Part 8

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 "buyout" 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 "buyout" 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 minimum 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."[6] 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 one-thirtieth, he will take a lump sum representing thirty times his annual revenue.

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.[7]

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 a year. The Government asks me to exchange my bit of paper against another bit of paper guaranteeing the payment of £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 £50 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 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.[8] In fine: _if you desire to confiscate, you must confiscate_.

You cannot outflank the enemy, as Financiers in the city and sharpers on the racecourse 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:--

(1) 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.

(2) 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 taxpayer 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.[9]

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.

Section Nine The Servile State Has Begun

In this last division of my book I deal with the actual appearance of the Servile State in certain laws and proposals now familiar to the Industrial Society of modern England. These are the patent objects, "laws and projects of laws," which lend stuff to my argument, and show that it is based not upon a mere deduction, but upon an observation of things.

Two forms of this proof are evident: first, the laws and proposals which subject the _Proletariat_ to Servile conditions; next, the fact that the _Capitalist_, so far from being expropriated by modern "Socialist" experiments, is being confirmed in his power.

I take these in their order, and I begin by asking in what statutes or proposals the Servile State first appeared among us.

A false conception of our subject might lead one to find the origins of the Servile State in the restrictions imposed upon certain forms of manufacture, and the corresponding duties laid upon the Capitalist in the interest of his workmen. The Factory Laws, as they are in this country, would seem to offer upon this superficial and erroneous view a starting point. They do nothing of the kind; and the view _is_ superficial and erroneous because it neglects the fundamentals of the case. What distinguishes the Servile State is not the interference of law with the action of any citizen even in connection with industrial matters. Such interference may or may not indicate the presence of a Servile status. It in no way indicates the presence of that status when it forbids a particular kind of human action to be undertaken by the citizen as a citizen.

The legislator says, for instance, "You may pluck roses; but as I notice that you sometimes scratch yourself, I will put you in prison unless you cut them with scissors at least 122 millimetres long, and I will appoint one thousand inspectors to go round the country seeing whether the law is observed. My brother-in-law shall be at the head of the Department at £2,000 a year."

We are all familiar with that type of legislation. We are all familiar with the arguments for and against it in any particular case. We may regard it as onerous, futile, or beneficent, or in any other light, according to our various temperaments. But it does not fall within the category of servile legislation, because it establishes no distinction between two classes of citizens, marking off the one as legally distinct from the other by a criterion of manual labour or of income.

This is even true of such regulations as those which compel a Cotton Mill, for instance, to have no less than such and such an amount of cubic space for each operative, and such and such protection for dangerous machinery. These laws do not concern themselves with the nature, the amount, or even the existence of a contract for service. The object, for example, of the law which compels one to fence off certain types of machinery is simply to protect human life, regardless of whether the human being so protected is rich or poor, Capitalist or Proletarian. These laws may in effect work in our society so that the Capitalist is made responsible for the Proletarian, but he is not responsible _qua_ Capitalist, nor is the Proletarian protected _qua_ Proletarian.

In the same way the law may compel me, if I am a Riparian owner, to put up a fence of statutory strength wherever the water of my river is of more than a statutory depth. Now it cannot compel me to do this unless I am the owner of the land. In a sense, therefore, this might be called the recognition of my _Status_, because, by the nature of the case, only landowners can be affected by the law, and landowners would be compelled by it to safeguard the lives of all, whether they were or were not owners of land.

But the category so established would be purely accidental. The object and method of the law do not concern themselves with a distinction between citizens.

A close observer might indeed discover certain points in the Factory laws, details and phrases, which did distinctly connote the existence of a Capitalist and of a Proletarian class. But we must take the statutes as a whole and the order in which they were produced, above all, the general motive and expressions governing each main statute, in order to judge whether such examples of interference give us an origin or not.

The verdict will be that they do not. Such legislation may be oppressive in any degree or necessary in any degree, but it does not establish status in the place of contract, and it is not, therefore, servile.

