Mises Daily Articles
[This article is excerpted from American Affairs, Volume XII, Number 2 (April 1950).]
NOW from the housetops may be heard voices of fear and warning, saying to the people, "Beware! You are marching toward Socialism. The declivity is there!" The people scoff or stop their ears, and the march continues. Then the voice of despair may be heard saying, "We are lost. The people do not care. Nor will they hear the truth."
It is evident that the people do not believe it; and this, despite anything the voice of despair may say to the contrary, is owing partly to the fact that socialism is the wrong word. As an epithet it is worn thin. When spelled with a capital S it stands for a political doctrine that has neither a clear common definition in the world, nor one that makes any immediate sense to American society. Marxian socialism in Soviet Russia is not like Fabian socialism in Great Britain. National socialism in Germany was Nazism. Chinese socialism may turn into something unique, notwithstanding the Soviet pattern with which it begins. And again, socialism in a surplus country like this — the one great surplus country in the world — would certainly be unlike any kind of socialism hitherto imagined.
Fifty years ago Arthur Balfour said: "Socialism means the public ownership of the means of production and distribution; that is Socialism and nothing else is Socialism."
There is probably no better definition. All the rest is method. Private property as a means of production may be abolished by violence as in Soviet Russia, by edict as in Hungary just now, or by nationalization as in Great Britain.
But try making that definition square with what may be called the Truman Program, or the Fair Deal, or for that matter the New Deal before it. Here are great departures, indeed, all very earnestly denounced as socialistic; yet if they do not propose to abolish private ownership of the means of production and distribution, then according to the definition they are not socialistic. Neither in the last annual message of the President on the State of the Union, nor in the report of his Council of Economic Advisers, was there a word agreeable to the proper definition of socialism, spelled with a big orthodox S.
On the contrary, the use and importance of private enterprise were heavily stressed — with only this difference between reality past and reality present, that henceforth private enterprise must collaborate intimately with government. The economic welfare of the national economy may no longer be trusted to free enterprise alone, nor the regulation of it to the play of free prices, free markets, and free competition. Hereafter the government must interfere with its own vast regulatory powers to keep business at a high rhythm, to maintain full employment, to make prices just, and to see that the national income is distributed in an equitable manner according to ideals of social justice.
This difference, it is true, cuts to the very taproots of the American tradition. The Jeffersonian doctrine that that government is the best which governs the least is forsaken. But is it Socialism? If not, then those who use the word to describe what is happening to the shape and meaning of American government not only confuse and divide the people in their thinking but give the enemy the defense of false identification.
ASK the people in the street where they are going. What is their goal? They may be vague about it. They may not know. But certainly their conscious goal is not socialism. The American people are not Socialist minded — not yet. Last year Drs. Link and Freiberg turned their Psychological Barometer to the question of socialism. It was a poll of miscellaneous city opinion. The results were as follows:
The answers were then classified by income brackets — upper, upper middle, low middle, and low. The result was to show that even in the low bracket 64% were against socialism, 8% were without conviction and only 28% were for it. That is about what one would expect.
Upon further analysis of the poll Drs. Link and Freiberg arrived at the following conclusions:
"Though 75% of the people say that they are against socialism in the U.S.A., they still favor certain measures which fall within their own definition of socialism.
"For instance, the T.V.A., and the government ownership and operation of public utilities, is favored by 66% of those who say they are against socialism.
"Obviously, socialism as a word or symbol, and socialism in terms of specific steps in government control, are not necessarily the same. People may say they are against socialism in general but still favor specific socialist measures.
"Even though socialism may be a scare-word to 75% of the people, it does not follow that this fear will be translated into the fear of specific measures such as government ownership of public utilities, government housing, 'socialized' medicine and the like."
TAKING this poll at its face value, the two most important inferences are —
First, that if people think they are against socialism they will of course be indifferent to those voices from the housetops, and
Second, that a conscious attitude against what people think is socialism may be progressively disarmed by a government that holds out to them material benefits, ameliorations and the hope of security.
But by whom are these blessings of government held out to the people? By socialists? No. They are held out competitively by Democrats, Republicans, and Liberals who all alike would honestly deny that they are socialists. Most people would think it absurd to call President Truman a socialist. Many Republicans now denounce the Truman Program as socialistic, and yet the Republican Party is embarrassed by the things that it set down in its own platform — things which before the New Deal it would have said were socialistic. In its 1944 platform the Republican Party pledged itself to support the following premises of a welfare state:
"… the purposes of the National Labor Relations Act."
