The struggle of socialism against capitalism is part of the historic rhythm in the concentration and dispersion of wealth. The capitalist, of course, has fulfilled a creative function in history: he has gathered the savings of the people into productive capital by the promise of dividends or interest; he has financed the mechanization of industry and agriculture, and the rationalization of distribution; and the result has been such a flow of goods from producer to consumer as history has never seen before. He has put the liberal gospel of liberty to his use by arguing that businessmen left relatively free from transportation tolls and legislative regulation can give the public a greater abundance of food, homes, comfort, and leisure than has ever come from industries managed by politicians, manned by governmental employees, and supposedly immune to the laws of supply and demand. In free enterprise the spur of competition and the zeal and zest of ownership arouse the productiveness and inventiveness of men; nearly every economic ability sooner or later finds its niche and reward in the shuffle of talents and the natural selection of skills; and a basic democracy rules the process insofar as most of the articles to be produced, and the services to be rendered, are determined by public demand rather than by governmental decree. Meanwhile competition compels the capitalist to exhaustive labor, and his products to ever-rising excellence.
There is much truth in such claims today, but they do not explain why history so resounds with protests and revolts against the abuses of industrial mastery, price manipulation, business chicanery, and irresponsible wealth. These abuses must be hoary with age, for there have been socialistic experiments in a dozen countries and centuries. We read that in Sumeria, about 2100 B.C.,
the economy was organized by the state. Most of the arable land was the property of the crown; labourers received rations from the crops delivered to the royal storehouses. For the administration of this vast state economy a very differentiated hierarchy was developed, and records were kept of all deliveries and distributions of rations. Tens of thousands of clay tablets inscribed with such records were found in the capital Ur itself, in Lagash, Umma… Foreign trade also was carried out in the name of the central administration.39
In Babylonia (c. 1750 B.C.) the law code of Hammurabi fixed wages for herdsmen and artisans, and the charges to be made by physicians for operations.40
In Egypt under the Ptolemies (323 B.C. – 30 B.C.) the state owned the soil and managed agriculture: the peasant was told what land to till, what crops to grow; his harvest was measured and registered by government scribes, was threshed on royal threshing floors, and was conveyed by a living chain of fellaheen into the granaries of the king. The government owned the mines and appropriated the ore. It nationalized the production and sale of oil, salt, papyrus, and textiles. All commerce was controlled and regulated by the state; most retail trade was in the hands of state agents selling state-produced goods. Banking was a government monopoly, but its operation might be delegated to private firms. Taxes were laid upon every person, industry, process, product, sale, and legal document. To keep track of taxable transactions and income, the government maintained a swarm of scribes and a complex system of personal and property registration. The revenue of this system made the Ptolemaic the richest state of the time.41 Great engineering enterprises were completed, agriculture was improved, and a large proportion of the profits went to develop and adorn the country and to finance its cultural life. About 290 B.C. the famous Museum and Library of Alexandria were founded. Science and literature flourished; at uncertain dates in this Ptolemaic era some scholars made the “Septuagint” translation of the Pentateuch into Greek. Soon, however, the pharaohs took to expensive wars, and after 246 B.C. they gave themselves to drink and venery, allowing the administration of the state and the economy to fall into the hands of rascals who ground every possible penny out of the poor. Generation after generation the government’s exactions grew. Strikes increased in number and violence. In the capital, Alexandria, the populace was bribed to peace by bounties and spectacles, but it was watched by a large military force, was allowed no voice in the government, and became in the end a violent mob. Agriculture and industry decayed through lack of incentive; moral disintegration spread; and order was not restored until Octavius brought Egypt under Roman rule (30 B.C.).
Rome had its socialist interlude under Diocletian. Faced with increasing poverty and restlessness among the masses, and with imminent danger of barbarian invasion, he issued in A.D. 301 an Edictum de pretiis, which denounced monopolists for keeping goods from the market to raise prices, and set maximum prices and wages for all important articles and services. Extensive public works were undertaken to put the unemployed to work, and food was distributed gratis, or at reduced prices, to the poor. The government—which already owned most mines, quarries, and salt deposits—brought nearly all major industries and guilds under detailed control. “In every large town,” we are told, “the state became a powerful employer,… standing head and shoulders above the private industrialists, who were in any case crushed by taxation.”42 When businessmen predicted ruin, Diocletian explained that the barbarians were at the gate, and that individual liberty had to be shelved until collective liberty could be made secure. The socialism of Diocletian was a war economy, made possible by fear of foreign attack. Other factors equal, internal liberty varies inversely as external danger.
