Freeland

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FREELAND

A SOCIAL ANTICIPATION

BY

DR. THEODOR HERTZKA

TRANSLATED BY
ARTHUR RANSOM

1891

TRANSLATOR'S NOTE

This book contains a translation of _Freiland; ein sociales Zukunftsbild_,
by Dr. THEODOR HERTZKA, a Viennese economist. The first German edition
appeared early in 1890, and was rapidly followed by three editions in an
abridged form. This translation is made from the unabridged edition, with a
few emendations from the subsequent editions.

The author has long been known as an eminent representative of those
Austrian Economists who belong to what is known on the Continent as the
Manchester School as distinguished from the Historical School. In 1872 he
became economic editor of the _Neue Freie Presse_; and in 1874 he with
others founded the Society of Austrian National Economists. In 1880 he
published _Die Gesetze der Handels-und Sozialpolitik_; and in 1886 _Die
Gesetze der Sozialentwickelung_. At various times he has published works
which have made him an authority upon currency questions. In 1889 he
founded, and he still edits, the weekly _Zeitschrift fuer Staats-und
Volkswirthschaft_.

How the author was led to modify some of his earlier views will be found
detailed in the introduction of the present work.

The publication of _Freiland_ immediately called forth in Austria and
Germany a desire to put the author's views in practice. In many of the
larger towns and cities a number of persons belonging to all classes of
society organised local societies for this purpose, and these local
societies have now been united into an International Freeland Society. At
the first plenary meeting of the Vienna _Freilandverein_ in March last, it
was announced that a suitable tract of land in British East Africa, between
Mount Kenia and the coast, had already been placed at the disposal of the
Society; and a hope was expressed that the actual formation of a Freeland
Colony would not be long delayed. It is anticipated that the English
edition of _Freiland_ will bring a considerable number of English-speaking
members into the Society; and it is intended soon to make an application to
the British authorities for a guarantee of non-interference by the
Government with the development of Freeland institutions.

Any of the readers of this book who wish for further information concerning
the Freeland movement, may apply either to Dr. HERTZKA in Vienna, or to the
Translator.

A.R.

ST. LOYES, BEDFORD: _June_, 1891.

AUTHOR'S PREFACE

The economic and social order of the modern world exhibits a strange
enigma, which only a prosperous thoughtlessness can regard with
indifference or, indeed, without a shudder. We have made such splendid
advances in art and science that the unlimited forces of nature have been
brought into subjection, and only await our command to perform for us all
our disagreeable and onerous tasks, and to wring from the soil and prepare
for use whatever man, the master of the world, may need. As a consequence,
a moderate amount of labour ought to produce inexhaustible abundance for
everyone born of woman; and yet all these glorious achievements have
not--as Stuart Mill forcibly says--been able to mitigate one human woe.
And, what is more, the ever-increasing facility of producing an abundance
has proved a curse to multitudes who lack necessaries because there exists
no demand for the many good and useful things which they are able to
produce. The industrial activity of the present day is a ceaseless confused
struggle with the various symptoms of the dreadful evil known as
'over-production.' Protective duties, cartels and trusts, guild agitations,
strikes--all these are but the desperate resistance offered by the classes
engaged in production to the inexorable consequences of the apparently so
absurd, but none the less real, phenomenon that increasing facility in the
production of wealth brings ruin and misery in its train.

That science stands helpless and perplexed before this enigma, that no beam
of light has yet penetrated and dispelled the gloom of this--the
social--problem, though that problem has exercised the minds of the noblest
and best of to-day, is in part due to the fact that the solution has been
sought in a wrong direction.

Let us see, for example, what Stuart Mill says upon this subject: 'I looked
forward ... to a future' ... whose views (and institutions) ... shall be
'so firmly grounded in reason and in the true exigencies of life that they
shall not, like all former and present creeds, religious, ethical, and
political, require to be periodically thrown off and replaced by others.'
[Footnote: _Autobiography_, p. 166.]

