61
SAFETY VALVES
IT could distribute the money in doles; but that would only spread the very evil the confiscation was intended to destroy: that is to say, the evil of unearned income. A much sounder plan (and do not forget this when next you are tempted to give a spare £5 note to a beggar instead of putting it on deposit at your bank) would be to throw all the money into the confiscated banks, and lend it to employers at unprecedentedly cheap rates. Another expedient would be to raise wages handsomely in the confiscated industries. Another, the most desperate of all, but by no means the least probable, would be to go to war, and waste on the soldier the incomes formerly wasted on the plutocrat.
These expedients do not exclude oneanother. Doles, cheap capital available in Government-owned banks, and high wages, could be resorted to simultaneously to redistribute purchasing power and employing power. The doles and pensions would tide over the remaining years of those discharged servants of the ruined rich who were incapable of changing their occupations, and of the ruined rich themselves. The cheap capital at the banks would enable employers to start new businesses, or modify old ones, and to cater for the increased purchasing power of the workers whose wages had been raised, thereby giving employment to the workers who had lost their jobs in Bournemouth or Bond Street. The art dealers could sell pictures to the National Gallery and the provincial municipal galleries. There would be a crisis: but what of that? Capitalism has often enough produced displacements of purchasing power and loss of livelihood to large bodies of citizens, and fallen back on doles in the shape of Mansion House Funds and the like as safety valves to ease the pressure when the unemployed began to riot and break windows. Why should we not muddle through as we have always done?
Well, we might. But serious as the biggest crises of Capitalism have been, they have never been as big as the crash that would follow confiscation by the Government of the entire property of the whole propertied class without any preparation for the immediate productive employment not only of the expropriated owners (who are too few to give much trouble) but of the vast parasitic proletariat who produce their luxuries. Would the safety valves act quickly enough and open widely enough? We must examine them more closely before we can judge.
A civilized country depends on the circulation of its money as much as a living animal depends on the circulation of its blood. A general confiscation of private property and its incomes would produce an unprecedented congestion in London, where the national Treasury is, of money from all over the kingdom; and it would become a matter of life or death for the Government to pump that congested money promptly back again to the extremities of the land. Remember that the total sum congested would be much larger than under the capitalist system, because, as the capitalists spend much more of their incomes than they save, the huge amount of this expenditure would be saved and added to the Government revenue from the confiscated property.
Now for the safety valves. A prodigious quantity of the congested money would come from the confiscated ground rents of our cities and towns. The present proprietors spend these rents where they please; and they seldom please to spend them in the places where they were produced by the work of the inhabitants. A plutocrat does not decide to live in Bootle when he is free to live in Biarritz. The inhabitants of Bootle do not get the benefit of his expenditure, which goes to the west end of London and to the pleasure resorts and sporting grounds of all the world, though perhaps a little of it may come back if the town manufactures first class boots and riding breeches and polo mallets. The dwellers in the town enjoy a good deal of municipal communism; but they have to pay for it in rates which are now oppressively heavy everywhere. And they would be heavier still if the Government did not make what are called Grants-in-Aid to the municipalities.
An obvious safety valve, and a popular one with the ratepayers, would be the payment of the rates by the Treasury through greatly increased grants. If you are a ratepaying householder, and your landlord were suddenly to announce that in future he would pay the rates, you would rejoice in the prospect of having that much more money to spend on yourself. A similar announcement by the Chancellor of the Exchequer would be equally welcome. It would relieve the congestion at the Treasury, and send a flood of money back from the heart to the extremities.
Then there is the combination of raised wages in the confiscated industries with a flood of cheap capital pumped to all the business centres through the confiscated banks. The raised wages would check the flow of income to the Treasury by reducing dividends; and the cheapening of capital would enable new businesses to be started and old ones re-equipped to meet the demand created by the increased purchasing power (pocket money) of the wage workers and the disburdened ratepayers.
