contained in these three principles of Marxism. The
magnitude and persistence of its success is commonly underestimated. This is due
to the habit of applying the term Marxist exclusively to formal members of one or
other of the self-styled Marxist parties, who are pledged to uphold word for word
the doctrines of Marx and Engels as interpreted by their respective sects and to
regard such doctrines as the unshakable foundation and ultimate source of all that
is known about Society and as constituting the highest standard in political dealings.
But if we include under the term "Marxist" all who have accepted the basic Marxian
principles—that class conditions thought, that Socialism is inevitable, and that
research into the being and working of the socialist community is unscientific—we
shall find very few non-Marxists in Europe east of the Rhine, and even in Western
Europe and the United States many more supporters than opponents of Marxism. Professed
Christians attack the materialism of Marxists, monarchists their republicanism,
nationalists their internationalism; yet they themselves, each in turn, wish to
be known as Christian Socialists, State Socialists, National Socialists. They assert
that their particular brand of Socialism is the only true one—that which "shall"
come, bringing with it happiness and contentment. The Socialism of others, they
say, has not the genuine class origin of their own. At the same time they scrupulously
respect Marx's prohibition of any inquiry into the institutions of the socialist
economy of the future, and try to interpret the working of the present economic
system as a development leading to Socialism in accordance with the inexorable demand
of the historical process. Of course, not Marxists alone, but most of those who
emphatically declare themselves anti-Marxists, think entirely on Marxist lines and
have adopted Marx's arbitrary, unconfirmed and easily refutable dogmas. If and when
they come into power, they govern and work entirely in the socialist spirit.
The incomparable success of Marxism is due to the prospect it offers of fulfilling those
dream-aspirations and dreams of vengeance which have been so deeply embedded in
the human soul from time immemorial. It promises a Paradise on earth, a
Land of Heart's Desire full of happiness and enjoyment, and—sweeter still to the losers in life's
game—humiliation of all who are stronger and better than the multitude. Logic and
reasoning, which might show the absurdity of such dreams of bliss and revenge, are
to be thrust aside. Marxism is thus the most radical of all reactions against the
reign of scientific thought over life and action, established by Rationalism. It
is against Logic, against Science and against the activity of thought itself—its
outstanding principle is the prohibition of thought and inquiry, especially as applied
to the institutions and workings of a socialist economy. It is characteristic that
it should adopt the name "Scientific Socialism" and thus gain the prestige acquired
by Science, through the indisputable success of its rule over life and action, for
use in its own battle against any scientific contribution to the construction of
the socialist economy. The Bolshevists persistently tell us that religion is opium
for the people. Marxism is indeed opium for those who might take to thinking and
must therefore be weaned from it.
In this new edition of my book, which has been considerably revised, I have ventured to defy the almost universally respected
Marxian prohibition by examining the problems of the socialist construction of society
on scientific lines, i.e., by the aid of sociological and economic theory. While
gratefully recalling the men whose research has opened the way for all work, my
own included, in this field, it is still a source of gratification to me to be in
a position to claim to have broken the ban placed by Marxism on the scientific treatment
of these problems. Since the first publication of this book, problems previously
ignored have come into the foreground of scientific interest; the discussion of
Socialism and Capitalism has been placed on a new footing. Those who were formerly
content to make a few vague remarks about the blessings which Socialism would bring
are now obliged to study the nature of the socialist society. The problems have
been defined and can no longer be ignored.
As might be expected, socialists of every sort and description, from the most radical Soviet Bolshevists to the "Edelsozialisten"
of western civilization, have attempted to refute my reasonings and conclusions.
But they have not succeeded, they have not even managed to bring forward any argument
that I had not already discussed and disproved. At the present time, scientific
discussion of the basic problems of Socialism follows the line of the investigation
of this book.
The arguments by which I demonstrated that, in a socialist community,
economic calculation would not be possible have attracted especially wide notice.
Two years before the appearance of the first edition of my book I published this
section of my investigations in the Archiv für Sozialwissenschaft (Vol. XLVII, No.
I), where it is worded almost exactly as in both editions of the present work.
