socialism and international economic order

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SOCIALISMAND INTERNATIONALECONOMIC ORDERBy

ELISABETH L. TAMEDLY

The CAXTON PRINTERS, Ltd.CALDWELL, IDAHO1969


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1969 BYELISABETH L. TAMEDLY

Library of Congress Catalog Card No. 69-11702

Printed and bound in the United States of America byThe CAXTON PRINTERS, Ltd.CaldwelL Idaho 83605110400


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To my mother and O.R.


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vi FOREWORDject states, as private law subjects individuals, to the rule ofcommonly accepted codes and to the judgments of an interna-tional arbitration agency in cases of disputes between nationalgovernments. All these systems have been frustrated by the factthat th e creation of an international coercive force which wouldautomatically enter into action when any state refused to com-ply with the provisions of international law has been regardedas an inadmissible interference w ith sovereignty. Even univer-sal and compulsory recourse to a supranational court is usuallyrejected on the same grounds.Intergovernmental relations therefore have a fundamentallyanarchic character. Ultimately, of course, they, too, constitutehum an relationships, bu t with the difference tha t they are basednot on a convened standard of right and wrong, but on power.It is a country's political and m ilitary strength, on the one hand,and the political and military strength of its opponents, on theother, that form both the basis and the limit of national aspira-tions. The last resort is war which, as Karl von Clausewitz said,is "nothing but the continuation of state policy with othermeans."1It follows that the theory of international economic order isconcerned with two basically different types of hum an relation-ships: those that belong to the private sphere of the individualand which are amenable to the rule of lawthe "dominium"and those that are backed by sovereign national powerthe"imperium" (W. Rpke). The essential question to be an-swered by this theory is whether, and how far, the element oforder in international relations can be extended over the ele-ment of arbitrariness; the prevalence of peace and stability overthe "assumption of violence."It is not difficult to see that individual human relationshipsare characterized by a tendency toward universalism, as distinctfrom the realm of political domination which presupposes aclearly defined national territory. This universalism is broughtabout by the institutional and the specific economic laws whichgovern dominium. These economic laws characteristically workindependently of any single hum an will. They result, via theprice mechanism, in the coordination of millions of individualdecisions. Conversely, the very essence of the political sphereis the reign of hum an willthat of the stronger (or the majority)


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FOREWORD ixover the weaker (or the minority). The principle of coordina-tion is here replaced by that of subordination. Hence, it be-comes very important to know which fields of human activityare subject, within a given state, to imperium and which are leftto the regulating influence of market values and p rivate law. Inother words, it is the internal political constitution of a countrythat provides the final answer to the question of whether politi-cal frontiers will also become economic and hum an division linesor whether the forces of dominium are strong enough withineach nation to restrict political power and arbitrariness at home.In practice, the international community can only be ap-proached to a greater or lesser degree. The very fact that na-tional states were able to develop shows that the urge towardsocial integration within them was far stronger than it was withoutside groups which, in turn, were merging into separate politi-cal units. Tradition, national character, and differences in histo-rical evolution led to widely differing legal, moral, and institu-tional settings among nations. Yet, to the extent that the bene-ficial effects of international trade were becoming more vividlydiscerned, and to the extent that the division of power as wellas the safeguard of individual liberties against the State wereaccepted as the leading principles of political theory, it becamepossible to speak of an international open society. This societyconstituted a community bound by an unwritten rule of lawand a set of generally recognized standards, principles, andvalues. These principles included a voluntary renunciation ofnational sovereignty by a state's monetary authorities whoshaped policies not according to the will of the government,but according to the dictates of international commodity andcapital flows. Such an international economic order was largelyrealized in the nineteenth century.In short, the problem of international economic order is theproblem of approximating the legal and moral climates betweennational states so that citizens, free to move, to buy, and to sellwherever they like, gain a feeling of confidence and security farbeyond the limits of their own political territory. To the degreethat this goal can be achieved, international relations will fol-low the rules of dominium rather than the rules of imperium."It is the spirit of commerce which cannot coexist with war, andwhich sooner or later takes hold of every nation. For, since the


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x FOREWORDmoney power is perhaps the most reliable among all the powerssubordinate to the state's power, states find themselves impelled(though hardly by moral compulsion) to promote the noblepeace and to try to avert war by mediation."2The underlying problem of international economic disinte-gration, then, is caused by powerful forces that seem to restrict"the spirit of commerce" originating from the individual'ssphere.The objective of this investigation is to study the effect ofsocialism on the framework of international economic coopera-tion. Without attempting an elaborate definition of socialism,we shall use this term to indicate a social order in which alleconomic activities are consciously determined (planned) bya restricted group that represents society. This group is con-ceived of as an elite which, due to its members' alleged super-ior character, knowledge, and intelligence, is regarded to bebest qualified to determine society's real needs and to use so-ciety's productive apparatus to best satisfy these needs. Thesocialist concept of the future international economic order isthat of a world united under a single government and centrallyplanned by experts for the benefit of all peoples.However, the present world is divided into national states,governed by particular economic and political systems. Theprincipal questions which will form the object of this analysisare therefore the following:

Is the continuing existence of separate political unitscompatible with the postulates of socialism and, if so,what is the internal political and economic organizationthat characterizes a socialist state?

How will this organization affect the object of rever-sing international economic disintegration?Is the socialist ideal of a future international economicorder identical with the postulate of an open society?If not, what is the essential difference?What forces are at work, under socialism, that willinduce "the creation of a single world economy regu-lated by the proletariat of all nations according to acommon plan" (Lenin) ?


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FOREWORD xiTh is book is div ided into thr ee par ts. Socialist views on in-ternational economic cooperation are, for the most part, givenonly implicitly; they must be distilled from the general philo-soph ical context of their autho r. P ar t I therefore conta ins briefsummaries of the most relevant socialist systems and the inter-national implications of their ideas. Here, the authors speak forthemselves. A critical evaluation of their thoughts is given inthe Summary and Conclusions section at the end of each chap-ter. By acquiring an understanding of the ideological roots ofsocialist thought, it becomes possible to judge objectively thevalidity of the socialist claim that their system, being outside

any social order hitherto known, is not amenable to analysiswith traditional intellectual tools. Only if this claim provesunfounded will it be admissible to apply the familiar "box oftools" to a theoretical investigation of the impacts of socialismon the international economic order. These impacts are ana-lyzed in Part II. Part III reviews the major aspects of interna-tional economic cooperation such as is realized by the Councilof Mutual Economic Aid (Moscow). Although research wascompleted before the introduction of economic reforms in theEastern European countries, the latter illustrate the problemsfaced by these states rather than impair the conclusions of thisinvestigation.T he late W ilhelm R pke, whose l ifelong w ork was centeredon the interrelationship of political, economic, and social ordersand their effects on international peace and cooperation, intro-duced me to the subject of this book. Without the encourage-ment and helpful criticism which he was able to give me untilthe completion of the first draft, this study may not have beenpossible.I would like to express my thanks for the advice and assist-ance which I received from the Graduate Institute of Interna-tional Studies, in Geneva, Switzerland, especially from its Di-rector, Professor Jacques Freymond and also from ProfessorsG erard Curzon and Mikls M olnr. T he opp ortun ity to use thewell documented libraries of the United Nations' European Of-fice and th e University of Genev a was a decisive advan tage . M ywarm appreciation goes to the personnel of these libraries fortheir expert and friendly assistance.I express my gratitude to the Earhart Foundation in Ann


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xii FOREWORDArbor, Michigan, for a grant that made the completion of thisbook possible. I also sincerely thank Professor Arthur Kemp,Claremont, California, for his kind cooperation and advice.South PasadenaJune, 1967


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TABLE OF CONTENTSPart I.

SOCIALIST THEORIES AND THEIR IMPLICATIONSFOR AN INTERNATIONAL ECONOMIC ORDERPage

I N T R O D U C T I O N 1C h a p t e r I . I D E A L C O M M O N W E A L T H S - - - - - - 5

I n t r o d u c t i o n - - - - - - - - - - - - - 5Plato: Politeia and Nomoi 6Sir Thomas More: Utopia 10}ohann Gottlieb Fichte: Der geschlosseneHandeLstaat 13Summary and Conclusions 19Notes to Chapter I 20

Chapte r I I . T H E PRE-MARX IAN SOCIALISTS 24The Sociological Roots of an Em erging Anti-

Capitalistic Theory - - - - - 24Robert Owen 26C. H. de Saint-Simon and His Followers - - - - 28Pierre-Joseph Proudhon: from Anarchy toFederalism 33Summary and Conclusions 37Notes to Chapter II - - - - - - - - - - - 4 0C h a p t e r I I I . K A R L M A R X A N D H I S F O L L O W E R S : T H E I RC R I T I Q U E O F T H E C A P I T A L I S T M O D E O FP R O D U C T I O N - - - - - 4 4

Introduction - 44The Elements of Marxian Political Economy - - 46Concentration and Centralization of Capital - - 47


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TABLE OF CONTENTS xvPart II.

