To this I answer that the first effects of its action are already apparent. The servile state is, in industrial England today, no longer a menace but something in actual existence. It is in process of construction. The first main lines of it are already plotted out; the cornerstone of it is already laid.
To see the truth of this I will next consider servile laws and projects of law, the first of which we already suffer, while the last will pass from project to positive statute in due process of time.
Appendix on “Buying-Out”
An appendix showing that the collectivist proposal to “buyout” the capitalist in lieu of expropriating him is vain.
There is an impression abroad among those who propose to expropriate the capitalist class for the benefit of the state, but who appreciate the difficulties in the way of direct confiscation, that by spreading the process over a sufficient number of years and pursuing it after a certain fashion bearing all the outward appearances of a purchase, the expropriation could be effected without the consequences and attendant difficulties of direct confiscation. In other words, there is an impression that the state could “buyout” the capitalist class without their knowing it, and that in a sort of painless way this class can be slowly conjured out of existence.
The impression is held in a confused fashion by most of those who cherish it, and will not bear a clear analysis.
It is impossible by any jugglery to “buyout” the universality of the means of production without confiscation.
To prove this, consider a concrete case which puts the problem in the simplest terms:—
A community of twenty-two families lives upon the produce of two farms, the property of only two families out of that twenty-two.
The remaining twenty families are proletarian. The two families, with their ploughs, stores, land, etc., are capitalist.
The labour of the twenty proletarian families applied to the land and capital of these two capitalist families produces 300 measures of wheat, of which 200 measures, or 10 measures each, form the annual support of the twenty proletarian families; the remaining 100 measures are the surplus value retained as rent, interest, and profit by the two capitalist families, each of which has thus a yearly income of 50 measures.
The state proposes to produce, after a certain length of time, a condition of affairs such that the surplus values shall no longer go to the two capitalist families, but shall be distributed to the advantage of the whole community, while it, the state, shall itself become the unembarrassed owner of both farms.
Now capital is accumulated with the object of a certain return as the reward of accumulation. Instead of spending his money, a man saves it with the object of retaining as the result of that saving a certain yearly revenue. The measure of this does not fall in a particular society at a particular time below a certain level. In other words, if a man cannot get a certain minimum reward for his accumulation, he will not accumulate but spend.
What is called in economics “the law of diminishing returns” acts so that continual additions to capital, other things being equal (that is, the methods of production remaining the same), do not provide a corresponding increase of revenue. A thousand measures of capital applied to a particular area of natural forces will produce, for instance, 40 measures yearly, or 4 percent; but 2000 measures applied in the same fashion will not produce 80 measures. They will produce more than the thousand measures did, but not more in proportion; not double. They will produce, say, 60 measures, or 3 percent, upon the capital. The action of this universal principle automatically checks the accumulation of capital when it has reached such a point that the proportionate return is the least which a man will accept. If it falls below that he will spend rather than accumulate. The limit of this minimum in any particular society at any particular time gives the measure to what we call “the effective desire of accumulation.” Thus in England today it is a little over 3 percent. The minimum which limits the accumulation of capital is a minimum return of about one-thirtieth yearly upon such capital, and this we may call for shortness the “E.D.A.” of our society at the present time.
When, therefore, the capitalist estimates the full value of his possessions, he counts them in “so many years’ purchase.”6 And that means that he is willing to take in a lump sum down for his possessions so many times the yearly revenue which he at present enjoys. If his E.D.A. is one-thirtieth, he will take a lump sum representing thirty times his annual revenue.
So far so good. Let us suppose the two capitalists in our example to have an E.D.A. of one-thirtieth. They will sell to the state if the state can put up thirty times their surplus or “income,” i.e. 3000 measures of wheat.
Now, of course, the state can do nothing of the kind. The accumulations of wheat being already in the hands of the capitalists, and those accumulations amounting to much less than 3000 measures of wheat, the thing appears to be a deadlock.
But it is not a deadlock if the capitalist is a fool. The state can go to the capitalists and say: “Hand me over your farms, and against them I will give you guarantee that you shall be paid rather more than 100 measures of wheat a year for the thirty years. In fact, I will pay you half as much again until these extra payments amount to a purchase of your original stock.”
Out of what does this extra amount come? Out of the state’s power to tax.
The state can levy a tax upon the profits of both capitalists A and B, and pay them the extra with their own money.
In so simple an example it is
