What Price Socialism?

Admiral Moreell is Chairman of the Board of Jones and Laughlin Steel Corporation.

Modern socialism in its several varieties is the culmination of the dreams of countless men and women during the past century and a half. It is a movement which began to crystallize out of the chaotic remnants of the French Revolution. The word “socialist,” however, was not coined until 1827 when it was used in the British Cooperative Magazine, an official journal of the London Cooperative Society, founded in 1824.

A Frenchman, Pierre Leroux, was the first to use the word “socialism” in an article in the newspaper, Le Globe, in February, 1832. He used it as an antithesis to the newly coined word “individualism.” Robert Owen, English businessman, used “socialism” in his periodical, The New Moral World, in 1835, as the opposite of “capitalism” and as signifying the collective ownership of land and capital. These two shades of meaning—socialism as opposed to individualism and socialism as opposed to capitalism—are not antagonistic. In fact, each lends strength to the other. If we grant that socialism means the control of productive property by the men in political agencies, allegedly in the name of and for the good of “society as a whole,” it follows that socialism means big government, and big government always implies little men. Individuals are diminished in order to exalt the Society and the State. “The State,” as Hegel said, “is the substance, whereof individuals are but accidents.”

While the term “social ownership,” or “ownership in common,” with its connotation that each one of us is a proprietor, may flatter the ego, it is in fact a gross deception. For society, which means all of us, cannot act as a whole to own and control property. It must act through its enforcement agency, government. The men:who comprise that agency are a very small minority. In actual practice, therefore, a socialist society is one in which the vast majority of men are controlled by the tiny minority which has the political power to direct their economic activities . . . .

Socialism purports to limit its restrictions on freedom to the economic level, a wholly unspectacular locale. We have come to associate the liberty we prize with such things as freedom of speech, freedom of the press, and freedom of worship. If our action in these admittedly significant areas is relatively unrestrained, we are not likely to attach great importance to government intervention, ownership, and control in the economic area. We have become accustomed to alarmists who cry “wolf” in this economic area; also, we have seen certain groups and individuals express great concern for freedom here, when their real motive is to get for themselves the political privileges they condemn when possessed by others. And so, for these reasons or perhaps some others, we do not get excited about alleged impairments of economic liberty and threats to our rights of private ownership.

It is unfortunate that we have forgotten the old adage, Whoso controls our subsistence, controls us. “Economic control is not merely control of a sector of human life which can be separated from the rest,” writes F. A. Hayek, in The Road to Serfdom, “it is the control of the means for all our ends.”

Freedom of worship is an empty thing if we are denied the financial means to erect churches, pay our clergy, print religious literature, and propagandize for our faith. Freedom of the press means nothing if we are deprived of the means to buy presses, type, and newsprint. And what meaning can be attached to free speech if we know that we must speak in a certain way or else lose favor with those who control the food, clothing, and shelter which we need to survive? Unless we have full freedom in the economic realm, we cannot have full freedom in any other. Unless we have a society in which the producer shall enjoy the full fruits of his labor, our freedom is impaired precisely to the degree that political exactions deprive the man who works, whether with mind or muscle, of his production.

Slavery is commonly thought of as the ownership of one man by another. But the slaveholder does not really care about owning another man; what he wants is the ownership of the products of another man’s labor. A slave is a man to whom the right of economic freedom is denied. From this premise the denial of all other rights follows. Therefore, in any realistic discussion of freedom, what happens in the economic realm is basic . . . .

As the essential prerequisite to his maximum development, the Founding Fathers held that the individual must be free to direct his own creative energies without restrictive laws, rules, and regulations imposed by political masters.

What are the effects of the socialistic corruption of that concept of freedom? I believe no fair-minded person would deny that our currently popular middle-of-the-road policy operates to place all citizens under the yoke of excessive taxation, and thus puts enormous amounts of money at the disposal of the political agency. The politicians then disperse the tax fund as subsidies to favored groups in the nation, with the result that society is broken up into three principal groups.

First, there is the group on the receiving end—the people who get back more in subsidies than they pay out in taxes. They get something for nothing. Secondly, there are those who pay more in taxes than they get in subsidies. They get nothing for something. Third, there are people who comprise the political agency, who produce no wealth but who have the power to forcibly transfer wealth from one set of pockets to another.

This three-part division of the nation constitutes an enormous drain of wealth and potential wealth. The producer group plays host to the parasitic action of the other two groups. Robbed by the taxation demanded by the arrangement, this group is reluctant to produce up to capacity because it knows that the harder it works the more it will be penalized by progressively heavier taxes.

The subsidized group is paid for not producing at all, or for producing less than it would if it knew its income depended entirely on its own efforts. Thus, for opposite reasons, the potential productive capacity of each of these groups is not realized, and the total amount of goods actually available in the nation is far less than it might be.

But this is not the whole story. The lowered production of these two groups, such as it is, must be shared with a third group which does not produce at all. The personnel in government is withdrawn from production altogether, and it does not—except for its defense establishment and policing functions—render services for which consumers would voluntarily exchange their own goods and services. But government has the power to siphon off an increasing share of the goods and services produced by the nation to pay the salaries and other costs of government itself.

The productive members of society would not consent to play host to both the subsidized group and the government bureaucracy if pressure were not brought to bear on them. The monopoly of force in society rests with government; and if the producing group refused to pay the tribute demanded, the power of government to compel and its willingness to employ violence would be evident.

This three-part division of the nation insures that fewer goods will be produced. And there is no alchemy by which more goods can be distributed while fewer are being produced. The power of government to take from producers is not the creation of wealth, but robbery and the abortion of wealth.

The uneconomic nature of this arrangement is obvious. No less obvious is the immorality of it. Men are forced to give up their property on demand by government. If the demand is not met, the powers of compulsion inherent in the apparatus of government are brought to bear . . . .

It is of utmost importance that we understand that socialism is based on coercion and on the control of some men by other men. It is equally important that we become expositors of the philosophy of freedom. When the alternatives—freedom versus socialism—are understood, then men are confronted with a clear-cut distinction on which to base their choice.

I believe that a social order which is designed to function only as government extensively intervenes with its legal power of coercion is a violation of the moral order whose precepts stress education and conversion. There is a rightful place for political action—to maintain the peace of society by restraining those who break the peace. If men universally understood and accepted the mandates of the moral law, there would be little or no need for political government to curb immorality. If men do not understand and accept the mandates of moral law, then coercion will not correct this condition. The only correctives are education and conversion, understanding and a change of heart. []


From an address to The Canadian Manufacturers Association, Toronto, June 7, 1956. Copies of the complete address may be obtained from Mr. J. D. Paulus, Director of Public Relations of Jones & Laughlin Steel Corporation. Pittsburgh 30, Pennsylvania.

Further Reading