Socialism: An Economic and Sociological Analysis

Precapitalist movements for the reform of property generally culminate in the demand for equality in wealth. All shall be equally rich; no one shall possess more or less than the others. This equality is to be achieved by redividing the land and to be made lasting by prohibiting sale or mortgage of land. Clearly, this is not Socialism, though it is sometimes called agrarian-Socialism.

Socialism does not want to divide the means of production at all, and wants to do more than merely expropriate; it wants to produce on the basis of common ownership of the means of production. All such proposals therefore, which aim only to expropriate the means of production are not to be regarded as Socialism; at best, they can be only proposals for a way to Socialism.

If, for example, they proposed a maximum amount to which one and the same person may own private property, they could be regarded as Socialism only if they intend to make the wealth thus accruing to the State the basis of socialist production. We should then have before us a proposal for socialization. It is not difficult to see that this proposal is not expedient. Whether the amount of the means of production which could thus be socialized is a greater or smaller one will depend on the extent to which private fortunes are still permitted. If this is fixed low, the proposed system is little different from immediate socialization. If it is fixed high, the action against private property will not do much to socialize the means of production. But anyway a whole series of unintended consequences must occur. For just the most energetic and active entrepreneurs will be prematurely excluded from economic activity, whilst those rich men whose fortunes approach the limit will be tempted to extravagant ways of living. The limitation of individual fortunes may be expected to slow down the formation of capital.

Similar considerations apply to proposals, which one hears in various quarters, to abolish the right of inheritance. To abolish inheritance and the right to make donations intended to circumvent the prohibition, would not bring about complete Socialism, though it would, in a generation, transfer to society a considerable part of all means of production. But it would, above all, slow down the formation of new capital, and a part of the existing capital would be consumed.