Yet more plainly does Laveleye express himself in the same sense at the
close of his book 'De la Propriete': 'There is an order of human affairs
_which is the best ... God knows it and wills it_. Man must discover and
introduce it.'

It is therefore an _absolutely best, eternal order_ which both are waiting
for; although, when we look more closely, we find that both ought to know
they are striving after the impossible. For Mill, a few lines before the
above remarkable passage, points out that all human things are in a state
of constant flux; and upon this he bases his conviction that existing
institutions can be only transitory. Therefore, upon calm reflection, he
would be compelled to admit that the same would hold in the future, and
that consequently unchangeable human institutions will never exist. And
just so must we suppose that Laveleye, with his '_God_ knows it and wills
it,' would have to admit that it could _not_ be man's task either to
discover or to introduce the absolutely best order known only to God. He is
quite correct in saying that if there be really an absolutely best order,
God alone knows it; but since it cannot be the office of science to wait
upon Divine revelation, and since such an absolutely best order could be
introduced by God alone and not by men, and therefore the revelation of the
Divine will would not help us in the least, so it must logically follow,
from the admission that the knowing and the willing of the absolutely good
appertain to God, that man has not to strive after this absolutely good,
but after the _relatively best_, which alone is intelligible to and
attainable by him.

And thus it is in fact. The solution of the social problem is not to be
sought in the discovery of an _absolutely good_ order of society, but in
that of the _relatively best_--that is, of such an order of human
institutions as best corresponds to the contemporary conditions of human
existence. The existing arrangements of society call for improvement, not
because they are out of harmony with our longing for an absolutely good
state of things, but because it can be shown to be possible to replace them
by others more in accordance with the contemporary conditions of human
existence. Darwin's law of evolution in nature teaches us that when the
actual social arrangements have ceased to be the relatively best--that is,
those which best correspond to the contemporary conditions of human
existence--their abandonment is not only possible but simply inevitable.
For in the struggle for existence that which is out of date not only _may_
but _must_ give place to that which is more in harmony with the actual
conditions. And this law also teaches us that all the characters of any
organic being whatever are the results of that being's struggle for
existence in the conditions in which it finds itself. If, now, we bring
together these various hints offered us by the doctrine of evolution, we
see the following to be the only path along which the investigation of the
social problem can be pursued so as to reach the goal:

First, we must inquire and establish under what particular conditions of
existence the actual social arrangements were evolved.

Next we must find out whether these same conditions of existence still
subsist, or whether others have taken their place.

If others have taken their place, it must be clearly shown whether the new
conditions of existence are compatible with the old arrangements; and, if
not, what alterations of the latter are required.

The new arrangements thus discovered must and will contain that which we
are justified in looking for as the 'solution of the social problem.'

When I applied this strictly scientific method of investigation to the
social problem, I arrived four years ago at the following conclusions, to
the exposition of which I devoted my book on 'The Laws of Social
Evolution,' [Footnote: _Die Gesetze der Sozialentwickelung_ Leipzig, 1886.]
published at that time:

The actual social arrangements are the necessary result of the human
struggle for existence when the productiveness of labour was such that a
single worker could produce, by the labour of his own hands, more than was
indispensable to the sustenance of his animal nature, but not enough to
enable him to satisfy his higher needs. With only this moderate degree of
productiveness of labour, the exploitage of man by man was the only way by
which it was possible to ensure to _individuals_ wealth and leisure, those
fundamental essentials to higher culture. But as soon as the productiveness
of labour reaches the point at which it is sufficient to satisfy also the
highest requirements of every worker, the exploitage of man by man not only
ceases to be a necessity of civilisation, but becomes an obstacle to
further progress by hindering men from making full use of the industrial
capacity to which they have attained.