Neither are those laws servile which in practice attach to the poor and not to the rich. Compulsory education is in legal theory required of every citizen for his children. The state of mind which goes with plutocracy exempts of course all above a certain standard of wealth from this law. But the law does apply to the universality of the commonwealth, and all families resident in Great Britain (not in Ireland) are subject to its provisions.

These are not origins. A true origin to the legislation I approach comes later. The first example of servile legislation to be discovered upon the Statute Book is that which establishes the present form of _Employer's Liability_.

I am far from saying that that law was passed, as modern laws are beginning to be passed, with the direct object of establishing a new status; though it was passed with some consciousness on the part of the legislator that such a new status was in existence as a social fact. Its motive was merely humane, and the relief which it afforded seemed merely necessary at the time; but it is an instructive example of the way in which a small neglect of strict doctrine and a slight toleration of anomaly admit great changes into the State.

There had existed from all time in every community, and there was founded upon common sense, the legal doctrine that if one citizen was so placed with regard to another by contract that he must in the fulfilment of that contract perform certain services, and if those services accidentally involved damages to a third party, not the actual perpetrator of the damage, but he who designed the particular operation leading to it was responsible.

The point is subtle, but, as I say, fundamental. It involved no distinction of status between employer and employed.

Citizen A offered citizen B a sack of wheat down if citizen B would plough for him a piece of land which might or might not produce more than a sack of wheat.

Of course citizen A expected it would produce more, and was awaiting a surplus value, or he would not have made the contract with citizen B. But, at any rate, citizen B put his name to the agreement, and as a free man, capable of contracting, was correspondingly bound to fulfil it.

In fulfilling this contract the ploughshare B is driving destroys a pipe conveying water by agreement through A's land to C. C suffers damage, and to recover the equivalent of that damage his action in justice and common sense can only be against A, for B was carrying out a plan and instruction of which A was the author. C is a third party who had nothing to do with such a contract and could not possibly have justice save by his chances of getting it from A, who was the true author of the unintentional loss inflicted, since he designed the course of work.

But when the damage is not done to C at all, but to B, who is concerned with a work the risks of which are known and willingly undertaken, it is quite another matter.

Citizen A contracts with citizen B that citizen B, in consideration of a sack of wheat, shall plough a bit of land. Certain known risks must attach to that operation. Citizen B, if he is a free man, undertakes those risks with his eyes open. For instance, he may sprain his wrist in turning the plough, or one of the horses may kick him while he is having his bread-and-cheese. If upon such an accident A is compelled to pay damages to B, a difference of status is at once recognised. B undertook to do work which, by all the theory of free contract, was, with its risks and its expense of energy, the equivalent in B's own eyes of a sack of wheat; yet a law is passed to say that B can have more than that sack of wheat if he is hurt.

There is no converse right of A against B. If the employer suffers by such an accident to the employee, _he_ is not allowed to dock that sack of wheat, though it was regarded in the contract as the equivalent to a certain amount of labour to be performed which, as a fact, has not been performed. A has no action unless B has been _culpably_ negligent or remiss. In other words, the mere fact that one man is _working_ and the other not is the fundamental consideration on which the law is built, and the law says: "You are not a free man making a free contract with all its consequences. You are a worker, and therefore an inferior: you are an _employee_; and that _status_ gives you a special position which would not be recognised in the other party to the contract."

The principle is pushed still further when an employer is made liable for an accident happening to one of his employees at the hands of another employee.

A gives a sack of wheat to B and D each if they will dig a well for him. All three parties are cognisant of the risks and accept them in the contract. B, holding the rope on which D is lowered, lets it slip. If they were all three men of exactly equal status, obviously D's action would be against B. But they are not of equal status in England to-day. B and D are _employees_, and are therefore in a special and inferior position before the law compared with their employer A. D's action is, by this novel principle, no longer against B, who accidentally injured him by a personal act, however involuntary, for which a free man would be responsible, but against A, who was innocent of the whole business.

Now in all this it is quite clear that A has peculiar duties not because he is a citizen, but because he is something more: an employer; and B and D have special claims on A, not because they are citizens, but because they are something less: _viz. employees_. They can _claim protection_ from A, as inferiors of a superior in a State admitting such distinctions and patronage.