2. Socialism of the Chair

Academic socialism is no homogeneous ideology. In the way syndicalism stands alongside socialism, although they often are not differentiated distinctly, there are two schools of thought in Socialism of the Chair: the Socialist School (state socialism or etatism), and the Syndicalist School (at times called “social liberalism”).

Socialism and syndicalism are implacable antagonists, and the two ideologies stand in irreconcilable contrast to liberalism. No specious argument can ignore the fact that direct control over the means of production can only rest either with individuals, with society as a whole, or with associations of workers in each industry. Politics can never succeed in dividing direct control over certain means of production between society (the state), labor unions, or individuals. Property as direct control over means of production is indivisible. True, there can be a social order in which some means are owned by the state or other administrative bodies, some by labor unions, and some by individuals. In this sense, there can be partial socialism, partial syndicalism, and partial capitalism. But there can never be a compromise between socialism, liberalism, and syndicalism with regard to the same means of production. This fundamental and logical implacability of the three conceivable social orders has again and again been obscured in theory and politics. But no one has ever succeeded in creating a social order that could be called a synthesis, or even reconciliation, of the conflicting principles.

Liberalism is the ideology that views private property in the means of production as the only possible, or at least best conceivable foundation of human society based on division of labor. Socialism seeks to transfer the property in the means of production to the hands of organized society, the state. Syndicalism wants to transfer control over the means of production to the association of workers in the individual branches of production.7

State socialism (etatism, also conservative socialism) and its related systems of military socialism and Christian socialism aim at bringing about a society in which “the management of property is left to individuals,” but its employment is supervised and guided by the collective whole so that “formally property is private, but in substance it is public.”8 The farmer, for instance, becomes a “civil servant and must grow what the country needs according to his best knowledge and conscience or by government order. If he receives his interest and a living salary, he has everything he can demand.”9 Some large enterprises are transferred directly to the state or community, all others formally remain in the hands of their owners, but must be managed in accordance with the plan of the authorities. Thus, every business becomes a public office, and every occupation an “appointment.”

At the time serious consideration was still given to the Social-Democratic program to transfer formally all means of production to society, there seemed to exist a considerable, although not fundamental, difference between the program of the etatists and that of the Social Democrats. Today the Social-Democratic program simply calls for an immediate nationalization of large enterprises, while trade shops and farms are to be under the control of the state. In this respect, etatists and socialists are much closer today than they were a dozen years ago.

However, the fundamental difference between the social ideals of etatism and the Social Democrats existed in the problem of income distribution, not in the nationalization program. It was self-evident to the Social Democrats that all income differences were to disappear. But etatism meant to distribute income according to “dignity.” Everyone was to receive according to his rank. On this point as well, the gap dividing Social Democrats and etatists has narrowed considerably.

Etatism, too, is genuine socialism, although it may differ in a few points from the socialism of the Communist Manifesto and the Erfurt Program. What is essential alone is its position on the problem of private property in the means of production. Inasmuch as the Socialists of the Chair represented etatism, and inasmuch as they demanded the nationalization of large enterprises and government supervision and control of all other enterprises, they engaged in socialistic politics.

But not all Socialists of the Chair were etatists. Lujo Brentano and his School promoted a syndicalistic program, although in many questions of daily politics they joined ranks with the other Socialists of the Chair and, together with the Social Democrats, fought against liberalism. As set forth, their syndicalism is no more definite and straightforward than any other program. As a matter of fact, it is so contradictory and leads to such absurd consequences that it could never be unswervingly advocated. Brentano carefully veiled his position, but nevertheless it was syndicalism. It became visible in his position on the problems of labor union coercion and strike, and the protection of workers willing to work.

If employees receive the right to shut down an enterprise as long as its owner rejects their demands, the control over production, in final analysis, has been placed in the hands of labor unions. The problem must not be obscured by the confusion between free collective bargaining—the workers’ freedom to organize—and the impunity of workers guilty of breach of contract. The protection of workers willing to work is an entirely different matter. As long as the work stoppage of the workers of one enterprise or in an entire industry can be rendered ineffective through employment of workers from other industries or from a given reservoir of unemployed workers, the labor unions are unable to raise wage rates above those paid without them. But as soon as the physical force of labor, with tacit consent or open promotion by the state, makes it impossible to replace the strikers, the labor unions can do as they like. The workers of “essential” enterprises then can freely determine their wage rates. They could raise them as high as they please were it not necessary to be mindful of public opinion and the sentiment of workers in other industries. At any rate, all labor unions have the power temporarily to raise wage rates above those the economic situation would determine without union intervention.

