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Fabian Socialism: a Theory of Rent as Exploitation

Published online by Cambridge University Press:  16 January 2014

David M. Ricci
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Extract

During the late nineteenth and the early twentieth centuries in Britain, Fabians stood out among socialists as diverging from the Marxian view. Fabians rejected Karl Marx's analysis of surplus value, the most widely accepted and influential socialistic theory of capitalist exploitation. In its place the Fabian Society expounded an entirely distinct notion of exploitation, a radical theory of rent. That theory led to a program for the electoral overthrow of bourgeois liberal societies and the creation of democratic socialism.

The Fabian theory of rent – an ethical touchstone for evaluating the wealth and income of every man – is the subject of this essay. When the theory is abstracted from Fabian writings and fully elaborated, it becomes a blueprint for building a socialist society. That such a society could be founded upon an understanding of rent should be noteworthy to scholars interested in the philosophical origins of Fabianism. Moreover, the point may also be generally significant since it demonstrates that a socialist society may have a non-Marxian genesis and a nonauthoritarian end, two propositions that require constant reiteration in an American political climate which, as Louis Hartz has pointed out, is predominantly liberal.

I

For reasons indicated below, this analysis of rent theory centers upon the years from 1887 to the 1920s. To begin with the term itself, in this period the word “rent” appeared often in Fabian and non-Fabian writings alike and carried two possible meanings. In everyday affairs rent was money received by an owner for the use of his land or goods; thus one paid rent for a farm, an apartment, a truck, or an adding machine.

Type
Research Article
Information
Journal of British Studies , Volume 9 , Issue 1 , November 1969 , pp. 105 - 121
Copyright
Copyright © North American Conference of British Studies 1969

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References

1. For a description of the rejection by early Fabians of Marxian value theory, see Appendix by Shaw, George Bernard, in Pease, Edward, A History of the Fabian Society (2nd ed.; London, 1926), pp. 273–77Google Scholar.

2. For the exposition of his thesis that Americans, regardless of contemporary labels, are predominantly liberal, see Hartz, Louis, The Liberal Tradition in America (Cambridge, 1955)Google Scholar.

3. This article is part of a larger study of Fabianism which utilizes the following works: Fabian Tract series; Shaw, George Bernard (ed.), Fabian Essays in Socialism (6th ed.; London, 1962)Google Scholar; books, articles, diaries, and plays by leading and representative Fabians such as Sidney and Beatrice Webb, Shaw, R. H. Tawney, Harold Laski, and G. D. H. Cole. Concerning rent, one finds the Tracts, the Fabian Essays, and the writings of Shaw and the Webbs to be particularly relevant.

4. The then accepted model of competition, as outlined by economists such as David Ricardo or John Stuart Mill, held that due to vigorous competition, rising rents, and wages irreducible below the starvation threshhold for workers, profits must over a period of years gradually decline as more and more businessmen crowd into the same industries. Ricardo, David, Principles of Political Economy and Taxation (London, 1962), pp. 54–76Google Scholar; Mill, John Stuart, Principles of Political Economy (7th ed.; London, 1929), pp. 725–39Google Scholar. The fault of the model, of course, was that it presumed a sort of moratorium both on technological innovation and on the creation of new and profitable commodities in a constant and never-ending process. At any rate, profits were expected to decline, and Walker's underlying concern with this point is noted by McBriar, A. M., Fabian Socialism and English Politics: 1884-1914 (Cambridge, 1962), p. 40Google Scholar.

5. Walker, Francis, “The Source of Business Profits,” Q.J.E., I (1887), 274–75Google Scholar.

6. Ibid.

7. Ibid., I, 281-82.

8. Ibid., I, 277-78.

9. Sidney Webb, “The Rate of Interest and the Laws of Distribution,” Ibid., II (1887), 197.

10. Ibid., II, 199-201.

11. Ibid., II, 200-03.

12. Ibid., II, 203.

13. Webb summed up his model with this passage in reply to Walker's rejoinder in the debate. See “Notes and Memoranda,” Ibid., II (1888), 472.

14. “Entrepreneurial talent” is a relatively modern term. Early Fabians found their theory opposed by a similar notion but couched in references to “the direction of labor” or “directive ability.” Such phrases figured prominently in the influential works of William Mallock. See Mallock, William, Property and Progress (New York, 1884), pp. 153–64Google Scholar, and A Critical Examination of Socialism (New York, 1907), pp. 20–33Google Scholar.

15. Classic examples of capitalist economic thought, supporting respectively the theories of sacrifice, hard work, or risk, are: Senior, Nassau, An Outline of the Science of Political Economy (London, 1936), pp. 58–60Google Scholar; Smiles, Samuel, Self-Help (New York, 1860), passimGoogle Scholar; Schumpeter, Joseph, Capitalism, Socialism and Democracy (New York, 1942), pp. 81–106Google Scholar.