For, as under the domination of exploitage the masses have no right to more
of what they produce than is necessary for their bare subsistence, demand
is cramped by limitations which are quite independent of the possible
amount of production. Things for which there is no demand are valueless,
and therefore will not be produced; consequently, under the exploiting
system, society does not produce that amount of wealth which the progress
of science and technical art has made possible, but only that infinitely
smaller amount which suffices for the bare subsistence of the masses and
the luxury of the few. Society wishes to employ the whole of the surplus of
the productive power in the creation of instruments of labour--that is, it
wishes to convert it into capital; but this is impossible, since the
quantity of utilisable capital is strictly dependent upon the quantity of
commodities to be produced by the aid of this capital. The utilisation of
all the proceeds of such highly productive labour is therefore dependent
upon the creation of a new social order which shall guarantee to every
worker the enjoyment of the full proceeds of his own work. And since
impartial investigation further shows that this new order is not merely
indispensable to further progress in civilisation, but is also thoroughly
in harmony with the natural and acquired characteristics of human society,
and consequently is met by no inherent and permanent obstacle, it is
evident that in the natural process of human evolution this new order must
necessarily come into being.

When I placed this conclusion before the public four years ago, I assumed,
as something self-evident, that I was announcing a doctrine which was not
by any means an isolated novelty; and I distinctly said so in the preface
to the 'Laws of Social Evolution.' I fully understood that there must be
some connecting bridge between the so-called classical economics and the
newly discovered truths; and I was convinced that in a not distant future
either others or myself would discover this bridge. But in expounding the
consequences springing from the above-mentioned general principles, I at
first allowed an error to escape my notice. That ground-rent and
undertaker's profit--that is, the payment which the landowner demands for
the use of his land, and the claim of the so-called work-giver to the
produce of the worker's labour--are incompatible with the claim of the
worker to the produce of his own labour, and that consequently in the
course of social evolution ground-rent and undertaker's profit must become
obsolete and must be given up--this I perceived; but with respect to the
interest of capital I adhered to the classical-orthodox view that this was
a postulate of progress which would survive all the phases of evolution.

As palliation of my error I may mention that it was the opponents of
capital themselves--and Marx in particular--who confirmed me in it, or,
more correctly, who prevented me from distinctly perceiving the basis upon
which interest essentially rests. To tear oneself away from long-cherished
views is in itself extremely difficult; and when, moreover, the men who
attack the old views base their attack point after point upon error, it
becomes only too easy to mistake the weakness of the attack for
impregnability in the thing attacked. Thus it happened with me. Because I
saw that what had been hitherto advanced against capital and interest was
altogether untenable, I felt myself absolved from the task of again and
independently inquiring whether there were no better, no really valid,
arguments against the absolute and permanent necessity of interest. Thus,
though interest is, in reality, as little compatible with associated labour
carried on upon the principle of perfect economic justice as are
ground-rent and the undertaker's profit, I was prevented by this
fundamental error from arriving at satisfactory views concerning the
constitution and character of the future forms of organisation based upon
the principle of free organisation. _That_ and _wherefore_ economic freedom
and justice must eventually be practically realised, I had shown; on the
other hand, _how_ this phase of evolution was to be brought about I was not
able to make fully clear. Yet I did not ascribe this inability to any error
of mine in thinking the subject out, but believed it to reside in the
nature of the subject itself. I reasoned that institutions the practical
shaping of which belongs to the future could not be known in detail before
they were evolved. Just as those former generations, which knew nothing of
the modern joint-stock company, could not possibly form an exact and
perfect idea of the nature and working of this institution even if they had
conceived the principle upon which it is based, so I held it to be
impossible to-day to possess a clear and connected idea of those future
economic forms which cannot be evolved until the principle of the free
association of labour has found its practical realisation.

