Thorstein Veblen
Some Neglected Points in the Theory of Socialism

Annals of American Academy of Political and Social Science, vol. 2, (Nov., 
1891), pp. 345-362 (= "The Place of Science in Modern Civilisation and Other 
Essays, pp. 387-408)
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[387] The immediate occasion for the writing of this paper was given by the 
publication of Mr. Spencer's essay, "From Freedom to Bondage";(1*) although it 
is not altogether a criticism of that essay. It is not my purpose to controvert 
the position taken by Mr. Spencer as regards the present feasibility of any 
socialist scheme. The paper is mainly a suggestion, offered in the spirit of the 
disciple, with respect to a point not adequately covered by Mr. Spencer's 
discussion, and which has received but very scanty attention at the hands of any 
other writer on either side of the socialist controversy. This main point is as 
to an economic ground, as a matter of fact, for the existing unrest that finds 
expression in the demands of socialist agitators.
I quote from Mr. Spencer's essay a sentence which does fair justice, so far as 
it goes, to the position taken by agitators: "In presence of obvious 
improvements, joined with that increase of longevity, which even alone yields 
conclusive proof of general amelioration, it is proclaimed, with increasing 
vehemence, that things are so bad that society must be pulled to pieces and 
reorganised on another plan." The most obtrusive feature of the change demanded 
by the advocates of socialism is governmental control of the industrial 
activities of society - the na-[388]tionalisation of industry. There is also, 
just at present, a distinct movement in practice, towards a more extended 
control of industry by the government, as Mr. Spencer has pointed out. This 
movement strengthens the position of the advocates of a complete nationalisation 
of industry, by making it appear that the logic of events is on their side.
In America at least, this movement in the direction of a broader assertion of 
the paramount claims of the community, and an extension of corporate action on 
part of the community in industrial matters, has not generally been connected 
with or based on an adherence to socialistic dogmas. This is perhaps truer of 
the recent past than of the immediate present. The motive of the movement has 
been, in large part, the expediency of each particular step taken. Municipal 
supervision, and, possibly, complete municipal control, has come to be a 
necessity in the case of such industries - mostly of recent growth - as 
elementary education, street-lighting, water-supply, etc. Opinions differ widely 
as to how far the community should take into its own hands such industries as 
concern the common welfare, but the growth of sentiment may fairly be said to 
favor a wider scope of governmental control.
But the necessity of some supervision in the interest of the public extends to 
industries which are not simply of municipal importance. The modern development 
of industry and of the industrial organisation of society makes it increasingly 
necessary that certain industries often spoken of as "natural monopolies" - 
should be treated as being of a semi-public character. And through the action of 
the same forces a constantly increasing number of occupations are developing 
into the form of "natural monopolies."
[389]The motive of the movement towards corporate action on the part of the 
community - State control of industry - has been largely that of industrial 
expediency. Put another motive has gone with this one, and has grown more 
prominent as the popular demands in this direction have gathered wider support 
and taken more definite form. The injustice, the inequality, of the existing 
system, so far as concerns these natural monopolies especially, are made much 
of. There is a distinct unrest abroad, a discontent with things as they are, and 
the cry of injustice is the expression of this more or less widely prevalent 
discontent. This discontent is the truly socialistic element in the situation.
It is easy to make too much of this popular unrest. The clamor of the agitators 
might be taken to indicate a wider prevalence and a greater acuteness of popular 
discontent than actually exists; but after all due allowance is made for 
exaggeration on the part of those interested in the agitation, there can still 
be no doubt of the presence of a chronic feeling of dissatisfaction with the 
working of the existing industrial system, and a growth of popular sentiment in 
favor of a leveling policy. The economic ground of this popular feeling must be 
found, if we wish to understand the significance, for our industrial system, of 
the movement to which it supplies the motive. If its causes shall appear to be 
of a transient character, there is little reason to apprehend a permanent or 
radical change of our industrial system as the outcome of the agitation; while 
if this popular sentiment is found to be the outgrowth of any of the essential 
features of the existing social system, the chances of its ultimately working a 
radical change in the system will be much greater.
The explanation offered by Mr. Spencer, that the popu-[390]lar unrest is due 
essentially to a feeling of ennui - to a desire for a change of posture on part 
of the social body, is assuredly not to be summarily rejected; but the analogy 
will hardly serve to explain the sentiment away. This may be a cause, but it can 
hardly be accepted as a sufficient cause.