16. This commonplace view underlies modern man's quest for economic progress. Even communists and advocates of free enterprise agree that the productive man should be rewarded; they disagree only as to which class is truly productive. Modern man's view, of course, differs markedly from medieval man's vision of an ideal community composed of different social strata, all serving valuable ends not necessarily economic. For a brilliant exposition of the evolution of modern, marketplace standards for judging the worth of men, see Polanyi, Karl, The Great Transformation (New York, 1944)Google Scholar.

17. Fabian Tract No. 126, The Abolition of Poor Law Guardians (1906), p. 22Google Scholar, notes such exceptions.

18. Ibid., p. 21. The analogy between workers and drones originated in John Cairnes, Some Leading, Principles of Political Economy (London, 1874), p. 32Google Scholar. It became a common figure of speech in Fabian literature. See, e.g., Shaw, , Fabian Essays, pp. 38, 118Google Scholar; Fabian Tract No. 5, Facts for Socialists (1887), p. 4Google Scholar; Shaw, George Bernard, The Socialism of Shaw, ed. Fuchs, James (New York, 1926), p. 39Google Scholar.

19. Fabian Tract No. 233, Socialism and Fabianism (1930), p. 4Google Scholar.

20. Fabian Tract No. 229, National Finance (1929), p. 3Google Scholar, includes these examples.

21. The term “functionless rich” is found in Webb, Sidney and , Beatrice, A Constitution for the Socialist Commonwealth of Great Britain (London, 1920), pp. xii, 80Google Scholar. That one of the most significant features of the Fabian Essays is the portrayal of owners of property as “functionless” is emphasized in an excellent study by Ulam, Adam, The Philosophical Foundations of English Socialism (Cambridge, Mass., 1951), p. 75CrossRefGoogle Scholar.

22. For a criticism of all those “people who live by owning instead of working,” see , S. and Webb, B., Constitution for the Socialist Commonwealth, p. xiiGoogle Scholar.

23. Tract No. 5, pp. 6-7.

24. Ricardo, , Principles, p. 33Google Scholar.

25. Ibid., pp. 64-76.

26. Fabian Tract No. 15, English Progress Towards Social Democracy (1890), p. 12Google Scholar.

27. Shaw, George Bernard, The Intelligent Woman's Guide to Socialism and Capitalism (New York, 1928), p. 123Google Scholar.

28. Fabian Tract No. 42, Christian Socialism (1892), p. 13Google Scholar.

29. See, e.g., Spencer, Herbert, The Principles of Ethics (New York, 1899), II, 91-92, 445–44Google Scholar. Spencer argues that even if the “prairie value” of virgin soil belongs by right to the community, government has no practical way of calculating and exacting that value from proprietors because it is inextricably mixed into present real estate prices.

30. Fabian Tract No. 7, Capital and Land (1888), p. 5Google Scholar: “When his tenants improve their holdings by their own labor, the landlord, on the expiration of the lease, remorselessly appropriates the capital so created, by raising the rent.”

31. Shaw, , Fabian Essays, pp. 36–44Google Scholar.

32. Mill, , Principles, pp. 817–19Google Scholar.

33. Fabian Tract No. 30, The Unearned Increment (1891), pp. 1–4Google Scholar.

34. Tract No. 7, p. 6.

35. See n. 1 above. Shaw explains that the Society based its economic calculations on the marginal utility theory of the English economist William Stanley Jevons rather than the works of Karl Marx; that is to say, the Society believed a thing possesses value because it is scarce, not because the work which made it has some intrinsic “labor value.”

36. Fabian Tract No. 146, Socialism and Superior Brains (1909). p. 11Google Scholar.

37. Ibid., p. 14.

38. Ibid., pp. 11-12.

39. The classic example of individualism as a doctrine was set forth in Smiles, Self-Help, passim. For a statement of Social Darwinism, see Kidd, Benjamin, Social Evolution (New York, 1894), passimGoogle Scholar.

40. Fabian Tract No. 2, A Manifesto (1884).

41. Fabian Tract No. 40, Fabian Election Manifesto (1892), p. 3.

42. Fabian Tract No. 13, What Socialism Is (1890), p. 1Google Scholar.

43. That the state represents the national community and should receive rents was a fundamental fact assumed in all Fabian literature, so much so that Fabians became known as “state socialists” as opposed to socialists who advocated small Utopian communities of men sharing production, consumption, and rents. This point is made by Irvine, William, “Shaw, the Fabians and the Utilitarians,” J.H.I., VIII (1947), 225Google Scholar. For a Fabian statement of the Society's opposition to small community socialism, and to anarchism, pure and simple, see Fabian Tract No. 45, The Impossibilities of Anarchism (1893), passim.

44. Fabian Tract No. 172, What about the Kates? (1913), pp. 11–12Google Scholar, notes the inequity of allowing rents to be enjoyed where they arise and recommends national taxation accompanied by national grants-in-aid to distribute rent justly.

45. See, for example, Shaw, , Fabian Essays, pp. 58-59, 213–16Google Scholar.

46. Shaw, , Intelligent Woman's Guide, p. 51Google Scholar. See also p. 49: “It [political economy] means nothing more abstruse than the art of managing the economy as a housekeeper manages a house. … The nation has a certain income to manage on just as a housekeeper has; and the problem is how to spend that income to the greatest general advantage.”

