The second part of the Essay from Belloc, taken from his classic work, The Servile State.
From the ChesterBelloc Mandate
What of the second factor, the gambling chance which the Capitalist system, with its necessary condition of freedom, of the legal power to bargain fully, and so forth, permits to the proletarian of escaping from his proletariat surroundings?
Of this gambling chance and the effect it has upon men's minds we may say that, while it has not disappeared, it has very greatly lost in force during the last forty years. One often meets men who tell one, whether they are speaking in defence of or against the Capitalist system, that it still blinds the proletarian to any common consciousness of class, because the proletarian still has the example before him of members of his class, whom he has known, rising (usually by various forms of villainy) to the position of capitalist. But when one goes down among the working men themselves, one discovers that the hope of such a change in the mind of any individual worker is now exceedingly remote. Millions of men in great groups of industry, notably in the transport industry and in the mines, have quite given up such an expectation. Tiny as the chance ever was, exaggerated as the hopes in a lottery always are, that tiny chance has fallen in the general opinion of the workers to be negligible, and that hope which a lottery breeds is extinguished. The proletarian now regards himself as definitely proletarian, nor destined within human likelihood to be anything but proletarian.
These two factors, then, the memory of an older condition of economic freedom, and the effect of a hope individuals might entertain of escaping from the wage-earning class, the two factors which might act most strongly against the acceptation of the Servile State by that class, have so fallen in value that they offer but little opposition to the third factor in the situation which is making so strongly for the Servile State, and which consists in the necessity all men acutely feel for sufficiency and for security. It is this third factor alone which need be seriously considered to-day, when we ask ourselves how far the material upon which social reform is working, that is, the masses of the people, may be ready to accept the change.
The thing may be put in many ways. I will put it in what I believe to be the most conclusive of all.
If you were to approach those millions of families now living at a wage, with the proposal for a contract of service for life, guaranteeing them employment at what each regarded as his usual full wage, how many would refuse?
Such a contract would, of course, involve a loss of freedom: a life-contract of the kind is, to be accurate, no contract at all. It is the negation of contract and the acceptation of status. It would lay the man that undertook it under an obligation of forced labour, coterminous and coincident with his power to labour. It would be a permanent renunciation of his right (if such a right exists) to the surplus values created by his labour. If we ask ourselves how many men, or rather how many families, would prefer freedom(with its accompaniments of certain insecurity and possible insufficiency) to such a life-contract, no one can deny that the answer is: "Very few would refuse it." That is the key to the whole matter.
What proportion would refuse it no one can determine; but I say that even as a voluntary offer, and not as a compulsory obligation, a contract of this sort which would for the future destroy contract and re-erect status of a servile sort would be thought a boon by the mass of the proletariat to-day.
Now take the truth from another aspect by considering it thus from one point of view and from another we can appreciate it best. Of what are the mass of men now most afraid in a Capitalist State? Not of the punishments that can be inflicted by a Court of Law, but of "the sack."
You may ask a man why he does not resist such and such a legal infamy; why he permits himself to be the victim of fines and deductions from which the Truck Acts specifically protect him; why he cannot assert his opinion in this or that matter; why he has accepted, without a blow, such and such an insult.
Some generations ago a man challenged to tell you why he forswore his manhood in any particular regard would have answered you that it was because he feared punishment at the hands of the law; to-day he will tell you that it is because he fears unemployment.
Private law has for the second time in our long European story overcome public law, and the sanctions which the Capitalist can call to the aid of his private rule, by the action of his private will, are stronger than those which the public Courts can impose.
In the seventeenth century a man feared to go to Mass lest the judges should punish him. To-day a man fears to speak in favour of some social theory which he holds to be just and true lest his master should punish him. To deny the rule of public powers once involved public punishments, which most men dreaded, though some stood out. To deny the rule of private powers involves to-day a private punishment against the threat of which very few indeed dare to stand out.
