H.M. Hyndman

Economics of Socialism


Such an analysis as that which it has been my endeavour to put in a compendious shape in the foregoing pages necessarily leads those who adopt it as a correct exposition of the main features of modern industrial society to consider the steps which can be consciously and advantageously taken towards the organisation of national and international production and distribution on a co-operative instead of on a competitive basis.

Manifestly, the many antagonisms of our existing social system, arising out of the initial antagonism between social production and individual ownership and exchange, cannot be harmonised so long as there is a wage-paying class and a wage-receiving class. All, therefore, who wish to solve the difficulties which at present face us must recognise that a complete economic and social revolution can alone give the desired result.

This economic and social revolution is even now being prepared by the inherent weakness of the capitalist system, which has already seen its best days. The capitalist class itself has conclusively shown that it is unable to handle the great means and instruments of production and distribution in any way to the advantage of the community. Periods of wild inflation and ruinous depression; overcrowded towns and deserted country; luxury above and starvation below; physical improvement of the well-to-do class accompanied by continuous deterioration and enfeeblement of the working class; monopoly extending, yet the powers of the State used against the people – such are a few of the more obvious shortcomings of fully-developed capitalism which are preparing its downfall in every country.

How to anticipate this downfall, and to ward off if possible the danger of an intermediate period of anarchy, should be the thought and work of economists and statesmen in every country. No doubt, in view of the deplorable social conditions of our time, it is a matter of little concern to the scientific sociologist whether the inevitable change takes place peacefully or tempestuously. We ourselves take no account to-day of the horrors of the barbarian invasion of the Roman Empire; of the wholesale slaughterings of conquering Mahommedanism in East and West; of the turmoil and ruffianism of the Middle Ages; or of the piracy and slaving which fitly ushered in the capitalist epoch. So it will be with those who come after us. The dwellers under international organised communism will assuredly not trouble themselves to count the numbers of those who fell in the preceding conflicts, or to discriminate between the people who died from actual violence and those who simply rotted out of existence in the bloody peace of our present class war.

But such a conscious advance as Socialists advocate, even though it may not relieve society from the physical struggles which have accompanied or preceded other epochs of crucial change, will at least tend to shorten the period of disturbance and to lay the foundations for a solid reconstruction.

That capital must be destroyed before any thorough reorganisation can take place is certain. This does not mean, however, that the great means and instruments of making and distributing wealth should be destroyed. Not at all. Capital expresses class-ownership and production for profit. Its destruction only involves the change from individual or company ownership to the ownership of the community at large. Wagedom being finally done away with by the abolition of capital, industrial communism will at once take its place.

Now the only way in which this can be peacefully brought about, assuming that no cataclysm occurs, is through the agency of the State as the organised power of the whole people. Each department of industry or distribution which becomes a Public Service is already approaching to the Socialist form. To the form I say, because, as in the case of the Post Office in all countries, the spirit of Socialism is wholly absent. Instead of co-operative organisation for the general advantage, we have to-day remuneration on the competitive scale and overwork, in all the lower grades of the department, for the benefit of the dominant class. But this arises, not from the nature of the case, but from the determination of that dominant class not to give up its position and privileges, and from the ignorance and apathy of the wage-earners, as well without as within the ranks of the department. There is no economic reason, at any rate, why this great public service in particular, with its wide national connections and international ramifications, should not form the nucleus of a great co-operative system. All its members and their families need food, clothing, and house-room, all render useful service in return for these and other necessaries of life; and the genuine co-operative methods of supply once set on foot in any of the public services would speedily spread to others.

Where the company form on a large scale has been attained, either in production or distribution, there the economic development has already reached the point at which the State can easily step in and advantageously substitute a public service for a shareholders’ organisation or monopoly. And those great enterprises which, from their inception, have been in the form of a joint-stock company are obviously those which lend themselves most naturally to this change. Railways and canals, for example, being the main arteries of transport and communication in every civilised country, might as well be in the possession of the public at large as the ordinary highways and bridges which it has been the policy everywhere of late years to free from turnpikes and toll-bars. Such functions as those now fulfilled by railways can never be safely left in private hands. This is being recognised both in England and America, where railway companies have been allowed more latitude than anywhere else. The monopoly of transport which they practically possess is so manifestly a government within a government and so opposed to the public interest that the demand for nationalisation, that is, for their conversion into a public service, is daily growing on both sides of the Atlantic, and finds acceptance among the members of the capitalist class itself.

