Comparison Of Blueprints

2. This definition does not identify economic efficiency with economic welfare or with given degrees of satisfaction of wants.

Even if any conceivable socialist economy were sure to be in our sense less efficient than any conceivable commercial economy, the majority of people—all in fact for whom the typical socialist cares—might still be “better off” or “happier” or “more content” in the former than in the latter. My first and main reply is that relative efficiency retains independent meaning even in such cases and that in all cases it will be an important consideration. But secondly I do not think that we lose much by adopting a criterion that neglects those aspects. This however is a very debatable matter on which it is just as well to be a little more explicit.

To begin with, convinced socialists will derive satisfaction from the mere fact of living in a socialist society. 4 Socialist bread may well taste sweeter to them than capitalist bread simply because it is socialist bread, and it would do so even if they found mice in it. If, moreover, the particular socialist system adopted happens to agree with one’s moral principles as for instance equalitarian socialism would with the moral principles of many socialists, this fact and the consequent gratification of one’s sense of justice will of course be listed among that system’s titles to superiority.

For the working of the system such moral allegiance is by no means indifferent; its importance even for efficiency in our sense will have to be noticed later. But beyond that all of us had better admit that our phraseology about justice and so on reduces largely to whether we like a certain form of society or not. There seems however to be a purely economic argument in favor of equalitarian socialism or any socialism the structure of which admits of greater equality of incomes. Those economists at least who feel no compunction about treating satisfactions of wants as measurable quantities and about comparing and adding the satisfactions of different persons have a right to argue that a given stock or stream of consumers’ goods will in general produce the maximum of satisfaction if equally distributed.

An equalitarian system as efficient as its commercial counterpart will hence run at a higher level of welfare. Even a somewhat less efficient equalitarian system might do so. Most modern theorists would discard this argument on the grounds, that satisfactions are not measurable or that comparison and addition of the satisfactions of different people are meaningless. We need not go so far. It is sufficient to point out that the equalitarian argument is particularly open to the objection raised in our analysis of monopolistic practice: the problem is not how to distribute a quantity given independently of the principles of income distribution.

Wage incomes might well be higher in a commercial society admitting unrestricted inequalities than the equal incomes would be in equalitarian socialism. So long as it is not made reasonably certain that the socialist engine of production would be at least nearly as efficient as the commercial engine is or was or can be expected to be at the time of the comparison, the argument about distribution remains inconclusive—question-begging in fact—even if we choose to accept it. 5 And as soon as the question of productive efficiency is settled the distributive argument will in most cases be superfluous; unless it be based exclusively on moral ideals, it will turn the balance only in borderline cases.

3. There is still another reason why similar levels of productive efficiency might be associated with different levels of welfare. Most socialists will hold that a given national income would go further in socialist than it goes in capitalist society because the former would make a more economical use of it. These economies follow from the fact that certain types of society may, by virtue of their organization, be indifferent or adverse to purposes to which other types, also by virtue of their organization, allocate considerable parts of their resources. A pacifist socialism for instance would economize on armaments, an atheist one on churches, and both might therefore have more hospitals instead.

This is so, of course. But since it involves valuations which cannot with confidence be attributed to socialism in general—though they could be to many individual socialists—it does not concern us here. Almost any socialist society—not the Platonic type though—would surely realize another type of economy, viz., the economy from the elimination of the leisure class, the “idle rich.” Since from the socialist standpoint it is quite proper to neglect the satisfactions accruing to the individuals belonging to this group and to evaluate its cultural functions at zero—though civilized socialists always save their faces by adding: in the world of today—there is obviously a net gain to be made by the socialist regime. How much do we lose by using an efficiency test which neglects this?

Of course, modern taxation of incomes and inheritance is rapidly reducing the problem to quantitative insignificance, even independently of the fiscal methods applied in financing the current war. But this taxation itself is the expression of an anti-capitalist attitude and possibly the forerunner of complete elimination of the typically capitalist income brackets. We must therefore put our question for a capitalist society not yet attacked at its economic roots. For this country, it seems reasonable to select the data of 1929. 6 Let us define rich people as those who have incomes of $50,000 and over.

In 1929, they received about 13 billion dollars out of a national total of about 93 billions.7 From these 13 billions we have to deduct taxes, savings, and gifts for public purposes, because the elimination of these items would not constitute economies for the socialist regime; it is only the expenditure of rich people for their own consumption that would be “saved” in the proper sense of the word.8

This expenditure cannot be estimated with any accuracy. All we can hope for is an idea about the orders of magnitude involved. Since most economists who have been willing to take the risk guessed at less than one-third of the 13 billions, it will be fairly safe to say that this expenditure did not amount to more than 4? billions or to about 4.6 per cent of the total national income. Now this 4.6 per cent includes all of the consumers’ expenditure from the higher business and professional incomes, so that the idle rich cannot have absorbed more than 1 or a per cent at the outside. And, so far as the family motive is still alive, not even all of that can be considered irrelevant to performance conducive to the efficiency of the economic engine.

Some readers will no doubt feel that the $50,000 limit is unduly high. It is clear of course that more could be economized by eliminating or reducing to a subsistence level the incomes of all the people who are, economically speaking, idle whether rich or poor. 9 Still more could be economized, so one would think, by rationalizing the distribution of all higher incomes so as to bring them into closer correspondence with performance. But arguments to be submitted in the next section suggest that the high hopes entertained on that score are likely to meet with disappointment. I do not wish however to insist. For if the reader should attach greater importance to these economies than I think justified, the conclusion we are going to arrive at will apply only a fortiori.