The task of controlling men in economic detail proved too much for Diocletian’s expanding, expensive, and corrupt bureaucracy. To support this officialdom—the army, the court, public works, and the dole—taxation rose to such heights that men lost incentive to work or earn, and an erosive contest began between lawyers finding devices to evade taxes and lawyers formulating laws to prevent evasion. Thousands of Romans, to escape the taxgatherer, fled over the frontiers to seek refuge among the barbarians. Seeking to check this elusive mobility, and to facilitate regulation and taxation, the government issued decrees binding the peasant to his field and the worker to his shop until all his debts and taxes had been paid. In this and other ways medieval serfdom began.43
China has had several attempts at state socialism. Szuma Ch’ien (B.C. 145 B.C.) informs us that to prevent private individuals from “reserving to their sole use the riches of the mountains and the sea in, order to gain a fortune, and from putting the lower classes into subjection to themselves,”44 the Emperor Wu Ti (r. 140 B.C. – 87 B.C.) nationalized the resources of the soil, extended governmental direction over transport and trade, laid a tax upon incomes, and established public works, including canals that bound the rivers together and irrigated the fields. The state accumulated stockpiles of goods, sold these when prices were rising, bought more when prices were falling; thus, says Szuma Ch’ien, “the rich merchants and large shop-keepers would be prevented from making big profits,… and prices would be regulated in the Empire.”45 For a time, we are told, China prospered as never before. A combination of “acts of God” with human deviltry put an end to the experiment after the death of the Emperor. Floods alternated with droughts, created tragic shortages, and raised prices beyond control. Businessmen protested that taxes were making them support the lazy and the incompetent. Harassed by the high cost of living, the poor joined the rich in clamoring for a return to the old ways, and some proposed that the inventor of the new system be boiled alive. The reforms were one by one rescinded, and were almost forgotten when they were revived by a Chinese philosopher-king.
Wang Mang (r. A.D. 9–23) was an accomplished scholar, a patron of literature, a millionaire who scattered his riches among his friends and the poor. Having seized the throne, he surrounded himself with men trained in letters, science, and philosophy. He nationalized the land, divided it into equal tracts among the peasants, and put an end to slavery. Like Wu Ti, he tried to control prices by the accumulation or release of stockpiles. He made loans at low interest to private enterprise. The groups whose profits had been clipped by his legislation united to plot his fall; they were helped by drought and flood and foreign invasion. The rich Liu family put itself at the head of a general rebellion, slew Wang Mang, and repealed his legislation. Everything was as before.46
A thousand years later Wang An-shih, as premier (1068–85), undertook a pervasive governmental domination of the Chinese economy. “The state,” he held, “should take the entire management of commerce, industry, and agriculture into its own hands, with a view to succoring the working classes and preventing them from being ground into the dust by the rich.”47 He rescued the peasants from the moneylenders by loans at low interest. He encouraged new settlers by advancing them seed and other aid, to be repaid out of the later yield of their land. He organized great engineering works to control floods and check unemployment. Boards were appointed in every district to regulate wages and prices. Commerce was nationalized. Pensions were provided for the aged, the unemployed, and the poor. Education and the examination system (by which admission to governmental office was determined) were reformed; “pupils threw away their textbooks of rhetoric,” says a Chinese historian, “and began to study primers of history, geography, and political economy.”48
What undermined the experiment? First, high taxes, laid upon all to finance a swelling band of governmental employees. Second, conscription of a male in every family to man the armies made necessary by barbarian invasions. Third, corruption in the bureaucracy; China, like other nations, was faced with a choice between private plunder and public graft. Conservatives, led by Wang An-shih’s brother, argued that human corruptibility and incompetence make governmental control of industry impracticable, and that the best economy is a laissez-faire system that relies on the natural impulses of men. The rich, stung by the high taxation of their fortunes and the monopoly of commerce by the government, poured out their resources in a campaign to discredit the new system, to obstruct its enforcement, and to bring it to an end. This movement, well organized, exerted constant pressure upon the Emperor. When another period of drought and flood was capped by the appearance of a terrifying comet, the Son of Heaven dismissed Wang An-shih, revoked his decrees, and called the opposition to power.49
The longest-lasting regime of socialism yet known to history was set up by the Incas in what we now call Peru, at some time in the thirteenth century. Basing their power largely on popular belief that the earthly sovereign was the delegate of the Sun God, the Incas organized and directed all agriculture, labor, and trade. A governmental census kept account of materials, individuals, and income; professional “runners,” using a remarkable system of roads, maintained the network of communication indispensable to such detailed rule over so large a territory. Every person was an employee of the state, and seems to have accepted this condition cheerfully as a promise of security and food. This system endured till the conquest of Peru by Pizarro in 1533.
