The socialist approach

CONTINUED FROM LAST WEEK

But the universal mind which is omnipotent, ‘omniscient, and omnipresent is not bound by precedents. Whatever good and beneficial ideals are held in the minds of men, especially in the minds of the vast majority of the people, and cherished by them, will materialize sooner or later, provided the people concerned remain constant and faithful in cherishing the ideals and in devising constructive means for their achievement.

THREE: It has been argued ad nauseam that without the powerful incentive provided by the profit motive and private property, economic progress would be very slow and, in any case, will not be as rapid as it otherwise would have been. Now, proceeds the argument, since socialism does not encourage the profit motive or individual initiative in economic enterprise, a socialist State is doomed to slow economic growth. At any rate, concludes this line of argument, it is inequitable and unfair in the extreme that the risk-bearer – the person who stands to lose everything – should be denied his just reward if, perchance or by dint of careful and efficient organization, it comes. Four points call for comment here. They are profit motive, income, individual initiative, and reward for risk-bearing.

What is euphemistically called profit motive is nothing but greed, and naked and unabashed self-interest. We already saw in Chapter 6, and in any case we are all familiar with the various ways by which the profit motive is realized in practice. They are, for the most parts, unedifying, immoral, and larcenous. Any system, therefore, which encourages these evil ways should be abolished. With regard to incentive, we would like to recall that there are four agents of production: land, labour, capital, and entrepreneurship which are rewarded respectively with rent, wage, interest, and profit. We Know that rent offers no incentive to the production’ of land. It is, in polite terms, an unearned income pure and simple. But in plain, blunt te1l11S, it is a fraud on Nature and humanity. We have shown that interest is unjustified and that deliberate and inevitable savers do not need it to make them save. The iniquity of paying interest is aggravated by the fact that the capitalist of today appropriates to himself, in addition to interest, the reward. (profit) which used to belong to the entrepreneur, without performing any of the functions of the latter. In any case, after the socialization of all the means of production, the State will acquire all existing capital, while new capital will belong to it on formation.

As for the entrepreneur, he is no longer the ‘Captain ofIndustry’ that he used to be: that is, the enterprising man who combined initiation and co-ordination of productive activities with ownership of capital. He is now a salaried employee of the capitalists, who are themselves nothing more and nothing less than absentee and idle earners of dividends. Except in order to indulge his appetite for naked self-interest and posthumous greed as well as for anti-social, injurious, conspicuous, and prestigious consumption.uhe more these idle absentee capitalists earn, the less incentive they have for providing more capital. Concerning risk-bearing, we all know that when a businessman

incurs loss, it is due to one or all of the following causes: bad planning or planlessness, mismanagement, act of God ,force majeure, or some unforeseen events in the state of supply and demand, arising from the actions of other producers or of consumers. We sincerely hope that no one is seriously insisting that anyone should be recompensed for bad planning or the lack of it, or for mismanagement. In all human endeavours, good and scientific planning is possible. Anyone who, in ignorance or recklessness of the facts and methods which lead to good planning, loses his enterprise should not expect any recompense or reward from society, if at a later stage he makes a success of the venture. When those who are engaged in the work of exploration, discovery, and invention lose, nobody takes notice of them and they are never at any time subsequently rewarded, though their efforts may be the bases from which others proceed to make actual and successful explorations, discoveries, and inventions which are epoch-making. Why should businessmen be treated differently? In other words, each year of business enterprise should be treated in watertight isolation. We are, all of us – whether in business or not – at one time or another victims of the act of God or force majeure. Whenever those of us who are not in business fall ,victims to these forces, we bear our losses in silence and without any hope of eventual reward. The businessman should not be treated differently. Furthermore, when a businessman loses as a result of some unforeseen events in the state of supply and demand, he is only reaping a bumper harvest from a state of planlessness and chaos to which he has generously contributed. And having made his bed of thorns, he must be compelled to lie on it without any relief whatsoever. From these brief observations, and from what we have said earlier on on the same point, it is clear that the only agent of production which deserves to be given incentive is labour; that is, labour of various gradations and skills, including the so-called entrepreneur.

Give labour the necessary incentive and, granting that it is sufficiently educated and enlightened, it will exploit land diligently and compel it to yield its fullest possible increase.

CONTINUES NEXT WEEK

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