Anyone who would deny protection to workers willing to work must raise the question of how excessive labor demands can be dealt with. It is no answer to refer to a sensible conduct of workers or to entrust committees of employers and employees with the power of decision. Committees with equal representation of both sides can come to an agreement only if one side makes the concessions. But if the decision is to be made by the state, either as judge with the power of binding arbitration or by the committee member representing the state, the solution again is that of etatism, the very thing that was to be avoided.

A social order that refuses to protect those willing to work lacks vitality and must disintegrate in short order. This is why all political systems, no matter how they collaborate with the unions, must finally oppose union coercion. To be sure, prewar Germany never managed to legislate government protection to those willing to work; an attempt failed on account of the resistance by Brentano and his School. But it should be noted that prewar Germany could easily have quashed a strike in essential enterprises by calling the strikers to active military duty. Postwar republican Germany no longer has this power at its disposal. And yet, despite the Social-Democratic Party’s supremacy, it has successfully taken a stand against strikes in essential enterprises and thus has expressly granted protection to workers willing to work. In the Russia of the Soviets, a strike is utterly impossible. Kautsky and Lenin completely agree that willing workers must be permitted to render a strike against vital facilities ineffective.

Etatism trusts in the wisdom and attitude of government officials. “Our officials are learning soon enough,” writes Knapp,

how things look in the clash of economic interests. They will not let the reins slip out of their hands, not even to parliamentary majorities, which we know how to handle so well. No rule is born so easily, in fact, perceived so gratefully as that of high-minded, very learned officials. The German state is officialdom, let us hope that it will always remain that. It should then be rather easy to overcome the confusion and error of economic struggles.10

Brentano and his School lacked this faith in the infallibility of government officials, on which they based their very claim to being “liberal.” But over the years, the two schools have come very close: the Brentano School advocated nationalization or municipalization of a number of enterprises, and the Schmoller School emphasized the activity of labor unions. For a long time, their positions on foreign trade policies separated the two schools. Brentano rejected protectionism, while the majority of etatists pursued it. On this point the etatists have made some concessions; an ambiguous free-trade resolution, devised in 1923 by university professors meeting at Stuttgart, revealed this change.

Brentano himself sought to describe their differences in the fundamental questions of social policy as follows:

We both favored the activity of free organizations as well as government intervention wherever the individual left to his own was too weak to preserve his personality and to develop his ability. But from the beginning our positions on both were reversed. My studies of British conditions had led me to build my hopes for lifting the working classes primarily on the activities of their organizations, while it mattered much more to Schmoller that the state assume the role of protector of the weak.11

Brentano wrote this in the spring of 1918, shortly after the collapse of the Schmoller system, and shortly before the collapse of the Brentano system became evident. While the fundamental differences between the two schools are not clearly delineated, they are at least discernible.

7Syndicalism as a social ideal must not be confused with syndicalism as tactics. The specific syndicalistic tactics (the action directe of the French syndicalists) may also serve other ideologies. For instance, they may be used toward the realization of socialism.
8Also in the restructuring of society by Othmar Spann, Der wahre Staat [The true state], Leipzig, 1921, P. 249. Cf. Honigheim, Romantische und religiös-mystisch verankerte Wirtschaftsgesinnungen [Romantic and religiously-mystically rooted economic opinions], vol. I, p. 264.
9See Philipp von Arnim, Ideen zu einer vollständigen Landwirtschaftlichen Buchhaltung [Ideas on complete agricultural accounting], 1805, quoted by Waltz, Vom Reinertrag in der Landwirtschaft [On the net return in agriculture], Stuttgart and Berlin, 1904, p. 21.
10Knapp, Die Landarbeiter in Knechtschaft und Freiheit [Agricultural workers in serfdom and freedom], 2nd ed., Leipzig, 1909, p. 86; now also in Einführung in einige Hauptfragen der Nationalökonomie [Introduction to a few principal questions of economics], Munich and Leipzig, 1925, p. 1922.
11Brentano, Ist das System Brentano zusaummengebrochen? [Has the Brentano system collapsed?], Berlin, 1918, p. 14 et seq.