INTERNATIONAL ECONOMIC ORDER VERSUSSTRUGGLE FOR WORLD DOMINATION:A THEORETICAL ANALYSIS OF THE INTERNATIONALECONOMIC IMPLICATIONS OF SOCIALISMPageI N T R O D U C T I O N 125

C h a p t e r VI. THE P R O B L E M O F V A L U E ANDE C O N O M I C C A L C U L A T I O N S IN AC O L L E C T I V I S T E C O N O M Y - - - - - - 128The Problem - - 129S o c i a l l y N e c e s s a r y L a b o r - - - - - - - - 1 3 0The "Mathematical Solution" - - 133The Impossibility of a Rational Evaluation of

Capital Goods under Collectivism 135T h e " M a r k e t S o l u t i o n " of S o c i a l i s m - - - - - 1 3 7Critical Objections - - - 139The "Theory of Planning' According to Sweezy - 143Summary and Conclusions - - 145Notes to Pages 125-127 and to Chapter VI - - - 146

C h a p t e r VII. P L A N N E D F O R E I G N T R A D E AND ITSC O N S E Q U E N C E S FOR I N T E R N A T I O N A LE C O N O M I C R E L A T I O N S - - 150The Place of Foreign Trade in IdealCommonwealths - - - - - - - - - - - 150P l a t o - - - - - - - - - - - - - - 150T h o m a s M o r e - - - - - - - - - - - 151J o h a n n G o t t l i e b F i c h t e - - - - - - - - 153T h e P r e -M a r x i a n S o c i a li s t s ' A t t i t u d e t o

I n t e r n a t i o n a l E c o n o m i c R e l a t i o n s - - - - - 1 5 5R o b e r t O w e n - - - - - - - - - - - 1 5 5S a i n t - S i m o n a n d H i s F o l l o w e r s - - - - - 1 5 5P i e r r e - J o s e p h P r o u d h o n - - - 1 5 6The General Problem of International Economic

Relations under Socialism - - 157The Permanent Pressure on Internal Resources 158The Impossibility of Measuring Profitability ofIndividual Foreign Trade Transactions - - 160


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xvi TABLE O F CON TENTSPageTrade Relations between Collectivist and FreeMarket Economies 161

Trade Relations betw een Collectivist States - 162Summary and Conclusions 165Notes to Chapter VII - 167Ch a p t e r V I I I . L I BER A L V ERS U S S O CI A LI S T EC O N O M I COR DE R. A COM PARA TIVE ANALYSIS - - 170

Preliminary Remarks 170Balance of Paym ents Adjustment and NationalMonetary Policies 172Th ree Con cepts of the Balance of Paym ents - 172Internat ional Payments Adjustment in aL ibe ra l E conom ic O rd e r - - - - - - 173The Internat ional Impact of National FullEm ploy m ent Polic ies 175T h e Collectiv ist Solution - - - - - - - 181The International Problem of Raw Materials - - 183The Liberal Solution Resting on the Divisibilityof Ownership and I ts Invalidat ion in Timesof W ar - - 183T h e Collectivist Solution - - - - - - - 186The International Population Problem - - - - 188The Problem of International Capital M ovem ents - 191Summary and Conclusions 193Notes to Cha pter VIII - - - - - - - - - - 194

C h a p t e r IX . E C O N O M I C D E V E L O P M E N T A N D T H EP R O B L E M O F I N T E R N A T I O N A L E C O N O M I CO R D E R 1 9 9The Problem 199The Socialist Approach 203"Monopoly Capital" and State Planning - - 203The Politicalization of International CapitalMovements - . _ . - 206The Liberal Approach 209Summary and Conclusions 212Notes to Chapter IX 214

Chapter X. TH E FUNDAM ENTAL PROBLEM OFWORLD PLANNING; CONCLUSION TOPART II - - 217


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TABLE O F CONTEN TS xviiPageThe Internationalist Approach: a Critical

E x a m i n a t i o n - - - - - - - - - - - - 2 1 7The "Explosive Effect of Collectivism" - - - - 220W h o W h o m ? - - - 2 2 2C o n c l u s i o n - - - - - - - - - - - - - 2 2 6N o t e s t o C h a p t e r X - - - - - 2 2 7

Part III.THE TEST BY PRACTICAL EXPERIENCE

INTROD UCT ION - - - 231Chapter XL TH E "SOCIALIST" W OR LD MARK ET" - - 232

The Soviet System of Econom ic Planning: A ShortSurvey - - - - - - - - - - - - - - 232The Main Aspects of Central ized Decis ion-Making and the Problem of Construct ing anEfficient Ad m inistrative H iera rch y - - - 233The Foundat ions of Soviet ManagerialBehavior 236T he Prob lem of Ec ono m ic Ra tionali ty - - - 239National Planning, International Solidarity and theCouncil of M utual Economic Aid 241The Initial Years Characterized by an A utarkicIndustrial Development within EachCountry - - 242Attempts at Closer Cooperation withinComecon by Plan Coordination - - - - 244Soviet Proposals for a Central ComeconPlanning Agency - - - - - - - - - 247The "Dialectical" Contradiction between theInternational Character of SocialistProduction and the National Ownershipof the Means of Production - 250The Basic Problems of Socialist InternationalEconomic Intercourse 252The Effects of the Foreign Trade "Mechanism"Operating in Each C.M.E.A. Country - - 253The N eed for an O bjective Measure ofProfitability for International EconomicTransactions 257


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xvi TABLE OF CON TENTSPageP r i c e F o r m a t i o n o n t h e S o c i al i s t W o r l d M a r k e t :T h e o r i e s a n d R e a l i t y - - - - - - - - 2 6 3I n t e r n a t i o n a l C l e a r i n g b e t w e e n C . M . E .A .C o u n t r i e s - - - - - - - - - - - - 2 6 4The Problems Connected with East-West Trade - 266Foreign Trade Problems with C.M.E.A.Countries as Seen from the West - - - - 267Foreign Trade with "Capitalist" Countries asSeen from the East - - - 269Th e Prospects of East-W est Trade - - - - 270

S u m m a r y a n d C o n c l u s i o n s - - - - - - - - 2 7 1N o t e s t o C h a p t e r XI - - - - - - - - - - 2 7 3C O N C L U S I O N - - - - - - - - - - - - 2 8 0B I B L I O G R A P H Y - - - - - - - - - - - 2 8 4I N D E X O F A U T H O R S - - - - - - - - - 3 0 1


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I N T R O D U C T I O NSOCIALISTS HAVE CONCLUDED that something is fundamentallywrong with the "society" in which they live. 1 Consequently,they feel compelled to change it.2This uncompromising will to reform is directed toward athorough transformation of existing social and political institu-tions. Con currently, i t postulates a basic chang e in hum an char-acter in the sense of "freeing" men from their narrow, egoisticoutlooks. To arrive at lasting happin ess a nd justice, it is th ou gh tthat human beings must be taught to place more value on thewell-being of the community, of which they are but subordi-nated m em bers, than on personal comfort. A third element isadded by the socialist 's contention that history moves in thedirection of ever more perfect social conditionseven though itis generally agreed that this development must be aided andaccomplished by a restricted group of individuals (aristoi) w hopossess the indispensable insight into what is just and right andw ha t is therefore in accord anc e w ith history. Most socialistsare convinced that such absolute knowledge and wisdom reallyexist. Hence, they demand that all "command positions" of so-ciety be transferred to men of superior capacity and characterand that these men be given the necessary freedom to carry outtheir designs. At the root of this po stulate is the belief tha t m an-kind has been granted the ability to create a near perfect socialorder on this earth.The main target of socialist criticism, therefore, is the lib-erals'3 stress on individual freedom and utility. Such freedoman d utility, it is argu ed, lead to particularism and chaos. Sincethe profit motive is founded on considerations of individual asdistinct from collective welfare, it is, in the opinion of socialists,totally un suitab le as a me ans of regu lating the econom y. Unlikethe liberals, therefore, the socialists are primarily preoccupied


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2 SOCIALISM AND INTERNATIONAL ECON OM IC ORDERwith the exaltation of the community, and the subordination ofthe individual to it.The desire to abolish private property has often been iden-tified with socialism. But this is true only to a very limited ex-tent. The authors advocating such a system, from Plato to Owenand his followers (the "communistic" authors as they came tobe called) have always constituted a minority among socialistwriters. Moreover, the motives underlying their theories wereby no means uniform in character. Most socialists, however,while leaving the share of consumer goods allotted by the com-munity to the exclusive enjoyment of the individual, have advo-cated the collectivization of the means of production. Twomajor reasons have been advanced in support of this measure:(1) it was alleged to be a requirement of "distributive justice"and (2) it was said to constitute the necessary prerequisite fora rational and sagacious control of the production process. Aparticular group of socialists was not slow to perceive that thiscontrol could be achieved equally well without legally abolish-ing the private property of capital goods. This group knew itwas sufficient to replace individual with centralized decision-making to arrive at the same result. Hence, the essence ofsocialist doctrine, despite divergence of detail, is the demandfor the collective and centralized control of the economicprocess.Socialists usually speak of "society," "community," or "col-lectivity" as the basic units of their proposed order. But w hereare these units located, and in what way are they to share theworld's geographical surface and natural resources? How dothe authors whose views will soon be examined deal with theproblem of territorial delimitation? We shall encounter fourmajor methods of looking at these questions.The first group of authors devote their attention to the con-struction of an abstract, ideal commonwealth and place specialemphasis on the internal setup of tha t commonwealth. Theprototype of this imaginary state is a happily ordered islandsituated in the midst of an ordinary, defective world. Relation-ships with this world are consequently regarded as undesirableand to be minimized in order to safeguard the achieved stand-ard of social perfection. This Utopian approach is treated inChapter I.