And there is always a good deal to be done in the way of public expenditure on roads; on reclamations of land from the sea; on afforestation; on building great dams across valleys and barrages across rivers and tideways to concentrate waterflow on turbine engines; on stations for the distribution of the power thus gained; on the demolition of slum towns that should never have been built, and their replacement by properly planned, healthy and handsome garden cities; and on a hundred other things that Capitalism never dreams of doing because it is impossible to appropriate their advantages as commercial profit. The demand for labor created by such operations would absorb all the employable unemployed, and leave only the superannuated and the incurably unemployable on the dole, with, of course, the children, on whom much more money could and should be spent than at present, with great uncommercial profit to the next generation.
All this sounds very reassuring, and costs little to describe on paper. But a few minutes’ reflection will dispel all hope that it could occur instantly and spontaneously through the uncompensated transfer of all existing shares and title-deeds to the Government. The Ministry of Health would have to produce a huge scheme for the grants-in-aid to the cities; and Parliament would wrangle for months over it. As to glutting the existing banks with spare money to lend without any further interference with them, the results would include an orgy of competitive enterprise, overcapitalization, overproduction, hopeless shops and businesses started by inexperienced or silly or rash people or people who are all three: in short, a boom followed by a slump, with the usual unemployment, bankruptcies, and so forth. To keep that part of the program under control, it would be necessary to set up a new department of the Treasury to replace the present boards of predatory company directors; to open banks wherever the post offices are doing substantial business; and to staff the new banks with specially trained civil servants. And all that would take longer than it takes a ruined citizen to starve.
As to raising industrial wages and reducing prices with the object of eliminating profit, that is so precisely the contrary of the policy which the existing managers of our industry have trained themselves to pursue, and which alone they understand, that their replacement by civil servants would be just as necessary as in the case of the banks. Such replacements could be effected only as part of an elaborate scheme requiring long preliminary cogitation and a practical preparation involving the establishment of new public departments of unprecedented magnitude.
Public works, too, cannot be set on foot offhand in the manner of Peter the Great, who, when asked to dictate the route to be taken by his new road from Moscow to Petrograd, took up a ruler and drew a straight line on the map from the word Moscow to the Neva. If Peter had had to get a proposal for a turbine barrage through a parliament with a fiery Welsh contingent determined that it should be across the Severn, and an equally touchy Scots contingent bent on having it across the Kyle of Tongue, he would have found many months slipping by him before he could set the first gang of navvies to work.
I need not weary you by multiplying instances. Wholesale nationalization without compensation is catastrophic: the patient dies before the remedy has time to operate. If you prefer a mechanical metaphor, the boiler bursts because the safety valves jam. The attempted nationalization would produce a revolution. You may say “Well, why not? What I have read in this book has made me impatient for revolution. The fact that any measure would produce a revolution is its highest recommendation”.
If that is yours view, your feelings do you credit: they are or have been shared by many good citizens. But when you go thoroughly into the matter you will realize that revolutions do not nationalize anything, and often make it much more difficult to nationalize them than it would have been without the revolution if only the people had had some education in political economy. If a revolution were produced by unskilled Socialism (all our parliamentary parties are dangerously unskilled at present) in the teeth of a noisy and inveterate Capitalist Opposition, it would produce reaction instead of progress, and give Capitalism a new lease of life. The name of Socialism would stink in the nostrils of the people for a generation. And that is just the sort of revolution that an attempt to nationalize all property at a blow would provoke. You must therefore rule out revolution on this particular issue of out-and-out uncompensated and unprepared general nationalization versus a series of carefully prepared and compensated nationalizations of one industry after another.
Later on, we shall expatiate a little on what revolutions can do and what they cannot. Meanwhile, note as a canon of nationalization (economists like to call their rules for doing anything canons) that all nationalizations must be prepared and compensated. This will be found an effectual safeguard against too many nationalizations being attempted at a time. We might even say against more than one nationalization being attempted at a time; only we must not forget that industries are now so amalgamated before they are ripe for nationalization that it is practically impossible to nationalize one without nationalizing half a dozen others that are inextricably mixed up with it. You would be surprised to learn how many other things a railway company does besides running trains. And if you have ever gone to sea in a big liner you have perhaps sometimes looked round you and wondered whether the business of making it was called shipbuilding or hotel building, to say nothing of engineering.