Statist socialism in Britain and the United States

In this period capitalism came under sustained critical fire from a number of quarters. For some, such as the Fabian socialists, the focus was on the anarchic nature of a system characterised by wasted resources, most obviously the unemployment of labour; by its instability, as evidenced by the periodic economic crises which afflicted it; and by the growth of monopoly power, which disadvantaged both labour and the consumer.

As to the growth of monopoly power, it was the particular Fabian view that any system which involved private ownership of the means of production necessarily entailed its exercise. This was so because the supply of all productive factors was finite and, gen­eralising from the principles of Ricardian land rent theory to capital and labour, this made for an economic surplus on all intra-marginal factors accruing to their owners; a surplus denominated a “rent of ability” in the case of highly skilled and educated labour and “interest” in the case of capital. As Sidney Webb put it in a Fabian Tract, English Progress towards Social Democracy (1892), “the additional product determined by the relative differences in the productive efficiency of the different sites, soils, capital and forms of skill above the margin of cultivation has gone to those exercising control over those valuable but scarce productive factors” (Webb 1892: 5).

Such a view of things led on logically to a critique of the contemporary allocation of resources, with a skewed distribution of income and wealth, resulting from the exercise of monopoly power, producing for Webb “a flagrantly ‘wrong production’ of commodi­ties”: “the unequal value of money to our paupers and our millionaires depriving the test of “effective demand” of all value as an index to social requirements” (Webb 1892: 11).

By way of remedy, Fabians such as William Clarke (1852-1901) supported the idea of a radically redistributive fiscal policy “of a socialistic character, involving collective checking of individual greed and the paring of slices off the profits of capital in the inter­ests of the working community” (Clarke 1889: 110). However, it was recognised that this, of itself, would be insufficient. For, as Sidney Webb put it, “the purpose of socialism is not the division of wealth among the poor but the assertion of the right of the community to the complete control over the means of production” (Webb 1892: 9). Or as George Bernard Shaw (1856-1950) phrased it, “socialism, as understood by the Fabian Society, means the organisation and conduct of the necessary industries of the country and the appropriation of all forms of economic rent of land and capital by the nation as a whole through the most suitable public authorities” (Shaw 1896: 5). Socialism required, there­fore, the public ownership of a substantial part of the means of production, distribution and exchange. Only then would the collective planning and organisation of economic activity eliminate the exploitation, economic anarchy and waste which characterised contemporary capitalism.

Here, with the growth of industrial monopolies, history seemed to be moving in a Fabian direction, laying the basis for what Annie Besant (1847-1933) anticipated would be “the taking over of the great centralized industries, centralized for us by the capital­ists, who thus unconsciously pave the way for their own supersession” (Besant 1889 [1962]: 190). (This is a very Marxist idea - it is also a very Fabian idea as they too saw the march of economic history in these “progressive” terms.) In effect the choice now lay between public and private monopoly and the Fabians looked to the former, with the gradual emergence of state and municipally owned and controlled enterprises, after the appropriate compensation of their existing owners.

Statist socialism also flourished in the United States in this period, in part as a consequence of the influx of European immigrants who brought with them the doctrines of Marx and other European socialists. There were, though, indigenous writers whose thinking proved influential, not just in the United States but also in Britain, most notably Laurence Gronlund (1846-99) and Edward Bellamy (1850-98).

Bellamy’s (1888 [1982]) utopian fantasy, Looking Backward, 2000-1887, was set in a twenty-first century Boston whose essentially socialist organisation of society contrasted with that prevailing in contemporary America. The work was one of the most widely read and influential in the history of American socialism, in large measure because it spoke to the challenges and discontents of the turbulent and dynamic experience of a rapidly industrialising fin-de-siecle United States.

For Bellamy that turbulence was manifested in the abandonment of production to the “haphazard efforts of individuals” who had “no means of knowing what demand there was for any class of products or what was the rate of supply” (Bellamy 1888 [1982]: 223). And in the absence of any “common control of the different industries and the conse­quent impossibility of their orderly and co-ordinated development”, disastrous micro and macroeconomic consequences were inevitable. Specifically, there was “waste by mis­taken undertakings... waste from competition and mutual hostility... waste by peri­odical gluts and crises, with... consequent interruptions of industry... waste from idle capital and labour at all times”. As “the industries of the world multiplied and became complex and the volume of capital was increased... business cataclysms [also] became more frequent” (Bellamy 1888 [1982]: 169, 171).

For Gronlund too, in The Co-operative Commonwealth (1886), “production by... [capitalist] manufacturers... must necessarily be absolutely planless. It depends alto­gether on chance... All their production, all their commerce is thus in the nature of gambling.

The solution to all this was public ownership as the basis for a scientific ordering of economic life. Prices were to be objectively determined by reference to the expenditure of labour time, and the allocation of resources would have reference to accurate statistical information on the extent of communal needs and thence the particular social utilities of different goods and services. At a macroeconomic level, crises would be eliminated by a calculated matching of aggregate demand with the aggregate capacity to supply and this would spell an end to the waste of unemployment and underutilised productive capacity. In short, the anarchy and planlessness of competitive market capitalism was to give way to the rational, social control and administration of economic activity.

In Britain writers such as Robert Blatchford (1851-1943) and Marxists such as H.M. Hyndman (1842-1921) saw things in a similar light and advanced comparable solutions. As to Blatchford, if Bellamy’s Looking Backward was the most popular work of socialist literature published in the late nineteenth and early twentieth-century United States, then the former’s Merrie England (1893) had a comparable standing in Britain. Blatchford professed himself “to have been a communist of the William Morris type” (Blatchford 1899: 10), but in truth his conception of the infrastructure of socialism, en route to the realisation of a Morrisian vision, was very different.

As with Gronlund and Bellamy, Blatchford believed that at root many of the failings of contemporary capitalism derived from its unplanned and anarchic nature, with private ownership of the means of production entailing individualistic and unco-ordinated eco­nomic decision-making. As he wrote in Britain for the British (1902), “today the indus­tries of England are not ordered nor arranged but are left to be disordered by chance and by the ups and downs of trade” (Blatchford 1902: 87). Like Gronlund and Bellamy too, Blatchford took a statist view of the initial economic organisation of a future socialist commonwealth. Thus “the land and all the machines, tools and buildings used in making needful things, together with all the canals, rivers, roads, railways, ships and trains used in moving... needful things shall be the property of the whole people” (Blatchford 1898: 13). On this basis and under what he termed “ideal socialism”, “the industry of the country would be organised and managed by the state” and “goods of all kinds would be produced and distributed for use, and not for sale, in such quantities as were needed” (Blatchford 1894: 103).