Guilds and the social crisis

1UILDS AND THE
iOCIAL CRISIS

BY

ARTHUR J. PENTY

1.87

LONDON: GEORGE ALLEN & UNW1N LTD.
RUSKIN HOUSE 40 MUSEUM STREET, W.C. 1

GUILDS AND THE
SOCIAL CRISIS

OLD WORLDS FOR NEW

EXTRACTS FROM REVIEWS

Daily News and Leader :

" It is an important controversial work, representative of many
new and far from negligible tendencies in labour and other
advanced circles."

Atheneeum :

"The author deals with a variety of topics, among which may
be mentioned the Mediaeval Guild System, large organization?,
the division of labour, machinery and industry, the tyranny of
the middleman, the problem of his elimination, and the
decentralization of industry."

The Scotsman :

" While the papers move over eminently controversial ground,
they are freshly reasoned and suggestive."

Sheffield Independent:

" There are ideas in this book worth more than a king's
ransom."

Church Times :

" The Guild Socialist Movement has its many exponents, but
Mr. Penty contrives at once to be exponent and critic. . . .
There are signs in plenty that Guild Socialism is the next
popular social doctrine with which we have to reckon."

Mr. G. K. Chesterton in the " New Witness " :

"We wish some of the honest elements roughly covered by
the National Party would read such a book as Mr. A. J.
Penty's 'Old Worlds for New' ; and they might not talk so
excitedly or at least so exclusively about Maximum Production.
. . . Even the few short words of Mr. Penty's title contains a
wide challenge to the progress of the modern world ; they are
not only a parody on Mr. Wells but a very valid comment on
him."

The Herald :

" The book should be read by all who are anxious about
altering the present conditions. It has much of permanent
value, and it is provoking and stimulating. It is a terrible
bore to read a book with which you agree in every detail.
You usually go to sleep. No one will do this, however, that
reads ' Old Worlds for New.' "

Manchester Guardian :

"Mr. Penty has considerable claims to be regarded as the
pioneer of Guild Socialism."

LONDON : GEORGE ALLEN & UNWIN LTD.

GUILDS AND THE

SOCIAL CRISIS

BY

ARTHUR J. PENTY

AUTHOR or "THE RESTORATION or THE GUILD SYSTEM

AND " OLD WORLDS TOR NEW "

-56§ COLL CHRIST!

BIB, WAJ,
TORONTO*

LONDON : GEORGE ALLEN & UNVVIN LTD.
RUSKIN HOUSE 40 MUSEUM STREET, W,C. i

First published in 1919

(AH rights reserved}

PREFACE

THIS book is, among other things, an attempt
to formulate a policy for Guildsmen in the
event of a revolution. Prophecy is always
dangerous, and it is, of course, conceivable that
a sudden enlightenment might descend upon the
governing class of this country such as would
enable them to steer safely through the social
rapids which lie ahead. It must be confessed,
however, that such a miracle is highly improbable,
considering that they do not apparently possess
sufficient understanding to retain the loyalty of
such a naturally conservative body of men as
the police. Prudence, therefore, suggests the
wisdom of accepting revolution as inevitable,
and of shaping Guild policy in the light of it, in
order that we may not be taken by surprise. For
revolution is at the same time a great oppor-
tunity and a great danger. If it should come

6 GUILDS AND THE SOCIAL CRISIS

upon us while we are unprepared, it is almost
a certainty we should drift into anarchy. On
the other hand, if anticipated, it might be used
for the purposes of reconstruction.

The circumstance that, owing to the excesses
of the Bolshevik regime in Russia, the idea ot
revolution is no longer popular in this country
does not affect the position one iota. For revo-
lutions are not definite political acts which owe
their origin to a more or less temporary mood of
the people, but are forced upon people by the
fact that a particular political and economic
system has reached a deadlock. For when normal
activities can no longer find an outlet there is
bound to come a bursting of barriers. Such an
impasse, I hope to show, is bound to follow the
economic policy of the Government, which may
be summarized in the term " Maximum pro-
duction." It is a policy which must either issue
in revolution or other wars, which if the public
allow could be used to relieve the pressure of the
markets by the creation of a demand for arma-
ments. It has been said that Governments are
never overthrown, but that they commit suicide,
' and, franklv confessed, our Government seems

PREFACE T

impelled by a kind of fate towards such an
ending.

As the assumption underlying my arguments is
that Germany will not repay our War Loan, it
is necessary to point out that even if she were
made to pay, the crisis would not be averted.
In this event we should have to provide her with
work, and this would react to increase unemploy-
ment in this country. I wish it were otherwise,
for justice demands that Germany should be
made to suffer ; but I cannot overlook the fact
that its economic reaction upon ourselves would
be as unfavourable as the introduction of slaves
was to the freemen of the Roman Empire.

It remains for me to thank the Editor of the
New Age for permission to reprint the two con-
cluding chapters.

A. J. P.

66 STRAND-ON-GREEX, W. 4.
September 1918

CONTENTS

PACE

PREFACE. . . . . .5

I. THE ECONOMIC CUL-DE-SAC . . .II

II. MAXI'MUM PRODUCTION AND SCIENTIFIC

MANAGEMENT . . . . • 29

III. THE RETURN TO MEDIAEVALISM . . 44

IV. THE SPIRITUAL CHANGE . . . -57
V. THE FUNCTION OF THE STATE . ; '7°

VI. THE CLASS WAR . . . . -77

GUILDS AND THE SOCIAL
CRISIS

i
THE ECONOMIC CUL-DE-SAC

IN spite of the repeated assurances of Cabinet
Ministers and others that things after the war
are going to be very different from what they
were before, there is little either in their words
or actions to suggest that they have any idea
of what the forthcoming changes are likely to
be. Though they talk a great deal about recon-
struction, and have set up a Ministry of Recon-
struction to elaborate plans for our guidance
in the future, it becomes more evident every day
that it is readjustment rather than reconstruction
that engages their attention There is nothing
either in the general principles laid down for
the guidance of the Committees set up by the
Ministry,1 or in such of their reports as have already

1 In introducing the Bill for the establishment of a
Ministry of Reconstruction (July 27, 1917) the Home

11

12 GUILDS AND THE SOCIAL CRISIS

come to hand, to suggest that the governing class
are in any way conscious of the need of recon-
struction. On the contrary, all the reports agree
in taking existing society in its main essentials
for granted as a thing of permanence and stability,
little suspecting the real peril that confronts us
and seeking only to effect such detailed adjust-
ments as they suppose are necessary to enable
society to recover from the shock and dislocations
occasioned by the war. One of the Committees
only — that concerned with the Labour Unrest-
shows any sign of alarm, while even here there
is little or no. suspicion that the trouble is irre-
movable so long as industrialism exists. On the
contrary, the trouble is regarded merely as a form
of distemper to be remedied by the balm and
plaster of the Whit ley Report.

While making this general comment on the work
of the Ministry, I must not be interpreted as
deprecating entirely the work of the Committees.
The problems of demobilization and the supply
and distribution of raw materials are problems
of fundamental importance, though they partake

Secretary (Sir George Cave) explained that it would be
concerned with

1. The restoration of normal conditions in connection
with commerce and industry and the development of
trade in the light of the experience gained by the war ;

2. The restoration of the normal rights of persons
affected by war conditions and improvement in conditions
also suggested by the circumstances of the war.

THE ECONOMIC CUL-DE-SAC 18

of the nature of readjustment rather than of
reconstruction. However much our eyes are fixed
on the future, however much we may be per-
suaded that the only way to avoid catastrophe
is finally to take such measures to strengthen
the base of society as are involved in a return
to first principles, the fact remains that we must
live from day to day during the period of transition.
And in order that we may so live, in order that
the economic reaction of the war may not pre-
cipitate anarchy, society as it exists to-day must
be propped up. To such an extent the work of
the Committees is valuable, and to such an extent
the various systems of control which are being
introduced into so many departments of produc-
tion and distribution are to be approved, even
though they do involve bureaucratic methods of
administration. If the temporary nature of these
arrangements be admitted, then no harm can
come of them. The danger is that these props,
instead of being regarded as scaffolding necessary
to the rebuilding of society, should be mistaken
for permanent structural arrangements, for they
touch no vital social issue. Though at the
moment they put a boundary to the growth of
anarchy, they do not seek to remove its cause,
and no scheme which does not seek first and
foremost to remove the cause of social anarchy is
worthy of the name of reconstruction.
That readjustment rather than reconstruction

U GUILDS AND THE SOCIAL CRISIS

was the aim of the Ministry is apparent not only
from the terms of reference to the Committees,
but from their manner of setting to work. Had
reconstruction been their aim, they would not
immediately have set up a number of Committees
to deal with the various aspects of the problem
presented, but would have sought first to estab-
lish some general unanimity of opinion as to its
cause. It was, I suppose, because they regarded
the war as a colossal accident rather than as
the goal towards which industrialism inevitably
tended that they made no such effort. And
this is where they went astray. If the war were
entirely due to the personal ambition of the
Kaiser and the lust for conquest of the Pan-
Germans, then there would be no more to be
said. But if on inquiry we find there to be
causes much more fundamental and intimately
connected with the economic expansion to which
industrialism had committed all the nations of
the West, the situation wears a very different
complexion. For it will then be seen that re-
adjustment is not only insufficient to meet the
perfectly legitimate demands of labour, but can-
not even save the governing class itself from
complete annihilation in the near future.

In such circumstances it becomes apparent
that if a scheme of reconstruction is to be for-
mulated which shall be in relation to the facts
of the case, we must make our starting-point

THE ECONOMIC CUL-DE-SAC 15

an inquiry into the causes of the war, and in
this connection it will be convenient to begin
with the Kaiser and his personal responsibility.
Evidence seems to point to the fact that though
the Kaiser's arrogant and bombastic spirit was
a great factor in the development of the war
spirit in Germany, yet at the last moment he was
reluctant to sign the declaration of war. The
Kaiser is evidently a weak man, and had doubt-
less to screw his courage up to take the final
step, as is evidenced by the testimony of Dr.
Muhlon, formerly a director of Krupps, who
has told the world the story of how early in July
1914 the Kaiser informed Herr Krupp von Bohlen
that he would declare war as soon as Russia
mobilized, adding " and this time the people
would see that he would not turn back."