"The Wage and Hour Act."
"The Social Security Act and all other Federal statutes designed to promote and protect the welfare of the American working man."
"Extension of the existing old age insurance and unemployment insurance systems to all employees not already covered."
"The establishment by Federal legislation of a permanent fair employment practice commission."
"Stimulation of state and local plans to provide decent low-cost housing properly financed by the Federal Housing Administration or otherwise, when such housing cannot be supplied or financed by private sources."
"An American market price to the American farmer and the protection of such prices by means of support prices, commodity loans, or a combination thereof, together with such other economic means as will insure income to agriculture that is fair and equitable."
Had the Republican Party gone socialist then? Nobody will say that. But it certainly did not foresee that these same things when carried a little further by the Democrats would cause it to call the Truman Program socialistic. It had forgotten that every extension of government begins small and has the character of a wedge.
The thin edge enters easily. It was so with the income tax, which was voted on the understanding that it was never going to be used except in times of emergency, and then in a few years became an instrument of government policy and was used to redistribute the wealth. It was so also with social security. Public assistance at first was thought of as supplemental and transitional only, to sustain the helpless until everybody could be covered by a system of contributory insurance. What came of it in a little while was the idea of public assistance as a right — as a right to receive at public expense not merely subsistence but a comfortable living.
And moreover, the Republican Party in 1944 wanted the votes of the New Deal's beneficiaries.
NEVERTHELESS, the voices from the housetops are saying two things true. The people are marching and the declivity is there. What are they marching toward if it cannot be called socialism? They are marching straight into the arms of big government, now government with a capital G —
- A government already so big that bigness itself becomes a defense, which is to say that, even if it were possible to cut it down, people would dread to do it for fear of the shock to business;
- A government that undertakes to maintain full employment, banish depression, and relieve everybody of the burden of poverty;
- A government that will tame private enterprise and make it cooperative, or else;
- A government that will see to it that the national income is fairly distributed;
- A government that more and more intervenes in the transactions of everyday life, sets the minimum wage, distributes leisure, and proposes to mind the health, the education, and the housing of the nation, the diet of school children and how people tolerate their neighbors.
In that light, if you will read again the President's message on the State of the Union, forgetting to look for socialism with a big S, you will see how it is with government that when its sign of power is ascendant, increase itself becomes the reason for increase, the rate of growth is self-accelerating, each new responsibility entails further responsibility.
How shall its expenditures be determined? By its income? No, but by its responsibilities. That means that its expenditures will be what they must be. They must be, says President Truman, "consistent with our international requirements and the essential needs of economic growth and the well-being of our people."
Those who look only at the fact that government is running into debt at the rate of $5 billion a year, he says, miss the magnificent view. This deficit spending creates prosperity; it brings nearer the day when the national income will be threefold greater. Think what these expenditures do for prosperity and how they put money in everybody's pocket. "The federal budget," says the President, "is a substantial part of the total flow of income and expenditures in our country each year."
He asks you to look at the fact that the total of all government payments in 1949, according to his figures, amounted to 23½% of the total national output, which is to say that the people were dependent upon government for nearly one fourth of their daily business.
Imagine what might happen if expenditures by government were suddenly reduced. What would people do for income? What would the world do?
"Irresponsible and shortsighted budgetary action," says the President, "could contribute to a worsening of the world situation and to a decline in production and employment in the United States." Therefore, he continues, "we must guard against the folly of attempting budget slashes which would impair our prospects for peace and cripple the programs essential to our national friends."
IF we look back it may make us a little giddy, the President says, to see how far we have come on "the road to a better living for all"; but it "should make us humble to think as we look ahead how much further we have to go."
The government cannot stop. It must not be afraid of its responsibilities. It must make the "substantial expenditures which are necessary to the growth and expansion of the domestic economy." To spend the money to make the economy grow faster and faster, so that the government's income will rise perhaps even faster — that is the "quickest and safest way" to balance the budget.