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INTRODUCTION 3A second group of socialists simply ignore the existence ofnational states and conceive the future world as consisting ofsmall, socialistically organized communities whose relationsare govern ed by broth erly love an d mu tual interests. Such acommunity can then be thought of as extending to cover thewhole world under one single, hierarchically organized bodywhich will guide economic activity and distribute its fruits tothose w ho hav e the greatest need . The se ideas are th e subjectof Chapter II.A third group of authors start with the assumption that thegre atest evil is to be seen no t in th e existence of distinc t politicalunits, but in the division of mankind into two classesthe ex-ploiting and the exploited. Abolish exploitation a nd the sys-tem on which it rests, say these authors, and you will create anorder of perfect harmony and justice. Representatives of thisorder will consciously combine man's efforts with the world'sabundant resources to achieve plenty for everyone and univer-sal pea ce; this age-long drea m of all peop les will at last beco m ereality. This is the Marxist approa ch, dealt with in Ch ap ter II I.Chapter IV is devoted to the practical proposals and impli-cations which socialists advance midway between the realm ofideology and concrete reality. The authors reviewed in thischapter, and indeed in the entire first part , need by no meansbe "officially" recognized socialists. Their writings or opinionswere selected because they appeared relevant to this context,and not because of the author's political affiliations.Finally, some writers consider the area within which collec-tive control is to be exercised over economic, as well as political,matters to be identical with the territory dominated by an exist-ing State. This group represents most modern socialists includ-ing Marx and Lenin. Their theories on the dictatorship of theproletariat and the international economic implications of thecollectivist state are described in Chapter V. The same chapteralso contains a section which illustrates the "national socialist"approach.Socialism is usually regard ed as a profoundly internationalistmo vem ent. This is becau se of its emphasis on hu m an equality,solidarity, and brotherhoodideals which suffer no human di-vision lines. But is collective (that is, centralized economic andpolitical) control, whatever the territory on which it is exer-


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4 SOCIALISM AND INTERNATIONAL ECONOMIC ORDERcised, compatible with a true international economic order?Let us seek an answer in the writings of the socialists them-selves.

NOTES TO PAGES viii-xi1. Clause witz, Karl v., On War. Prefatory note. In Seldes, G., The Great Quota-tions. New York, Lyle Stuart, 1960, p. 160.2. Kant, Immanuel, Zum ewigen Frieden. Knigsberg, 1795, reprinted in Fried-rich, C. J., The PhiLsophy of Kant. Immanuel Kant's Moral and PoliticalWritings. New York, The Modern Library, 1949, p. 455, italics original.

NOTES TO PAGES 1-41. "Socialism, the n, will flourish in propo rtion as the consciousness grows tha tthere is something vitally wrong in the industrial organization of society."Guthrie, W. B., Socialism Before the French Revolution. New York, Macmillan,1907, p. 68. As Robert Owen expresses it: "Until society can be made to un-derstand the impracticability of improving its conditions under the existing cir-cumstances and can be induced to change these circumstances in toto, noreal advantages can be obtained for mankind." Lectures on an Entire NewState of Society. London, 1820, p. 138.2. Cf. Karl Marx's 11th Thesis on Feuerbach. In Borkenau, F. (ed.) , Karl Marx.Frankfurt/M., Fischer, 1956, p. 42.3. Th e term "libe ral" is used here in its original Europ ean sense. "Liberalism isa belief in the value of human personality, and a conviction that the source ofall progress lies in free exercise of individual energy ; . . . it therefore involvesa readiness to use the power of the state for the purposes of creating the con-ditions within which individual energy can thrive, of preventing all abuses ofpower, of affording to every citizen the means of acquiring mastery of his owncapacities and of establishing a real equality of opportunity. . . ." EncyclopaediaBritannica, Vol. XIII, 1959, p. 999d.


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CHAPTER I

IDEAL COMMONWEALTHSINTRODUCTIONHow is THE SOCIALIST world order to be accomplished? Mostreformers know it cannot be established in one stroke. They arealso aware of the two main obstacles to its realization: individualselfishness, and the traditional institutions and customs whichare embodied in the existing State. This new world order musttherefore be implemented outside the spheres which are domi-nated by these two factors, at some distant place beyond theoceans. What mainly interests us here is not the geographicallocation, bu t the intellectual elaboration of that basic unit whichis to form the kernel of future order."Let us found a State" said Socrates when opening discus-sion in "Politeia." In this work Plato endeavors to design amodel state which may one day be turned into reality by menof action. The Utopias treated in this chapter are not unbridledphantasies of their authors; rather the authors are, as H. Freyerrightly points out, animated by a responsible political will.Their commonwealthscalculated to exercise a manifest in-fluence on their contemporariesare therefore "a closed, con-sistent, convincing and so to speak viable world . . . which,if non-existent, could at least be real in theory."1 This world isconsciously organized and balanced. As Johann Gottlieb Fichtewrites:

In government, as well elsewhere, everything possible must be con-ceptualized; whatever can be computed must cease to be left to blindchance, in the hope that chance will make it.2Thus, Utopian writers do not propose to overcome the State,bu t only to change its structure. A utopia is a state that pos-sesses the proper solution to all human problemsand morethan that : it is identical with this solution. Human conflicts


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6 SOCIALISM AND INTERNATIONAL ECON OM IC ORDERcease to exist; individual and community, dominium and im-perium, all merge into one. Every part is bound together by thecommon, righteous cause, and the one derives its perfectionfrom the other. The old antinomy between personal freedomand central control, manifested by constraint and even terror, isreplaced by perfect harmony.The citizens of such a Utopian State, whose lives are spentbetween collective work and leisure, are so happy, so free fromfear and worry, that they eagerly encourage other peoples, andeventually all mankind, to follow their example.Freyer compares the inner organizational structure of anideal commonwealth with the "cosmos of the Greek philoso-phers :finite,round and numerically ordered so that it can simp-ly and clearly be governed by static laws."3 To this self-inclu-sive system all forces not rooted in its laws, and which thereforethreaten to interfere with its proper functioning, must appearhostile and dangerous. The only choice a Utopian author leaveshis reader is an uncompromising take it or leave it.4 Hence, aUtopia must be strictly isolated from the rest of the world; "allfactors and forces which by their nature transgress borderlinesand join countries, must at the outset be viewed suspiciously inUtopias."5PLATO: POLITEIA AND NOMOI

Mankind will always be indebted to Plato for the prototypeof the ideal commonwealth. This author lived at a time whendemocracy, the long cherished political order of Athens, haddegenerated into a "bustle of rancour and baseness."6 In thisperiod of political disintegration and liberated individualism,Socrates had been sentenced to death and executed by the Athe-nian authorities. The rising philosophical school of the Soph-ists relativized all moral institutions as being solely dependenton human will in general, and that of the strong in particular.Against this philosophical anarchism Plato set his theoryof the objective existence of absolute principles, the highest ofwhich was justice. Justice may be recognized by an intelligibleact and thus refuses to tolerate any authority besides itself, noteven that of laws. "What is just can only be discerned for eachindividual case with respect to the Idea and by the one who


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8 SOCIALISM AND INTERNATIONAL ECONOMIC ORDERsalvation of laws;"14 therefore, "everyone shall regard the friendor enemy of the State as his own personal friend or enemy."15Internal economic life is strictly regimented. Thus, "eachseveral craftsman in the State shall have one single craft andgain from it his living."16 Or again:

The Law-wardens must meet in consultation with experts in everybranch of retail trade, and at their meetings they must consider whatstandard of profits and expenses produces a moderate gain for the trader,and the standard of profits and expenses thus arrived at they must pre-scribe in writing; and this they must insist onthe market stewards, thecity stewards and the rural stewards, each in their own sphere.17By the location Plato gives to his Stateit is to be situatedon a lonely stretch of Crete, eighty stades away from the sea-he implies that he aims at maximum self-sufficiency. Thus, weread:Most of the Greeks arrange for their food to be derived from bothland and sea, but our people will derive it only from the land. This makesthe lawgiver's task easier.18

