Ernest Belfort Bax

Laissez Faire Outflanked

(23 June 1894)

Laissez-Faire Outflanked, Justice, 23rd June 1894, p.2.
Transcribed by Ted Crawford.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

Some years ago I put forward the view that among the most effective of shooing-horns to the assumption of the means of production by the community was the limitation or suppression of the legal enforcibility of contract. I am still convinced that this is an end better worth the attention of Socialists as an immediate “objective” than any amount of municipal “collectivism,” and in some respects even than the limitation of hours.

Let us consider for a moment first the feasibility and then the ultimate effect of the change referred to. As to the first point. I have heard it alleged that it would be as easy to take over the land and capital of the country at once as to do away with the legal guarantee of contract. This, however, is hardly the case. The direct confiscation of land and capital without compensation would have to run the gauntlet of a mass of moral sentiment, the product of centuries of individualistic property-holding which, though certainly not insurmountable, would nevertheless undoubtedly form a formidable obstacle for some time to come. Assuming the expropriation to take place with compensation you are confronted with the hugeness of the amount of any compensation which at present computation possibly could be considered “fair.” In fact the direct assumption sans phrase by the State of the totality of land and capital involves under any circumstances, a break with the past, ethically and economically, which dwarfs any other measure which could possibly be considered, and than which any juridical step not involving such a direct break infinitely easier And now let us consider just this latter point. Does this limitation, or even the abolition, of the enforcibility of contract involve anything more than a further and more logical carrying out of the doctrine of laissez-faire, and can anyone allege that it is not within the strict rights of the State as they are at present recognised? I trow not. It is proposed in effect that the State should simply decline further to interfere with private arrangements of individuals while leaving them perfectly free in making of those arrangements. Formerly State interference with commerce and industry was the rule rather than the exception. The Manchester school, with its doctrine of laissez-faire, has changed all that. Well and good, we simply propose to go further in the same direction. The function of the protection of person and property from direct molestation often alleged by the Manchester school to be the only true function of the State remains untouched. It simply withdraws itself yet again, and still further, from interference with the private dealings of men with each other. It says, in effect, make what arrangements you like, and settle your disputes between yourselves, the function of the State is simply to keep the peace.

But now mark the result. Direct expropriation, without compensation, of the means of production may be called by ugly names, and as above: said, would undoubtedly at present shock the moral sense of a larger section of the community even than that directly affected by it. But nobody can have any moral objection to the State renouncing a particular civic function. And supposing this were the case; supposing it were impossible to recover debt by recourse to law; supposing the various machinery of the law-courts for compelling the accomplishment of liabilities were not at the back of our industrial and commercial relations, based as they are upon contract between individuals, what would be the position of capital? Take the concrete case of a house. Who would particularly care to retain house property, save for personal use, when there was no remedy for neglect to pay rent or other breaches of the conditions of tenancy, except that of eviction after notice given. There is no interference here with the rights of private property in the house. The owner retains his power of evicting, after notice, the recalcitrant tenant, thereby asserting his claim over his property, but he can do no more. For all the rest he must rely on the self interest of the tenant, who will know that if he wishes to retain possession of the house he must pay his rent as agreed upon. The same in trade. The manufacturer or merchant who gives credit while deprived of the power of suing upon; goods supplied will be compelled to rely upon the “honour” of the customer and his self-interest in retaining his commercial good name and credit. A similar principle applies now in the “sporting” world: No man can sue upon a betting transaction. So that the principle of non-intervention in private disputes is already operating in one case.

But now mark the effect of this juridical change. It would not directly do away with a system of trading based on contract between individuals any more than the abolition of the legal enforcement of gambling contracts has done away with gambling. But it would shake the system to its foundations. It would reduce the value of all forms of capital as such, since the ultimate guarantee of its productivity would be destroyed. For it must be remembered we are here concerned, not as in the case of gambling, with an exceptional thing, and a limited class having a special code of honour, but with all the relations of life and all sorts and conditions of men. This withdrawal of the legal safeguard for its profitable operation would undoubtedly bring down to the minimum the selling value of the capital itself. The difficulties of working in an industrial or commercial undertaking without the law-courts in the background would be so considerable, and the risks would be so much increased (for it will be readily seen the system of cash payment could only operate to a limited number of cases) that in many instances the game would be barely worth the candle. The number of “bad debts” would be fatal to all but the barest profits. Now then, the “fair” price having been reduced, would be the time for the community, through its official organ, to take over at a low rate of compensation the whole fixed capital of the country. Here surely we have the possibility of getting rid of a number of objections and delays in the collectivisation of the means of production and distribution, and obtaining the latter cheaply and even without necessarily resorting to force!


E. Belfort Bax


Last updated on 11.6.2004