Socialist agitators urge that the existing system is necessarily wasteful and 
industrially inefficient. That may be granted, but it does not serve to explain 
the popular discontent, because the popular opinion, in which the discontent 
resides, does notoriously not favor that view. They further urge that the 
existing system is unjust, in that it gives an advantage to one man over 
another. That contention may also be true, but it is in itself no explanation, 
for it is true only if it be granted that the institutions which make this 
advantage of one man over another possible are unjust, and that is begging the 
question. This last contention is, however, not so far out of line with popular 
sentiment. The advantage complained of lies, under modern conditions, in the 
possession of property, and there is a feeling abroad that the existing order of 
things affords an undue advantage to property, especially to owners of property 
whose possessions rise much above a certain rather indefinite average. This 
feeling of injured justice is not always distinguishable from envy; but it is, 
at any rate, a factor that works towards a leveling policy. With it goes a 
feeling of slighted manhood, which works in the same direction. Both these 
elements are to a great extent of a subjective origin. They express themselves 
in the general, objective form, but it is safe to say that on the average they 
spring from a consciousness of disadvantage and slight suffered by the person 
expressing them, and by persons whom he classes with himself. No flippancy is 
intended [391] in saying that the rich are not so generally alive to the 
necessity of any leveling policy as are people of slender means. Any question as 
to the legitimacy of the dissatisfaction, on moral grounds, or even on grounds 
of expediency, is not very much to the point; the question is as to its scope 
and its chances of persistence.
The modern industrial system is based on the institution of private property 
under free competition, and it cannot be claimed that these institutions have 
heretofore worked to the detriment of the material interests of the average 
member of society. The ground of discontent cannot lie in a disadvantageous 
comparison of the present with the past, so far as material interests are 
concerned. It is notorious, and, practically, none of the agitators deny, that 
the system of industrial competition, based on private property, has brought 
about, or has at least co-existed with, the most rapid advance in average wealth 
and industrial efficiency that the world has seen. Especially can it fairly be 
claimed that the result of the last few decades of our industrial development 
has been to increase greatly the creature comforts within the reach of the 
average human being. And, decidedly, the result has been an amelioration of the 
lot of the less favored in a relatively greater degree than that of those 
economically more fortunate. The claim that the system of competition has proved 
itself an engine for making the rich richer and the poor poorer has the 
fascination of epigram; but if its meaning is that the lot of the average, of 
the masses of humanity in civilised life, is worse to-day, as measured in the 
means of livelihood, than it was twenty, or fifty, or a hundred years ago, then 
it is farcical. The cause of discontent must be sought elsewhere than in any 
increased difficulty in obtaining the means of subsistence or of comfort. But 
there is a sense [392] in which the aphorism is true, and in it lies at least a 
partial explanation of the unrest which our conservative people so greatly 
deprecate. The existing system has not made, and does not tend to make, the 
industrious poor poorer as measured absolutely in means of livelihood; but it 
does tend to make them relatively poorer, in their own eyes, as measured in 
terms of comparative economic importance, and, curious as it may seem at first 
sight, that is what seems to count. It is not the abjectly poor that are 
oftenest heard protesting; and when a protest is heard in their behalf it is 
through spokesmen who are from outside their own class, and who are not 
delegated to speak for them. They are not a negligible element in the situation, 
but the unrest which is ground for solicitude does not owe its importance to 
them. The protest comes from those who do not habitually, or of necessity, 
suffer physical privation. The qualification "of necessity," is to be noticed. 
There is a not inconsiderable amount of physical privation suffered by many 
people in this country, which is not physically necessary. The cause is very 
often that what might be the means of comfort is diverted to the purpose of 
maintaining a decent appearance, or even a show of luxury.
