This section is from the "Elementary Principles of Economics" book, by Richard T. Ely and George Ray Wicker. Also available from Amazon: Elementary Principles Of Economics: Together With A Short Sketch Of Economic History
It must be observed that not every public activity in relation to industry is socialistic. Properly speaking, that only can be considered socialistic which tends to render government dominant in all production. Does any proposed measure tend to the suppression of production by individuals or by voluntary cooperation, and to the absorption of production by government? Then it is socialistic; otherwise it is not. This is the only way to distinguish between socialistic and non-socialistic, or even anti-socialistic measures. It furnishes us with a rational basis for judgment. Are compulsory education and free schools socialistic ? By our test they are decidedly anti-socialistic. By developing capacity for self-help, they enable those who grow up under their influence to make the best of existing institutions. They are a conservative force. Is municipal ownership of gasworks, electric-lighting works, or other natural monopolies, socialistic ? No; for they are in line with the modern tendency to separate sharply the proper industrial functions of private persons from the proper industrial functions of the politically organized community. There is a sound principle not socialistic underlying the modern tendency. The conviction is gradually being forced upon us by science and by actual experience that most of those industries which are natural monopolies must in the end be owned and operated by government, and that outside the field of natural monopoly there is a sharply defined territory in which business can flourish only in the atmosphere of private enterprise and competition. If we separate thus frankly and rationally the private from the public industrial sphere, we lay the strongest possible foundations for the existing industrial order, instead of allowing things to drift haphazard into socialism or chaos.
Socialism makes perhaps its strongest claims in its plea, first, for a scientific organization of the productive forces of society, and second, for a just distribution of the social income from production.
1. The Relation of Socialism to Production.When the opponent of socialism objects to that system on the ground that more equal division of the social income would result in pitifully small portions for individuals, the socialist replies : " There is little to divide now, naturally enough. Competition is wasteful. Two railways run where one would suffice. Three times as many milk wagons, horses, and drivers are required to serve the people with milk as would suffice if the milk business were organized on the plan of the mail-distribution business in cities. Look at the stores, wholesale and retail, and note the waste of human force. Millions of dollars are annually expended in advertising, which would be saved in the socialistic state. Without competition the whole drygoods and grocery businesses could be carried on with a third of the present expenditure of economic energy. Reflect, too, on all the idle classes in society, the idle rich and the idle poor. Socialism would find a place for every one, and would put every one in his right place, and by making each one dependent on his own exertions for success, would stimulate all energies." The socialistic argument, continued indefinitely after this same fashion, is a really telling one. It does not prove the point, however, unless we grant three things : first, that present waste and idleness cannot be suppressed or greatly diminished without departing from the fundamental principles of our existing industrial order; second, that in the advantages of competition there are not social gains which more than outweigh the social losses just described; and third, that socialism is practicable.
2. The Relation of Socialism to Distribution.Distribu--tive justice also makes a strong plea for the programme of socialism. It cannot be claimed for one moment that every man's income is now proportioned to his social service. Income in proportion to merit appeals to our sense of right and fitness ; but cannot we approach more nearly to that than at present by social reform, without going to the length of social reorganization? No doubt the idle man is morally a thief. He receives, but gives in return no personal effort. Any man who has not earned the right of repose by his own past services, with fruitful mental or physical toil, is a shameless cumberer of the earth, unless, indeed, he is incapacitated for useful employment. Would the world suffer by your death ? That is the test. If you merely clip coupons, no one would miss you. Social Obligations of Wealth. We may take hope from the fact that men everywhere are coming to recognize the social obligations of the individual. Dr. James Fraser, late Bishop of Manchester, England, expressed the idea in words the essential thought of which is as follows: "Most of us are compelled by our necessities to render service to our fellows. Some of us, however, have inherited or received money in some way without a return on our part. We are placed by God on our honor. It becomes a matter, not of physical compulsion, but of honor with us to serve our fellows." What is here said would apply also to those who become wealthy through the accidental discovery of valuable treasures, such as oil, natural gas, or gold on or under the soil which they own, or through the growth of cities, which adds immensely to the value of favored land. Were you to receive an accession of wealth in such a way, the wealth would be yours in the eyes of the law, but morally it would be simply a new opportunity to help forward the progress of humanity. It is the growing realization of this idea that is leading American men of wealth to endow so generously universities and other institutions for the public welfare. This idea is contained in the now famous epigram of one of our wealthiest manufacturers, " To die rich is to die disgraced."
3. and 4. The Relation of Socialism to Exchange and Consumption. We cannot take the space necessary to point out all the economic changes that would appear in a socialistic state. It must suffice merely to note that exchange and consumption, as well as production and exchange, would be revolutionized. A credit economy might entirely supersede our present mixed money and credit economy, and socialism, to be consistent, would have to make exchange values accurately proportionate to costs in human labor and other sacrifice. Moreover, equitable distribution of a largely increased product, if it could be achieved, would of course be reflected in the amount and character of goods consumed. Particularly, it may be supposed that inclusive, as contrasted with exclusive, enjoyment of wealth would fill a much larger place in the life of a people socialistically organized.