The Influence of the Socialists

The Influence of the Socialists

The influence of Social­istic writers upon economic thought has been a very important one. Especially is this true of Marx and Rodbertus, though it should be remembered that both were heavily indebted to their predecessors. The effect of Socialistic criticisms can be fully appreciated only when its twofold aspect is realized; for, in addition to its direct or primary results, there has been a pro­found influence which might be called reactional, — a tacit tendency so to modify or state economic doctrine? as to take the ground from underneath Socialism.

a. Direct or Primary Effects

(1) In the first place, among the primary effects of Socialistic thought upon economic theory, a point already made with regard to the earlier Socialists should be reiterated. The so-called "scientific Socialists" continued and strengthened the idea that social institutions are of historical growth and relative to environment. This is particularly true of Karl Marx, who added a wealth of illustration from industrial history to strengthen his position. This idea was potent in over­throwing the conceptions of nature philosophy and the "nat­ural."

(2) The Socialists gave greater strength to such tendency as there was among the economists to take the social point of view. As already stated, they emphasized the fact that modern pro­duction involves a large degree of cooperation and that the product is to that extent a social one. A similar idea appears in the doctrine of conjuncture. And in their ideas concerning crises and overproduction they kept to the front the concept of social utility, as contrasted with the private, individualistic stand­point, according to which economists considered objective ex­change value alone.

(3) Socialistic criticism, moreover, has led to a closer analysis of the economic functions of the state. Whether collectivists, State Socialists, Communists, or anarchists, some more or less radical change in the office of the government was involved; some alteration in the scope of the individual's activity. The discussion of such topics has made possible a more accurate separation of those activities which are most profitably intrusted to the state, from those which are, all things considered, carried on most efficiently by private initiative. The result has been a saner individualism, on the one hand; while at the same time men are no longer alarmed when the government takes over some branch of industry which the principles of politics and economics show will be best administered for the public welfare when in public hands.

(4) Socialism, too, has emphasized the problems of distribu­tion as contrasted with production, and, above all, has kept the question of distributive justice heavy upon our consciences. It must not be thought for a moment that economists as a whole had overlooked this question. From Adam Smith on, some had dealt sympathetically with it, while others, like Senior, had honestly believed — and perhaps correctly — that their science would make most progress by eliminating such questions, leav­ing them to ethics and politics. But there is such a thing as un­due abstraction and narrowness in this regard. The Socialists, then, with their charges of exploitation, have perhaps done a service to economists by causing them to consider the question, What is a just wage?
On the other hand, it may be that some economists have been led too far afield in discussing such problems; that is, have unduly broadened the field of discussion open to economists as such.

(5) Socialism as a whole has brought the general idea of un­earned income into prominence, and particularly "agrarian socialism," in centering attention upon landed property, has emphasized the "unearned increment" of land.

(6) Undoubtedly the function of capital and the nature of interest and profits have been placed in a clearer light on account of Socialistic attacks. It is most obvious that the refutation of arguments that capital is merely congealed labor and that profits are robbery, involved a more careful analysis of the doctrines of Smith and Ricardo than had been given to them prior to the days of Rodbertus and Marx. Even the writings of the earlier Socialists probably had some direct effect in this way.
But somewhat less obvious would be a possible negative in­fluence upon certain theories. It is possible that the downfall of the wages-fund doctrine may have been furthered by Socialistic criticism; while the separation of profits from interest was en­couraged, partly because of the Socialist emphasis of the non-productivity of capital, and partly to put interest in a better light. Both of these developments, however, would have come regardless of Socialism.

b. Secondary or Reactional Effects

(1) By way of reaction, Socialism has deeply influenced the tone and emphasis of economic writings. The effects here referred to are far too subtle to be pointed out in detail. One cannot read the works of the Austrian school or of Professor J. B. Clark, however, without finding evidence of what is meant. Today there are few text­books in economics which do not give some space to a criticism of Socialism, and here and there stress some point in theory as running counter to its doctrines.

(2) Certain particular theories have probably received their present emphasis, in part, at least, from a desire to refute So­cialism. For illustration, the productivity theory of distribution as developed by the Austrians and Professor J. B. Clark may be mentioned. A part of the idea seems to be that if it can be shown that each factor of production gets what it produces, the prob­lem of distributive justice is solved.

And so it is with the utility side of value. It is not improbable that the narrow, labor-cost theories of the Socialists helped bring on the reaction to extreme marginal utility theories beginning in the seventies. This would be the logical result of the narrow and extreme way in which Marx carried the doctrines of Smith and Ricardo on value to a reduciio ad absurdum.

Even before this, as has already been suggested, the theory of abstinence was doubtless stimulated as a result of Socialistic criticism; and in later days, the refinement of this theory as illustrated by the adoption of.such concepts as those of "sav­ing" and "waiting" clearly have been stimulated by the attacks which have been made upon the doctrine of abstinence.