Man as we find him to-day has much regard to his good fame - to his standing in 
the esteem of his fellowmen. This characteristic he always has had, and no doubt 
always will have. This regard for reputation may take the noble form of a 
striving after a good name; but the existing organisation of society does not in 
any way preeminently foster that line of development. Regard for one's 
reputation means, in the average of cases, emulation. It is a striving to be, 
and more immediately to be thought to be, better than one's neighbor. Now, 
modern society, the society in which competition without [393] prescription is 
predominant, is preeminently an industrial, economic society, and it is 
industrial - economic - excellence that most readily attracts the approving 
regard of that society. Integrity and personal worth will, of course, count for 
something, now as always; but in the case of a person of moderate pretentions 
and opportunities, such as the average of us are, one's reputation for 
excellence in this direction does not penetrate far enough into the very wide 
environment to which a person is exposed in modern society to satisfy even a 
very modest craving for respectability. To sustain one's dignity - and to 
sustain one's self-respect - under the eyes of people who are not socially one's 
immediate neighbors, it is necessary to display the token of economic worth, 
which practically coincides pretty closely with economic success. A person may 
be well-born and virtuous, but those attributes will not bring respect to the 
bearer from people who are not aware of his possessing them, and these are 
ninety-nine out of every one hundred that one meets. Conversely, by the way, 
knavery and vulgarity in any person are not reprobated by people who know 
nothing of the person's shortcomings in those respects.
In our fundamentally industrial society a person should be economically 
successful, if he would enjoy the esteem of his fellowmen. When we say that a 
man is "worth" so many dollars, the expression does not convey the idea that 
moral or other personal excellence is to be measured in terms of money, but it 
does very distinctly convey the idea that the fact of his possessing many 
dollars is very much to his credit. And, except in cases of extraordinary 
excellence, efficiency in any direction which is not immediately of industrial 
importance, and does not redound to a person's economic benefit, is not of great 
value as a means of respectability. Economic success is in our day [394] the 
most widely accepted as well as the most readily ascertainable measure of 
esteem. All this will hold with still greater force of a generation which is 
born into a world already encrusted with this habit of a mind.
But there is a further, secondary stage in the development of this economic 
emulation. It is not enough to possess the talisman of industrial success. In 
order that it may mend one's good fame efficiently, it is necessary to display 
it. One does not "make much of a showing" in the eyes of the large majority of 
the people whom one meets with, except by unremitting demonstration of ability 
to pay. That is practically the only means which the average of us have of 
impressing our respectability on the many to whom we are personally unknown, but 
whose transient good opinion we would so gladly enjoy. So it comes about that 
the appearance of success is very much to be desired, and is even in many cases 
preferred to the substance. We all know how nearly indispensable it is to afford 
whatever expenditure other people with whom we class ourselves can afford, and 
also that it is desirable to afford a little something more than others.
This element of human nature has much to do with the "standard of living." And 
it is of a very elastic nature, capable of an indefinite extension. After making 
proper allowance for individual exceptions and for the action of prudential 
restraints, it may be said, in a general way, that this emulation in expenditure 
stands ever ready to absorb any margin of income that remains after ordinary 
physical wants and comforts have been provided for, and, further, that it 
presently becomes as bard to give up that part of one's habitual "standard of 
living" which is due to the struggle for respectability, as it is to give up 
many physical comforts. In a general way, the need of expenditure in this 
direction grows as fast as the means of satisfying [395] it, and, in the long 
run, a large expenditure comes no nearer satisfying the desire than a smaller 
one.
It comes about through the working of this principle that even the creature 
comforts, which are in themselves desirable, and, it may even be, requisite to a 
life on a passably satisfactory plane, acquire a value as a means of 
respectability quite independent of, and out of proportion to, their simple 
utility as a means of livelihood. As we are all aware, the chief element of 
value in many articles of apparel is not their efficiency for protecting the 
body, but for protecting the wearer's respectability; and that not only in the 
eyes of one's neighbors but even in one's own eyes. Indeed, it happens not very 
rarely that a person chooses to go ill-clad in order to be well dressed. Much 
more than half the value of what is worn by the American people may confidently 
be put down to the element of "dress," rather than to that of "clothing." And 
the chief motive of dress is emulation - "economic emulation." The like is true, 
though perhaps in a less degree, of what goes to food and shelter.
This misdirection of effort through the cravings of human vanity is of course 
not anything new, nor is "economic emulation" a modern fact. The modern system 
of industry has not invented emulation, nor has even this particular form of 
emulation originated under that system. But the system of free competition has 
accentuated this form of emulation, both by exalting the industrial activity of 
man above the rank which it held tinder more primitive forms of social 
organisation, and by in great measure cutting off other forms of emulation from 
the chance of efficiently ministering to the craving for a good fame. Speaking 
generally and from the standpoint of the average man, the modern industrial 
organization of society has practically narrowed the scope of emulation [396] to 
this one line; and at the same time it has made the means of sustenance and 
comfort so much easier to obtain as very materially to widen the margin of human 
exertion that can be devoted to purposes of emulation. Further, by increasing 
the freedom of movement of the individual and widening the environment to which 
the individual is exposed - increasing the number of persons before whose eyes 
each one carries on his life, and, pari passu, decreasing the chances which such 
persons have of awarding their esteem on any other basis than that of immediate 
appearances, it has increased the relative efficiency of the economic means of 
winning respect through a show of expenditure for personal comforts.