On the opposite slope of South America, in a Portuguese colony along the Uruguay River, 150 Jesuits organized 200,000 Indians into another socialistic society (c. 1620–1750). The ruling priests managed nearly all agriculture, commerce, and industry. They allowed each youth to choose among the trades they taught, but they required every able-bodied person to work eight hours a day. They provided for recreation, arranged sports, dances, and choral performances of a thousand voices, and trained orchestras that played European music. They served also as teachers, physicians, and judges, and devised a penal code that excluded capital punishment. By all accounts the natives were docile and content, and when the community was attacked it defended itself with an ardor and ability that surprised the assailants. In 1750 Portugal ceded to Spain territory including seven of the Jesuit settlements. A rumor having spread that the lands of these colonies contained gold, the Spanish in America insisted on immediate occupation; the Portuguese government under Pombal (then at odds with the Jesuits) ordered the priests and the natives to leave the settlements; and after some resistance by the Indians the experiment came to an end.50
In the social revolt that accompanied the Protestant Reformation in Germany, communistic slogans based on the Bible were advanced by several rebel leaders. Thomas Münzer, a preacher, called upon the people to overthrow the princes, the clergy, and the capitalists, and to establish a “refined society” in which all things were to be in common.51 He recruited an army of peasants, inspired them with accounts of communism among the Apostles, and led them to battle. They were defeated, five thousand of them were slain, Münzer was beheaded (1525). Hans Hut, accepting Münzer’s teachings, organized at Austerlitz an Anabaptist community that practiced communism for almost a century (c. 1530–1622). John of Leiden led a group of Anabaptists in capturing control of Münster, the capital of Westphalia; there, for fourteen months, they maintained a communistic regime (1534–35).52
In the seventeenth century a group of “Levellers” in Cromwell’s army begged him in vain to establish a communistic utopia in England. The socialist agitation subsided during the Restoration, but it rose again when the Industrial Revolution revealed the greed and brutality of early capitalism—child labor, woman labor, long hours, low wages, and disease-breeding factories and slums. Karl Marx and Friedrich Engels gave the movement its Magna Carta in the Communist Manifesto of 1847, and its Bible in Das Kapital(1867–95). They expected that socialism would be effected first in England, because industry was there most developed and had reached a stage of centralized management that seemed to invite appropriation by the government. They did not live long enough to be surprised by the outbreak of Communism in Russia.
Why did modern socialism come first in a Russia where capitalism was in its infancy and there were no large corporations to ease the transition to state control? Centuries of peasant poverty and reams of intellectual revolt had prepared the way, but the peasants had been freed from serfdom in 1861, and the intellectuals had been inclined toward an anarchism antipodal to an all-absorbing state. Probably the Russian Revolution of 1917 succeeded because the Czarist government had been defeated and disgraced by war and bad management; the Russian economy had collapsed in chaos, the peasants returned from the front carrying arms, and Lenin and Trotsky had been given safe conduct and bon voyage by the German government. The Revolution took a Communistic form because the new state was challenged by internal disorder and external attack; the people reacted as any nation will react under siege—it put aside all individual freedom until order and security could be restored. Here too Communism was a war economy. Perhaps it survives through continued fear of war; given a generation of peace it would presumably be eroded by the nature of man.
Socialism in Russia is now restoring individualistic motives to give its system greater productive stimulus, and to allow its people more physical and intellectual liberty. Meanwhile capitalism undergoes a correlative process of limiting individualistic acquisition by semi-socialistic legislation and the redistribution of wealth through the “welfare state.” Marx was an unfaithful disciple of Hegel: he interpreted the Hegelian dialectic as implying that the struggle between capitalism and socialism would end in the complete victory of socialism; but if the Hegelian formula of thesis, antithesis, and synthesis is applied to the Industrial Revolution as thesis, and to capitalism versus socialism as antithesis, the third condition would be a synthesis of capitalism and socialism; and to this reconciliation the Western world visibly moves. Year by year the role of Western governments in the economy rises, the share of the private sector declines. Capitalism retains the stimulus of private property, free enterprise, and competition, and produces a rich supply of goods; high taxation, falling heavily upon the upper classes, enables the government to provide for a self-limited population unprecedented services in education, health, and recreation. The fear of capitalism has compelled socialism to widen freedom, and the fear of socialism has compelled capitalism to increase equality. East is West and West is East, and soon the twain will meet.