Look at the matter from yet another aspect. A law is passed (let us suppose) which increases the total revenue of a wage-earner, or guarantees him against the insecurity of his position in some small degree. The administration of that law requires, upon the one hand, a close inquisition into the man's circumstances by public officials, and, upon the other hand, the administration of its benefits by that particular Capitalist or group of Capitalists whom the wage-earner serves to enrich. Do the Servile conditions attaching to this material benefit prevent a proletarian in England to-day from preferring the benefit to freedom? It is notorious that they do not.
No matter from what angle you approach the business, the truth is always the same. That great mass of wage-earners upon which our society now reposes understands as a present good all that will increase even to some small amount their present revenue and all that may guarantee them against those perils of insecurity to which they are perpetually subject. They understand and welcome a good of this kind, and they are perfectly willing to pay for that good the corresponding price of control and enregimentation, exercised in gradually increasing degree by those who are their paymasters.
It would be easy by substituting superficial for fundamental things, or even by proposing certain terms and phrases to be used in the place of terms and phrases now current it would be easy, I say, by such methods to ridicule or to oppose the prime truths, which I am here submitting. They nonetheless remain truths.
Substitute for the term " employee " in one of our new laws the term "serf," even do so mild a thing as to substitute the traditional term " master " for the word "employer," and the blunt words might breed revolt. Impose of a sudden the full conditions of a Servile State upon modern England, and it would certainly breed revolt. But my point is that when the foundations of the thing have to be laid and the first great steps taken, there is no revolt; on the contrary, there is acquiescence and for the most part gratitude upon the part of the poor. After the long terrors imposed upon them through a freedom unaccompanied by property, they see, at the expense of losing a mere legal freedom, the very real prospect of having enough and not losing it.
All forces, then, are making for the Servile State in this the final phase of our evil Capitalist society in England. The generous reformer is canalised towards it; the ungenerous one finds it a very mirror of his ideal; the herd of "practical" men meet at every stage in its inception the "practical " steps which they expected and demanded; while that proletarian mass upon whom the experiment is being tried have lost the tradition of property and of freedom which might resist the change, and are most powerfully inclined to its acceptance by the positive benefits which it confers.
It may be objected that however true all this may be, no one can, upon such theoretical grounds, regard the Servile State as something really approaching us. We need not believe in its advent (we shall be told) until we see the first effects of its action.
To this I answer that the first effects of its action are already apparent The Servile State is, in industrial England to-day, no longer a menace but something in actual existence. It is in process of construction. The first main lines of it are already plotted out; the cornerstone of it is already laid.
To see the truth of this it is enough to consider laws and projects of law, the first of which we already enjoy, while the last will pass from project to positive statute in due process of time.
APPENDIX ON "BUYING-OUT'
There is an impression abroad among those who propose to expropriate the Capitalist class for the benefit of the State, but who appreciate the difficulties in the way of direct confiscation, that by spreading the process over a sufficient number of years and pursuing it after a certain fashion bearing all the outward appearances of a purchase, the expropriation could be effected without the consequences and attendant difficulties of direct confiscation. In other words, there is an impression that the State could "buy-out " the Capitalist class without their knowing it, and that in a sort of painless way this class can be slowly conjured out of existence.
The impression is held in a confused fashion by most of those who cherish it, and will not bear a clear analysis. It is impossible by any jugglery to "buy-out" the universality of the means of production without confiscation. To prove this, consider a concrete case which puts the problem in the simplest terms:
A community of twenty-two families lives upon the produce of two farms, the property of only two families out of that twenty-two.
The remaining twenty families are Proletarian. The two families, with their ploughs, stores, land, etc., are Capitalist,
The labour of the twenty proletarian families applied to the land and capital of these two capitalist families produces 300 measures of wheat, of which 200 measures, or 10 measures each, form the annual support of the twenty proletarian families ; the remaining 100 measures are the surplus value retained as rent, interest, and profit by the two Capitalist families, each of which has thus a yearly income of 50 measures.
The State proposes to produce, after a certain length of time, a condition of affairs such that the surplus values shall no longer go to the two Capitalist families, but shall be distributed to the advantage of the whole community, while it, the State, shall itself become the unembarrassed owner of both farms.