It is not probable that further advance in the same direction will lead to a 
different result in the immediate future; and it is the immediate future we have 
to deal with. A further advance in the efficiency of our industry, and a further 
widening of the human environment to which the individual is exposed, should 
logically render emulation in this direction more intense. There are, indeed, 
certain considerations to be set off against this tendency, but they are mostly 
factors of slow action, and are hardly of sufficient consequence to reverse the 
general rule. On the whole, other things remaining the same, it must be admitted 
that, within wide limits, the easier the conditions of physical life for modern 
civilised man become, and the wider the horizon of each and the extent of the 
personal contact of each with his fellowmen, and the greater the opportunity of 
each to compare notes with his fellows, the greater will be the preponderance of 
economic success as a means of emulation, and the greater the straining after 
economic respectability. Inasmuch as the aim of emulation is not any absolute 
degree of comfort or of excellence, no advance in the average well-[397]being of 
the community can end the struggle or lessen the strain. A general amelioration 
cannot quiet the unrest whose source is the craving of everybody to compare 
favorably with his neighbor.
Human nature being what it is, the struggle of each to possess more than his 
neighbor is inseparable from the institution of private property. And also, 
human nature being what it is, one who possesses less will, on the average, be 
jealous of the one who possesses more; and "more" means not more than the 
average share, but more than the share of the person who makes the comparison. 
The criterion of complacency is, largely, the de facto possession or enjoyment; 
and the present growth of sentiment among the body of the people - who possess 
less - favors, in a vague way, a readjustment adverse to the interests of those 
who possess more, and adverse to the possibility of legitimately possessing or 
enjoying "more"; that is to say, the growth of sentiment favors a socialistic 
movement. The outcome of modern industrial development has been, so far as 
concerns the present purpose, to intensify emulation and the jealousy that goes 
with emulation, and to focus the emulation and the jealousy on the possession 
and enjoyment of material goods. The ground of the unrest with which we are 
concerned is, very largely, jealousy, - envy, if you choose: and the ground of 
this particular form of jealousy, that makes for socialism, is to be found in 
the institution of private property. With private property, under modern 
conditions, this jealousy and unrest are unavoidable.
The corner-stone of the modern industrial system is the institution of private 
property. That institution is also the objective point of all attacks upon the 
existing system of competitive industry, whether open or covert, whether 
directed against the system as a whole or against any [398] special feature of 
it. It is, moreover, the ultimate ground - and, under modern conditions, 
necessarily so - of the unrest and discontent whose proximate cause is the 
struggle for economic respectability. The inference seems to be that, human 
nature being what it is, there can be no peace from this - it must be admitted - 
ignoble form of emulation, or from the discontent that goes with it, this side 
of the abolition of private property. Whether a larger measure of peace is in 
store for us after that event shall have come to pass, is of course not a matter 
to be counted on, nor is the question immediately to the point.
This economic emulation is of course not the sole motive, nor the most important 
feature, of modern industrial life; although it is in the foreground, and it 
pervades the structure of modern society more thoroughly perhaps than any other 
equally powerful moral factor. It would be rash to predict that socialism will 
be the inevitable outcome of a continued development of this emulation and the 
discontent which it fosters, and it is by no means the purpose of this paper to 
insist on such an inference. The most that can be claimed is that this emulation 
is one of the causes, if not the chief cause, of the existing unrest and 
dissatisfaction with things as they are; that this unrest is inseparable from 
the existing system of industrial organisation; and that the growth of popular 
sentiment under the influence of these conditions is necessarily adverse to the 
institution of private property, and therefore adverse to the existing 
industrial system of free competition.