Therefore, the President recommends that the power of government be increased to the following ends:
That it may meet "a special responsibility to help create and maintain the conditions which will permit the growth we know is possible";
That it may see to it, first of all, that there is "a fair distribution of our increasing prosperity among all the great groups of our population";
That it may provide aids to independent business, so that it may have the credit and capital to compete in a system of free enterprise;
That it may assist small business and encourage the growth of new enterprise;
That it may establish "a Labor Extension Service to encourage educational activities" in the field of collective bargaining;
That, besides supporting agricultural prices with public funds, it may go on to guarantee the farmer a minimum cash income according to the Brannan plan;
That, having undertaken to subsidize low cost housing for poor families, it may now go on to subsidize housing for "middle income" families;
That it may make yet larger "investments in the conservation and development of our resources";
That it may "encourage the production and transmission of public power";
That it may subsidize "a National Science Foundation";
That it may develop the Social Security System "into the main reliance of our people for basic protection against the economic hazards of old age, unemployment, and illness";
That it may "establish a system of medical insurance which will enable all Americans to afford good medical care";
That it may provide assistance to the states to maintain and improve their schools;
That it may assume entire responsibility for protecting every citizen in his civil and human rights;
That it may "prevent the kind of anarchy and irresponsibility in world trade that did so much to bring about the depression in the 1930's"; and
That, in cooperation with other free nations, it may "extend the full benefits of the democratic way of life to millions who do not now enjoy them, and preserve mankind from tyranny and dictatorship."
THUS the President himself delineates the features of insatiable government, moving with terrific speed down the declivity of deficit spending.
If you say it is toward socialism you leave out the possibility that it may turn into something else. Much more than that, if you say it is toward socialism you fill the view with smoke and may fail to see clearly what it already has in common with every kind of totalitarian government we know anything about, namely, insatiability. There is no way to sate its appetite for more power. Fascist government was insatiable, Nazi government was insatiable, Marxian government in Soviet Russia and Labor government in Great Britain are insatiable — all with one lust, which is the lust for power; all alike resolved to control the people's way of living according to a plan, and all alike creating a dependent society.
The passion in every case is to act upon people by compulsion, always of course for their own good. Differences of ideology may be less important than we think. It may be the idea of conquest, the idea of equality, the idea of a classless society, the idea of a welfare state or the idea of complete security for every citizen. Let it be the government that imposes it, give that government the power to command acquiescence by fear or bribery, by any system of rewards and punishment, and the result in every case will be the same. The ancient pattern will be restored. The authority of government will rise and the people will become subservient. And where people are still marching, as in this country, that is what they are marching toward.
The exact shape of the sequel is probably unpredictable. It is already evident, for example, that the American people may arrive at a planned society without changing a word of the Constitution, only the meaning of it by interpretation. That is what Aristotle described as revolution within the form. But the kind of sequel, if not the precise form of it, may be foretold; and if there is no proper name for it one may have to be invented.
Hilaire Belloc said it would be the servile state. He defined the idea of the socialist as that of "putting the means of production into the hands of politicians to hold in trust for the community." Then he wrote:
"These aims and convictions are simple enough, and my point is not that they are either illusions or doubtful, but that in point of fact we are not headed toward them; that the effect of socialist doctrine upon capitalist society is to produce a third thing, different from either of its two bêtes noires, to wit, the servile state — a society in which the proletarian mass shall not suffer from particular regulations, oppressive or beneficent, but shall change their status, lose their present legal freedom and be subject to compulsory labor."
Roscoe Pound, dean emeritus of Harvard Law School, calls it the service state. His description of it is penetrating. He says:
"The service state, the state which, instead of preserving peace and order and employing itself with maintaining the general security, takes the whole domain of human welfare for its province and would solve all economic and social ills through its administrative activities, has been creeping up on us in the present century. It was known earlier in Continental Europe. But although some writers in England were calling attention to its possibilities at the end of the last century, it was so at outs with ingrained modes of Anglo-American thought that few tried to put the pieces of evidence together to see what it indicated as to the direction in which we have been moving. In the meantime, since the first world war, it has made exceedingly rapid progress and has covered already a very wide field of individual activity and of official promotion of wide welfare programs on every side.
"I say service state rather than welfare state. The term welfare state seems to me a boast. Governments have always held that they were set up to promote and conserve public welfare. This is implicit in the synonym commonwealth — the common weal or general welfare personified in the state. So far men have agreed. But when it comes to the question how the common weal or general welfare is to be achieved, they have differed and do differ profoundly. Some think the general welfare is best promoted by a government which maintains order and administers justice; for the rest, leaving men free to do things for themselves in their own way so far as they do not commit aggressions upon others or subject others to unreasonable risk of injury, and act in good faith in their intercourse with others. On the other hand, there have always been those who have believed in a benevolent government which helps men instead of leaving them free to help themselves; who have believed in a paternal ruler or paternal state doing things for his subjects or its citizens to the fullest extent.