The problem, which had scarcely been touched before, at once roused lively discussion
in German-speaking countries and abroad. It may truly be said that the discussion
is now closed; there is today hardly any opposition to my contention.
Shortly after the first edition appeared, Heinrich Herkner, chief of the Socialists of the
Chair ("Kathedersozialisten") in succession to Gustav Schmoller, published an essay
which in all essentials supported my criticism of Socialism. His remarks
raised quite a storm amongst German socialists and their literary followings. Thus
there arose, in the midst of the catastrophic struggle in the
Ruhr and the hyper-inflation, a controversy which speedily became known as the crisis
of the "Social Reform Policy." The result of the controversy was indeed meagre.
The "sterility" of socialist thought, to which an ardent socialist had drawn attention,
was especially apparent on this occasion. Of the
good results that can be obtained by an unprejudiced scientific study of the problems
of Socialism there is proof in the admirable works of Pohle, Adolf Weber, Röpke,
Halm, Sulzbach, Brutzkus, Robbins, Hutt, Withers, Benn, and others.
But scientific inquiry into the problems of Socialism is not enough. We must also break down the
wall of prejudice which at present blocks the way to an unbiased scrutiny of these
problems. Any advocate of socialistic measures is looked upon as the friend of the
Good, the Noble, and the Moral, as a disinterested pioneer of necessary reforms,
in short, as a man who unselfishly serves his own people and all humanity, and above
all as a zealous and courageous seeker after truth. But let anyone measure Socialism
by the standards of scientific reasoning, and he at once becomes a champion of the
evil principle, a mercenary serving the egotistical interests of a class, a menace
to the welfare of the community, an ignoramus outside the pale. For the most curious
thing about this way of thinking is that it regards the question, whether Socialism
or Capitalism will better serve the public welfare, as settled in advance—to the
effect, naturally, that Socialism is considered as good and Capitalism as evil—whereas
in fact of course only by a scientific inquiry could the matter be decided. The
results of economic investigations are met, not with arguments, but with that "moral
pathos," which we find in the invitation to the Eisenach Congress in 1872 and on
which Socialists and Etatists always fall back, because they can find no answer
to the criticism to which science subjects their doctrines.
The older Liberalism, based on the classical political economy, maintained that the material position
of the whole of the wage-earning classes could only be permanently raised by an
increase of capital, and this none but capitalist society based on private ownership
of the means of production can guarantee to find. Modern subjective economics has
strengthened and confirmed the basis of the view by its theory of wages. Here modern
Liberalism agrees entirely with the older school. Socialism, however, believes that
the socialization of the means of production is a system which would bring wealth
to all. These conflicting views must be examined in the light of sober science:
righteous indignation and jeremiads take us nowhere.
It is true that Socialism is today an article of faith for many, perhaps for most of its adherents. But scientific
criticism has no nobler task than to shatter false beliefs.
To protect the socialist ideal from the crushing effects of such criticism, attempts have recently
been made to improve upon the accepted definition of the concept "Socialism." My
own definition of Socialism, as a policy which aims at constructing a society in
which the means of production are socialized, is in agreement with all that scientists
have written on the subject. I submit that one must be historically blind not to
see that this and nothing else is what has stood for Socialism for the past hundred
years, and that it is in this sense that the great socialist movement was and is
socialistic. But why quarrel over the wording of it! If anyone likes to call a social
ideal which retains private ownership in the means of production socialistic, why,
let him! A man may call a cat a dog and the sun the moon if it pleases him. But
such a reversal of the usual terminology, which everyone understands, does no good
and only creates misunderstandings. The problem which here confronts us is the socialization
of ownership in the means of production, i.e. the very problem over which a worldwide
and bitter struggle has been waged now for a century, the problem (above all others) of our epoch.