That is conclusive. But there is a question
arising out of this. Why did the Kaiser say
" this time " ? It had reference to the Agadir
crisis of 1911, when the Kaiser came to an agree-
ment with France over matters in dispute in
Morocco without having occasion to resort to
war. This pacific act of the Kaiser did not please
the Pan-Germans, who denounced him in the
Berlin Press as a coward and a traitor, and so,
being a weak man, he yielded to their clamour.
But why did the Pan-Germans desire war ?

Prince Lichnowsky has told us that when the
British Government showed the utmost readiness

IS GUILDS AND THE SOCIAL CRISIS

to meet the wishes of Germany in its desire for
colonial expansion and a treaty denning the
respective spheres of influence of the two Powers
had been arranged, the German Government
refused to sign it upon the only terms on which
Sir Edward Grey would become a party to it —
namely, that it should be given publicity. The
answer is, of course, that as the Pan-Germans
desired war under all circumstances and deter-
mined that nothing should stand in its way, they
deprecated the publication of a treaty which
would, have knocked the bottom out of their
propaganda. Had the treaty been published, it
would have been impossible publicly to maintain
the theory that Germany was surrounded by a
world of enemies, cut off from any peaceful
expansion by the envious jealousy and the en-
circlement policy of British statesmen.

But why did the Pan-Germans desire war
apparently under any circumstances ? The usual
answer is, of course, to say that Germany was
ambitious, desired world dominion, that she had
become so saturated with the spirit of war and
conquest that she had become incapable of think-
ing politically except in the terms of war. While
this undoubtedly was the case, it does not explain
why war broke out in 1914 instead of before,
for such a spirit had been present in Germany
since 1871. The reason is, I think, to be found
in the economic condition at which Germany

THE ECONOMIC CUL-DE-SAC 17

had then arrived. The financial strain in Germany
in the three or four years preceding the war had
become so terrible that it is conceivable that
the war was as much caused by the desire for
relief from such trying circumstances as by the
warlike proclivities of the German ruling class.
German trade had been built up upon a highly
organized system of credit ; and as -that system
showed signs of breaking down, German states-
men and financiers apparently had come to the
conclusion that the only way to save the country
from financial disaster was to secure the huge
indemnities which would follow upon a successful
war. That is the reason, I believe, why Germany
refused to sign the treaty with Great Britain.
It was because its statesmen felt that while it
would make war impossible, it would not solve
the economic problem with which Germany was
confronted in 1914.

Before the outbreak of the war the joint-stock
system of banking in Germany was in a very
rotten condition. Germany was trading upon a
broadly extended system of credit, controlled
through the Reichsbank by the Government.
Under the Reichsbank flourished a system of
four hundred and twenty-one joint-stock banks.
In February 1914 the ninety-one principal joint-
stock banks had owing to them from various
debtors 6,068,000,000 marks, while their indebted-
ness was 8,600,000,000 marks, or in other words,

2

18 GUILDS AND THE SOCIAL CRISIS

they were insolvent — a fact which is not sur-
prising when we learn the highly speculative
nature of the enterprises which they were accus-
tomed to finance. The stability hitherto of the
English banks rests on the fact that they can
only invest in gilt-edged securities. But the
German banks would apparently finance any-
thing, no matter how speculative. Many of them
had been heavily engaged in promoting doubtful
ventures at home and abroad, such as the building
of railways in Russia, Asia Minor and South
America, while in order to encourage German
export trade the}' were accustomed to grant long
credits to foreign customers without near prospects
of payment. It was by such means that Germany
had hoped to secure the commercial hegemony
of the world. But she had overreached herself.
The system was clearly breaking down.

It will be unnecessary for me to go deeply
into this matter, but a moment or two spent
over the greatest of the joint-stock banks — the
Deutschebank — will be worth while. " On paper
this limited company, which must not be mis-
taken for the Imperial State Bank, is an imposing
institution. Its securities and reserves amount
to 425,000,000 marks, or £21,000,000, of which
250,000,000 marks are capital and 175,000,000
reserve, figures which will compare reasonably
well with one or other of the smaller joint-stock
banks of this country or of France. But where

THE ECONOMIC CUL-DE-SAC 10

the English joint-stock banks or the Credit*
Lyonnais, let us say, are largely institutions of
deposit, doing only very conservative financial
business, the Deutschebank, which has lately
absorbed the Bergisch-Marckischebank, employs
the greater part of its capital and its resources
in speculations of a very doubtful type, or definitely
and absolutely employs the deposits entrusted to
it for political ends or the extension of German
interests. In Turkey, for instance, the Deutsche-
bank has employed itself in the building of
railways, in the farming of the octrois ; in Berlin
it has attempted to found a petroleum monopoly
under the control of the Government, and it has-
advanced more than 100,000,000 marks for the
purpose of saving the Fuersten-Conzern.

" This Princes-Concern was an immense syndi-
cate of princes and courtiers who were determined
to obtain their share of the industrial development
of Germany. They built hotels, factories, immense
shops, where they traded in every possible article
of commerce ; they speculated in building land ;
and last year (1914) the whole concern came
to the ground with an immense crash, threaten-
ing with absolute ruin several of the princely
houses 6f Germany. That the Deutschebank
should have tried to come to the rescue of this
concern was nothing more or less than dishonesty
to its depositors, or, if that is too strong a state-
ment, it is exact to say that at the date of the

20 GUILDS AND THE SOCIAL CRISIS

outbreak of the war the Deutschebank, in spite
of its advance of 100,000,000 marks, was very
far from having established the Fuersten-Conzern
on anything like a satisfactory basis." l

Corroborative testimony to the economic depres-
sion which had overtaken Germany prior to the
war is to be found in the Reports of H.B.M.'s
Consular Agents in Germany. Reading them
makes it fairly apparent that by the end of 1912
the German industrial system had reached its limit
of expansion, and that the competition of French,
Japanese, English, and Scotch manufacturers
was either closing markets to the Germans, or
was actually making inroads in the German home
trade, and it becomes evident that the German
financial system, built on an inverted pyramid
of credit, could not for long bear the strain of
adverse conditions. Germany was committed to
a policy of indefinite industrial expansion, and
signs were not wanting that that expansion had
reached its limit. Professor Hauser 2 tells us

1 The quotation is from When Blood is their Argument tby
Ford Maddox Hueffer (Hodder & Stoughton), which in
spite of its gory title is one of the most interesting books
I have read on pre-war conditions in Germany. Corrobor-
ative testimony as to the rotten state of the joint-stock
banks is to be found in Professor J. Laurence Laughlin's
Credit of the Nations (Scribners, New York), to which I
am also indebted.

4 Germany's Commercial Grip of the World, by Professor
Hauser of Dijon (Eveleigh Nash).

According to Messrs. Farrow and Crotch in the space

THE ECONOMIC CUL-DE-SAC 21

in this connection that the ratio of productivity,
due to never-slackening energy, technique and
scientific development, was before the war far
outstripping the ratio of demand. Production
was no longer controlled by demand, but by
plant. What the Americans call overhead ex-
penses had increased to such an enormous extent
that no furnace could be damped down and no
machine stopped, or the overhead expenses would
eat up the profits, and the whole industrial
organization come crashing down, bringing with
it national bankruptcy. In other words, the
commercial history of the German Empire was
one of enormous artificial expansion obtained
not infrequently by cutting prices to such an
extent that there were no available profits when
the expansions were secured. Since the opening
years of the present century the whole financial
position of Germany has, in fact, been one of
long anxieties, qualified by short periods of hectic
confidence.

But, it will be said, if the German economic

of liftecn years Germany quadrupled her output, and in
consequence a day came when all the world that would
take German-made goods was choked to the lips. Economic
difficulties began to make themselves felt in Germany,
and then the Prussian doctrine of force spread with
alarming rapidity. War was decided upon for the purpose
of relieving the pressure of competition by forcing goods
upon other markets (The Coming Trade War, by Thomas
Farrow and Walter Crotch: Chapman & Hall, 2S. 6d.).

22 GUILDS AND THE SOCIAL CRISIS

system was really breaking down before the war,
how is it that she has been able to finance the
war for four years ? For if such had been the
case, would not the strain of the war have broken
it down long ago ?

The answer is that though in the long run the
continuance of war tends to wreck every economic
system, its immediate effects may be otherwise,
inasmuch as the exigencies of war can be used
by an all-powerful Government to perpetuate a
financial system which is moving towards bank-
ruptcy by changing temporarily the basis on which
it rests. Let me explain how this works.

It will not be disputed that under normal
peace conditions every financial system rests
upon confidence. The maintenance of this confi-
dence in these days rests upon an ability to make
profits, for it is only by making profits that
interest on loans and other financial obligations
can be met. Should the pressure of competition
become so severe that the margin of profit is
reduced beyond the point at which obligations
can be met, confidence goes, and if the great
majority of people in a community are in these
difficult straits economic stagnation results. Such
a state of things might exist in a society in which
a small minority of the community was very
wealthy. Economic stagnation in such circum-
stances would not mean that there was not wealth
in a country, but that the possessors of wealth

THE ECONOMIC CUL-DE-SAC 23

withhold their money from circulation because
they cannot see a return for their capital. The
evidence I have given appears to show that some
such state of financial stagnation had overtaken
Germany in the two years preceding the war.
Competition had become so keen and profits so
reduced that confidence had been largely destroyed,
and money withdrawn from circulation. But
once war was declared the system began to work
again, because finance rested no longer on confi-
dence but on force. In other words, war intro-
duced a change in financial operations to the
extent that confidence came to rest no longer
upon personal solvency, but upon Government
solvency, which in turn rested upon faith in
German arms to secure huge war indemnities
at the conclusion of peace. Realizing the root
trouble in German finance, namely, small profits
which disposed the possessors of wealth to with-
hold money from circulation, I do not see how
war indemnities could provide a remedy. But
that is by the way. The important thing was
the German people thought so, and that set the
financial machine in motion again.

