1. The State and Economic Activity

It is the aim of Socialism to transfer the means of production from private ownership to the ownership of organized society, to the State.1  The socialistic State owns all material factors of production and thus directs it. This transfer need not be carried out with due observance of the formalities elaborated for property transfers according to the law set up in the historical epoch which is based on private property in the means of production. Still less important in such a process of transfer is the traditional terminology of Law. Ownership is power of disposal, and when this power of disposal is divorced from its traditional name and handed over to a legal institution which bears a new name, the old terminology is essentially unimportant in the matter. Not the word but the thing must be considered. Limitation of the rights of owners as well as formal transference is a means of socialization. If the State takes the power of disposal from the owner piecemeal, by extending its influence over production; if its power to determine what direction production shall take and what kind of production there shall be, is increased, then the owner is left at last with nothing except the empty name of ownership, and property has passed into the hands of the State.

People often fail to perceive the fundamental difference between the liberal and the anarchistic idea. Anarchism rejects all coercive social organizations, and repudiates coercion as a social technique. It wishes in fact to abolish the State and the legal order, because it believes that society could do better without them. It does not fear anarchical disorder because it believes that without compulsion men would unite for social co-operation and would behave in the manner that social life demands. Anarchism as such is neither liberal nor socialistic: it moves on a different plane from either. Whoever denies the basic idea of Anarchism, whoever denies that it is or ever will be possible to unite men without coercion under a binding legal order for peaceful co-operation, will, whether liberal or socialist, repudiate anarchistic ideals. All liberal and socialist theories based on a strict logical connection of ideas have constructed their systems with due regard to coercion, utterly rejecting Anarchism. Both recognize the necessity of the legal order, though for neither is it the same in content and extent. Liberalism does not contest the need of a legal order when it restricts the field of State activity, and certainly does not regard the State as an evil, or as a necessary evil. Its attitude to the problem of ownership and not its dislike of the ‘person’ of the State is the characteristic of the liberal view of the problem of the State. Since it desires private ownership in the means of production it must, logically, reject all that conflicts with this ideal. As for Socialism, as soon as it has turned fundamentally from Anarchism, it must necessarily try to extend the field controlled by the compulsory order of the State, for its explicit aim is to abolish the ‘anarchy of production’. Far from abolishing State and compulsion it seeks to extend governmental action to a field which Liberalism would leave free. Socialistic writers, especially those who recommend Socialism for ethical reasons, like to say that in a socialistic society public welfare would be the foremost aim of the State, whereas Liberalism considers only the interests of a particular class. Now one can only judge of the value of a social form of organization, liberal or socialistic, when a thorough investigation has provided a clear picture of what it achieves. But that Socialism alone has the public welfare in view can at once be denied. Liberalism champions private property in the means of production because it expects a higher standard of living from such an economic organization, not because it wishes to help the owners. In the liberal economic system more would be produced than in the socialistic. The surplus would not benefit only the owners. According to Liberalism therefore, to combat the errors of Socialism is by no means the particular interest of the rich. It concerns even the poorest, who would be injured just as much by Socialism. Whether or not one accepts this, to impute a narrow class interest to Liberalism is erroneous. The systems, in fact, differ not in their aims but in the means by which they wish to pursue them.

• 1The term ‘Communism’ signifies just the same as ‘Socialism’. The use of these two words has repeatedly changed during the past decades, but always the question which separated socialists from communists was only political tactics. Both aim to socialize the means of production.