One cannot evade this defining of Socialism
by asserting that the concept Socialism includes other things besides the socialization
of the means of production: by saying, for example, that we are actuated by certain
special motives when we are socialists, or that there is a second aim—perhaps a
purely religious concept bound up with it. Supporters of Socialism hold that the
only brand worthy the name is that which desires socialization of the means of production
for "noble" motives. Others, who pass for opponents of Socialism, will have it that
nationalization of the means of production desired from "ignoble" motives only,
has to be styled Socialism also. Religious socialists say that genuine Socialism
is bound up with religion; the atheistical socialist insists on abolishing God along
with private property. But the problem of how a socialistic society could function
is quite separate from the question of whether its adherents propose to worship
God or not and whether or not they are guided by motives which Mr. X from his private
point of view would call noble or ignoble. Each group of the great socialist movement
claims its own as the only true brand and regards the others as heretical; and naturally
tries to stress the difference between its own particular ideal and those of other
parties. I venture to claim that in the course of my researches I have brought forward
all that need be said about these claims.
In this emphasizing of the peculiarities of particular socialist tendencies, the bearing which they may have on the aims
of democracy and dictatorship obviously plays a significant part. Here, too, I have
nothing to add to what I have said on the subject in various parts of this book
(Chapter 3, Chapter 15, and Chapter 31). It suffices here to say that the planned
economy which the advocates of dictatorship wish to set up is precisely as socialistic
as the Socialism propagated by the self-styled Social Democrats.
Capitalist society is the realization of what we should call economic democracy, had not the
term—according I believe, to the terminology of Lord Passfield and Mrs. Webb—come
into use and been applied exclusively to a system in which the workers, as producers,
and not the consumers themselves, would decide what was to be produced and how.
This state of affairs would be as little democratic as, say, a political constitution
under which the government officials and not the whole people decided how the state
was to be governed—surely the opposite of what we are accustomed to call democracy.
When we call a capitalist society a consumers' democracy we mean that the power
to dispose of the means of production, which belongs to the entrepreneurs and capitalists,
can only be acquired by means of the consumers' ballot, held daily in the market-place.
Every child who prefers one toy to another puts its voting paper in the ballot-box,
which eventually decides who shall be elected captain of industry. True, there is
no equality of vote in this democracy; some have plural votes. But the greater voting
power which the disposal of a greater income implies can only be acquired and maintained
by the test of election. That the consumption of the rich weighs more heavily in
the balance than the consumption of the poor—though there is a strong tendency to
overestimate considerably the amount consumed by the well-to-do classes in proportion
to the consumption of the masses—is in itself an 'election result', since in a capitalist
society wealth can be acquired and maintained only by a response corresponding to
the consumers' requirements. Thus the wealth of successful business men is always
the result of a consumers' plebiscite, and, once acquired, this wealth can be retained
only if it is employed in the way regarded by consumers as most beneficial to them.
The average man is both better informed and less corruptible in the decisions he
makes as a consumer than as a voter at political elections. There are said to be
voters who, faced with a decision between Free Trade and Protection, the Gold Standard
and Inflation, are unable to keep in view all that their decision implies. The buyer
who has to choose between different sorts of beer or makes of chocolate has certainly
an easier job of it.
The socialist movement takes great pains to circulate
frequently new labels for its ideally constructed state. Each worn-out label is
replaced by another which raises hopes of an ultimate solution of the insoluble
basic problem of Socialism—until it becomes obvious that nothing has been changed
but the name. The most recent slogan is "State Capitalism." It is not commonly realized
that this covers nothing more than what used to be called Planned Economy and State
Socialism, and that State Capitalism, Planned Economy, and State Socialism diverge
only in non-essentials from the "classic" ideal of egalitarian Socialism. The criticisms
in this book are aimed impartially at all the conceivable forms of the socialistic
Only Syndicalism, which differs fundamentally from Socialism, calls
for special treatment (Chapter 16, Section 4).
I hope that these remarks will
convince even the cursory and superficial reader that my investigation and criticisms
do not apply solely to Marxian Socialism. As, however, all socialistic movements
have been strongly stimulated by Marxism I devote more space to Marxian views than
to those of other varieties of Socialism. I think I have passed in review everything
bearing essentially on these problems and made an exhausting criticism of the characteristic
features of non-Marxist programmes too.