And again:For if the State was to be on the sea-coast, and to have fine harbors,and to be deficient in many products, instead of productive of everythingin that case it would need a mighty savior and divine lawgivers, if, withsuch a character, it was to avoid having a variety of luxurious and de-praved habits. As things are, however, there is consolation in the fact ofthat eighty stades. Still, it lies unduly near the sea, and the more so be-cause, as you say, its harbors are good; that, however, we must make thebest of. . . . Our State has compensation in the fact that it is all-produc-tive; and since it is hilly, it cannot be highly productive as well as all-productive; if it were, and supplied many exports, it would be floodedin return with gold and silver moneythe one condition of all, perhaps,that is most fatal, in a State, to the acquisition of noble and just habits oflife.19What remains of foreign trade is severely guarded by theState. It is true that "no toll shall be paid in the State by any-one either on exported goods or on imports,"20 but this is prac-tically meaningless sinceFrankincense and all such foreign spices for use in religious rites, andpurple and all dyes not produced in the country, and all pertaining to any


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IDEAL COMMON WEALTHS 9other craft requiring foreign imported materials for a use that is not nec-essary, no one shall import; nor, on the other hand, shall he export anyof the stuff which would of necessity remain in the country. . . . 21In regard to arms and all instruments of war, if there is need to importany craft or plant or metal or rope or animal for military purposes, thehipparchs and generals shall have control of both imports and exports,when the State both gives and takes, and the Law-wardens shall enactsuitable and adequate laws therefor; but no trading for the sake of gain,either in this matter or in any other, shall be carried on anywhere withinthe boundaries of our State and country.22

It can be seen that foreign transactions are to cover only"essentials" and that they are to be conducted on the basis ofstrict barter. Foreign exchange reservesin the form of preciousmetalsare therefore unnecessary.As with the movement of commodities, the lawgiver mustalso concern himself with the movement of men across theState's frontiers. His prescriptions are a compromise betw eentwo antagonistic tendencies. On the one hand ,the intermixture of States with States naturally results in a blending ofcharacters of every kind, as strangers import among strangers novel cus-toms: and this result would cause immense damage to peoples who enjoya good polity under righ t laws.23On the other hand, the State must not "get the reputation ofadopting harsh language," sincereputation in the eyes of others, whether for goodness or the reverse, is athing that should never be lightly esteemed.24

The State may send out "inspectors," i.e. men over fifty yearsof age and of great merit, "who desire to survey the doings ofthe outside world in a leisurely way."25 But they must be "in-corruptible, so as to confirm thereby such of his native laws asare rightly enacted, and to amend any that are deficient."26 Ontheir return, the inspectors will report to a "mixed body ofyoung men and old" on "anything important they may havelearnt elsewhere."27But if, on the other hand, such an inspector appears to be corruptedon his return, in spite of his pretensions to wisdom, he shall be forbiddento associate with anyone, young or old; wherein if he obeys the magis-


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10 SOCIALISM AND INTERNATIONAL ECON OM IC ORD ERtrates, he shall live as a private person, but if not, he shall be put todeath.28

All foreignerswhether in a public capacity or on a privatevisitare, immediately upon their arrival, taken care of byState officials or by priests. Plato is especially distrustful ofthat "inevitable emigrant" choosing "summer, as a rule, for hisan nu al visits."29SI R THOMAS MORE: UTOPI A

"Plato was the intellectual father of socialists as well as ofphilosophers." 30 But whereas he "had a more general abstractend in view . . . , More was interested in the practical solutionof actual and present social problems, and busied himself withplans to alleviate existing unfortunate conditions."31 Theseconditions resulted from the enclosure movement in sixteenth-century En gland . Therefore, "the appe arance of 'Utopia ' marksthe beginnin g of the m odern social problem s as they show them -selves in the incipient stages of the capitalistic period."32The sixteenth-century was also the age of overseas discov-eries. The living conditions of the newly found lands and peo-ples, as they were related by the tales and reports of the ex-plorers, seemed to be a challenging contrast to the m isery wh ichwas thou ght to be provoked b y the progress of productive m eth-ods based on priva te prop erty. T he qualities of prim itive so-ciety beg an to be studied and soon becam e identified, especiallyby the "natural" philosophers of the eighteenth century, withhappiness and equality. I t was believed that nature had grantedevery man equal access to the fruits of the land, originallyowned in common. The influence of this philosophy can beseen in Thomas More's work.The Island of which Hythloday enthusiastically reports is inthe form of a horseshoe and its shores are washed by a calmand friendly sea. However, when Utopus first conquered"Ab raxa," it wa s a pen insu la. This wise king m ad e it an islandby cutting an isthmus of fifteen miles.33 The entry into Utopia 'sinviting bay is, moreover, made treacherous by nature becauseof dispersed rocks and shallowsthe safe passages being knownonly to the fortunate inhabitants themselves.


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IDEAL COMMO NWEALTHS 11The secret of the Utopians' joyful life lies in the fact

that they do not think felicity to rest in all pleasure, but only in thatpleasure that is good and honest. . . . They define virtue to be a lifeordered according to nature . . . and that he does follow the course ofnature who in desiring and refusing things is ruled by reason.34This greatly simplifies the economic process. Both men andwomen work and, since private property is unknown, there isno distinction betw een rich and poor. H en ce, an idle classwh ich mu st b e supported does not exist. In addition, the d e-mand for goods and services is reduced because homespun gar-

ments "are throughout all the Island of one fashion . . . seemlyand comely to the eye, fit both for winter and summer."35 Sim-ple bu t abu nd an t meals are taken in comm on, and wh atever elseis pro du ce d is don e so in good an d lasting quality. H enc e, sixhours of daily work are sufficient to provide for the Utopians'necessities; the rest of th e tim e is devoted to comm on recreation,games, and studies. But even so, the inhabitants cannot helpproducing surplus. All commodities are stored in warehousesor markets;from hence the father of every family or every householder fetches what-soever he and his have need of, and carries it away with him withoutmoney, without exchange, without any gage or pledge. For why shouldanything be denied to him; seeing there is abundance in all things, andthat it is not to be feared lest any man will ask more than he needs. 36

To provide against poor harvests, stocks sufficient for twoyears are accumulated. When the present and possible futurerequirements of the community are thus met,then of those things whereof they have abundance, they carry forth intoother countries great plenty; as grain, honey, wool, flax, madder, purpledye, felles, way, tallow, leather and livestock. And the seventh pa rt ofall these things they give frankly and freely to the poor of that country.The residue they sell at a reasonable and mean price. By this trade oftraffic or merchandise, they bring into their own country not only greatplenty of gold and silver, but also all such things as they lack at home,which is almost nothing bu t Iron. And by reason they have long usedthis trade, now they have more abundance of these things than any manwill believe.37

Here More implies that Utopia's balance of payments shows


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IDEAL COMMO NWEALTHS 13to be spread among their enemies."44 The Utopians themselves,though well trained and prepared for war, fight only if theymust to defend their country.JOHANN GOTTLIEB FICHTE: DER GESCHLOSSENE HANDELSSTAAT"The first socialistic theorist, Sir Thomas More,"45 wrote hisUtopia as a reac tion against the social evils of his time. G ene ralhumanitarian feelings and a strong empathy with the miserablelot of the poor classes merged, in the eighteenth century, intothe powerful current of thought which was set free by the En-lighten m ent. History and politics w ere now subjected to theanalysis of reason. A natural and reasonable social, political,and economic order was supposed to exist, derivable from thekno w ledge of hu m an charac ter. T h e "social con tract" offereda normative formula which indicated how society should bebuilt if its construction were influenced only by reason and notalso by error, lust for power, and custom.Joha nn G ottlieb Fich te, at the turn of the century, comb inedFrench rationalism and radicalism with German nationalism.Unlimited freedom, he wrote, means no freedom at all since"no one may appropriately put something into effect and relyfor one m om ent on its du ration. This antagon ism of the freeforces can only be counteracted by the individuals making amutual agreement."48 This agreement restricts the liberty of itsparticipants equally and contains the assignment of an exclusiveright to a determ ined "free" activity to each participan t. T heagreement thereby consti tutes property.47The outward manifestation of this multilateral contract andof the corresponding unification of human activity is, as Fichtesees it, the Vernuntsstaat (Rational State). To the customaryassumption "that property exists independently of the State, andthat the latter needs only to safeguard the present state of prop-erty in which it finds its citizens without inquiring into the law-fulness of the acquisition," Fich te opposes the idea tha tit is the State's function to assign property to each and then only to pro-tect his corresponding rights.48

merceIn the Vernunftsstaat, agriculture, manufacture, and com-rce form th e three main categories of economic activity. Th e


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IDEAL COMMONWEALTHS 15the possibility of such an influence. All intercourse with foreigners mustbe forbidden and m ade impossible to its subjects.52This is becausethe government, in order to continuously guarantee its subjects the ful-fillment of their customary needs, must be able to rely on the fact that acertain quantity of goods is being traded. How can it count on theforeigner's contribution to this quantity since he is outside the govern-ment's dominion? It is tofixand warrant the price of a commodity. Howcan it succeed with respect to the foreigner if it is unable to determinethose prices which prevail in his country and at which he buys the rawmaterials? If the government sets him a price which he cannot afford,he will henceforth avoid its market and deficiency in the satisfaction ofcustomary needs will result. It is to guarantee to each subject the sale ofhis products at the due price. How can it do so if the subject sells onforeign markets where different commodity relations prevail which itcan neither survey nor influence?53

Fichte is very emphatic on the external consequences of theRational State. It isa closed com mercial state just as it is a closed imperium of laws and in-dividuals.54Each man as well as each commodity belongs either to its juris-diction or it does not: "there is no third choice."55 It follows thatany foreign trade that may be judged necessary falls to the ex-clusive competence of the government "just as it alone is to de-cide on war, peace, and alliances."56This has important consequences for the monetary systemin that the State becomes free from all ties resulting from cus-tomary international economic intercourse:

A closed commercial state . . . can turn into money whatever it desires,provided only that it declares to accept this and no other money. . . . Itwould thus create a national currency without even raising the quest ionas to whether th is money would or would not be accepted abroad, sincefo r a closed commercial state foreign countries are as good as non-existent.57Furthermore,

A closed commercial state is utterly indifferent to whether there is, tospeak in customary language, a large or a small circulation of money.