"What is to be the effect of the service state upon American constitutional democracy? The service state as it develops as a superservice state must be par excellence a bureau state. From the very nature of administration the bureau state calls for a highly organized official hierarchy. A hierarchy calls for a superman (very likely an ex officio superman) at its head. Thus, unless we are vigilant, the service state may lead to a totalitarian state. It has Marxian socialism and absolute government in its pedigree and has grown up along with the totalitarian state in other parts of the world. Liberty — free individual self-assertion, individual initiative and self-help — is looked on with suspicion if not aversion by the service state, and its advocates seek a 'new concept of liberty' as freedom from want and freedom from fear, not freedom of self-assertion, or self-determination. Self-help by the individual, competing with the service rendered by the state, seems an interference with the regime maintained by the government. Spontaneous individual initiative is frowned on as infringing on the domain of state action. The service state easily becomes an omnicompetent state with bureaus of ex officio experts and propaganda activities carried on at public expense. If the step to it is gradual, the step from it to an absolute state is easy and may be made quickly.
"A service state must be bureaucratic. Bureaus are characteristically zealous to get everything in reach under their control. Would it be a great public service to have a bureau of psychologists to examine us for our aptitudes and assign us, whether we like it or not, to the calling for which they find us fitted? Before the advent of psychologists such a state was argued for by Greek philosophers. The later Eastern Roman Empire stabilized society by putting and keeping men in callings somewhat in this way. An omnicompetent state postulates omnicompetent bureaus. Why in the perfect all-regulating state allow human energy to be wasted by permitting individuals to engage in futile efforts to employ themselves?"
The Honorable James F. Byrnes, former Secretary of State and Justice of the Supreme Court — a Democrat — calls it statism. He says:
"We are going down the road to statism. Where we will end up, no one can state. But if some of these new programs, seriously proposed, should be adopted, there is danger that the individual, whether farmer, worker, manufacturer, lawyer, or doctor, will soon be an economic slave pulling an oar in the galley of the state."
NOTE that Dr. Pound and Mr. Byrnes both suggest that a dependent society will in the end taste involuntary servitude. Few Americans can imagine anything so strange or extreme. Neither could the people of England. In the ecstasy of taking control of government in England the socialists announced that for once, and for the first time, they would demonstrate a planned society without forced labor. Within less than two years they came to it, and proclaimed what they euphemistically called a Control of Engagement Order. It was to be temporary, for the emergency only, and was limited to fourteen months. Before its life expired, it was extended for one year. Last year it was extended again, and is still in force. True it has not been widely used but there it is, a power in the hands of a government that was pledged to reconcile planning with freedom.
And it seems to be almost forgotten that only three years ago Mr. Truman proposed to militarize the railroad labor force to end a strike. Having intervened in the labor contract to promote collective bargaining and to exempt organized labor from competition, the government's next problem is what to do about a strike that creates a national emergency. Then, like an outraged parent, it thinks of compulsion and justifies it on grounds of general welfare.
In the same way, having undertaken to provide social security, the government moved very easily to a law of compulsory thrift. Compulsory is a stark word with no shades of meaning. To a people schooled in the habits of voluntary thrift the idea of compulsory thrift was very strange not long ago — almost as strange as now the idea of forced labor — and yet the right of the individual to receive the whole of the wage he has earned and to do with it what he likes has been surrendered to government, almost without protest. The individual who does not like it is helpless.
SINCE the first of this century the deepening historic enigma has been the rise in the power and authority of government and the recession of individual freedom everywhere in the world. In the East it has been made vivid by the enormities of tyranny and oppression; yet it is stranger in the West, where individualism was fast rooted and where freedom was understood in both theory and practice. At the same time there has occurred in the West what Professor Corwin calls, "a decadence of the fear of aggression by government."
So far as that may have happened it has been most evident in the United States and Great Britain, where people have strongly believed in the divine right of majorities. That was the faith that delivered people from the divine right of kings. So far it was good. Nevertheless, at a later time that same faith served to obscure truth in two unpopular aspects. People had to learn by experience that majorities may be as tyrannical as kings, and secondly, that when government is big enough in its own right it will find ways to appease, cajole, and command majorities — one way being to serve up palatable minorities on the tax platter.
But since all intelligent people may now observe these consequences flowing from the divine right of majorities, and since instead of turning back they continue to march toward supreme government, one must take this explanation to be very limited. The great enigma remains.
