But it is argued that in a complex state, where you are dealing with myriads of individual capitalists and thousands of particular forms of profit, the process can be masked.
There are two ways in which the state can mask its action (according to this policy). It can buy out first one small area of land and capital out of the general taxation and then another, and then another, until the whole has been transferred; or it can tax with peculiar severity certain trades which the rest who are left immune will abandon to their ruin, and with the general taxation plus this special taxation buy out those unfortunate trades which will, of course, have sunk heavily in value under the attack.
The second of these tricks will soon be apparent in any society, however complex; for after one unpopular trade had been selected for attack the trying on of the same methods in another less unpopular field will at once rouse suspicion.7
The first method, however, might have some chance of success, at least for a long time after it was begun, in a highly complex and numerous society were it not for a certain check which comes in of itself. That check is the fact that the capitalist only takes more than his old yearly revenue with the object of reinvesting the surplus.
I have a thousand pounds in Brighton railway stock, yielding me 3 percent: £30 a year. The government asks me to exchange my bit of paper against another bit of paper guaranteeing the payment of £50 a year, that is, an extra rate a year, for so many years as will represent over and above the regular interest paid a purchase of my stock. The government’s bit of paper promises to pay to the holder £50 a year for, say, thirty-eight years. I am delighted to make the exchange, not because I am such a fool as to enjoy the prospect of my property being extinguished at the end of thirty-eight years, but because I hope to be able to reinvest the extra £20 every year in something else that will bring me in 3 percent. Thus, at the end of the thirty-eight years I shall (or my heirs) be better off than I was at the beginning of the transaction, and I shall have enjoyed during its maturing my old £30 a year all the same.
The state can purchase thus on a small scale by subsidising purchase out of the general taxation. It can, therefore, play this trick over a small area and for a short time with success. But the moment this area passes a very narrow limit the “market for investment” is found to be restricted, capital automatically takes alarm, the state can no longer offer its paper guarantees save at an enhanced price. If it tries to turn the position by further raising taxation to what capital regards as “confiscatory” rates, there will be opposed to its action just the same forces as would be opposed to frank and open expropriation.
The matter is one of plain arithmetic, and all the confusion introduced by the complex mechanism of “finance” can no more change the fundamental and arithmetical principles involved than can the accumulation of triangles in an ordnance survey reduce the internal angles of the largest triangle to less than 180 degrees.8 In fine: if you desire to confiscate, you must confiscate.
You cannot outflank the enemy, as financiers in the city and sharpers on the racecourse outflank the simpler of mankind, nor can you conduct the general process of expropriation upon a muddleheaded hope that somehow or other something will come out of nothing in the end.
There are, indeed, two ways in which the state could expropriate without meeting the resistance that must be present against any attempt at confiscation. But the first of these ways is precarious, the second insufficient.
They are as follows:—
(1) The state can promise the capitalist a larger yearly revenue than he is getting in the expectation that it, the state, can manage the business better than the capitalist, or that some future expansion will come to its aid. In other words, if the state makes a bigger profit out of the thing than the capitalist, it can buy out the capitalist just as a private individual with a similar business proposition can buy him out.
But the converse of this is that if the state has calculated badly, or has bad luck, it would find itself endowing the capitalists of the future instead of gradually extinguishing them.
In this fashion the state could have “socialised” without confiscation the railways of this country if it had taken them over fifty years ago, promising the then owners more than they were then obtaining. But if it had socialised the hansom cab in the nineties, it would now be supporting in perpetuity that worthy but extinct type the cab-owner (and his children forever) at the expense of the community.
(2) The second way in which the state can expropriate without confiscation is by annuity. It can say to such capitalists as have no heirs or care little for their fate if they have: “You have only got so much time to live and to enjoy your £30, will you take £50 until you die?” Upon the bargain being accepted the state will, in process of time, though not immediately upon the death of the annuitant, become an unembarrassed owner of what had been the annuitant’s share in the means of production. But the area over which this method can be exercised is a very small one. It is not of itself a sufficient instrument for the expropriation of any considerable field.
I need hardly add that as a matter of fact the so-called “socialist”