The emulation to which attention has been called in the preceding section of 
this paper is not only a fact of importance to an understanding of the unrest 
that is urging its towards an untried path in social development, but it [399] 
has also a bearing on the question of the practicability of any scheme for the 
complete nationalisation of industry. Modern industry has developed to such a 
degree of efficiency as to make the struggle of subsistence alone, under average 
conditions, relatively easy, as compared with the state of the case a few 
generations ago. As I have labored to show, the modern competitive system has at 
the same time given the spirit of emulation such a direction that the attainment 
of subsistence and comfort no longer fixes, even approximately, the limit of the 
required aggregate labor on the part of the community. Under modern conditions 
the struggle for existence has, in a very appreciable degree, been transformed 
into a struggle to keep up appearances. The ultimate ground of this struggle to 
keep up appearance by otherwise unnecessary expenditure, is the institution of 
private property. Under a régime which should allow no inequality of acquisition 
or of income, this form of emulation, which is due to the possibility of such 
inequality, would also tend to become obsolete. With the abolition of private 
property, the characteristic of human nature which now finds its exercise in 
this form of emulation, should logically find exercise in other, perhaps nobler 
and socially more serviceable, activities; it is at any rate not easy to imagine 
it running into any line of action more futile or less worthy of human effort.
Supposing the standard of comfort of the community to remain approximately at 
its present average, the abolition of the struggle to keep up economic 
appearances would very considerably lessen the aggregate amount of labor 
required for the support of the community. How great a saving of labor might be 
effected is not easy to say. I believe it is within the mark to suppose that the 
struggle to keep up appearances is chargeable, directly and indi-[400]rectly, 
with one-half the aggregate labor, and abstinence from labor - for the standard 
of respectability requires us to shun labor as well as to enjoy the fruits of it 
- on part of the American people. This ddoes not mean that the same community, 
under a system not allowing private property, could make its way with half the 
labor we now put forth; but it means something more or less nearly approaching 
that. Any one who has not seen our modern social life from this point of view 
will find the claim absurdly extravagant, but the startling character of the 
proposition will wear off with longer and closer attention to this aspect of the 
facts of everyday life. But the question of the exact amount of waste due to 
this factor is immaterial. It will not be denied that it is a fact of 
considerable magnitude, and that is all that the argument requires.
It is accordingly competent for the advocates of the nationalisation of industry 
and property to claim that even if their scheme of organisation should prove 
less effective for production of goods than the present, as measured absolutely 
in terms of the aggregate output of our industry, yet the community might 
readily be maintained at the present average standard of comfort. The required 
aggregate output of the nation's industry would be considerably less than at 
present, and there would therefore be less necessity for that close and 
strenuous industrial organisation and discipline of the members of society under 
the new régime, whose evils unfriendly critics are apt to magnify. The chances 
of practicability for the scheme should logically be considerably increased by 
this lessening of the necessity for severe application. The less irksome and 
exacting the new régime, the less chance of a reversion to the earlier system.
[401] Under such a social order, where common labor would no longer be a mark of 
peculiar economic necessity and consequent low economic rank on part of the 
laborer, it is even conceivable that labor might practically come to assume that 
character of nobility in the eyes of society at large, which it now sometimes 
assumes in the speculations of the well-to-do, in their complacent moods. Much 
has sometimes been made of this possibility by socialist speculators, but the 
inference has something of a utopian look, and no one, certainly, is entitled to 
build institutions for the coming social order on this dubious ground.
What there seems to be ground for claiming is that a society which has reached 
our present degree of industrial efficiency would not go into the Socialist or 
Nationalist state with as many chances of failure as a community whose 
industrial development is still at the stage at which strenuous labor on the 
part of nearly all members is barely sufficient to make both ends meet.
In Mr. Spencer's essay, in conformity with the line of argument of his 
"Principles of Sociology," it is pointed out that, as the result of constantly 
operative social forces, all social systems, as regards the form of 
organisation, fall into the one or the other of Sir Henry Maine's two classes - 
the system of status or the system of contract. In accordance with this 
generalisation it is concluded that whenever the modem system of contract or 
free competition shall be displaced, it will necessarily be replaced by the only 
other known system - that of status; the type of which is the military 
organisation, or, also, a hierarchy, or a bureaucracy. It is something after the 
fashion of the industrial organisation of ancient Peru that Mr. Spencer pictures 
as the inevitable sequel of the demise of the existing competitive system. 
Voluntary coöperation can [402] be replaced only by compulsory coöperation, 
which is identified with the system of status and defined as the subjection of 
man to his fellow-man.
Now, at least as a matter of speculation, this is not the only alternative. 