Momentous political changes may obey a law of cycle which we hardly comprehend. If you could plot the course of freedom for 2,000 years you would see many fluctuations up and down, some of them violent and sudden. In The Meaning of History, Nicholas Berdyaev wrote:
"The path of freedom is difficult and tragic, more beset than any other with heroic responsibility and martyrdom. The paths of necessity and compulsion are easier, less tragic and less heroic. That is why the historical process shows so many derogations from the path of freedom to that of compulsion."
It would not be the first time that people had turned from the perplexities of freedom to the comforts of authority, from the anxieties of self-responsibility to the security of status. In one of his essays on liberty Lord Acton wrote:
"Looking back over the space of 1000 years, which we call the Middle Ages, to get an estimate of the work they did, if not toward perfecting their institutions at least toward attaining the knowledge of political truth, this is what we find. Representative government, which was unknown to the ancients, was almost universal. The methods of election were crude; but the principle that no tax was lawful that was not granted by the class that paid it — that is, that taxation was inseparable from representation — was recognized not as a privilege of certain countries but as the right of all. 'Not a prince in the world,' said Philip de Comines, 'can levy a penny without the consent of the people.' "
After that what happened? Lord Acton continues:
"By what seemed the operation of an irresistible and constant law, royalty prevailed over all enemies and competitors and became a religion. Year after year the assemblies that represented self-government all over the Continent met for the last time and passed away, to the satisfaction of the people, who had learned to venerate the throne as the constructor of their unity, the promoter of prosperity and power, the defender of orthodoxy and the employer of talents…. One generation beheld the change all over Europe from the anarchy of the days of the Roses to the passionate submission, the gratified acquiescence in tyranny that marks the reign of Henry VIII and the kings of his time."
TOWARD something is from something. To see what it is people are marching from one need only to read again the last chapter of John Stewart Mill's essay "On Liberty," published in the middle of the last century, wherein he sets forth the reasons why the authority of government over the individual must be limited if what you want is a society of free men, to be developed and perfected by experience. He said:
"In many cases, though individuals may not do the particular thing so well, on the average, as the officers of government, it is nevertheless desirable that it should be done by them, rather than by the government, as a means to their own mental education — a mode of strengthening their active faculties, exercising their judgment, and giving them a familiar knowledge of the subjects with which they are thus left to deal.
"These are not questions of liberty, and are connected with that subject only by remote tendencies; but they are questions of development. It belongs to a different occasion from the present to dwell on these things as parts of national education; as being, in truth, the peculiar training of a citizen, the practical part of the political education of a free people, taking them out of the narrow circle of personal and family selfishness, and accustoming them to the comprehension of joint interests, the management of joint concerns — habituating them to act from public or semi-public motives, and guide their conduct by aims which unite instead of isolating them from one another. Without these habits and powers, a free constitution can neither be worked nor preserved; as is exemplified by the too-often transitory nature of political freedom in countries where it does not rest upon a sufficient basis of local liberties.
"The management of purely local business by the localities, and of the great enterprises of industry by the union of those who voluntarily supply the pecuniary means, is further recommended by all the advantages which have been set forth in this essay as belonging to individuality of development, and diversity of modes of action.
"Government operations tend to be everywhere alike. With individuals and voluntary associations, on the contrary, there are varied experiments, and endless diversity of experience. What the state can usefully do is to make itself a central depository and active circulator and diffuser, of the experience resulting from many trials. Its business is to enable each experimentalist to benefit by the experiments of others; instead of tolerating no experiments but its own.The third and most cogent reason for restricting the interference of government is the great evil of adding unnecessarily to its power. Every function superadded to those already exercised by the government causes its influence over hopes and fears to be more widely diffused, and converts, more and more, the active and ambitious part of the public into hangers-on of the government, or of some party which aims at becoming the government.
"If the roads, the railways, the banks, the insurance offices, the great joint-stock companies, the universities, and the public charities, were all of them branches of the government; if, in addition, the municipal corporations and local boards, with all that now devolves on them, became departments of the central administration; if the employees of all these different enterprises were appointed and paid by the government, and looked to the government for every rise in life; not all the freedom of the press and popular constitution of the legislature would make this or any other country free otherwise than in name. And the evil would be greater, the more efficiently and scientifically the administrative machinery was constructed — the more skillful the arrangements for obtaining the best qualified hands and heads with which to work it."
That was the philosophy that governed American thinking, feeling, and behavior from the beginning of the Republic down to the New Deal — a Constitutional, representative, limited government, with emphasis on limited, very jealous of the rights of minorities. And that is what people are marching from.