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16 SOCIALISM AND INTERNATIONAL ECON OM IC ORDERThe total sum of circulating money simply represents the total quantityof publicly traded goods.58

Fichte gave clear policy directives by which to achieve theclosed commercial state. His rigorous and analytic mind dis-tinguished the following mutually complementary governmentactions and decrees:In the first place private foreign trade is to be made impos-sible by depriving citizens of all international means of pay-ment.59 This deprivation must be preceded by the followingmeasure:Immediately before the promulgation of the new national currency,the government buys all foreign goods existing in the country. . . . Thispurchase takes place partly in order to assess the available stock and thepresent needs for these commodities, and partly in order to centralizetheir price fixing.60As a third measure, the government sets up a foreign trademonopoly:

By the same stroke with which it introduces the new national cur-rency, it is to take over all assets and liabilities resulting from foreigntrade.61Henceforth, the government will decide which commoditieswill continue to be exported and imported.62Fourthly, the government creates a central clearing agencywhich immediately takes control of and liquidates all interna-tional claims to and from its citizens. The method herebyadopted is the following:The government pays to or claims world currency from the foreignerand th en pays to or claims national currency from the citizen.63The same method of control will be applied to all foreign tradetransactions and their corresponding payments. The separationof currencies will be paralleled by a separation of the internalprice level from that prevailing on the world market.

64There-fore,

the citizen does not buy at the price the government pays to the foreignerfor a commodity, but at the one prescribed by internal law with due con-sideration for the citizen's fair subsistence during the time he resells it. 65


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IDEAL COMMONWEALTHS 17Exports are to be similarly regimented. The prices of foreigngoods are gradually raised so as to break the citizens of theirhabit of desiring them, the final aim being "that the State com-pletely isolates itself from any foreign trade."66Fifthly, "simultaneously with the execution of these mea-sures the State is to move into its natural frontiers."67 This leadsus to an interesting point of Fichte's political theory. He writes:

Certain areas of the earth's surface, including their inhabitants, areclearly destined by nature to form political units. They are separatedfrom the rest of the earth by large rivers, seas, inaccessible mountains.. . . It is these indications of nature as to what is to remain united andwhat is to be separated that one has in mind when speaking, in modernpolitics, of the natural frontiers of empires; a consideration which shouldbe taken far more seriously than is commonly done. Nor is sole emphasisto be placed on strong and militarily well protected frontiers, but muchrather on productive independence and self-sufficiency.The author concludes: governmentswill speak of the necessity of rounding off their borders and assert that,in view of their other lands, they cannot exist without this fertile provinceand that mine or salt work, always dimly thinking of the acquisition oftheir natural frontiers.69

Wars are therefore inevitable and must be fought by theState, though "not properly speaking by the peoples, to whom,if only they are united, it can be indifferent under whose nameor dynasty this takes place."70The State, once it has reached its legitimate goal,must give and be able to give its neighbors the guarantee that it willhenceforth refrain from further expansion. However, it can give thisguarantee only on the condition of becoming a closed commercial state.Closure of territory, and closure of commercial intercourse are mutuallyinterrelated and complementary measures. A state which adheres to theordinary system of commerce and aims at supremacy in world trade, re-tains a continuing interest in expanding beyond its natural frontiers inorder to increase its trade and hence its wealth. . . . To the closed com-mercial state, on the other hand, not the slightest advantage can accruefrom an expansion beyond its natural frontiers since its whole constitu-tion is calculated only for its given extension.71

The Vernunftsstaat, finally, establishes the foundations ofthe future closed economic order. It does so by systematically


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18 SOCIALISM AND INTERNATIONAL ECON OM IC ORDERexploring the production possibilities of the country with re-spect to import substitutes and by setting up plans accordingly.In its calculations, the government must, on the one hand, dis-tinguish "between such needs which can really contribute towell-being and others which merely serve prestige purposes." 72On the other hand, it will not be difficult to find adequate sub-stitutes for foreign products if neither trouble nor costs arespared.73 The governmenthas enough means to try everything at its own costs and calmly awaitsuccess. Within the country, this costs nothing more than a piece ofmoney which it can easily produce.74

At this time, foreign trade is still being transacted so thatthe State can use all foreign exchange reserves for building upthe fundaments of the present and future economy.75 Fichte hasso much confidence in the size and efficiency of the RationalState's gold and silver stock that the latter's purposeful devotionto the preparation of warthe acquisition of raw materials andarmamentsmay exclude any serious resistance of its enemiesso that it may reach its goal without bloodshed and almost without strik-ing a blow, and that its operation is more like an occupational campaignthan a war.78

Fichte imagines the future world to be divided among anumber of closed commercial states that have reached theirnatu ral frontiers. Th eir m utu al trade is severely restricted tothose commodities which, for climatic reasons, cannot be pro-du ced in certain countries. It is to be co nd ucted on a bilateralbasis:

Between such states, destined by nature to a continuing barter, a tradeagreement could be reached according to which one partner is pledgedfor eternal times to grow for the other a certain quantity of wine in ex-change for the delivery of a specified quantity of corn. Neither partner isto aim at a profit, bu t at an absolute equality of value. Hence, therewould be no need for money for such trade, only for clearing.77Beyond that, each nation must content itself with the levelof production made possible by the natural and social condi-tions within its borders.

Questions such as: why should I not have a commodity in the same


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IDEAL COMMONW EALTHS 19perfection as that manufactured in another country, comes down to ask-ing: why am I an inhabitant of this country, and amounts to the same asif the oak tree should ask: why am I not a palm tree and vice versa.Every man must content himself with the sphere in which nature hasplaced him and with everything that comes from this sphere. 78SUMMAKY AND CONCLUSIONSA study of ideal commonwealths leads to two important in-sights : first, it sheds light on our prob lem rega rding the intern alna ture of a socialist state and its external consequen ces. T hecommunity, or rather its top representatives, allocate resourcesand productive tasks, distribute income and consumption goods,and cond uct relations w ith the outside wo rld. H en ce, the forcesof dominium are completely paralyzed; international trade andforeign policy are considered as one single field, belongingmore than anything else to the exclusive competence of theState. Fichte's treatise on the closed commercial state is, in itsclarity and consistency, as yet unsurpassed as a textbook on thetheory of socialist foreign economic relations.But secondly, by reading Utopian authors, one already en-coun ters the particu lar me tho d of socialist reasoning. It basi-cally consists of plac ing conc reteness on abst rac t term s. By re-garding the State, as Plato does, as a model of human perfec-tion, the State acquires a higher form of reality than that pos-sessed by the individual. Fro m this comes the postu late to giveutmost freedom to the State and "repress the majority of de-sires" of its citizens. The intellectual design of a perfect institu-tion, its endowment with unlimited power, and the belief thatthis institution suddenly awakens to independent life is thedevice which permits these authors to turn their backs on thereal source of social problems: the weaknesses of human char-acter. By subjecting the imperfect individual to the perfectstate, the individu al either becom es perfect himself, as in M ore'sUtopia, or, at least, his selfish impulses are brought under thestern control of virtue, as embodied by the State.Just as the individual has control only over his proper bodyand soul, so the State's actions, as Fichte emphasized, mustnecessarily be limited strictly to the territory under its control.Thus, the decisive question is this: what principles will governth e relationships betw een the various States? If all States have


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20 SOCIALISM AND INTERNATIONAL ECO NO MIC ORDERbecome ideal commonwealths, founded upon the same internalprinciples, governments should play the same role on the inter-national level as individuals do within the State; for a worldorder can only be established if the various communities readilysubmit to the interests of the whole. These interests, and thisfollows from the inherent logic of Utopias, must be embodiedin the decrees of a central world authority possessing a powerover the States similar to the power the States possess overthe citizen. But this implies the complete disappearance ofthe hitherto sovereign States, i.e. their merging with and there-fore subjection to a comprehensively planned world commu-nity. If, however, the individual States should refuse to sac-rifice themselves in this wayif they insist on their freedomof action and on their being the last resort of truth and virtueinternational tensions and eventually war would become in-evitable, unless international relations were strictly minimized.In Part II of this study we shall go more deeply into the anal-ysis of "closed commercial States" and their implications forpeace and international order.