Enjoying this illusion, the possessors of wealth,
who in peace times withheld their money from
circulation because they could see no return for
it, lent it to the Government when it declared
war, partly out of fear, lest if they did not support
the Government their country might be invaded

24 GUILDS AND THE SOCIAL CRISIS

or they might be compelled to acquiesce in an
unfavourable peace, but primarily because the
Government promised them interest on their
loans. Further, under the plea of urgency to
which the war gave justification, the credit of
the German subject was propped up by the
Government, which, acting through the Reichs-
bank, put a value by fiat on securities which are
now unsaleable, and can only have value on the
hypothesis of a German victory : values on
German business concerns abroad sequestrated
and possibly to be confiscated, values of conces-
sions that may never be returned to Germany,
values of export houses that may never be able
to regain their markets, values of ships seized
or sunk, etc. By placing a credit value on such
securities, the Government could borrow money.
The expenditure of these loans by the Government
put money into circulation, which the German
Government borrowed again from the people
into whose hands it had passed, paying the interest
out of further borrowing. This process could be
continued so long as the belief persisted that the
country would be ultimately victorious, and it
took a long time to destroy this belief, for by
the exercise of arbitrary power the German
Government had managed to merge with its
shaky structure of public credit the whole
structure of private credit as well. The limit is
only reached when the accumulations of interest

THE ECONOMIC CUL-DE-SAC 25

to be paid cannot be met out of further
borrowings.

It will be with the return of peace that the
real troubles will begin. This will be not merely
because of the political and financial complications
which will arise in every belligerent country over
the repayment of their war loans, and the
problems of demobilization and unemployment,
but because the economic lesson which the war
should have taught has not been heeded. The
war is still regarded by most people as a colossal
accident, a stupendous misfortune which has
overtaken the world. Individual thinkers here
and there have seen its connection with indus-
trialism, have seen that the war was precipitated
by the fact that industrialism, at least in Germany,
had reached its limit of expansion. But nowhere
is there any public recognition of the fact, and
this is where the danger lies. For it is certain
that the whole of Western civilization was
travelling in the same direction, and, apart from
the war, would soon have found itself in this
same economic cul-de-sac, from which the only
escape is backwards. It is a paradox, but it is
nevertheless true, that what we term expansion
ends finally in congestion. The congestion which
for so long followed every attempt to break the
line in France symbolizes the congestion which has
entered into every department of modern activity.
Everything in modern life is congested — our politics,

26 GUILDS AND THE SOCIAL CRISIS

our trade, our professions and cities have one
thing in common : they are all congested. There
is no elbow-room anywhere, and, as I have said,
there can be but one path of escape, and that
is backwards.

Modern thinkers, although they will sometimes
admit that many things in life have their limits,
nevertheless find it difficult to believe that there
is such a thing as a limit to economic development.
Somehow or other jthey imagine that economic
expansion can go on for ever, and deny absolutely
the possibility of such a thing as an economic
deadlock overtaking industry. I believe that a
terrible disillusionment awaits them, for events
very soon after the war will prove my contention
in a way more forcible than logic — unless, of
course, in the meantime the danger is clearly
recognized and measures are taken for meeting
it. Judging by the trend of opinion, such a course
seems extremely unlikely.

Let me try to show why industrial expansion
must eventuate in an economic deadlock. I will
begin by defining an economic deadlock as a
state of affairs in which the balance between
demand and supply is so completely upset that
only changes so drastic and fundamental as to
amount to a revolution can by any possibility
restore it again. What is there improbable about
such a situation arising ? The balance has been
upset many times during the last hundred years,

THE ECONOMIC CUL-DE-SAC 27

and after a time it is true things have adjusted
themselves again. But what reason is there to
suppose that the balance will always be restored,
any more than to suppose that because a man
has recovered several times from some serious
illness he will always be able to offer effective
resistance ? We know that such is not the case,
and that the constant recurrence of illness will
so weaken a man's constitution that in the end
he succumbs. The same holds good with respect
to economic evils which attack the body politic.
They undermine this and undermine that until
finally they bring disaster. That this is not
popularly recognized is due to the long period
of time which elapses between the first symptoms
and the final catastrophe. When the evil first
appears it gives rise to alarm. People predict
dreadful consequences, and they are right, but
the delay seems to disprove them. Familiarity
breeds indifference. Then apologists appear, and
the various stages of the disease are heralded
as signs of progress, until finally all ideas of right
and wrong become so confused that when the
final crisis arrives the foundations of right
thinking have become so completely undermined
that nothing can prevent collapse.

Let me argue the point another way. If there
is no limit to the possibilities of production there
must be no limit to consumption, because the
volume of production can only increase on the

28 GUILDS AND THE SOCIAL CRISIS

assumption that there is a corresponding increase
in consumption. But is it not apparent that
there must be a limit to the possibilities of con-
sumption ? If by automatic machinery we could
increase production a thousandfold the balance
between demand and supply would be upset and
an economic deadlock created, for it is a certainty
we could not increase our consumption to a
corresponding degree, except by recourse to a
war a thousandfold more destructive than the
present one.

That is the answer, I think, to those people who
agree in theory that there is a limit to consump-
tion, but deny that we are in any way reaching
this limit. The proof that there is such a thing
as a limit to consumption lies in the fact that
we are at war. We are at war to decide, among
other things, which nation or group of nations
shall have the right to dominate the markets
of the world. If the limit of consumption has
not been reached, why should there be this
struggle, why this intensification of competition ?
Surely it can only mean that, having reached
this limit, we are in an economic cul-de-sac,
that we are unable to go forward and too proud
to go back.

II

MAXIMUM PRODUCTION AND
SCIENTIFIC MANAGEMENT

THE underlying cause of the destruction of
the balance between demand and supply,
which in turn has been the economic cause
of the war and will lead us afterwards into an
economic cul-de-sac, is the sin of avarice, which
leads people to be for ever reinvesting their
surplus wealth for further increase instead of
spending it upon crafts and arts.

This mania — for it is nothing less — is of quite
modern origin. In the Middle Ages, as in the
East to-day, it was the custom of people to spend
or invest their wealth in beautiful things. They
would spend their all upon fine buildings, furni-
ture, metal-work, rugs, or jewellery. Incident-
ally, this is why people who were poor according
to modern standards invariably lived in a beautiful
environment. It was natural for these people
to spend their wealth in this way because when
the laws against usury were strict there was no

SO GUILDS AND THE SOCIAL CRISIS

other way to spend it. But with the relaxation
of the Mediaeval laws against usury, and the rise
of Protestantism, which sought to accommodate
morals to the practice of the rich, a change
gradually took place. Still, in spite of gross
inequalities in the division of wealth, the balance
between demand and supply was fairly main-
tained, since, so long as hand production obtained,
a natural boundary prevented the growing tendency
of people to reinvest surplus wealth for further
increase from developing beyond a certain
point. But with the coming of machinery and
the limited liability company this boundary was
removed, and opportunities for investment pre-
sented themselves at every turn. It was thus
that the old idea that surplus wealth should be
spent upon the arts first fell into disuse, and then
was forgotten. When people build nowadays
they no longer regard it as a means of consuming
a surplus, but as a speculation by which they
hope to increase their riches. This applies not
only to building, but to pictures, which are
bought to-day as investments.1

Had the governing class any grip of the economic

1 After the Franco -German War the French saved
themselves by putting in hand extensive building opera-
tions, or, in other words, by spending money. The defect
of our Housing Scheme from this point of view is that it
is not being undertaken in order to spend money, but as
an investment. This different spirit betrays the lack of
insight into economic questions by the governing class.

PRODUCTION AND MANAGEMENT 31

situation, they would have seized upon this issue
as being the central one for themselves, and by
diverting . surplus wealth into its proper channel
have sought to readjust the balance between
demand and supply. But in spite of all that has
happened, and is happening, they seem to be
entirely blind to the situation. They never for
one moment reflect on the general economic
situation, which in their minds appears to be
entirely obscured by two issues considered by
them of more immediate importance, namely,
how to secure our commercial supremacy after
the war against the competition of Germany,
and how to repay the war loan. Being practical
men — that is, men who can never see the wood
for the trees — they concentrate on these two
issues, disregarding entirely the wider considera-
tions involved. Faced, apparently, by a dilemma
and seeing no sure path of escape, they close
their eyes to half of the 'facts of the situation
and plunge wildly forward in a desperate bid
for safety. How else can the advocacy of maxi-
mum production and scientific management be
explained ? If it is not a policy of desperation,
what is it ? For no one could advocate it who
has made any attempt to see the problem as a
whole. It is a gambler's last throw with the
dice loaded against him.

I feel well advised in making this assertion,
for all the facts of the situation point to this

32 GUILDS AND THE SOCIAL CRISIS

conclusion. The advocates of maximum produc-
tion and scientific management make no attempt
to think as statesmen who take all sides of a
problem into consideration ; they do not even
think of the class interests of capitalists, for
maximum production can be shown to be contrary
to their interests as a class ; they think as indi-
vidual capitalists who interpret national problems
in the terms of their own businesses. There can
be no doubt about this, for it "is only by thinking
in such terms that it is possible to make out a
case for these proposed innovations. Their
reasoning is arcadian in its simplicity. To repay
the war loan and to maintain our commercial
supremacy after the war, it is necessary to make
more money and to produce more cheaply. These
ends are to be attained by maximum production
on a basis of scientific management. What
could be simpler ? Scientific management will
reduce the cost of production, and will therefore
allow us to compete more successfully with
Germany, while maximum production increases
opportunities for the making of profits. Such a
policy is without doubt a sound business propo-
sition from the point of view of the individual
capitalist who has to consider ways and means
of holding his own in the market and meeting
his financial obligations after the war. But it
is not possible for many of them to adopt it
without imperilling the stability of the whole

PRODUCTION AND MANAGEMENT 33

social and economic system. For it has this
defect, when considered from a national point of
view, that it increases immeasurably the dis-
crepancy between demand and supply. It
trespasses further on the margin of economic
safety. In a word, it is a proposal to take a
short cut by sailing too near the wind, and as
after the war the political and economic atmo-
sphere will be charged with storms and tempests,
the chances are that the ship of state will
capsize.