Now capital is accumulated with the object of a certain return as the reward of accumulation. Instead of spending his money, a man saves it with the object of retaining as the result of that saving a certain yearly revenue. The measure of this does not fall in a particular society at a particular time below a certain level. In other words, if a man cannot get a certain minimum reward for his accumulation, he will not accumulate but spend.
What is called in economics "The Law of Diminishing Returns" acts so that continual additions to capital, other things being equal (that is, the methods of production remaining the same), do not provide a corresponding increase of revenue. A thousand measures of capital applied to a particular area of natural forces will produce, for instance, 40 measures yearly, or 4 per cent. ; but 2000 measures applied in the same fashion will not produce 80 measures. They will produce more than the thousand measures did, but not more in proportion; not double. They will produce, say, 60 measures, or 3 per cent., upon the capital. The action of this universal principle automatically checks the accumulation of capital when it has reached such a point that the proportionate return is the least which a man will accept. If it falls below that he will spend rather than accumulate. The limit of this minimum in any particular society at any particular time gives the measure to what we call "the Effective Desire of Accumulation." Thus in England to-day it is a little over 3 per cent. The minimum which limits the accumulation of capital is a mimimum return of about one-thirtieth yearly upon such capital, and this we may call for shortness the "E.D.A." of our society at the present time.
When, therefore, the Capitalist estimates the full value of his possessions, he counts them in "so many years' purchase."* And that means that he is willing to take in a lump sum down for his possessions so many times the yearly revenue which he at present enjoys. If his E.D.A. is *By an illusion which clever statesmanship could use to the advantage of the community, he even estimates the natural forces he controls (which need no accumulation, but are always present) on the analogy of his capital, and will part with them at "so many years' purchase." It is by taking advantage of this illusion that land purchase schemes (as in Ireland) happily work to the advantage of the dispossessed.
So far so good. Let us suppose the two Capitalists in our example to have an E.D.A. of one-thirtieth. They will sell to the State if the State can put up 3000 measures of wheat.
Now, of course, the State can do nothing of the kind. The accumulations of wheat being already in the hands of the Capitalists, and those accumulations amounting to much less than 3000 measures of wheat, the thing appears to be a deadlock.
But it is not a deadlock if the Capitalist is a fool. The State can go to the Capitalists and say: "Hand me over your farms, and against them I will give you guarantee that you shall be paid rather more than 100 measures of wheat a year for the thirty years. In fact, I will pay you half as much again until these extra payments amount to a purchase of your original stock."
Out of what does this extra amount come ? Out of the State's power to tax.
The State can levy a tax upon the profits of both Capitalists A and B, and pay them the extra with their own money.
In so simple an example it is evident that this "ringing of the changes" would be spotted by the victims, and that they would bring against it precisely the same forces which they would bring against the much simpler and more straightforward process of immediate confiscation.
But it is argued that in a complex State, where you are dealing with myriads of individual Capitalists and thousands of particular forms of profit, the process can be masked.
There are two ways in which the State can mask its action (according to this policy). It can buy out first one small area of land and capital out of the general taxation and then another, and then another, until the whole has been transferred ; or it can tax with peculiar severity certain trades which the rest who are left immune will abandon to their ruin, and with the general taxation plus this special taxation buy out those unfortunate trades which will, of course, have sunk heavily in value under the attack.
The second of these tricks will soon be apparent in any society, however complex; for after one unpopular trade had been selected for attack the trying on of the same methods in another less unpopular field will at once rouse suspicion.*
The first method, however, might have some chance of success, at least for a long time after it was begun, in a highly complex and numerous society were it not for a certain check which comes in of itself. That check is the fact that the Capitalist only takes more than his old yearly revenue with the object of reinvesting the surplus.