If, however, the ideal commonwealth is thought of as a sin-gle unit, surrounded by "ordinary" peoples and countries, itsestablishment signifies a disruption of the existing internationalorder. Utopia becomes a heterogeneous body within this order,and both must view each other with increasing mutual suspi-cion. More than that, the outside world is forced, if it wishesto entertain relations with Utopia, to introduce certain featuresalien to its system, but typical for that of this strange, isolatedcommunity (such as state tradin g) . It must constantly fear hos-tile propaganda, subversive activities, and "wars of liberation."Thus, the assumption of war is by no means absent from theworks of Utopian authors. On the contrary, the internal struc-ture of the ideal commonwealth, as is most impressively illus-trated by Plato's State, corresponds to strict military discipline,eased only by the citizens' preparedness to accept it joyfully.Living space and "natural frontiers" are regarded as the legiti-mate goals of warfare.NOTES TO CHAPTER I1. Freyer, H., Die politische Insel. Eine G eschichte der Utopien von P laton biszur Gegenwart. Leipzig, Biographisches Institut, 1936, pp. 22-23.


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I D E A L C O M M O N W E A L T H S 212. Fichte, J. G., Der geschlossene HandeLstaat. Jena, Fischer, 1920 (originallypublished in 1800), p. 12.3. Freyer, H., op. cit., p. 26.4. "It follows from what has been said that the system here established, if it is tobe realized, should be adopted or rejected in entirety." Fichte, J. G., op. cit.,p . 103.5. Freyer, H., op. cit., p. 26.6. Heuss, A., "Hellas. Die archaische Zeit." Propylen Weltgeschichte, ed., G.Mann and A. Heuss, Berlin, Propylen Verlag, 1962, III, p. 373.7. Ibid.8. "They will go to mess and live together like soldiers in a camp. . . . They aloneof all the citizens may not touch or handle silver or gold, or be under thesame roof with them or wear them, or drink from them. And this will be theirsalvation, and they will be the saviors of the State." Quoted from Republic,

Book I, in Gray, A., The Socialist Tradition. Mo ses to Lenin. London, Long-mans, 1946, p. 19.9. Plato, Laws. With an English translation by R. G. Bury, London, Heinemann,1926, Vol. I, Book I, p. 9.10. Ibid., Vol. II, Book XII, p. 477.11 . Ibid., Book V II, p. 135.12. Ibid., p. 149.13 . Ibid., Book XII, p. 547.14. Ibid., p. 537.15 . Ibid., p. 521.16. Ibid., Book VII, p. 185.17 . Ibid., Book XI, p. 413.18 . Ibid., Book VIII , p. 171.19. Ibid., Vol. I, Book IV, pp. 257-59, italics add ed.20. Ibid., Vol. II, Book V III, p. 185.21. Ibid.22. Ibid., p. 187.23. Ibid., Book XII, p. 503.24. Ibid. Plato lays down the following rules: "First, no man under forty yearsold shall be permitted to go abroad to any place whatsoever; next, no manshall be permitted to go abroad in private capacity, but in a public capacitypermission shall be granted to heralds, embassies, and certain commissions ofinspection. . . . These men, when they return home, will teach the youth thatthe political institutions of other countries are inferior to their own." Ibid., p.505.25. Ibid., p. 507.26. Ibid.27. Ibid., p. 509.28. Ibid., p. 511.29. Ibid. "The officials . . . shall have a care lest any such strangers introduce

any innovation, and they shall duly dispense justice to them, and shall holdsuch intercourse as is necessary with them, but to the least extent possible."Ibid., p. 513.30. Guthrie, W. B., op. cit., p. 64.31. Ibid.32. Ibid., p. 68.33. More, Sir Thomas, The Utopia. In Latin from the edition of March 1518 and


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22 SOCIALISM AND INTERNATIONAL ECONOMIC ORDERin English from the first edition of Ralph Robynson, translated in 1551, editedby J. H. Lupton. Oxford, Clarendon Press, 1895, p. 118.34. Ibid., p. 119.35. Ibid., p. 140.

36. Ibid., p. 157.37. Ibid., pp. 170-71.38. Ibid., pp. 171-72.39 . Ibid., p. 245.40. Ibid., p. 244.41. Ibid., p. 154.42. Ibid., pp. 154-55, italics add ed.43. Ibid., p. 179.44. Ibid., p. 251.45. Guthrie, W. B., op. cit., p. 54.46. Fichte, J. G., op. cit., pp. 4-5.47. "I have described property as the exclusive right to actions, by no means tothings." Ibid., pp. 5-6, italics original.48. Ibid., p. 4.49. Ibid., p. 56, italics original.50 . Ibid., p. 14.51. Ibid., p. 19.52 . Ibid., p. 26, italics added.53. Ibid.54. Ibid., p. 27, italics original.55. Ibid.56. Ibid.57. Ibid., p. 41 , italics original.58. "The wealth of a person does not depend on how many pieces of money hepossesses, but on how large a part of total circulating money he holds." Ibid.,p . 42.59. "Every possibility of world trade presupposes the availability of a universallyaccepted means of exchange. . . . Hence, our task should be solved in thefollowing way: all world money possessed by the citizens, that is all gold and

silver, should be brought out of circulation and exchanged for a new nationalcurrency which would be valid only inside the country." Ibid., pp. 99-100,italics original.60 . Ibid., p. 111.61. Ibid.62. "The import and use of commodities which serve prestige purposes only canat once be prohibited." Ibid., p. 115.63. Ibid., p. 113, italics origina l.64 . Fichte clearly realized this and also the danger of inflation it implies. There-fore, in order to assure the success of the monetary reform, "the governmentformally renounces, for eternal times, to increase arbitrarily and to its ownadvantage the quantity of circulating national money." Ibid., p. 103. Theauthor goes so far as demanding that the centrally fixed prices must be con-stitutionally laid down and guaranteed.65. Ibid., p. 114.66. Ibid., p. 90, italics original.67. Ibid., p. 119.


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IDEAL COMMONWEALTHS 2368. Ibid., pp. 94-95, italics adde d.69. Ibid., pp. 95-96.70. Ibid.71. Ibid., p. 98.72. Ibid., p. 94.73. Ibid., p. 93.74. Ibid., p. 118 (note). This, however, is in contradiction to Fichte's apprehen-sions against inflation. Cf. footnote 64 of this chapter.75. "Foreign machines should be bought and imitated at home. Promise of moneydefeats any prohibition." Ibid., p. 117. Moreover, the government "shouldattract, from abroad, at whatever cost, great personalities who are competentin the applied sciences. . . . By paying rewards which no other governmentscan afford, people will hurry to offer their services." Ibid., p. 116.76. Ibid., p. 119.77. Ibid., pp. 122-23.78. Ibid., p. 16.


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CHAPTER II

THE PRE-MARXIAN SOCIALISTSTHE SOCIOLOGICAL ROOTS OF AN EMERGING ANTI-CAPITALISTIC THEORYTHE PROFOUND SOCIAL and economic changes brought about bythe Industrial Revolution decisively influenced socialist thought.The body of socialist doctrine advanced during the early nine-teenth century had a twofold aspect: (1) continued utopisticspeculation and (2 ) a sharp theoretical criticism of existing con-ditions. Both elements supplied the raw material out of whichKarl Marx and Friedrich Engels were to forge their compre-hensive theoretical system of "scientific socialism." What mostoccupied the minds of social thinkers at that time was the strik-ing contrast emerging between the huge increase of wealthwhich was made possible by the mutually enforcing develop-ment of the division of labor and machinery, and the concur-rent misery of a large and growing portion of the population.1Some authors, of whom Fourier is the most representative,reacted to these developments by simply turning their backson the blessings of the industrial age, inescapably accompanied,as it seemed to be , by misery and ugliness. They instead advo-cated their own version of a return to nature: the establishmentof small, self sufficient associations in the countryside where in-hab itants would live mainly from gardening.Other authors, such as Sismondi, came out with criticismagainst the generally accepted economic theories of the classi-cal-orthodox school. Sismondi reproached Ricardo and Saybecause their method of theoretical abstractions convertedeconomics, in his view, into a "chrematistic" science and therebylost man from its sight. Sismondi's historical and sociologicalapproach to economic problems led him to emphasize the so-cial suffering caused by the disequilibria of the market and theensuing process of readjustment. His criticism of the economic


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TH E PRE-MARXIAN SOCIALISTS 25and social conditions of his time served as a starting point formany subsequent socialists.In the first half of the nine teenth century, socialist criticismbecame more and more directed against and crystallized aroundcertain principal institutions with which capitalism was identi-fied. Private wealth was interpreted as being "derived from theunsurrendered earnings of the working class"2 and "the pos-session of that which gives power over and commands the laborof man."3 Competition was denounced as the triumph of theprinciple of struggle over harmony and solidarity. Crises cameto be explained by the theory of overproduction and the dis-placement of labor by machines. Finally, many authors refusedto make any distinction between trade and treachery and ex-ploitation since trade was not based on what they felt was theonly just principle: the exchange of equal amounts of labor.Charles Hall, for example, saw the essence of international tradeto be in the export of vital goods in exchange for luxuries; theseluxuries were intended to be consumed by the rich wherebythe latter "commit greater waste than it would otherwise bein their power to do."4W hat conclusions were drawn by the early socialist theoristswith respect to international economic cooperation in a futureorder of production? One author writes: the remedy for thedescribed deficienciesis to find an unfailing market for all sorts of useful produce . Th e systemof cooperative industry accomplishes this, not by the vain search afterforeign markets throughout the globe which are no sooner found thanoverstocked or glutted by the restless competition of the starving pro-ducers, but by the voluntary union of the industrial classes in such num-bers as to afford a market to each other by working together for eachother, for the direct and mutual supply by themselves of all the mostindispensable wants in the way of food, clothing, dwelling and furniture.5

But what will happen to the State? And who is going to de-termine which "industrial class" is to produce which commo-dities and in what quantities? Le t us see what three of themajor socialists in the first half of the nineteenth century (or"forerunners of socialism" as some choose to call them) haveto say on these subjects.


