BLUNDERS OF SOCIALISM

Evening Star, Issue 18716, 19 August 1924, Page 6

BLUNDERS OF SOCIALISM

AGAINST HUMAN NATURE. EVER-VARYING TRADE NEEDS. Where has tho Socialist diagnosis of the economic problem gone wrong? It has gone wrong (says tho ‘Round Table,’ because it has considered the distribution of tho rewards of industry but lias _ not studied how those rewards wore gained. Above all, it has not reckoned with tho factor of marketing or tho problem of satisfying demand. If tho needs and desires of man were uniform, measurable, and predictable, Socialism might possibly work. Public ownership and management ■aro successful precisely in those fields such as gas, electricity, tramways, where the demand is constant. But human desire is in a constant state of change. Mankind’s need of food, clothing, housing, transportation, and recreation is constant; but its taste is ever-changing, and it is ever seeking some new or better or cheaper way of satisfying those fundamental needs. Every hour man is seeking new varieties of food new fabrics, better contrivances in tho iiousc, improved machinery in the workshop or in tho field, new and more ambitious forms of amusement, wider facilities. Wherever ho can lind them ho will give the product of his own labor in exchange, leaving the older products unsold on the stalls of the market place. Thereforo industry is incessantly inventing these novelties, producing them, and making them cheaper, because in no other way can it obtain the custom from which wages and profits can be paid and employment secured. Businesses aro in competition not so much with one another as with human desire. Businesses disappear if they cannot adapt themselves rapidly and continuously to tho changes in human desire. The capital sunk in them is lost, and the labor goes into the employ of some more intelligent, resourceful, and enterprising firm.

BUSINESSES MUST BE ADAPTABLE. Would-bo reformers of industry must allow for these facts. Tim overwhelming mass of people aro dependent for their living on producing better and more serviceable and cheaper food, clot lies, ships, locomotives, engineers’ products, pottery, and so on. than they have done in the past, or the buying public will give its custom to others who are move adaptable, efficient, and enterprising. To-day the initiative, is taken by nmn possessed of ideas and organising ability, who make savings themselves, or borrow the savings of build the factories, pay the expenses between originating production and tho receipt of cash for the finished product, and thereafter continuously improve and expand their enterprise. And unless these men are present in sufficient abundance, and are allowed to do their work with the greatest possible efficiency, or unless Labor or tho State can do that work with equal or more efficiency, tho national standard of living will decline. For good or ill, (hat is the world in which we live. It has become a more competitive and strenuous world, not through (lie “ profiteering ” motive, but because modern invention has immensely multiplied the possibility of satisfying man’s innate desire lor novelty, variety, and progress. There lias never been a time when man’s desires were not infinite; but till recently it was impossible for him to satisfy them except on tho most mode : rate scale. The root of our present competitive industrial civilisation is the immense expansion in recent times in the moans of satisfying humanity's insatiable needs. And there is no method of arresting the onward rush of modern industrial civilisation save an alteration in human demand itself.

WHY RUSSIAN EXPERIMENTS FAILED.

Tho Communists have attempted to deflect human desire. In Russia Lenin saw that if Communism was to succeed he must control demand. He coni rolled it by confiscating all private property and absolutely forbidding private enterprise of every kind. But Communism lias completely broken down. The peasants would not abandon the private ownership of their land. Neither peasant nor worker would produce efficiently for the common pot when all relation between skill or effort and reward was removed. So the wheels of national production slowed clown until tho standard of living fell to famine point. The stimulus, of private ownership and enterprise and piofit was restored in 1921 in tile new economic policy, and the standard of living in Russia began once more to rise. To-day, while the Communists, keep in their own hands most of (he great industries and the hanks, transportation, and foreign trade, the “ncpmcn,” or smallscale capitalists, aro proving so much more successful in manufacturing what llio people want and in saving the capital for enterprise that it seems only a question of lime for Socialism, even in its present limited form, to he abandoned in favor of practically unrestricted Capitalism.

NOVELTY AND PROGRESS ESSENTIAL.

Modern industrialism reals upon the insatiable demand of mankind for novelty and progress. And, granted that it is a good thing that humanity should have freedom to,satisfy these desires, Capitalism is the best system ever contrived for expanding the variety and interest of human life. Most of the Socialist criticism of Capitalism has boon based upon emphasising its defences and failing to recognise its fundamental merits. One merit is that it has produced an incomparably higher standard of living and an infinitely more varied life for the whole community than any system of wealth production previously known to history. Tt has dona so by enlisting tho energy and enterprise of immense numbers of people in the difficult and risky business of, satisfying that multiform thing, human demand. Capitalism has made it possible for these people lo reap ample reward for successfully supplying human needs.

MR RAMSAY MACDONALD'S MISTAKE.

One of tho ways in which Socialism has gone wrong may he illustrated by a statement of Mr Ramsay MacDonald. In ‘ Socialism, Critical and Constructive,'’ he writes;—“Tim first essential to their (labor) being employed at all is that their employers make profits by allowing them to work. This is the crux of the whole matter. Tho machinery of production and exchange has been constructed and is run in order that commercial need may bo supplied by self-interest, and, in the nature of the ease, tho self-interest is the selfinterest of tho owners of industrial capital.’’ The essential Socialist fallacy could not ho better expressed than in these words. In (ho first place tho employer does not “ allow ” his employees to work. Without his knowledge and ability, and without his use of his own or somebody else’s savings, tlm vast majority are unable to make'anything which their neighbors will buy. Without employment they would starve. In the second place.', tho machinery of production and exchange only runs if, in fact, it does serve the community’s needs. It any part of it docs not produce what tho world wants, it will cease to pay, the capital invested in it will bo lost, and it will disappear. The fundamental merit, of Capitalism is that it can only exist by successful public service. There is a- complete confusion of ideas in tho Socialist’s argument about “service” being the right motive for industry, and profit, being the wrong._ The, question of whether a. particular kind of product is one of “service” or not cannot bo determined by the producer or the State, but by the 'purchaser. If it suits his needs lie will buy it. If it docs not ho will leave it nnbought. Tho _ true test of whether, a particular activity is a “service” or not is whether it satisfies demand. And if one analyses Socialism closely it becomes apparent that, “service,” in tho Socialist sense, means forcing the consumer to take, not what ho wants, but what the producer or tho State- considers that he ought to want. And this is the rock upon which Socialism is bound to be wrecked. COMPETITION MUST BE FACED.

Socialism, as it is believed in by the great mass of Socialists, is the elimination of the capitalist, of private profit-making, and of competition, by socialisation of the means of production, distribution, and exchange. Such a system cannot work.

If social direction of industry is to make progress at all, it will do so only because the State, municipalities, or trade unions go into business on exactly the same competitive basis as private enterprise, and prove in practice more efficient than private enterprise in every field into which they enter. Despite the dreams of idealists, there is no possibility of dodging economic law. 'Man can live only by doing something or making something which bis neighbor will voluntarily buy. Efficiency in serving the world’s needs is the only fund from which high wages and high standards of living can bo paid.