47. Fabian Tract No. 39, A Democratic Budget (1892), p. 2Google Scholar.

48. Shaw, , Fabian Essays, p. 72, n. 2Google Scholar

49. For the marked decline of Fabian optimism in recent years, see Grossman, R. H. (ed.), New Fabian Essays (New York, 1952)Google Scholar. E.g., “It is important to observe … that there is no evidence of any continuous upward line of social progress”; or, “socialist society is not the norm, evolved by material conditions, but the exception, imposed on immoral society by human will and social conscience.” Ibid., pp. 10, 15.

50. E.g., , S. and Webb, B., Constitution for the Socialist Commonwealth, p. 351Google Scholar: “And this substitution of the motive of self-enrichment will be fostered by the change already beginning in public opinion, which will make ‘living by owning’ as shameful as the pauperism of the wastrel; and will moreover, regard the exceptionally gifted man who insists on extorting from the community the full rent of his ability as a mean fellow.”

51. Tract No. 5, pp. 12-13, contends that what is known popularly as “class war” is in fact a phenomenon of conflict which stems from the efforts of rentiers to retain their monopolistic hold over land, capital, and ability.

52. See Smith, Adam, Wealth of Nations (New York, 1937), p. 47Google Scholar, for Smith's famous observation that landlords “love to reap where they have never sowed.” Ricardo, agreeing with Smith, rephrased the thought and argued that rent is “that compensation which is paid to the owner of land for the use of its original and indestructible powers.” Ricardo, , Principles, p. 34Google Scholar.

53. Halevy, Élie, The Growth of Philosophic Radicalism (New York, 1928), pp. 102-03, 107Google Scholar. Halévy notes the contradiction between Smith's notion of an “invisible hand” guiding all things to a just end and his condemnation of landlords; he concludes that the liberal faith in harmony was so strong that exploitation and different class interests were subordinated in the classical economic model devoted to proving that harmony's existence.

54. Webb, Sidney and Beatrice, , Problems of Modern Industry (London, 1898), p. 472Google Scholar.

55. Fabian Tract No. 69, The Difficulties of Individualism (1896), p. 9Google Scholar.

56. Shaw, , Fabian Essays, pp. 213–14Google Scholar.

57. Shaw, , Intelligent Woman's Guide, pp. 190–91Google Scholar.

58. For a modern, procapitalist critique of rent as the central component of early Fabianism, see Stigler, George, “B. Shaw, S. Webb and the Theory of Fabian Socialism,” Proc. Amer. Phil. Soc., CIII (1959), 469–76Google Scholar.

59. For Sidney Webb's Preface, see Shaw, , Fabian Essays, pp. 268–81Google Scholar.

60. Crossman, New Fabian Essays, passim. Even so, it is worthwhile noting that regardless of the disappearance of rent as an explicit doctrine and live issue, and all of the new and practical concerns of Fabianism notwithstanding, if one figuratively scratches a latter-day Fabian essayist, there appears a socialist plainly disturbed by conditions which at an earlier date would have fallen within the purview of rent theory. Thus Crossman argues that a dialectical movement toward great concentration of economic power and bureaucratic rule by large-scale organizations is the greatest social danger of modern industrial society – capitalist or communist – and that socialists must continually expose and oppose this trend, for the stated reason that it leads to “exploitation, injustice and inequality.” Ibid., p. 10. In much the same vein, Roy Jenkins addresses himself directly to the politically explosive issue of economic equality and concludes that contemporary society is marked by great disparities of income and status. Equal opportunity for education is therefore a necessity, he declares, for through education what he calls “freedom of entry into all occupations” will gradually reduce that unequal and unearned element of income which he terms “monopoly revenue” – the very vice which Fabians formerly saw as rent. Ibid., pp. 84-85.

61. Fabian thinking was incorporated into Labour Party doctrine when Sidney Webb helped write the 1918 party platform, “Labour and the New Social Order.” See Pease, , History of the Fabian Society, pp. 264–65Google Scholar; Cole, Margaret, The Story of Fabian Socialism (New York, 1964), pp. 167–74Google Scholar; Milburn, J. F., “The Fabian Society and the British Labour Party,” Western Political Quarterly, II (1958), 328Google Scholar. For a recent group-theory-of-politics interpretation of this 1918 event, cf. Beer, Samuel, British Politics in the Collectirist Age (New York, 1965), pp. 126–52Google Scholar, esp. p. 138. For various views concerning the extent of direct Fabian influence in the shaping of Labour Party programs and policy, and for an understanding of the extent to which Fabian socialist ideas underlie England's welfare state in general, see Milburn, , “Fabian Society,” Western Political Quarterly, II, 319–39Google Scholar; McBriar, , Fabian Socialism and English Politics, pp. 307–45Google Scholar; Murphey, Mary, “The Role of the Fabian Society in British Affairs,” Southern Economic Journal, XIV (1947), 14–24CrossRefGoogle Scholar; and Underhill, F. H., “Fabians and Fabianism,” Canadian Forum, XXVI (1946), 8–12Google Scholar.