These two systems, of status, or prescription, and of contract, or competition, 
have divided the field of social organisation between them in some proportion or 
other in the past. Mr. Spencer has shown that, very generally, where human 
progress in its advanced stages has worked towards the amelioration of the lot 
of the average member of society, the movement has been away from the system of 
status and towards the system of contract. But there is at least one, if not 
more than one exception to the rule, as concerns the recent past. The latest 
development of the industrial organisation among civilised nations - perhaps in 
an especial degree in the case of the American people - has not been entirely a 
continuation of the approach to a régime of free contract. It is also, to say 
the least, very doubtful if the movement has been towards a régime of status, in 
the sense in which Sir Henry Maine uses the term. This is especially evident in 
the case of the great industries which we call "natural monopolies"; and it is 
to be added that the present tendency is for a continually increasing proportion 
of the industrial activities of the community to fall into the category of 
"natural monopolies." No revolution has been achieved; the system of competition 
has not been discarded, but the course of industrial development is not in the 
direction of an extension of that system at all points; nor does the principle 
of status always replace that of competition wherever the latter fails.
The classification of methods of social organisation under the two beads of 
status or of contract, is not logically exhaustive. There is nothing in the 
meaning of the [403] terms employed which will compel us to say that whenever 
man escapes from the control of his fellow man, under a system of status, he 
thereby falls into a system of free contract. There is a conceivable escape from 
the dilemma, and it is this conceivable, though perhaps impracticable, escape 
from both these systems that the socialist agitator wishes to effect. An 
acquaintance with the aims and position of the more advanced and consistent 
advocates of a new departure leaves no doubt but that the principles of contract 
and of status, both, are in substance familiar to their thoughts - though often 
in a vague and inadequate form - and that they distinctly repudiate both. This 
is perhaps less true of those who take the socialist position mainly on ethical 
grounds.
As bearing on this point it may be remarked that while the industrial system, in 
the case of all communities with whose history we are acquainted, has always in 
the past been organised according to a scheme of status or of contract, or of 
the two combined in some proportion, yet the social organisation has not in all 
cases developed along the same lines, so far as concerns such social functions 
as are not primarily industrial. Especially is this true of the later stages in 
the development of those communities whose institutions we are accustomed to 
contemplate with the most complacency, e.g., the case of the English-speaking 
peoples. The whole system of modern constitutional government in its latest 
developed forms, in theory at least, and, in a measure, in practice, does not 
fall under the head of either contract or status. It is the analogy of modern 
constitutional government through an impersonal law and impersonal institutions, 
that comes nearest doing justice to the vague notions of our socialist 
propagandists. It is true, some of the most noted among them are fond of the 
analogy of the military organisation, [404] as a striking illustration of one 
feature of the system they advocate, but that must after all be taken as an 
obiter dictum.
Further, as to the manner of the evolution of existing institutions and their 
relation to the two systems spoken of. So far as concerns the communities which 
have figured largely in the civilised world, the political organisation has had 
its origin in a military system of government. So, also, has the industrial 
organisation. But while the development of industry, during its gradual escape 
from the military system of status, has been, at least until lately, in the 
direction of a system of free contract, the development of the political 
organisation, so far as it has escaped from the régime of status, has not been 
in that direction. The system of status is a system of subjection to personal 
authority, - of prescription and class distinctions, and privileges and 
immunities; the system of constitutional government, especially as seen at its 
best among a people of democratic traditions and habits of mind, is a system of 
subjection to the will of the social organism, as expressed in an impersonal 
law. This difference between the system of status and the "constitutional 
system" expresses a large part of the meaning of the boasted free institutions 
of the English-speaking people. Here, subjection is not to the person of the 
public functionary, but to the powers vested in him. This has, of course, 
something of the ring of latter-day popular rhetoric, but it is after all felt 
to be true, not only speculatively, but in some measure also in practice.
The right of eminent domain and the power to tax, as interpreted under modern 
constitutional forms, indicate something of the direction of development of the 
political functions of society at a point where they touch the province of the 
industrial system. It is along the line indi-[405]cated by these and kindred 
facts that the socialists are advancing: and it is along this line that the 
later developments made necessary by the exigencies of industry under modern 
conditions are also moving. The aim of the propagandists is to sink the 
industrial community in the political community; or perhaps better, to identify 
the two organisations; but always with insistence on the necessity of making the 
political organisation, in some further developed form, the ruling and only one 
in the outcome. Distinctly, the system of contract is to be done away with; and 
equally distinctly, no system of status is to take its place.