Assuming such nationalisation to be carried out to the fullest extent, it by no means follows, of course, that, except in form, we should be any nearer to the institution of Social-Democracy, seeing that in countries where the railways are already national property capitalism reigns supreme. But, as in the case of the Post Office, the machinery for co-operation is so far made ready for immediate use and the area of possible peaceful transition greatly widened.

Similarly with coal and oil mines. Coal is a necessary of modern industrial life, and as in the case of the railways, many of the dominant class who regard Social Democracy with horror have been frightened by coal strikes, and the consequent stoppage of trade, into the advocacy of the State acquisition and management of coal mines in the interest of the whole community. The same reasoning applies with almost equal force to the great monopoly of mineral oil. The production and distribution of both is controlled by companies, and there is assuredly no economic difficulty to be overcome in their appropriation by the people at large.

Here again the area of possible co-operative production and distribution would again be greatly extended as these branches of industry became public services instead of company monopolies.

The conversion of the factory industry in its various departments of cotton, wool, iron, leather, liquors, &c., presents greater difficulty. But here, likewise, there is now no longer any economic obstacle to be overcome. On the contrary, the economic forms are manifestly ready – and this applies in an equal degree to the great distributing stores owned by limited companies – for the transformation from competition and production and distribution for profit, to co-operation and production and distribution for use. Raw materials and goods of all kinds would then be produced and warehoused in State and communal stores for the service of all who formed part of the co-operative commonwealth. The moment, in short, men’s minds become capable of understanding the real problem to be solved around them that problem is virtually on the high road to solution in so far as all these large organisations are concerned.

A more serious question is presented by the land; and the reorganisation of the great fundamental industry of agriculture on a co-operative basis is the most difficult problem of all. In no country has agriculture attained the company form except in a few isolated instances in the United States. In no nation except in England have the peasants been completely uprooted from the soil; though the tendency for population everywhere is to migrate from the rural districts to the large towns. Each nation must inevitably settle this as other matters in accordance with its historic growth and the stage of its economic development. Where the population is still attached to the soil as in France, Germany, Italy, and generally on the Continent of Europe, or where it has lately settled in the country districts, as in the United States and the Colonies, it is manifest that the difficulties to be met are quite different from those which have to be faced and dealt with in England. Yet in both cases the establishment of farming and market-gardening as an industry to be worked with the best possible machinery and scientific appliances in co-operative union with other industries is obviously the end to be aimed at. Nor are the obstacles so great as might at first sight appear. Though there can be no immediate progression from the company to the public service as in other cases, the moment co-operation and communism begin to replace competition the tendency of agriculture will be towards the same organisation as obtains in the other departments of social work.

It is the necessity for treating all the agencies of production and distribution as portions of the next great national development which constitutes mere municipalisation a danger in the immediate future. To put gas, water, tramways, and so on under the control of the municipalities may mean better and cheaper administration under capitalist conditions. But the tendency of those who fix upon municipalities as the limit is to crystallise the towns as they are. Instead of doing this the first object of Socialists must of necessity be to break down the barriers between country and town and spread the population out into the rural districts; not for the purpose of remaining isolated and immovably planted on the soil, but as a portion of the active life of the whole community according to the seasons, the towns forming the centres of manufacture and handicraft and the gathering places for the higher instruction and amusement. That the greater part of our modern cities will have to be completely destroyed is at any rate clear to all who bear in mind that fresh air is a necessity for healthy existence.

Such reorganisation on progressive Socialist lines may but too probably be interrupted by the economic and social collapse and cataclysm which some of us fear will overtake the peoples uninstructed as to its real meaning, and unprepared to deal capably with its results. In any case, however, the whole civilised world will inevitably be forced to act together in the reconstitution of the future. The class war knows no national boundaries, the markets of our day are the markets of the world. As mankind has advanced in its economic and social progression from the gens and the tribe to the province, the municipality, the nation; so the change from the social production of commodities and the exchange for profit under the control of individuals has broken down the boundaries of nationality, and the next stage will he the international social production and social exchange of articles of use without profit. Economics, in the main, though by no means wholly, guide the course of human development, and the most careful economic analysis of our present society shows us that, partly consciously and partly unconsciously, the greatest transformation of all the ages has already begun.

Conclusion to the Economics of Socialism, Twentieth Century Press, 1896, pp.258 being the last chapter, pp.246-253, after a series of seven lectures on political economy, all republished by Twentieth Century Press 2nd edition, 1900; 3rd edition, 1909, republished by Twentieth Century Press; republished by Grant Richards as The Economics of Socialism; Marx Made Easy, 1922, 286pp.


Last updated on 21.1.2006