SUBSIDIZED PRIVATE ENTERPRISE

WHILST we are nationalizing the big industries and the wholesale businesses we may have to leave a good many unofficial retailers to carry on the work of petty distribution much as they do at present, except that we may control them in the matter of prices as the Trusts do, whilst allowing them a better living than the landlords and capitalists allow them, and relieving them from the continual fear of bankruptcy inseparable from the present system. We shall nationalize the mines long before we nationalize the village smithy and make the village blacksmith a public official. We shall have national or municipal supplies of electric power laid on from house to house long before we meddle with the individual artists and craftsmen and scientific workers who will use that power, to say nothing of the housemaids who handle the vacuum cleaners. We shall nationalize land and large-scale farming without simultaneously touching fancy fruit farming and kitchen gardening. Long after Capitalism as we know it shall have passed away more completely than feudalism has yet passed away there may be more men and women working privately in businesses of their own than there ever can be under our present slavish conditions.

The nationalization of banking will make it quite easy for private businesses to be carried on under Socialism to any extent that may be found convenient, and will in fact stimulate them vigorously. The reduction of the incomes derived from them to the common level could be effected by taxing them if they were excessive. But the difficulty is more likely to be the other way: that is, the people in the private businesses might find themselves, as most of them do at present, poorer than they would be in public employment. The immense fortunes that are made in private businesses to-day are made by the employment of workers who, as they cannot live without access to the products of land and capital, must either starve or consent to work for the landlords and capitalists for much less than their work creates. But when everybody could get a job in one of the nationalized industries, and receive an income which would include his or her share of the rent of the nationalized land, and the interest on the nationalized capital, no private employer could induce anyone to come and work for wages unless the wages were big enough to be equivalent to the advantages of such public employment; therefore private employment could not create poverty, and would in fact become bankrupt unless the employers were either clever and useful enough to induce the public to pay them handsomely for their products or services, or else were content, for the sake of doing things in their own way, to put up with less than they could make in some national establishment round the corner. To maintain their incomes at the national level some of them might actually demand and receive subsidies from the Government. To take a very simple instance: in an out-of-the-way village or valley, where there was not enough business to pay a carrier, the Government or local authority might find that the most economical and sensible plan was to pay a local farmer or shopkeeper or innkeeper a contribution towards the cost of keeping a motor lorry on condition that he undertook the carrying for the district.

In big business, as we have seen, this process has actually begun. When Trade Unionism forced up the wages of the coal miners to a point at which the worst coal mines could not afford to continue working, the owners, though devout opponents of Socialism, demanded and obtained from a Conservative Government a subsidy of £10,000,000 to enable them to make both ends meet. But it was too ridiculous to tax the general public to keep a few bad mines going, and incidentally to keep up the monstrous prices charged for coal, when the mines as a whole were perfectly well able to pay a decent living wage, which was all the Trade Unions asked for. The subsidy was stopped; and a terrific lock-out ensued. All this could have been prevented by nationalizing the coal mines and thus making it possible to keep up wages and reduce the price of coals to the public simultaneously. However, that is not our point at present. What comes in here is that the capitalists themselves have established the Socialistic practice of subsidizing private businesses when they do not yield sufficient profit to support those engaged in them, though they are too useful to be dispensed with. The novelty, by the way, is only in subsidizing common industries. Scientific research, education, religion, popular access to rare books and pictures, exploration, carriage of mails oversea, and the like are partly dependent on Government grants, which are subsidies under another name.

What is more, capitalists are now openly demanding subsidies to enable them to start their private enterprises. The aeroplane lines, for instance, boldly took it as a matter of course that the Government should help them, just as it had helped the dye industry during the war (and been sorry for it afterwards). I draw your attention specially to this new capitalistic method because by it you are not only invited to throw over the Capitalist principle of trusting to unaided competitive private enterprise for the maintenance of our industries, but taxed to take all the risks of it whilst the capitalists take all the profits and keep prices as high as possible against you, thus fleecing you both ways. They cannot consistently object (though they do object) when workmen ask the Government to guarantee them a living wage as well as guaranteeing profits and keeping up prices for their employers.

When Socialism is the order of the day these capitalistic exploitations of the taxpayer will have provided plenty of precedents for subsidizing experimental private ventures in new industries or inventions and new methods, or, as in the case of the village carrier, making it worth somebody’s while to undertake some necessary service that is not for the moment worth nationalizing. In fact this will be the most interesting part of Socialism to clever business people. Direct and complete nationalizations will be confined mostly to well established routine services.