I was slow in discovering the above-mentioned connection of my doctrine of
social evolution with the orthodox system of economy. The most
clear-sighted minds of three centuries have been at work upon that system;
and if a new doctrine is to win acceptance, it is absolutely necessary that
its propounder should not merely refute the old doctrine and expose its
errors, but should trace back and lay open to its remotest source the
particular process of thought which led these heroes of our science into
their errors. It is not enough to show _that_ and _wherefore_ their theses
were false; it must also be made clear _how_ and _wherefore_ those thinkers
arrived at their false theses, what it was that forced them--despite all
their sagacity--to hold such theses as correct though they are simply
absurd when viewed in the light of truth. I pondered in vain over this
enigma, until suddenly, like a ray of sunlight, there shot into the
darkness of my doubt the discovery that in its essence my work was nothing
but the necessary outcome of what others had achieved--that my theory was
in no way out of harmony with the numerous theories of my predecessors, but
that rather, when thoroughly understood, it was the very truth after which
all the other economists had been searching, and upon the track of
which--and this I held to be decisive--I had been thrown, not by my own
sagacity, but solely by the mental labours of my great predecessors. In
other words, _the solution of the social problem offered by me is the very
solution of the economic problem which the science of political economy has
been incessantly seeking from its first rise down to the present day_.

But, I hear it asked, does political economy possess such a problem--one
whose solution it has merely attempted but not arrived at? For it is
remarkable that in our science the widest diversity of opinions co-exists
with the most dogmatic orthodoxy. Very few draw from the existence of the
numberless antagonistic opinions the self-evident conclusion that those
opinions are erroneous, or at least unproved; and none are willing to admit
that--like their opponents--they are merely seeking the truth, and are not
in possession of it. So prevalent is this tenacity of opinion which puts
faith in the place of knowledge that the fact that every science owes its
origin to a problem is altogether forgotten. This problem may afterwards
find its solution, and therewith the science will have achieved its
purpose; but without a problem there is no investigation--consequently,
though there may be knowledge, there will be no science. Clear and simple
cognisances do not stimulate the human mind to that painstaking,
comprehensive effort which is the necessary antecedent of science; in
brief, a science can arise only when things are under consideration which
are not intelligible directly and without profound reflection--things,
therefore, which contain a problem.

Thus, political economy must have had its problem, its enigma, out of the
attempts to solve which it had its rise. This problem is nothing else but
the question '_Why do we not become richer in proportion to our increasing
capacity of producing wealth?_' To this question a satisfactory answer can
no more be given to-day than could be given three centuries ago--at the
time, that is, when the problem first arose in view, not of a previously
existing phenomenon to which the human mind had then had its attention
drawn for the first time, but of a phenomenon which was then making its
first appearance.

With unimportant and transient exceptions (which, it may be incidentally
remarked, are easily explicable from what follows) antiquity and the Middle
Ages had no political economy. This was not because the men of those times
were not sharp-sighted enough to discover the sources of wealth, but
because to them there was nothing enigmatical about those sources of
wealth. The nations became richer the more progress they made in the art of
producing; and this was so self-evident and clear that, very rightly, no
one thought it necessary to waste words about it. It was not until the end
of the sixteenth and the beginning of the seventeenth centuries of our era,
therefore scarcely three hundred years ago, that political economy as a
distinct science arose.

It is impossible for the unprejudiced eye to escape seeing what the first
political economists sought for--what the problem was with which they
busied themselves. They stood face to face with the enigmatical fact that
increasing capacity of production is not necessarily accompanied or
followed by an increase of wealth; and they sought to explain this fact.
Why this remarkable fact then first made its appearance will be clearly
seen from what follows; it is unquestionable _that_ it then appeared, for
the whole system of these first political economists, the so-called
Mercantilists, had no other aim than to demonstrate that the increase of
wealth depends not, as everybody had until then very naturally believed,
upon increasing productiveness of labour, but upon something else, that
something else being, in the opinion of the Mercantilists, money.
Notwithstanding what may be called the tangible absurdity of this doctrine,
it remained unquestioned for generations; nay, to be candid, most men still
cling to it--a fact which would be inconceivable did not the doctrine offer
a very simple and plausible explanation of the enigmatical phenomenon that
increasing capacity of production does not necessarily bring with it a
corresponding increase of wealth.