I have a thousand pounds in Brighton railway stock, yielding me 3 per cent. : 30(pounds) a year. The Government asks me to exchange my bit of paper against another bit of paper guaranteeing the payment of (pounds)50 a year, that is, an extra rate a year, for so many years as will represent over and above the regular interest paid a purchase of my stock. The Government's bit of paper promises to pay to the holder 50pounds a year for, say, thirty-eight years. I am delighted to make the exchange, not because I am such a fool as to enjoy the prospect of my property being extinguished at the end of thirty-eight years, but because I hope to be able to reinvest the extra 20 every year in something else that will bring me in 3 per cent. Thus, at the end of the thirty-eight years I shall (or my heirs) be better off than I was at the beginning of the transaction, and I shall have enjoyed during its maturing my old 30 pounds a year all the same.
The State can purchase thus on a small scale by subsidising purchase out of the general taxation. It can, therefore, play this trick over a small area and for a short time with success. But the moment this area passes a very narrow limit the " market for investment " is found to be restricted, Capital automatically takes alarm, the State can no longer offer its paper guarantees save at an enhanced price. If it tries to turn the position by further raising taxation to what Capital regards as "confiscatory" rates, there will be opposed to its action just the same forces as would be opposed to frank and open expropriation.
The matter is one of plain arithmetic, and all the confusion introduced by the complex mechanism of "finance" can no more change the fundamental and arithmetical principles involved than can the accumulation of triangles in an ordnance survey reduce the internal angles of the largest triangle to less than 180 degrees.* In fine: if you desire to confiscate, you must confiscate.
You cannot outflank the enemy, as Financiers in the city and sharpers on the race-course outflank the simpler of mankind, nor can you conduct the general process of expropriation upon a muddle-headed hope that somehow or other something will come out of nothing in the end.
There are, indeed, two ways in which the State could expropriate without meeting the resistance that must be present against any attempt at confiscation. But the first of these ways is precarious, the second insufficient.
They are as follows :
(i) The State can promise the Capitalist a larger yearly revenue than he is getting in the expectation that it, the State, can manage the business better than the Capitalist, or that some future expansion will come to its aid. In other words, if the State makes a bigger profit out of the thing than the Capitalist, it can buy out the Capitalist just as a private individual with a similar business proposition can buy him out.
But the converse of this is that if the State has calculated badly, or has bad luck, it would find itself endowing the Capitalists of the future instead of gradually extinguishing them.
In this fashion the State could have "socialised " without confiscation the railways of this country if it had taken them over fifty years ago, promising the then owners more than they were then obtaining. But if it had socialised the hansom cab in the nineties, it would now be supporting in perpetuity that worthy but extinct type the cab-owner (and his children for ever) at the expense of the community.
The second way in which the State can expropriate without confiscation is by annuity. It can say to such Capitalists as have no heirs or care little for their fate if they have: "You have only got so much time to live and to enjoy your 30, will you take 50 until you die?" Upon the bargain being accepted the State will, in process of time, though not immediately upon the death of the annuitant, become an unembarrassed owner of what had been the annuitant's share in the means of production. But the area over which this method can be exercised is a very small one. It is not of itself a sufficient instrument for the expropriation of any considerable field.
I need hardly add that as a matter of fact the so-called "Socialist" and confiscatory measures of our time have nothing to do with the problem here discussed. The State is indeed confiscating, that is, it is taxing in many cases in such a fashion as to impoverish the tax-payer and is lessening his capital rather than shearing his income. But it is not putting the proceeds into the means of production. It is either using them for immediate consumption in the shape of new official salaries or handing them over to another set of Capitalists.*
But these practical considerations of the way in which sham Socialist experiments are working belong rather to my next section, in which I shall deal with the actual beginnings of the Servile State in our midst.
* Thus the money levied upon the death of some not very wealthy squire and represented by, say, locomotives in the Argentine, turns into two miles of palings for the pleasant back gardens of a thousand new officials under the Inebriates Bill, or is simply handed over to the shareholders of the Prudential under the Insurance Act. In the first case the locomotives have been given back to the Argentine, and after a long series of exchanges have been bartered against a great number of wood -palings from the Baltic not exactly reproductive wealth. In the second case the locomotives which used to be the squire's hands become, or their equivalent becomes, means of production in the hands of the Sassoons.