To realize the danger of this proposal it is only
necessary to enlarge the area of the problem.
Granted that maximum production and scientific
management would enable our manufacturers
to produce more cheaply and to make more
money, would it enable them to. give more employ-
ment ? For unemployment is going to be the
problem of problems after the war, and a policy
which does not make this issue its starting-point
is no policy at all. It is an evasion of the whole
difficulty. In comparison, how to repay the war
loan, and how to maintain our position in the
markets of the world are matters of quite secondary
importance, since the whole future of our civili-
zation depends upon our capacity to deal
successfully with unemployment. Failure means
not only revolution, but a relapse into anarchy
and barbarism.

" But," it will be said by the advocates of this

84 GUILDS AND THE SOCIAL CRISIS

insane policy, " making good the shortage which
has been occasioned by the war, the revival of
agriculture, protection for home markets, and
bounties for key industries will provide work
for some time to come, and so there is no imme-
diate danger. Unemployment there probably will
be, but it will not be of such dimensions as to
imperil the stability of society." To which I
answer that though by such means we may put
off the evil day, they leave the central problem
essentially unaltered. The reason for this is to
be found by again enlarging its area. For the
problem is really an international one. All , the
other belligerent nations will have to face the
same problems as ourselves. If we adopt maximum
production, they in turn will be compelled to
adopt it in self-defence, while in so far as by
means of Protection and bounties we encourage
home industries at the expense of foreign ones,
the result will be a decreased purchasing power
in other nations, which in turn will deprive us
of markets for our surplus goods. On this issue
the Free Trade argument is perfectly sound. I
am in favour of Protection for other reasons —
for military and political reasons, and because
apart from it the regulation of our internal
economic arrangements will remain impossible.
But the idea that by means of Protection our
volume of trade can be increased appears to me
to be altogether illusory.

PRODUCTION AND MANAGEMENT 35

I said that if we adopt maximum production
other nations will be compelled to do the same
in self-defence. Where shall we be then ? The
competition will be more severe than ever.
Profits will decline, and how is that going to help
us to repay the war loan ? So that finally we
see that maximum production defeats its own
ends, even from the point of view of its promoters.
Sooner or later the truth will have to be faced
(and the sooner the better) that the only way
to repay the war loan is to effect such a radical
revolution in our methods of taxation as will
enable the wealthy class to liquidate the debt
among themselves. All efforts of the wealthy to
evade their responsibilities by attempts to shift
the burden on to the shoulders of other classes
must in the nature of things not only fail in the
end, but will be accompanied by a measure of
retribution that they will not easily forget. The
new world, it is true, is going to be different from
the old, but it rests with the wealthy class whether
the transition is going to be one of orderly pro-
gression or revolution. For if it be true, as I
have already shown, that industrialism before
the war had reached its limit of expansion, then
it follows that the reorganization of industry on
a basis of scientific management must be accom-
panied by the growth of a permanently unemployed
class — a class which tends gradually to increase.
For, as the whole underlying basis of modern

36 GUILDS AND THE SOCIAL CRISIS

industry is one of expansion, it follows that once
the limit is reached, contraction must take its
place. Here again there will be no stopping the
tendency, once it gets fairly in motion, apart
from a return to those first principles of social
organization which we abandoned four hundred
years ago.

While maximum production is calculated to
make trouble for us in the markets, scientific
management will make trouble for us in the
workshop. It is not a policy calculated to pour
oil on troubled waters, but rather to add fuel to
the flames of discontent. For the moment appear-
ances are to the contrary. Labour Ministers
have been brought into line, and are doing their
best to induce the workers to scrap their old
prejudices in favour of limitation of output, while
holding out promises of increased earnings if
they will join hands with the employers in an
effort to increase the volume of production by
accepting scientific management. But promises
are one thing and fulfilment is another. The
workers' instinct in favour of limiting output is
not altogether a prejudice, though it may appear
as such to capitalists and others. On the con-
trary, it is born of experience, and an experience
not to be gainsaid. The workers know that such
a policy keeps them employed, whereas when
more than the average is produced the markets
are glutted and unemployment results. This has

PRODUCTION AND MANAGEMENT 37

been the experience of the maximum production
policy in America, where a factory will work at
full pressure for several months arid then close
down until its surplus stock can be disposed of.
It is experiences of this kind which have led the
American Labour Unions to adopt an attitude of un-
compromising hostility towards scientific manage-
ment. It may be possible for our Labour Ministers
to persuade the workers to give it a trial. But
they will not acquiesce for long, for the old
difficulties will soon reappear, and then the old
troubles will begin again.

But there are other and deeper reasons for the
hostility of labour. Scientific management irri-
tates the workers. They dislike the kind of
supervision which it entails. Labour is essentially
human and does not care about being scientifically
managed. Its idea is to manage industry some
day itself, and so it naturally looks with suspicion
upon a system which proposes to deprive the
worker of what remains of his skill and to transfer
all labour knowledge to the management. For
scientific management is a good scavenger. It
is out for every scrap of trade knowledge it can
get. Following the machine, it proposes to clean
up the last vestiges of craftsmanship, and to put
the ship-shape touches to modern industry,
" Each one of these ' scientific ' propositions is
perfectly familiar to the workman in spite of the
rather naive assurance of the efficiency engineers

38 GUILDS AND THE SOCIAL CRISIS

that they are new. He has known them in
slightly different guise for a century past. The
new thing is the proposition to develop what has
been in the past the tricks of the trade into a
principle of production. Scientific management
logically follows, and completes the factory
process." l

It is important to note that it completes the
factory process. As such it is a cul-de-sac. Mr.
J. A. Hobson, in an article on scientific manage-
ment, brings home the truth of that assertion.
" Indeed," he says, " were the full rigour of scien-
tific management to be applied throughout the
staple industries, not only would the human costs
of labour appear to be enhanced, but progress
in the industrial arts itself would probably be
damaged. For the whole strain of progress
would be thrown upon the scientific manager
and the consulting psychologist. The large assist-
ance given to technical intervention by the observa-
tion and experiments of intelligent workmen, the
constant flow of suggestion for detailed improve-
ments would cease. The elements of creative
work still surviving in most creative labour would
disappear. On the one hand there would be
small bodies of efficient taskmasters carefully
administering the orders of expert managers ;
on the other, large masses of physically efficient

1 American Labor Unions, by Helen Marot (Henry
Holt & Co., New York}.

PRODUCTION AND MANAGEMENT 89

but mentally inert executive machines. Though
the productivity of existing industrial processes
might be greatly increased by this economy, the
future of industrial progress might be imperilled.
For not only would the arts of invention and
improvement be confined to the few, but the
mechanization of the great mass of workmen
would render them less capable of adapting their
labour to any other method than that to which
they had been drilled. Again, such automatism
in the workers would react injuriously upon their
character as consumers, damaging their capacity
to get full human gain out of any higher remuner-
ation that they might obtain. It would also
injure them as citizens, disabling them from
taking an intelligent part in the arts of political
self - government. For industrial servitude is
inimical to political liberty. It would become
more difficult than now for a majority of men,
accustomed in their workday to mechanical
obedience, to stand up in their capacity as citizens
against their industrial rulers when, as often
happens, upon critical occasions, political interests
correspond with economic cleavages." I

There is one comment to make on this quotation.
Mr. Hobson's reference to " large masses of physi-
cally efficient executive machines " does not
receive medical support. American Medicine
comments editorially on the result to labour of
1 J. A. Hobson, Sociological Review, July 1913.

40 GUILDS AND THE SOCIAL CRISIS

efficiency schemes designed to relieve it of
" wasted " effort.

" Working along with his partner the efficiency
engineer, the speeder-up has managed to obtain
from the factory worker a larger output in the
same period of time. This is done by eliminating
the so-called superfluous motions of the arms
and fingers — i.e. those which do not contribute
directly to the fashioning of the article under
process of manufacture. . . . The movements
thought to be superfluous simply represent
Nature's attempt to rest the strained and tired
muscles. Whenever the muscles of the arms
and fingers, or of any part of the body for that
matter, undertake to do a definite piece of work,
it is physiologically imperative that they do not
accomplish it by the shortest mathematical route.
A rigid to-and-fro movement is possible only to
machinery ; muscles necessarily move in curves,
and that is why grace is characteristic of muscular
movement and is absent from a machine. The
more finished the technique of a workman and
the greater his strength, the more graceful are
his movements, and, what is more important in
this connection, vice versa. A certain flourish,
superfluous only to the untrained eye, is absolutely
characteristic to the efficient workman's motions.

" Speeding-up eliminates grace and the curved
movements of physiological repose, and thus
induces an irresistible fatigue, first in small

PRODUCTION AND MANAGEMENT 41

muscles, second in the trunk, ultimately in the
brain and nervous system. The early result is
a fagged and spiritless worker of the very sort
that the speeder-up's partner — the efficiency
engineer — will be anxious to replace by a younger
and fresher candidate, who, in his turn, will soon
follow his' predecessor if the same relentless
process is enforced.

" It will always be necessary to consider
workers as human beings, and charity and moder-
ation in the exaction of results will usually be
found the part of wisdom, as representing a wise
economy of resources. This scientific charity,
however, is something quite apart from the moral
effect on the personnel of due recognition of
their long service, and of loyalty which is likely
to accompany it." r

So after all it appears that the workers' prejudice
is not altogether without some foundation, and
as it so happens that the workers are masters of
the position to the extent that they must be
willing to co-operate with the efficiency engineer
if a scheme is to be evolved suitable to a particular
trade, the pill has to be gilded if they are to
swallow it. This is the secret of the bonus system
and promises of high wages, as it is doubtless the
secret of the Whitley scheme. For, according
to Mr. F. W. Taylor, its pioneer, scientific manage-

1 American Medicine, April 1913, quotation from
American Labor Unions, by Helen Marot.

42 GUILDS AND THE SOCIAL CRISIS

ment requires of industry a new ethical standard,
and involves a complete revolution both on the
part of the management and the men. But if
I am not mistaken, the anxiety of our new
industrialists to introduce this new ethical stan-
dard is a case of crying peace, peace, when
there is no peace. For industrialism has exhibited
disruptive tendencies since the day of its birth
— disruptive tendencies which have hitherto only
been held in check by the military organization.
But for the military, industrialism could never
have been introduced. The Luddite anti-machinery
riots bear witness to the opposition that had to
be overcome, while every stage of its development
has been punctuated by the military on whose
assistance capitalists have been able to rely in
their warfare with the workers for the suppression
of riots which developed out of strikes. So there
is a sense in which it may be affirmed that indus-
trialism and militarism rest to-day on a common
foundation. The war, as I have already shown,
was precipitated by the economic crisis which
had overtaken industrialism in Germany. The
idea that militarism could be abolished and
industrialism retained is quite illusory. For if
militarism went, a check would be removed which
so far has prevented industrialism from bearing
its bitterest fruit. The workers would rise against
its tyranny if they felt that they no longer need
submit, and it looks as if scientific management

PRODUCTION AND MANAGEMENT 43

would bring the trouble to an issue. Under
the new dispensation it is to play the part of
agent provocateur until the workers rise and rebel.1
Meanwhile, there is some consolation in the
fact that as every industrialized nation after the
war will be confronted by the same problems,
all the nations involved in the struggle are learning
the same lesson at the same time. All of them
will discover that industrialism is a cul-de-sac
from which the only escape is backwards. There
is reason therefore to hope that beneath the
fierce and cruel oppositions of the hour a profound
principle of unity is at work, and that when
after the war the dream of a glorified industrialism
is dispelled, common action may be taken to put
an end not only to militarism, but also to the
industrial warfare of which it is the bitter fruit.