But it is equally impossible for the inquiring human mind to remain
permanently blind to the fact that money and wealth are two very different
things, and that therefore some other solution must be looked for of the
problem, the existence of which is not to be denied. The Physiocrats found
this second explanation in the assertion that the soil was the source and
origin of all wealth, whilst human labour, however highly developed it
might be, could add nothing to what was drawn from the soil, because labour
itself consumed what it produced. This may look like the first application
of the subsequently discovered natural law of the conservation of force;
and--notwithstanding its obvious absurdity--it was seriously believed in
because it professed to explain what seemed otherwise inexplicable. Between
the labourer's means of subsistence, the amount of labour employed, and the
product, there is by no means that quantitative relation which is to be
found in the conversion of one physical force into another. Human labour
produces more or less in proportion as it is better or worse applied; for
production does not consist in converting labour into things that have a
value, but in using labour to produce such things out of natural objects. A
child can understand this, yet the acutest thinkers of the eighteenth
century denied it with the approval of the best of their contemporaries and
of not the worst of their epigones, because they could not otherwise
explain the strange problem of human economics.

Then arose that giant of our science, one of the greatest minds of which
humanity can boast--Adam Smith. He restored the ancient wisdom of our
ancestors, and also clearly and irrefutably demonstrated what they had only
instinctively recognised--namely, that the increase of wealth depends upon
the productiveness of human labour. But while he threw round this truth the
enduring ramparts of his logic and of his sound understanding, he
altogether failed to see that the actual facts directly contradicted his
doctrine. He saw that wealth did _not_ increase step by step with the
increased productiveness of labour; but he believed he had discovered the
cause of this in the mercantilistic and physiocratic sins of the past. In
his day the historical sense was not sufficiently developed to save him
from the error of confounding the--erroneous--explanations of an existing
evil with its causes. Hence he believed that the course of economic events
would necessarily correspond fully with the restored laws of a sound
understanding--that is, that wealth would necessarily increase step by step
with the capacity of producing it, if only production were freed from the
legislative restraints and fiscal fetters which cramped it.

But even this delusion could not long prevail. Ricardo was the first of the
moderns who perceived that wealth did not increase in proportion to
industrial capacity, even when production and trade were, as Smith
demanded, freed from State interference and injury. He hit upon the
expedient of finding the cause of this incongruity in the nature of labour
itself. Since labour is the only source of value, he said, it cannot
increase value. A thing is worth as much as the quantity of labour put into
it; consequently, when with increasing productiveness of labour the amount
of labour necessary to the production of a thing is diminished, then the
value of that thing diminishes also. Hence no increase in the
productiveness of labour can increase the total sum of values. This,
however, is a fundamental mistake, for what depends upon the amount of
labour is merely the _relative_ value of things--the exchange relation in
which they stand to other things. This is so self-evident that Ricardo
himself cannot avoid expressly stating that he is speaking of merely the
'relative' value of things; nevertheless, this relative value--which,
strictly speaking, is nothing but a value relation, the relation of
values--is treated by him as if it were absolute value.

And yet Ricardo's error is a not less important step in the evolution of
doctrine than those of his previously mentioned predecessors. It signifies
the revival of the original problem of political economy, which had been
lost sight of since Adam Smith; and Ricardo's follower, Marx, is in a
certain sense right when, with bitter scorn, he denounces as 'vulgar
economists' those who, persistently clinging to Smith's optimism, see in
the _productiveness_ of labour the measure of the increase of _actual_
wealth. For all that was brought against Ricardo by his opponents was known
by him as well as or better than by them; only he knew what had escaped
their notice, or what they saw no obligation to take note of in their
theory--namely, that the actual facts directly contradicted the doctrine.
It by no means escaped Ricardo that his attempted reconciliation of the
theory with the great problem of economics was absurd; and Marx has most
clearly shown the absurdity of it. The latter speaks of the alleged
dependence of value, not upon the productiveness of labour, but upon the
effort put forth by the labourer, as the 'fetishism' of industry; this
relation, being unnatural, contrary to the nature of things, ought
therefore--and this, again, is Marx's contribution to the progress of the
science--to be referred back to an unnatural ultimate cause residing, not
in the nature of things, but in human arrangements. And in looking for this
ultimate cause, he, like his great predecessors, comes extremely near to
the truth, but, after all, glides past without seeing it.