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They are helping us now to secure advanced
Labor legislation; they will help us later to secure land reform
and other measures for all classes of wealth producers, and we need
all the help they give us. But if they are threatened with a class
war, then they will surely sulk and harden into downright Toryism.
What gain will that be for Labor?" (My italics.)[44]

The Chancellor of the Exchequer here bids for Labor's political support
on the plea that what he was doing for Labor meant an expense and not a
profit to the middle class, and that these reforms would only be
assented to by that class as the necessary price of the Labor vote. I
have shown grounds for believing that the chief motives of the new
reforms have nothing to do with the Labor vote. However much Mr. Lloyd
George, as a political manager, may desire to control that vote, he
knows he can do without it, as long as it is cast _against_ the Tories.
The Liberals will hold the balance of power, and their small capitalist
followers will continue to carry out their capitalistic progressive and
collectivist program--even without a Labor alliance. Nor does he fear
that even the most radical of reforms, whether economic or political,
will enable Labor to seize a larger share of the national income or of
political power. On the contrary, he predicted in 1906 that it would be
a generation before Labor could even hope to be sufficiently united to
take the first step in Socialism. "Does any one believe," he asked,
"that within a generation, to put it at the very lowest, we are likely
to see in power a party pledged forcibly to nationalize land, railways,
mines, quarries, factories, workshops, warehouses, shops, and all and
every agency for the production and distribution of wealth? I say again,
within a generation? He who entertains such hopes must indeed be a
sanguine and simple-minded Socialist."[45]

Mr. Lloyd George sought the support of Labor then, not because it was
all-powerful, but because, for a generation at least, it seemed doomed
to impotence--except as an aid to the Liberals. The logic of his
position was really not that Labor ought to get a price for its
political support, but that _having no immediate alternative_, being
unable to form a majority either alone or with any other element than
the Liberals, they should accept gladly anything that was offered, for
example, a material reform like his Insurance bill--even though this
measure is at bottom and in the long run purely capitalistic in its

And this is practically what Labor in Great Britain has done. It has
supported a government all of whose acts strengthen capitalism in its
new collectivist form, both economically and politically. And even if
some day an isolated measure should be found to prove an exception, it
would still remain true that the present policies _considered as a
whole_ are carrying the country rapidly and uninterruptedly in the
direction of State Capitalism. And this is equally true of every other
country, whether France, Germany, Australia, or the United States, where
the new reform program is being put into execution.

Many "Socialistic" capitalists, however, are looking forward to a time
when through complete political democracy they can secure a permanent
popular majority of small capitalists and other more or less privileged
classes, and so build their new society on a more solid basis. Let us
assume that the railways, mines, and the leading "trusts" are
nationalized, public utilities municipalized, and the national and local
governments busily engaged on canals, roads, forests, deserts, and
swamps. Here are occupations employing, let us say, a fourth or a fifth
of the working population; and solvent landowning farmers, their numbers
kept up by land reforms and scientific farming encouraged by government,
may continue as now to constitute another fifth. We can estimate that
these classes together with those among the shopkeepers, professional
elements, etc., who are directly dependent on them will compose 40 to 50
per cent of the population, while the other capitalists and their direct
dependents account for another 10 per cent or more. Here we have the
possibility of a privileged _majority_, the logical goal of "State
Socialism," and the nightmare of every democrat for whom democracy is
anything more than an empty political reform. With government employees
and capitalists (large and small)--and their direct dependents, forming
50 per cent or more of the population, and supported by a considerable
part of the skilled manual workers, there is a possibility of the
establishment of an iron-bound caste society solidly intrenched in
majority rule.

There are strong reasons, which I shall give in later chapters, for
thinking that some great changes may take place before this day can


[35] William Allen White in the _American Magazine_, January, 1911.

[36] Dr. Lyman Abbott in a series of articles published in the
_Outlook_, 1910, entitled "The Spirit of Democracy," now in book form.

[37] _New York Journal_, Aug. 2, 1910.

[38] The _Outlook_, Sept. 10, 1910.