1 The relations of industrialism and militarism are
discussed in other terms in Mr. L. P. Jack's book From
ih& Human End.

HI
THE RETURN TO MEDIAEVAL1SM

A CONSIDERATION of the issues raised in
the foregoing chapters points to the con-
clusion that capitalism is about to commit
suicide. Having reared the industrial system upon
a basis of social and economic injustice, capitalists
are driven from one desperate expedient to another
in a vain effort to attain economic stability. But
these efforts will avail nothing, for the crisis
ahead cannot be met by men whose primary
interest is in maintaining the capitalist system.
Hence their dilemma.

It is because industrialism is finally based upon
social injustice that the balance between demand
and supply has been upset For this phenomenon
is but the reflection in the economic sphere of the
destruction of the balance of power in the body
politic which followed the destruction of the
Guilds at the time of the Reformation, when the
people lost control of those things which immedi-
ately affected their lives Uncontrolled by Guilds,

THE RETURN TO MEDIAEVALJSM 45

industry could no longer be related to human needs.
It became subject to mass movements entirely
incapable of control by any human agency whatso-
ever, whether collective or individual, and it has
gone on floundering ever since, while Parliament,
which came to usurp all power in the State, has
in turn been drawn into the sweep of these invisible
world-currents.

In one sense it is true to say that the present
state of things marks a condition into which
civilization has drifted, and is the result of no
policy, no forethought, no design. And yet in
another sense this is not true. The modern State
has become what it is because for the last four
hundred years the governing class have sought
to perpetuate the injustices established by the
Reformation. It was because the governing class
was living on the plunder of the monasteries and
the Guilds that they were in the past led to blacken
Catholicism, to condone usury, to misrepresent
the Guilds and to give support to false political
and economic theories. They did this because
in no other way could they justify themselves.
While they denied the people the right to manage
their own affairs through the agency of Guilds —
the only institution through which the people are
capable of exercising control — they found that
they themselves were unable to control the economic
situation. When they found that their meddling
only made matters worse, they came to drift, to

46 GUILDS AND THE SOCIAL CRISIS

adopt the policy of laissez-faire, which the force
of circumstances has brought to an end, but
which leaves them in a sad dilemma. For whereas
things have reached such a pass that something
must be done, they find that not only are they
without any rational social theory to guide them
in the task of reconstruction, but that the prejudice
against Mediaeval society which has been created
by lying historians in the past stands in their
way, because it has led men to look with suspicion
upon all normal social arrangements. In rejecting
the Guild, political philosophers denied the chief
corner stone of any sane political theory, and have
in consequence been driven into error after error
and into compromise after compromise in a vain
endeavour to find solutions to problems which
for minds with their perverted outlook are
insoluble.

To Mediaeval social arrangements we shall
return, not only because we shall never be able
to regain complete control over the economic
forces in society except through the agency of
restored Guilds, but because it is imperative to
return to a simpler state of society. x Further
development along present lines can only lead to
anarchy. For anarchy is the product of com-
plexity. It comes about in this way : the growth
of complexity leads to confusion, because when
any society develops beyond a certain point the
human mind is unable to get a grip of all the

THE RETURN TO MEDIAEVALISM 47

details necessary to its proper ordering. Con-
fusion leads to misunderstandings and suspicions,
and these things engender a spirit of anarchy.
No one will deny that such a spirit is rife to-day,
and it is difficult to avoid the conclusion that it
is a sign that modern society is beginning to break
up. We are certainly beginning to turn the
corner, and once it is turned there will be no stop-
ping until we get back to the Mediaeval basis.
We shall travel of course by stages. But we shall
get there eventually because we shall find no rest,
no stability, until we reach our destination. There
will be no stopping at any half-way house ; so
much is certain.

Meanwhile it is interesting to note how Mediaeval
economic principles are insinuating themselves
into latter-day practice as a consequence of the
force of circumstances. We have not yet attained
to the Mediaeval conception of a Just Price, but
the necessity of putting a boundary to the depre-
dations of the profiteer has revived its Mediaeval
corollary — the Fixed Price. Being a practical
people with machinery as our god, we indignantly
repudiate the idea that it is in the interests of
society that machinery be controlled. Yet all
the same machinery is being controlled in Lanca-
shire and Yorkshire to-clay l — it is true as measures

1 The Cotton Control Board administering the cotton
trade in Lancashire states the number of spindles each

48 GUILDS AND THE SOCIAL CRISIS

of war emergency consequent upon the shortage
of cotton and wool, but it is none the less significant
on that account ; for if the war is not to be regarded
as a colossal accident but as something towards
which the whole modern polity inevitably tended,
then we may be sure that the forces at work which
make control necessary to-day will make it neces-
sary in the future. The cotton shortage may come
to an end ; but Lancashire is losing its Indian
market because of an adverse tariff, as indeed it
is losing other markets through the growth of
competition — circumstances which bring home to
us the fact that industrialism has reached its limit
of expansion. Wisdom might have suggested
years ago the desirability of regulating the output
of cotton. For it would surely have been better
to have introduced such regulations than to be
for ever lowering the standard of quality in order
to adjust the balance between demand and supply
which the use of an ever-increasing number of
spindles necessitated. Is it not strange that
nothing short of a war of universal dimensions
could induce Lancashire to face up to the situa-
tion ? I should like to believe that wars would
be impossible in the future, but the unwillingness
or inability of mankind to face the simple facts

factory may use. The operatives work a fortnight and
then take a week's holiday for which they are paid, men
receiving 255. and women 155. The Wool Control in
Yorkshire proceeds along similar lines.

THE RETURN TO MEDIAEVALISM 49

of society apart from them does not leave much
room for hope.

The examples I have given of the tendency of
latter-day economic practice to follow Mediaeval
lines are interesting, but the strongest evidence
of all in support of the hypothesis that a return
to Mediaevalism is essential to the preservation
of society is to be found in the success of the
National Guild movement which proposes to trans-
form the Trade Unions into Guilds. For there is
historical continuity in the idea, inasmuch as the
Trade Unions are the legitimate successors of the
Mediaeval Guilds, not only because the issues with
which they have concerned themselves have
arisen as a result of the suppression of the Guilds,
but because they acknowledge in their organization
a corresponding principle of growth. The Unions
to-day with their elaborate organizations exercise
many of the functions which were formerly per-
formed by the Guilds — such as the regulation of
wages and hours of labour, in addition to the
more social duty of giving timely help to the sick
and unfortunate. Like the Guilds, the Unions
have grown from small beginnings until they now
control whole trades. Like the Guilds also, they
are not political creations, but voluntary organi-
zations which have arisen spontaneously to protect
the weaker members of society against the oppres-
sion of the more powerful. They differ from the
Guilds only to the extent that, not being in posses-

4

50 GUILDS AND THE SOCIAL CRISIS

sion of industry and of corresponding privileges,
they are unable to accept responsibility for the
quality of work done and to regulate the prices.
The National Guild proposal therefore to trans-
form the Trade Unions into Guilds by giving
them a monopoly of industry is thus seen to be
an effort to give conscious direction to a move-
ment which hitherto has been entirely instinctive
— which is, to use Mr. Chesterton's words, " a
return to the past by men ignorant of the past,
like the subconscious action of some man who
has lost his memory." l And the propaganda
has met with a phenomenal success — a success
which I have some right to say has been out of
all proportion to the amount of work put into it
or the means at the disposal of its advocates, and
which therefore can only be finally explained on
the assumption that it voices a felt need ; that
the balance of power in society has become so
upset that men instinctively support the Guild
idea as a means of restoring the equilibrium.

It is safe to say that the Guild propaganda
would not have been followed with the success it
has had but for the co-operation of certain external
happenings. In the first place there is the growing
distrust of Parliament and centralized govern-
ment. In the next there is the increasing sense
of personal insecurity and loss Jof ^personal inde-
pendence which has followed the growth of large

1 A Short History of England, by G, K, Chesterton.

THE RETURN TO MEDIAEVALISM 51

organizations. Then there is the war and the
Munitions Act, which gave the workers a taste of
Collectivism and the enormous growth of bureau-
cracy, which has brought home to many people
the utter inadequacy of such a method for meeting
really vital problems. In consequence almost
everybody has come to feel that some fundamental
change must be made, and as the road forward is
impassable, there is no alternative but to go back.
I am aware of course that many National Guilds-
men would not go to such lengths. Their concern
is with the problem of transforming the Unions
into Guilds, which they can justify as going for-
ward. All the same it is a step backwards of a
very fundamental order, for it is nothing less than
a proposal to reverse the practice and judgment
of the last four hundred years. I say " practice
and judgment," but I place practice first because
I do not seriously think that the present state of
things owes its existence to any reasoned judgment
whatsoever. It was established first by force
and attempted justifications were made afterwards.
That is the history of all modern ideas.