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THE PRE-MARXIAN SOCIALISTS 27the animal wants of our nature would be made with the same order andregularity with which the seasons succeed each other.10

The "animal wants of our nature" are food, clothing, andshelter; their quantity and quality can be scientifically deter-mined.11 Thus, "the waste of capital and labor by unnecessaryestablishments and by the production of useless or injuriousarticles"12 will strictly be avoided. Hence, the new system willpossesspowers to create a superfluity of all things useful or rationally desirablefor the whole population; powers more than abundant to satisfy thewishes of all.13because these powers are "properly combined and rightly di-rected.14Concerning the distribution of the goods produced betweenthe associated members, Owen writes:

As the easy, regular, healthy, rational employment of the individualsforming these societies will create a very large surplus of their own prod-ucts beyond what they will have any desire to consume, each may befreely permitted to receive from the general store of the community what-ever they may require. This, in practice, will prove to be the greatesteconomy.15

But what will, finally, be the relations between the variousassociations? Unlike the ideal commonwealths, Owen's Villagesare not closed against each other:There will be the best means of communication adopted between allthe communities: the best roads, railways and water communicationsupon which there will be the best that can be constructed of carriage andwater conveyances for commodities and persons.16At this stage, Owen once again summarizes the qualities ofhis proposed order17 as if, without its moral foundations, thesystem of the "beneficial interchange" could not fully begrasped. Then he continues:

These two points being ascertained,18 they will know what particularcommodities will be the most beneficial to create in their own community,for their own consumption, and what to exchange with their own surplusproduction, for the same amount of labor in the surplus productions ofother, similar communities. ... As truth and perfect sincerity will be the


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28 SOCIALISM AND INTERNATIONAL ECON OM IC ORDERsole practice of all the members of these communities, the amount oflabor in, or the real prime cost of every commodity produced, will beaccurately ascertained and be publicly known.19In the more advanced state of these superior social communities, therewill be no trafficking between the members of the same association. Allinterchange of commodities will be effected between community andcommunity; and on the only just principalthat is the real amount oflabor in one article against the real amount of labor in the article forwhich it is exchanged.20

However, Owen relegates economic activity as a whole tothe second place: "education will be the chief object of interestin the community, because it will comprise the greater part ofthe operations of its members."21 As a result of this "general su-perintendence of the individual from birth to maturity,"22the re-created or new-formed man will be enabled easily to subdue theearth and make it an ever-varying paradise, the fit abode of highly in-tellectual moral beings, each of whom, for all practical purposes, will bethe free possessor and delighted enjoyer of its whole extent, and thatjoy will be increased a thousandfold, because all his fellow-beings willequally enjoy it with him.23C . H . D E S A I N T - S I M O N A N D H I S F O L L O W E R SWhereas Owen puts forward the design of a "new milieu"as the prerequisite for the full development of what is best inhuman nature, C. H. Comte de Saint-Simon attempts to discoverthe directing principles of the new social order emerging fromhistorical evolution. What are the basic facts of this new order?"A review of the history of society has shown that the indus-trial class has continually gained in importance at the expense ofthe others who ha ve be en losing it."24 Fra nce is "a nation w hichis essentially industrial, but whose government is essentiallyfeudal."25 The bourgeoisie, having accomplished the great rev-olution, now "lies heavy with the noble class on the industrialclass."26Against this background, Saint-Simon circumscribes "thereal objectives of my ambition":to organize a great industrial establishment, to found a scientific schoolof improvement, and to contribute, in one word, to the progress of en-lightenment and to the betterment of the lot of humanity.27


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TH E PRE-MARXIAN SOCIALISTS 29Leaving feudalism behind, "human species . . . has been des-tined to transgress from a governmental or military regime toan administrative or industrial regime." 28How will this future regime work without government?

The industrialists will constitute the first class of society; the mostinfluential industrialists will, free of charge, assume the direction andadministration of the public fortune; they will make the law and deter-mine the mutual ranks of the other classes; they will attach to eachclass the importance which is in proportion to the services which eachwill render to industry. . . . When this result is achieved, tranquillity willbe completely assured, public prosperity will advance with all possiblespeed, and society will enjoy whatever individual and collective happi-ness human nature m ay claim.29

Does this m ean the abolition of priv ate prope rty? No, onlythe disappearance of les oisis (the idle). But Saint-Simonstresses the necessity "that talent and possession not be di-vided."30 Therefore, "property should be constituted so as tostimulate its owner to use it in a most pro du ctive way."31Scientific research has, in the past, been carried on sepa-rately in each specialized field; it was now necessary to arriveat a great synthesis and to establish the one generally valid lawwhich would manifest itself in all sub-branches of science.32Consequently,

in a society organized to the positive goal of working for its prosperityby means of the sciences, the fine arts, and the crafts, the most importantpolitical act is that of fixing the direction where society is to advance.This act is no longer attributed to men of social functions; it is exercisedby the social body (corps social) itself; it is in this way that Society,taken collectively, may effectively exercise sovereignty, which then doesnot consist of an arbitrary opinion exalted into law by the masses, but ofa principle derived from the very nature of things that man has donenothing but recognize as appropriate and necessary.33Politics therefore cease to exist, or rather, they are mergedinto "the science of production."34 But this science, Saint-Simon

argues, must be complemented by a renewed spiri tual powerw hich a lone can pro vid e a firm basis for a future ord er of things .This great, unifying force is to be the Church, propagating apurified Christian message. The essence of this message is this:Men must behave toward each other as brothers; and this principle,


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30 SOCIALISM AND INTERNATIONAL ECON OM IC ORDERwhich belongs to primitive Christianity, will undergo a transfiguration.. . . This regenerated principle will be presented as follows: religion m ustdirect society toward the great goal which is the fastest possible amelio-ration of the lot of the poorest class.36

This imp rovem ent must be phys ical as well as mo ral. T henew clergy not only will attend to religious matters, but alsowill monopolize knowledge; science and religion are, in fact,considered identical. And if these two powers unite,the power of Caesar which is impious in its origin as well as its preten-sions, will be completely annihilated.38

As to the final picture of the world without states, Saint-Simon envisages it as follows:The new Christ iani ty is cal led to br ing to a t r iumph the principles ofgeneral ethics in the st ruggle which exists between these principles andthose schemes which aim at obtaining a part icular advantage at theexpense of the publ ic weal . This regenerated rel igion is cal led to const i -tute all peop les in a s tate of pe rm ane nt peac e . . . i t is cal led to un i te

the learned, the ar t is ts , and the industr ial is ts , and to appoint them asthe general managers of the human species as well as of the special in-terests of each peop le wh ich ma ke it up . . . i t is f inally cal led . . . todeclare as impious a l l doct r ines which recommend to men means forobtaining eternal l i fe other than to work with ful l capaci ty toward theamelioration of the life of their fellow-beings.37It can be seen that Saint-Simon's ideas are founded on thetwo basic elements we have already encountered in Owen's

work: the existence of an objective science of economic admin-istration, coupled with the moral principle of brotherly love.Saint-Simon's followers set themselves the task of completingand spreading the master's theories in the journal Le Produc-teur. But by developing his doctrine, they gave it a definitedirection toward collectivism. In their Doctrine de Saint-SimonExposition Premiere Anne jointly written by P. Enfantin andS. A. Bazard, they erected "one of the most important monu-ments of modern socialism (Menger)."They maintained that it was entirely false to focus (asmost historians did) historical investigation on the individualinstead of on le corps organise;38