[39] In his enthusiasm for these undemocratic measures, Dr. Abbott has
retrogressed more than the Southern States, which do not require both a
property and educational qualification, but only one of the two.
Moreover, by the "grandfather" and "understanding" clauses they seek to
exempt as many as possible of the whites, _i.e._ a majority of the
population in most of these States, from any substantial qualification
whatever. Nor does it seem likely that even in the future they will
apply freely; against the poor and illiterate of the white race, the
measures Dr. Abbott advocates. Just such restricted suffrage laws were
repealed in many Southern States from 1820 to 1850, and it is not likely
that the present reaction will go back that far.

[40] The _Outlook_, May 24, 1911.

[41] Governor Woodrow Wilson, Speech in Portland, Oregon, May 18, 1911.

[42] Speech in Senate, May 24, 1911.

[43] Miss Jessie Wallace Hughan in her "American Socialism of the
Present Day" (page 184) has quoted me as saying (in the _New York Call_
of December 12, 1909) that the amendability of the Constitution by
majority vote is a demand so revolutionary that it is exclusively
Socialist property. Within the limitations of a very brief journalistic
article I believe this statement was justified. It holds for the United
States to-day. It does not hold for agrarian countries like Australia,
Canada, or South Africa, for backward countries like Russia, or
dependent countries like Switzerland or Denmark, where there is no
danger of Socialism. And before it can be put into effect, which may
take a decade or more, the increased proportion in the population of
well-paid government employees and of agricultural lessees of government
lands and similar classes, may make a democratic constitution a safe
capitalistic policy, for a while, even in the United States.

[44] Lloyd George, _op. cit._, pp. 33, 34.

[45] Lloyd George, _op. cit._, p. 35.



State Capitalism has a very definite principle and program of labor
reform. It capitalizes labor, views it as the principal resource and
asset of each community (or of the class that controls the community),
and undertakes every measure that is not too costly for its
conservation, utilization, and development--_i.e._ its development to
fill those positions ordinarily known as _labor_, but not such
development as might enable the laborers or their children to compete
for higher social functions on equal terms with the children of the
upper classes.

On the one hand is the tendency, not very advanced, but unmistakable and
almost universal, to invest larger and larger sums for the scientific
development of industrial efficiency--healthy surroundings in childhood,
good food and healthy living conditions, industrial education, model
factories, reasonable hours, time and opportunity for recreation and
rest, and on the other a rapidly increasing difficulty for either the
laborer or his children to advance to other social positions and
functions--and a restriction of the liberty of laborers and of labor
organizations, lest they should attempt to establish equality of
opportunity or to take the first step in that direction by assuming
control over industry and government. From the moment it approaches the
labor question the "Socialist" part of "State Socialism" completely
falls away, and nothing but the purest collectivist capitalism remains.
Even the plausible contention that it will result in the maximum
efficiency and give the maximum product breaks down. For no matter how
much the condition of the laborers is improved, or what political rights
they are allowed to exercise, if they are deprived of all initiative and
power in their employments, and of the equal opportunity to develop
their capacities to fill other social positions for which they may prove
to be more fit than the present occupants, then the human resources of
the community are not only left underdeveloped, but are prevented from

In the following chapters I shall deal successively with the plans of
the "State Socialists" to develop the productive powers of the laboring
people and their children--_as laborers_, together with the accompanying
tendencies towards compulsory labor, and formation of a class society.

"Our Home policy," says a manifesto of the Fabian Society (edited by
Bernard Shaw), "must include a labor policy, _whether the laborer wants
it or not_, directed to securing _for him, what, for the nation's sake
even the poorest_ of its subjects should have." (Italics mine.)[46]

Here is the basis of the attitude of the "State Socialist" towards
labor. Labor is to be given more and more attention and consideration.
But the governing is to be done by other classes, and the foundation of
the new policy is to be the welfare of society as these other classes
conceive it,--and not the welfare of the masses of the people as
conceived by the masses themselves.

Indeed, a government official has recently pleaded with capital in the
name of labor that the time has come when it pays to treat labor as well
as valuable horses and cattle.

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Keywords: liberals, measure, opportunity, countries, democracy, community, secure, positions, larger, whether
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