We may agree with the National Guildsmen
that the first step is for the workers to take over
the control of industry, and that in order to do
this they must for the present accept industry
as it actually exists.1 But if they are not to be

1 Something approximating to National Guilds was
organized under the Menshevik Regime in the Russian

52 GUILDS AND THE SOCIAL CRISIS

involved in the catastrophe which threatens the
modern world, they should be sufficiently frank
with themselves to know in what direction we
are travelling ; for there will be no time to
discuss properly the issues involved when the
transfer actually takes place. One funda-
mental issue — the incompatibility of democratic
control with highly centralized organization — is
being realized, so there is nothing to fear in that
direction. No difficulties are likely to be put
in the way of the growth of local autonomy. The
trouble is likely to come over the unemployed
problem which will certainly follow the demobiliza-
tion of the forces and the closing down of the
munition factories in spite of the shortage which
must be made good. National Guildsmen will
be as powerless as capitalists to face this problem
unless in the meantime they make up their minds
in what direction society is travelling.1 Socialists

Revolution. But the good work which was then done
wras rendered nugatory by the action of the Bolsheviks, who,
raising the cry that the capitalists were creeping back to
the control of industry, urged the workers to elect to
their Workshop and Factory Committees not those best
qualified to administer the work, but those who were
the exponents of Bolshevik views. It was thus the reign
of the demagogue was inaugurated in Russia and industrial
chaos made its appearance. It is to be hoped that we
shall have the sense not to fall into this pitfall.

1 Since these words were written I am pleased to say
some unanimity of opinion is coming into existence on
this issue.

THE RETURN TO MEDIAEVALISM 53

generally have not emancipated themselves entirely
from Capitalist ways of thinking. Almost without
exception they still think about finance in com-
mercial terms, while Guildsmen have not always
learned to think primarily in the terms of things.
Yet Guild finance must differ as fundamentally
from commercial finance as Guild organization
differs from commercial organization. To make
a long story short, Guild finance means the
abolition of finance as we understand it. For
finance to-day means nothing more than finding
ways and means of using money for the purposes
of increase, and obviously Guilds can have nothing
to do with such a motive. It follows that in pro-
portion as the Guild principle of fixed prices can
be applied, opportunities for making money by
the manipulation of exchange will tend to dis-
appear, while in proportion as the workers come
into the possession of industry, opportunities for
investment will likewise come to an end. Book-
keeping there will be, but bookkeeping is not
what we understand by finance. From this point
of view the primary aim of the Guild is to guard
society against the evils of an unregulated currency
by restricting currency to its legitimate use as
a medium of exchange.

The introduction of a change so fundamental
in the conduct of industry will create a host of
problems with which it will be necessary to deal.
For with the change many occupations will auto-

54 GUILDS AND THE SOCIAL CRISIS

matically come to an end, and if society is not to
relapse speedily into anarchy it is important that
the situation should be intelligently anticipated.
All who find themselves unemployed should be
put upon free rations until such time arrives as
they can become absorbed in the new social system.
There is no other way of preventing bloodshed.
Meanwhile the surplus workers should be put
upon the land, for not only would this measure
have the merit of immediately relieving the situa-
tion, but the revival of agriculture would confer
the permanent benefit of strengthening society
at its base, while it would react to restore normal
conditions in industry. Of course some discrimina-
tion would need to be shown, as in the case of old
people who would be unable to adjust themselves
to the new conditions and should be pensioned off.
While the revival of agriculture would relieve
the unemployed problem, it would by no means
solve it. Such a desideratum can only be reached
by such a complete change in the purpose and
scope of industry as is involved in the substitution
of a qualitative for the present quantitative ideal
of industry. This is a big question, and pre-
supposes a revolution not only in our methods of
production but in our ways of thinking, habits
of life and personal expenditure. As I have dis-
cussed this question and its implications at some
length in my Old Worlds for New,1 it will not be
' George Allen & Unwin, Ltd. 35. 6d. net.

THE RETURN TO MEDIAEVALISM 55

necessary for me to repeat the argument I there
used. Suffice it here only to say that such a
change in concrete terms means the revival of
handicraft together with a definite limitation of
the use of machinery. That the revival of handi-
craft would assist us in our efforts to cope with
the unemployed problem becomes apparent when
we realize that with a reversion to handicraft
we should no longer be haunted by the problem
of surplus goods which has followed in the wake
of unregulated machine production. Anyway it
is apparent that if men are unemployed they must
either be provided for or left to starve. Would
it not be wiser to employ them as handicraftsmen
than to compel them to live on doles while being
employed on some useless and unnecessary work ?
Tliis issue must be faced. It cannot be evaded
any longer, because nowadays, when there arc
no new markets left to exploit, it will be impossible
to put off the evil day by dumping our surplus
products in foreign markets.

To ordinary sane men such reasoning is con-
clusive. Unfortunately, however, the decision
in such matters does not rest with them to-day,
but with the " politically educated " members of
society — that is with men whose natural instincts
have been perverted by the training of their
minds oja false issues in the supposed interests of
capitalists and the status quo. That Socialists
and Labour men generally are just as much victims

5« GUILDS AND THE SOCIAL CRISIS

of our false academic tradition as members of the
governing class does not lessen but increases the
danger, for by depriving the working class of their
natural leaders, it is surely bringing about the rule
of the mob. It is tragic, but still it is nevertheless
true to say that, generally speaking, the more
highly educated a man is to-day the more likely
he is to be wrong. This is the secret of the power
of the Northcliffe Press, of the Billing verdict,
as of the impotence of our governing class. The
feeling against leaders, rightly interpreted, is really
a demand for leaders whose instincts are sound.
The good men believe the wrong things. That is
our root trouble to-dav.

IV
THE SPIRITUAL CHANGE

THE danger inherent in the growing dis-
respect for all forms of authority is that
from being a perfectly legitimate protest
against spurious forms of authority and culture
it may develop into a revolt against authority
and culture in general. To the Neo-Marxian
whose faith is absolute in the materialist inter-
pretation of history this may seem a matter of
no consequence. But to those who realize the
dependence of a healthy social system on living
traditions of culture it is a matter of some concern.
For whereas a false culture like the academic
one of to-day tends to separate people by dividing
them in classes and groups and finally isolating
them as individuals, a true culture like the great
cultures of the past unites them by the creation
of a common bond of sympathy and understanding
between the various members of the community.
The recovery of such a culture is one of our
most urgent needs, for some such unifying principle

58 GUILDS AND THE SOCIAL CRISIS

is needed if society is to be reconstituted. If
the overthrow of capitalism is not to be followed
by anarchy, this dual nature of the social problem
must be acknowledged. For it is apparent that
if a change in the economic system is to be made
permanent it will need to be accompanied and
fortified by a change in the spirit of man. Most
Socialist activity to-day is based upon the assump-
tion that one will necessarily follow more or less
automatically as a consequence of the other, and
that all it is necessary to do is to seek to abolish
economic insecurity under a restored Guild system
and the materialist spirit would disappear as a
matter of course. But such reasoning, I submit,
is fallacious. Even granting that it could be
proved that the social problem had its origin in
a purely economic cause, it does not follow that
to effect economic change in the right direction
would automatically produce the change we
desire on the spiritual side of life, because, as we
are all creatures of habit, the materialist habit
of mind would tend to persist when the cause
which originally created it had been removed.
What most Socialists fail to realize is that the
material and spiritual sides of the problem must be
attacked simultaneously if reaction is not to result.
Otherwise it is a certainty that the one which at
the moment is left standing would wreck the other.
We know that a religious revival to-day would
not effect permanent results unless it were accom-

THE SPIRITUAL CHANGE 59

panied by a change in the economic system. For
precisely the same reason a change in the economic
system cannot be permanent unless accompanied
by a corresponding change in the spirit of man.
Apart from a change in the spirit of man, it is
conceivable that a restored Guild system, instead
of laying the basis of a happy and prosperous
society, would, under materialist direction, degener-
ate into a number of warring groups, in which the
groups in an economically weak position would
be ground down by those in a stronger one. All
the circumstances which now so rightly shock
the Socialist conscience would be reproduced.
The tree would still only bear thistles, for self-
interested human nature must ever inflict suffering
on those that are weak. Economic change is
therefore impotent to redeem society unless it is
accompanied by such a change in the spirit of
man as is tantamount to a religious awakening.
" For," to quote de Maeztu, " men cannot unite
immediately among one another ; they unite in
things, in common values, in common ends." l
The materialist philosophy of organized Socialism
supplies no common aim capable of uniting men
for the purposes of reconstruction ; on the contrary,
it can only unite them for the purposes of destruc-
tion, for the overthrow of the existing system.
Once that is done, Socialists must split up among

1 Authority, Liberty and Function in the Light of the
War, by Ramiro de Maeztu (Geo. Allen & Unwin, 4$. 6d.),

60 GUILDS AND THE SOCIAL CRISIS

themselves, for their lives -are governed by no
common denominator. Like the builders of Babel,
they will be overtaken by a confusion of tongues
— for such is the inevitable end of all materialist
systems.

The more one thinks about the social problem,
the moie one comes to see that economic health
in a community is dependent upon morals ; and
the more one thinks about morals the more one
comes to realize that their roots are finally to be
found in religious conviction. Brotherhood is
only possible on the assumption that evil motives
can be kept in subjection, and the experience of
history seems to prove that only a religion which
appeals to the heart and conscience of men is
capable of this. If evil motives can be kept in
subjection, then the kingdom of God upon earth
can be realized, but on no other terms. This, I
take it, was the central truth and purpose of
Christianity throughout its great historic period.
By strengthening man it sought to establish and
fortify the normal in life and society. That
Christians at times have been drawn to other
ideals is true, but that the central aim of Chris-
tianity was the establishment of the kingdom
of God upon earth the wonderful architecture and
social organization of the Middle Ages bears
witness.