There are doctrinaire Socialists who will be shocked at the suggestion that a Socialist Government should not only tolerate private enterprise, but actually finance it. But the business of Socialist rulers is not to suppress private enterprise as such, but to attain and maintain equality of income. The substitution of public for private enterprise is only one of several means to that end; and if in any particular instance the end can be best served for the moment by private enterprise, a Socialist Government will tolerate private enterprise, or subsidize private enterprise, or even initiate private enterprise. Indeed Socialism will be more elastic and tolerant than Capitalism, which would leave any district without a carrier if no private carrier could make it pay.

Note, however, that when a private experiment in business has been financed by the State, and has been successful in establishing some new industry or method or invention as part of the routine of national production and service, it will then be nationalized, leaving private enterprise to return to its proper business of making fresh experiments and discovering new services, instead of, as at present, wallowing in the profits of industries which are no longer experimental. For example, it has for many years past been silly to leave railways in the hands of private companies instead of nationalizing them, especially as the most hidebound bureaucrat could not have been more obsoletely reactionary, uninventive, and obstructive than some of our most pretentious railway chairmen have been. Everything is known about railway locomotion that need be known for nationalization purposes. But the flying services are still experimenting, and may be treated as State-aided private enterprises until their practice becomes as well established and uniform as railway practice.

Unfortunately this is so little understood that the capitalists, through their agents the employers and financiers, are now persuading our Conservative governments into financing them at the taxpayers’ expense without retaining the taxpayers’ interest in the venture. For instance, the £10,000,000 subsidy to the coalowners should clearly have been given by way of mortgage on the mines. For every £100 granted to private enterprise the Government should demand a share certificate. Otherwise, if and when it subsequently nationalizes the enterprise, it will be asked to compensate the proprietors for the confiscation of its own capital; and though this, as we have seen in our study of compensation, does not really matter, it does matter very seriously that the State should not have at least a shareholder’s control. To make private adventurers an unconditional present of public money is to loot the Treasury and plunder the taxpayer.

So, you see, the difference between Capitalist and Socialist governments is not as to whether nationalization should be tolerated; for neither could get on for a day without it: the difference is as to how far it should be carried and how fast pushed. Capitalist governments regard nationalization and municipalization as evils to be confined to commercially unprofitable works; so as to leave everything profitable to the profiteers. When they acquire land for some temporary public purpose, they sell it to a private person when they have done with it, and use the price to reduce the income tax. Thereby a piece of land which was national property becomes private property; and the unearned incomes of the income taxpayers are increased by the relief from taxation. Socialist governments, on the other hand, push the purchase of land for the nation at the expense of the capitalists as hard and as fast as they can, and oppose its resale to private individuals fiercely. But they are often held back and even thrown back, just as the Russian Soviet was, by the inexorable necessity for keeping land and capital in constant and energetic use. If the Government takes an acre of fertile land or a ton of spare subsistence (capital) that it is not prepared instantly to cultivate or feed productive labor with, then, whether it likes or not, it must sell it back again into private hands and thus retrace the step towards Socialism which it took without being sufficiently prepared for it. During the war, when private enterprise broke down hopelessly, and caused an appalling slaughter of our young soldiers in Flanders by leaving the army without shells, the munitions had to be made in national factories. When the war was over, the Capitalist Government of 1918 sold off these factories as fast as it possibly could for an old song, in spite of the protests of the Labor Party. Some of the factories were unsaleable, either because they were in such out-of-the-way places (lest they should be bombarded) that private enterprise thought it could do better elsewhere, or because private enterprise was so wretchedly unenterprising. Yet when a Labor Government took office it, too, had to try to sell these remaining war factories because it could not organize enough new public enterprises to employ them for peace purposes.

This was another object-lesson in the impossibility of taking over land from the landlords and capital from the capitalists merely because doing so is Socialistic, without being ready to employ it productively. If you do, you will have to give it back again, as the Moscow Soviet had. You must take it only when you have some immediate use for it, and are ready to start on the job next morning. If a Capitalist Government were forced by a wave of successful Socialist propaganda to confiscate more property than it could administer, it might quite easily be forced to reissue it (not at all unwillingly, and with triumphant cries of “I told you so”) to private employers on much worse terms for the nation than those on which it is held at present.