Humanity . . . is a collective being (tre collectif) which develops it-


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32 SOCIALISM AND INTERNATIONAL ECO NOM IC ORD ERH enc e, th e first step tow ard the ne w order "consists of tran s-ferring th e right of inheritance to the state which ha s becom e anassociation of the workers."48 In this association,

it is no longer the owners . . . who determine the choices made in theenterprises and the destiny of the workers. A social institution will be in-vested with these functions which today are so poorly discharged. Itwill supervise the use of instruments of production and will preside overthe material production process; thereby it will be in a position to over-look the entire process and will perceive all parts simultaneously of theindustrial machinery. . . . It is thus able to assess general and individualneeds and to entrust the most meritorious industrialists with the instru-ments of labor. . . . In one word, industry is organized, everything islinked together and calculated in advance: the division of labor is per-fected, the combination of efforts becomes stronger each day.49As the most suitable instrument of this organization, theSaint-Simonians advocate a hierarchically constructed generalsystem of banks, with a central bank at the top guiding andcoordinating the entire economy through a network of localand specialized agencies:All needs would converge toward the higher banks; all efforts woulddiverge from them: the general bank would allocate credits, that is, in-struments of labor, to the local units only after having balanced andcombined the various operations. And these credits would then be dis-tributed among the workers by special banks, representing the differentbranches of industry.50

This carefully constructed organization is accompanied byan equally careful selection of the new elite: "The only claim towealth (droit la richesse), that is, to the disposition of the in-struments of labor, will be the capacity of putting them intooperation."51 But this principle must be supplemented by an-other, still higher principle in order to produce the desired re-sults :

The essence of the question is who will have authority, who will classmen according to their capacities, who will appraise and reward theirperformance; and we answer: whatever the extension of the associationwhich one has in view: it is the one who loves most the social destiny.82

The close bond between the "science of production" and re-ligion,53 already propagated by Saint-Simon, is thus emphati-


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TH E PRE-MARXIAN SOCIALISTS 33cally reaffirmed by his followers. W ith ou t this bo nd , no in-ternational order is possible; when it has been established, hu-man evolution will overcome the stages of "family, city, nation,"and will arrive at "Church," 64 the final goal of this evolution,which is synonymous with universal association in happinessand peace. "The division of power into secular and spiritual,the separation of the Church from the state"65 led to the devel-opment of "military associations" instead of "universal" 56 ones.The Saint-Simonians therefore propose to reestablish "the unityof doctrine and activity"57 as the only means of creating "orderon the entire globe."68 This order is described as follows:

In the state of association . . . each particular group will see its pros-perity and growth in that of all the other groups. . . . 59 The elements ofcontinued struggle within each association will become weaker as sever-al associations are united into one. . . . This development can be expressedby the constant growth of the reign of love, harmony, and peace. 60Exploitation of man by man . . . this characterizes human relationsin the past: exploitation of nature by man associated to man: this is thepicture of the future.61P I E R R E - J O S E P H P R O U D H O N : F R O M A N A R C H Y T O F E D E R A L I S MWith Proudhon, we enter an era of social and politicaltho ug ht wh ich was deep ly m arked by He gelian influence. T heauthor reviewed in this section has often been called a brilliantdialectic; yet "no one could accuse him of having an orderlymind. He was never a system-maker, and was usually more athome in criticism than in construction." 62 The last part of thisremark, however, is not true of Proudhon's later years; his ownlife, too, was m arked by a dialectal evolution.63 We are part icu-larly interested in his later writings.The balancing of antagonistic forcesthis is Proudhon'scatch w ord , and it is th e task to b e solved by social science. H eclearly distinguishes himself from the "communists," who wishto destroy property, and the "socialists," who, in their exaltationof equality, neglect liberty. "W hat I am postulating for prop -erty is its justification and balance."64 Proudhon also boastedthat he was the first to have recognized thatinstead of restricting the economic forces the exaggeration of which isfatal, they should be balanced one against the other. . . . What society issearching for is the equilibrium of its natural forces.65


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34 SOCIALISM AND INTERNATIONAL ECO NO M IC ORD ERProudhon proposes to establish this equilibrium by the in-troduction of what he calls the systme mutuelliste promisingand assuring "service for service, value for value, credit for

credit, guarantee for guarantee."66 With the elimination of themonopoly of private property and the droit d'aubaine attachedto it,67 this state could be achieved. Then, Proudhon thought,all values would clearly be definable in terms of labor and justlyexchangeable against one another. Contracts would take theplace of governments whose function as oppressor would nolonger be needed:Once capital and labor are united, society will exist by itself and nolonger need government.68

Proudhon's mutualism thus points straight toward anarchy.During the last years of his life, Proudhon turned his atten-tion to the basic problem s of internationa l order. H e w rot e:Even though, in 1840, I set out with anarchy as the conclusion to mycritique of the idea of government, I finished with federation as the nec-essary basis for European international law and, later, for the organiza-tion of all states.69In 1861, Proud hon published La paix et la guerre. In thistreatise he explains that war is one manifestation of "that anta-gonism which we accept as the law of humanity and nature." 70Wars are waged between two powers

with a view to a new state of things which, in providential order, mustbe substituted to the old one, whether the war's aim be the formation ofa new state replacing others or simply the determination of their exten-sions and m utual relations.71In contrast to these aims, however, "the first, universal andunchanging cause of war . . . is the lack of means of subsistence. . . the upsetting of economic equilibrium . . . pauperism." 72Pro ud hon pro ceeds to show tha t there is a striking contradictionbetween the cause and the goals of war, the cause belonging to

the economic, th e goals to the political sphere:It is evident. . . that, instead of having one problem to solve, we havetwo: a political problem concerning the formation, delimitation and dis-solution of states . . . and an economic problem relating to the organiza-tion of productive faculties and to the distribution of services and goods.73


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THE PRE-MARXIAN SOCIALISTS 35A distinction must therefore be made between "the right toforce" on the one hand and "economic righ ts" on the other; be-tween "the public sphere, the one and only goal of conquest,and the private estates (proprits particulires) situatedbeyond its reach."74 In the nineteenth century, the economicquestion has become preeminent; "woe to the nation which,forgetting itself, asks from the weapons w hat only science, labor,and liberty can give."75The economic sphere is essentially characterized by a mu-tuality of interests despite the fact that human antagonism stillasserts itself:But there is this enormous difference that in industrial struggles, thereally defeated are only those who have fought cowardly or not at all.. . . In the realm of labor, production follows destruction; the consumedforces are revived after their destruction.76As this new antagonism gains ground, the old one recedes;"the increase in influence which one is forced to admit for labor,is at the expense of raison d'Etat,"77 that is, war. Proudhon'stheory did not pass without criticism, but his opponents wereunable to shake the author's basic conviction that economy andpeace belonged to one fundamental category of internationalrelations, politics and war to the other:

They have admitted that it did not appertain to war to solve questionsrelating to credit, wages, association, exchange; yet there always remaineda political questionone could almost say an international petitoryto besettled, on which rested the entire economic structure. To this I reply,using the same style, that the petitory is constantly being modified andtransformed by the possessory; that, as property . . . tends . . . to fallentirely under commercial jurisdiction, the state . . . tends to assumea purely administrative character and be reduced to budget regulations;that, as these things happen, international relations tend to dissolve intopurely economic relations which dispels the hypothesis of a jurisdictionby force.18Although maximum freedom from government interven-tion is the ideal of the economic sphere, some kind of authoritymust exist. Proudhon's next task is to find a balance betweenthese two antagonistic forces. He distinguishes between twokinds of authority: monarchy and "panarchy," or "commu-nism,"79 which is characterized by centralized administration


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36 SOCIALISM AND INTERNATIONAL ECONOMIC ORDERand undivided power, and democracy or self-government whichis founded on liberty and law.80

With arbitrariness fatally entering politics, corruption soon becomesthe soul of power and society is dragged, without pause or mercy, on tothe endless path of revolutions. That is where the world is today.81The escape from this dilemma is federation, freely enteredinto by communities or states:

A federative contract aiming, in general terms, at guaranteeing to thefederated states their sovereignty, their territory, the freedom of theircitizens; at settling their disputes; at providing for general measures per-taining to the security and common prosperity . . . this contract then, inspite of the magnitude of the interests involved, is essentially restricted.The authority charged with its execution is never allowed to prevailover its constituting members; I mean that the federal attributes cannever exceed in number or reality, those of the communal and provincialauthorities, just as the latter cannot exceed the rights and prerogativesof man and the citizen. If it were otherwise, . . . the federation wouldagain become a centralization of the monarchic type.82

The internal structure of the federate system is thus seento be the exact opposite of the internal structure of hierarchyand administrative centralization. But the political order mustbe complemented by a free economic order, designed so that itdoes not give "ceaseless causes for dissolution."83Proudhon m aintains tha t all states based on undivided pow-er are, by their nature, annexationist:In such systems . . . one can say that the idea of natural frontiers isa fiction or rather a political fraud; rivers, mountains, and seas are re-garded in them not as territorial limits, but as obstacles over which thefreedom of the sovereign and of the nation provides a challange for tri-umph. And this is the natural outcome of its underlying principle: thefaculty of possessing, accumulating, commanding, and exploiting is in-finitely great, limited only by the universe itself. . . . Nothing can stopits encroaching advance [of the State, E.T.] except the collision with an-other State, just as aggressive, and capable of defending itself.84The international implications of a truly federal system arequite different. Such a system, again by its nature, excludesaggression:By virtue of the principle which, by limiting the treaty of federation


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TH E PRE-MARXIAN SOCIALISTS 37to mutual defense and to a few other objects of common util

socialism and international economic order

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