We have moved so far away from the Middle
Ages that it is difficult for us to conceive of life

THE SPIRITUAL CHANGE 61

as it was then lived or religion as it was then
understood. Religion then was not a thing to
be indulged in by people who had a bias in that
direction and ignored by others — something apart
from life with little or no influence on the main
current of affairs — but was the creative force at
the centre of society ; the mainspring and guiding
principle that shaped art, politics, business and
all other activities to a common end. It was
moreover a culture which united king and peasant,
craftsman and priest in a common bond of sympathy
and understanding ; for, unlike modern culture,
it did not depend upon books and so did not raise
an intellectual barrier between the literate and
the illiterate, but united all, however varying the
extent of their knowledge and understanding.
The mason who carved the ornaments of a chapel
or cathedral drew his inspiration from the same
source of religious tradition as the ploughman who
sang as lie worked in the field or the minstrel
who chanted a story in the evening. Modern
education at the best is a poor substitute for the
old culture which came to a man at his work.
The utmost it can do is to give us an opportunity
of reading in books descriptions of a beautiful
life which once existed in reality. And let us
never forget that the central mystery around
which this life moved was religion. This fact is
the last one the modernists are willing to admit.
They may be fascinated by the glamour and

62 GUILDS AND THE SOCIAL CRISIS

romance of the Middle Ages, by its wonderful
architecture and its social organization. But it
may be said of them what Mr. Chesterton said of
Ruskin, " that he wanted all parts of the cathedral
except the altar."

In accounting for the changes which destroyed
Mediaeval Society and inaugurated the .modern
world, it is customary in economic circles to ascribe
them to the Reformation and the Great Pillage
which accompanied it. But the Reformation
itself was the consequence of that many-sided
movement which we know as the Renaissance,
which in turn was the direct consequence of that
awakened interest in Greek and Roman literature,
science and art in the fourteenth century in Italy
which followed the Revival of Learning. So that
when we search for the impulse which first set
in motion the forces which have created the modern
world we find it in the labour of scholars who
ransacked libraries in their enthusiasm for the
culture of the pagan world.

The immediate results of their labour were full
of promise. The rediscovery of the literature and
art of the ancient world had a wonderfully stimula-
ting effect on the imagination of Europe, inclining
as it did at the beginning to give a certain added
grace and refinement to the vigorous traditions
of Mediae valism. It seemed, indeed, for a time as
if the Renaissance was really what its name implies
— a rebirth — and that life itself, casting off the

THE SPIRITUAL CHANGE 68

fetters which bound it, was to come to its own at
last. But it was not to be. Early in the sixteenth
century its morning splendour in Italy received
a check, and as time wore on it became more and
more evident that the glories of the Renaissance
were over and that its tyrannies had begun. For
what happened in Italy happened wherever it
succeeded in establishing itself. Its immediate
effect was always that of a stimulant which for
a time quickened things into a vigorous life. After
this reaction set in. A kind of staleness overcame
everything. Mankind suffered spiritual atrophy.
Religion and art withered as a consequence of the
forces set in motion, and in spite of attempted
revivals, have never succeeded in becoming properly
rooted again, nor will they ever do so until the
false values which the Renaissance imposed upon
the world are banished. For, briefly, it may be
said that the fundamental error of the Renaissance
was that it everywhere concentrated attention
upon secondary things to the neglect of the primary
ones. In its enthusiasm for learning it came to
exalt knowledge above wisdom, science above
religion, mechanism above art. The misdirection
of energy which has followed these false valuations
has literally turned the world upside down, so that,
like a pyramid balanced upon its apex, it remains
in a state of unstable equilibrium. For there
can be no peace so long as the major powers which
alone are capable of giving direction to society

64 GUILDS AND THE SOCIAL CRISIS

are subjected to the caprice and domination of
the minor ones.

It is a fact not without significance that science
alone has profited by the changes associated
with the Renaissance. I say it is not without
significance because science is not a creative but
a destructive force. Let there be no mistake
about this. Science always destroys. There are
of course some things — disease, for instance — which
need to be destroyed, and in destroying these science
does useful work. But the usefulness of science
is strictly limited. As the handmaid of religion
and art its services may be invaluable. For it
is their function to know the why of things, whereas
science only concerns itself with the how. And
in a healthy society the why would take precedence
to the how. When this natural order is reversed
and science assumes the leadership, society lives
in peril of its existence. For the liberation of
natural forces which science aims at effecting is
to liberate forces which man is powerless to control.
It is no accident that science has become the
servant of militarism. Too proud to accept
spiritual direction, it was left no choice in the
matter.

The materialist spirit which science has helped
to engender shows itself irreconcilably hostile
to all the higher interests of mankind. All men
who care for spiritual things are conscious of this
antagonism. But hitherto opinion has been

THE SPIRITUAL CHANGE 65

divided as to the best means of combating it.
Feeling themselves more or less powerless in the
face of the vast mechanism of industrialism, many
such men are inclined to take the view that indus-
trialism must be accepted to-day as an established
fact, and urge upon all who are conscious of its
limitations to seek to supplant its materialist
direction by a spiritual one. This view, which
has the advantage of appearing broad and mag-
nanimous, has the further one of reconciling men
temporarily to the servitude to which they must
submit. Nevertheless, it is both impracticable
and fallacious. The very magnitude of the indus-
trial system forbids it, thus making of our would-
be industrial reformers utterly impracticable
dreamers. Small machines may be used by man,
but large machinery acquires a will of its own.
The men who direct it soon find out that they can
only remain solvent on the assumption that
they are willing to sacrifice everything to the all-
absorbing interest of keeping the vast machinery
in commission. Hence it comes about that it is
the tendency of industrialism to throw out all
men who are unwilling to bend their will to the
will of the machine. It is in the nature of things
that this should be so. For there are only two
possible lines of development. Either industry
must be brought into relation with what we regard
as the permanent needs of human nature, or human
nature is not to be regarded as a fixed quantity

5

66 GUILDS AND THE SOCIAL CRISIS

and must adapt itself to the needs of industry.
There is no third position such as the proposed
spiritual control of industrialism would suggest.

Though there exists to-day an undoubted
antagonism between the material and spiritual
sides of life, it has not always been so. Whether
such antagonism exists or not is all a matter of
proportion. Up to a certain point in the develop-
ment of civilization no antagonism is felt. The
material and spiritual aspects of life go hand in
hand. But beyond a certain point this is no longer
the case. Separation begins. Henceforth further
development of one side can only be at the expense
of the other. It is not a case of any one definitely
willing this separation. It simply happens as a
loss of balance consequent upon an undue con-
centration upon the problems appertaining to
one side of life. In this sense things are to be
regarded not as necessarily good or bad in them-
selves, but may be either according to the pro-
portion they bear to each other. As in chemistry
we know that the elements composing any com-
pound substance will combine with others in a
certain definite and fixed proportion, and in no
other, so it appears that in society the material
and spiritual elements can only combine organi-
cally when they co-exist in a certain definite
proportion.

Exactly what that proportion is it is impossible
in words to say. What, however, we do know is

THE SPIRITUAL CHANGE 67

that the material side of life is to day abnormally
over-developed while the spiritual side is to an
equal extent under-developed, and this is sufficient
for practical purposes. For our business being
to restore the balance now destroyed, we are right
in supporting whatsoever tends to increase spiritual
activities on the one hand and to limit material
ones on the other. In reality, however, this is
not two forms of activity but one, inasmuch as
both reforms must proceed simultaneously. The
material development is to day so overwhelming
and its force is so irresistible that there can be
no such thing as a widespread spiritual reawakening
so long as the material crust in which our life is
embedded remains unimpaired. That crust will
need to be broken before the spirit of man can
move freely again, and there is every reason to
believe it will be broken before long. For the
determination of the Government, capitalists
and others to carry the industrial system after
the war to its logical conclusion is the surest
way of ending it, for all the contradictions which
now underlie our civilization will then come into
the light of day. Once that happens, the system
will not be able to go on. The lie upon which it
is built will be out, and there will be no hiding
the truth any longer. We shall have to face the
facts because the facts will be facing us. Unable
so much as to entertain the idea of a limit to
material expansion or to conceive of a social

68 GUILDS AND THE SOCIAL CRISIS

order fundamentally different from our own, the
governing class are nevertheless unconsciously
preparing the way for the new social order by
seeking political suicide, which of course is the
only thing they can do considering they cannot
go forward and are too proud to go back. For
" pride goeth before a fall."

Far be it that any words of mine should deter
our governing class from the pursuit of a policy
which is so full of beneficent promise for the
future of mankind. My concern is not with
them, but with the Socialist and Labour move-
ments, which I fear may fall into the same pit.
For the situation after the war will be full of
dangers for men who have hitherto based their
policy upon the assumption that industrialism
has come to stay. They have assured themselves
so often that " we cannot go back " that they
will be entirely helpless when confronted with a
situation through which they cannot go forward.
If therefore they are not to be taken by surprise,
if after the war we are not to go to pieces as
Russia did after' her revolution, it is urgent that
the leaders of the Socialist and Labour movements
should pause and think. If they do not, then
the collapse of the present order will leave society
entirely without leaders, at the mercy of our
Jacobins and Bolsheviks, who, like their prede-
cessors in the French and Russian Revolutions,
will make the anarchy complete by facing every

THE SPIRITUAL CHANGE 69

issue as it arises, not with the understanding
which comes from broad and humane sympathies,
but in the narrow and mechanical way which is
only possible to minds drilled in the materialist
misinterpretation of history.

That is where I will leave the matter. I have
drawn attention to the danger which threatens
us, and I have suggested within certain limits the
direction in which a solution may be found. If
you ask for a more detailed plan I reply that such
is undesirable, for a purpose wedded to details
may easily suffer shipwreck. Our need, on the
contrary, is an aim sufficiently noble to unite men
coupled with an understanding and determination
to mould circumstances as they arise. A pre-
cedent condition of success upon such lines is a
clear and widespread recognition of the problem
confronting us as it actually exists. If this could
be secured half of the battle would be won, and
we need have no fear as to our ability to improvise
measures when the crisis comes. Meanwhile two
prejudices stand in the way of such a desideratum.
One is our utterly irrational faith in the stability
of industrialism ; the other is an ignorance where
it is not a wilful misrepresentation of the past.
Let us not forget that in history, as Mr. Chesterton
has reminded us, there has never been a Revolution
which did not in some measure aim at being a
Restoration.

V
THE FUNCTION OF THE STATE

This is the reason why the law was made, that the
wickedness of men should be restrained through fear of
it, and that good men could safely live amongst bad men ;
and that bad men should be punished by the law and
should cease to do evil for Tear of the punishment.

(From the Feuro Juzzo, a collection of laws Gothic and
Roman in origin, made by the Ilispano-Gothic
King Chindasvinto, A.D. 6.-jO. In the National
Library of Spain, Madrid.)