My book is a scientific inquiry, not
a political polemic. I have analysed the basic problems and passed over, as far
as possible, all the economic and political struggles of the day and the political
adjustments of governments and parties. And this will, I believe, prove the best
way of preparing the foundation of an understanding of the politics of the last
few decades and years: above all, of the politics of tomorrow. Only a complete critical
study of the ideas of Socialism will enable us to understand what is happening around
The habit of talking and writing about economic affairs without having
probed relentlessly to the bottom of their problems has taken the zest out of public
discussions on questions vital to human society and diverted politics into paths
that lead directly to the destruction of all civilization. The proscription of economic
theory, which began with the German historical school, and today finds expression
notably in American Institutionalism, has demolished the authority of qualified
thought on these matters. Our contemporaries consider that anything which comes
under the heading of Economics and Sociology is fair game to the unqualified critic.
It is assumed that the trade union official and the entrepreneur are qualified by
virtue of their office alone to decide questions of political economy. "Practical
men" of this order, even those whose activities have, notoriously, often led to
failure and bankruptcy, enjoy a spurious prestige as economists which should at
all costs be destroyed. On no account must a disposition to avoid sharp words be
permitted to lead to a compromise. It is time these amateurs were unmasked.
The solution of every one of the many economic questions of the day requires a process
of thought, of which only those who comprehend the general interconnection of economic
phenomena are capable. Only theoretical inquiries which get to the bottom of things
have any real practical value. Dissertations on current questions which lose themselves
in detail are useless, for they are too much absorbed in the particular and the
accidental to have eyes for the general and the essential.
It is often said that all scientific inquiry concerning Socialism is useless, because none but the
comparatively small number of people who are able to follow scientific trains of
thought can understand it. For the masses, it is said, they will always remain incomprehensible.
To the masses the catchwords of Socialism sound enticing and the people impetuously
desire Socialism because in their infatuation they expect it to bring full salvation
and satisfy their longing for revenge. And so they will continue to work for Socialism,
helping thereby to bring about the inevitable decline of the civilization which
the nations of the West have taken thousands of years to build up. And so we must
inevitably drift on to chaos and misery, the darkness of barbarism and annihilation.
I do not share this gloomy view. It may happen thus, but it need not happen
thus. It is true that the majority of mankind are not able to follow difficult trains
of thought, and that no schooling will help those who can hardly grasp the most
simple proposition to understand complicated ones. But just because they cannot
think for themselves the masses follow the lead of the people we call educated.
Once convince these, and the game is won. But I do not want to repeat here what
I have already said in the first edition of this book, at the end of the last chapter.
I know only too well how hopeless it seems to convince impassioned supporters
of the Socialist Idea by logical demonstration that their views are preposterous
and absurd. I know too well that they do not want to hear, to see, or above all
to think, and that they are open to no argument. But new generations grow up with
clear eyes and open minds. And they will approach things from a disinterested, unprejudiced
standpoint, they will weigh and examine, will think and act with forethought. It
is for them that this book is written.
Several generations of economic policy
which was nearly liberal have enormously increased the wealth of the world. Capitalism
has raised the standard of life among the masses to a level which our ancestors
could not have imagined. Interventionism and efforts to introduce Socialism have
been working now for some decades to shatter the foundations of the world economic
system. We stand on the brink of a precipice which threatens to engulf our civilization.
Whether civilized humanity will perish forever or whether the catastrophe will be
averted at the eleventh hour and the only possible way of salvation retraced—by
which we mean the rebuilding of a society based on the unreserved recognition of
private property in the means of production—is a question which concerns the generation
destined to act in the coming decades, for it is the ideas behind their actions
that will decide it.
Vienna, January 1932
 Herkner, "Sozialpolitische
Wandlungen in der wissenschaftlichen Nationalokonomie" (Der Arbeitgeber, 13, Jahrgang,
 Cassau, "Die sozialistische
Ideenwelt vor und nach dem Kriege" in Die Wirtschaftwissenschaft nach dem Kriege,
Festgabe fur Lujo Brentano zum 80. Geburtstag, (Munchen 1925) I Bd., p. 149 et seq.).
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