All this is pretty vague, and of a negative character, but it would quickly pass 
the limits of legitimate inference from the accepted doctrines of the socialists 
if it should - attempt to be anything more. It does not have much to say as to 
the practicability of any socialist scheme. As a matter of speculation, there 
seems to be an escape from the dilemma insisted on by Mr. Spencer. We may 
conceivably have nationalism without status and without contract. In theory, 
both principles are entirely obnoxious to that system. The practical question, 
as to whether modern society affords the materials out of which an industrial 
structure can be erected on a system different from either of these, is a 
problem of constructive social engineering which calls for a consideration of 
details far too comprehensive to be entered on here. Still, in view of the past 
course of development of character and institutions on the part of the people to 
which we belong, it is perhaps not extravagant to claim that no form of 
organisation which should necessarily eventuate in a thoroughgoing system of 
status could endure among us. The inference from this proposition may be, either 
that a near approach to nationalisation of industry would involve a [406] régime 
of status, a bureaucracy, which would be unendurable, and which would therefore 
drive us back to the present system before it had been entirely abandoned; or 
that the nationalisation would be achieved with such a measure of success, in 
conformity with the requirements of our type of character, as would make it 
preferable to what we had left behind. In either case the ground for alarm does 
not seem so serious as is sometimes imagined.
A reversion to the system of free competition, after it had been in large part 
discarded, would no doubt be a matter of great practical difficulty, and the 
experiment which should demonstrate the necessity of such a step might involve 
great waste and suffering, and might seriously retard the advance of the race 
toward something better than our present condition; but neither a permanent 
deterioration of human society, nor a huge catastrophe, is to be confidently 
counted on as the outcome of the movement toward nationalisation, even if it 
should prove necessary for society to retrace its steps.
It is conceivable that the application of what may be called the "constitutional 
method" to the organisation of industry - for that is essentially what the 
advocates of Nationalisation demand - would result in a course of development 
analogous to what has taken place in the case of the political organisation 
under modern constitutional forms. Modern constitutional government - the system 
of modern free institutions - is by no means an unqualified success, in the 
sense of securing to each the rights and immunities which in theory are 
guaranteed to him.
Our modern republics have hardly given us a foretaste of that political 
millennium whereof they proclaim the fruition. The average human nature is as 
yet by no means entirely fit for self-government according to the 
"constitutional method." Shortcomings are visible at every [407] turn. These 
shortcomings are grave enough to furnish serious arguments against the 
practicability of our free institutions. On the continent of Europe the belief 
seems to be at present in the ascendant that man must yet, for a long time, 
remain under the tutelage of absolutism before he shall be fit to organise 
himself into an autonomous political body. The belief is not altogether 
irrational. just how great must be the advance of society and just what must be 
the character of the advance, preliminary to its advantageously assuming the 
autonomous - republican - form of political organisation, must be admitted to be 
an open question. Whether we, or any people, have yet reached the required stage 
of the advance is also questioned by many. But the partial success which has 
attended the movement in this direction, among the English-speaking people for 
example, goes very far towards proving that the point in the development of 
human character at which the constitutional method may be advantageously adopted 
in the political field, lies far this side the point at which human nature shall 
have become completely adapted for that method. That is to say, it does not seem 
necessary, as regards the functions of society which we are accustomed to call 
political, to be entirely ready for nationalisation before entering upon it. How 
far the analogy of this will hold when applied to the industrial organisation of 
society is difficult to say, but some significance the analogy must be admitted 
to possess.
Certainly, the fact that constitutional government - the nationalisation of 
political functions - seems to have been a move in the right direction is not to 
be taken as proof of the advisability of forthwith nationalising the industrial 
functions. At the same time this fact does afford ground for the claim that a 
movement in this direction may prove itself in some degree advantageous, even 
[408] if it takes place at a stage in the development of human nature at which 
mankind is still far from being entirely fit for the duties which the new system 
shall impose. The question, therefore, is not whether we have reached the 
perfection of character which would be necessary in order to a perfect working 
of the scheme of nationalisation of industry, but whether we have reached such a 
degree of development as would make an imperfect working of the scheme possible.

NOTES:
1) Introductory paper of A Plea for Liberty; edited by Thomas Mackay.