IT is typical of the confusion in which a gene-
ration of Collectivist thinking has involved
social theory that when to-day men specu-
late on the attributes of the State in the society
of the future they invariably proceed upon the
assumption that its primary function is that of
organization. The syndicalist, with his firmer grip
on reality, realizing that the State is an extremely
bad and incompetent organizer, rightly comes, to
the conclusion that if the State can find no better
apology for its existence it is an encumbrance — a
conclusion from which I can see no escape for

70

THE FUNCTION OF THE STATE 71

such as conceive organization to be the primary
function of the State.

National Guildsmen, though accepting the State
as essential to a well-ordered society, have not
always been able to escape from this dilemma.
Mr. Hobson l dismisses the idea of organization
being the primary function of the State, but
conceives of it as spiritual, though the examples
he gives in support of his contention, with the
exception of education, namely, foreign policy,
public health and local government, appear to me
to be more mundane than spiritual. This con-
tention, however, is begging the question. It is
not a satisfactory answer to the Syndicalist. It
suggests the existence of activities with which a
Guild Congress may not be qualified to deal, but
it offers us no clear principle for guidance. Mr.
Hobson 's understanding of " spiritual " is different
from mine ; and I would say that if the State
cannot justify itself as an organizer, it certainly
cannot do so as a spiritual influence. Not only
does it not exercise any spiritual influence to-day,
but it is questionable if the State has ever done
so in the past. On the contrary, the State appears
to exercise a baneful influence on whatever spiritual
activities it has taken under its protection. Most
people would agree that the influence of the
State upon the Anglican Church has been a most

1 Guild Principles in Peace and War, by S. G. Hobson
(S. Bell & Son).

72 GUILDS AND THE SOCIAL CRISIS

depressing one ; while it is significant that in the
one section of this Church which is to-day alive
— the High Church — advocates of disestablishment
are to be found. Nobody will be found to defend
our national educational system or to maintain
that the participation of the State in the task of
education has in any way fulfilled the expectations
of its promoters. Nor, again, can any one maintain
that the patronage of the arts by the State exhibits
any degree of insight or understanding. It is, I
believe, in the nature of things that this should
be so, for the State is of the earth earthy. The
problem of temporal power which engages its
attention does not tend to create an atmosphere
favourable to the growth and development of
things spiritual.

If, then, the State is not to be justified as an
organizer nor can it exercise spiritual functions,
on what grounds is it to be justified ? The experi-
ence of history provides the answer. The function
of the State is to give protection to the com-
munity— military protection in the first place,
civil protection in the next, and economic pro-
tection in the last. Let me deal with economic
protection first ; for if I am to be understood at
all it is necessary to make it clear that I refer to
something very different from the Protection of
current politics. Protection is a double-edged
sword and may just as easily be a cur^ as a
blessing. Protection against the economic enemy

THE FUNCTION OF THE STATE 73

beyond the seas is the necessary corollary of any
stable economic system. But protection against
the economic enemy at home is the primary
necessity, for it means the protection of the workers
against exploitation. It involves a restoration of
the Guilds. By chartering these the State gives
economic protection to the community.

The connection between an economic protection
of this order and military and civil protection
may not at first sight be obvious. But a little
thought will perhaps show that they are mutually
dependent. All these forms of protection have
this one thing in common — they seek to guard
society against the depredations of the man of prey.
Economic protection or privilege is demanded
for the Guild in order to prevent the man of prey
from securing his ends by means of trickery.
Civil protection is demanded in order to prevent
the same type of man from securing his ends by
means of personal violence. Military protection
is demanded in order to secure the community
against attacks from without, which is the inevitable
consequence of the domination of an adjacent
people by men of this type. From this point of
view the differing psychology of nations is to .be
explained. The internationalist may be right in
affirming that, taken in the mass, men are very
much alike all over the world. But in practical
affairs what makes the difference is the type of
man that dominates a civilization, for the domi-

74 GUILDS AND THE SOCIAL CRISIS

nating type gives the tone to a community, and
it is that which in politics must be reckoned with.
The manifest truth of this view of the function
of the State has been obscured by two things :
firstly, by the undoubted fact that in our day
the State is very much at the mercy of the man
of prey ; and secondly, by the acceptance of re-
formers of Rousseau's doctrine of the " natural
perfection of mankind." The first may or may
not be a reason for giving the existing State an
unqualified support, since law is no longer
enacted to enable good men to live among bad,
but to enable rich men to live among poor. The
second is a more serious matter, because it tends
to confirm the man of prey in the possession of
the State by standing in the way of the only thing
that can finally dislodge him — the growth of a
true social philosophy. It has always been a
mystery to me why Rousseau's doctrine should
have found acceptance among Socialists. How
they reconcile their belief in the natural perfection
of mankind with their violent hatred of capitalists
I am entirely at a loss to understand. If the
domination of the modern world by capitalists
is not to be explained on the hypothesis that
when the State withdrew economic protection
from its citizens by suppressing the Guilds the
capitalists, by a process of natural selection, came
to dominate the lives of .the more scrupulous
members of society, then how is it to be explained ?

THE FUNCTION OF THE STATE 75

To exonerate capitalists from personal responsi-
bility by blaming the " system " is pure nonsense,
because it presupposes the existence of a social
system independent of the wills of its individual
members, and especially of capitalists who are
its dominating type. Moreover to speak of
capitalism as the capitalist system is itself a mis-
nomer, for it is not in any sense a system. On the
contrary, capitalism is a chaotic and disorderly
growth, while every effort to bring order into it
reacts to increase the prevailing confusion.
Socialists are right in hating capitalists ; they are
wrong in denying the only rational justification
for that hatred — original sin. I insist upon a
frank recognition of this fact because I do not see
how the Guilds are to be restored apart from it.
Just in the same way as the modern Parliamentary
system is the political expression of the doctrine
of the natural perfection of mankind, so the Guild
system in the Middle Ages was the political expres-
sion of the doctrine of original sin. About this
no two opinions are possible. The Mediaevalists
realized that rogues are born as well as made,
and that the only way to prevent the growth of
a cult of roguery such as oppresses the modern
world is to recognize frankly the existence of evil
tendencies in men and to legislate accordingly.
It was for this reason that they sought to suppress
profiteering in its various forms of forestalling,
regrating and adulteration ; for they realized

76 GUILDS AND THE SOCIAL CRISIS

that rogues are dangerous men, and that the only
way to control them is to suppress them at the
start by insisting that all men who set up in
business should conform to a strict code of morality
in their business dealings and daily life. Liberal-
ism, with its faith in the natural perfection of
mankind, was based upon the opposite assumption
— that the best will come to the top if men are
left free to follow their own desires. They sought
to inaugurate an industrial millennium by denying
economic protection to the workers, while they
dreamed of a day when military protection would
no longer be necessary. Both of these illusions
have been shattered by the war, but the doctrine
upon which they were built — the natural per-
fection of mankind — remains to perpetuate our
confusion. When it, too, is shattered we may
recover the theory of the State.

VI
THE CLASS WAR

THERE can be little doubt that the struggle
which will decide the form which Socialist
thought and action must finally take
will be fought between the Neo-Marxians and
Guild Socialists. For though the immediate
practical proposals of the two movements have
sufficient in common for the differences to appear
to a Collectivist as the differences between the
moderate and extreme parties into which all
movements tend to divide, yet they are finally
separated by principles which are as the poles
asunder, and Socialists must before long choose
between them. As the situation develops they
must cleave either to a purely materialist or to a
spiritual conception of the nature of the problem
which confronts us. They cannot remain in their
present indeterminate state.

Though a collision between the two movements
is inevitable, so far nothing more than skirmishes
between outposts have taken place. Yet they

77

78 GUILDS AND THE SOCIAL CRISIS

are sufficient to indicate upon what lines the
attack of the Neo-Marxians is likely to develop.
Guild Socialism, it appears, is not acceptable to
men whose central article of faith is the class war.
Though Guild Socialism has arisen in opposition
to Collectivism, and though, I believe, when it
has reached its final form, it will be found to be
farther removed from Collectivism than Neo-
Marxianism itself, nevertheless, Mr. Walton
Newbold l tells us that the Neo-Marxians firmly
and honestly believe it to be a bureaucratic varia-
tion of Collectivism intended to perpetuate the
authority of the middle class.

That the Neo-Marxians should have chosen
this line of attack is significant. It testifies to
what is uppermost in their minds. For though
in their propaganda they demand social justice
for the workers, it is manifest that class-hatred
rather than the desire for justice is the mainspring
of their actions. I hold no brief for the middle
class. It has many and grievous faults, and it
pays for them dearly in defeat, in isolation, in
lack of hold upon the modern world. So far from
seeking to save itself in the manner which the Neo-
Marxians suspect, it has not to-day sufficient
faith to believe it might be successful if it made
the attempt, and it is increasingly reconciling
itself to an idea of Marx which the Neo-Marxians

' Letters to the New Age, by J. T. Walton Newbold,
May 30 and June 27, 1918.

THE CLASS WAR T9

appear to have forgotten — that the middle class
will become merged in the proletariat. Anyway,
on no other hypothesis except pure idealism can
I explain the action of those middle-class Socialists
who have sought to advocate the Guilds. For
if they imagine they are going to save the middle
class by the promotion of a system of democratic
organization in every unit of which they would
be in a hopeless minority, then all I can say is
that they must be fools of the first order and are
entitled to the contempt with which Mr. Newbold
regards them. Further, if the Neo-Marxian con-
tention is correct they must explain why the
National Guilds League opposed the Whitley
Report, for the middle class has certainly nothing
to lose by its adoption.

Facts of this kind are not to be gainsaid. The
reason why Guild Socialists propose to include the
salariat in the Guild is a purely practical one. The
simplest way to bring the capitalist system to an
end is for the workers to take over the industries
of the country as they actually exist. This is
common sense and nothing more. Modern industry
is a very complex affair, and our daily needs require
that the various people concerned in industry
can be persuaded to co-operate together. But
if any radical change is to be brought about, and
the spirit of co-operation maintained, it can only
be on the assumption that the workers are mag-
nanimous when they are victorious. This is the

80 GUILDS AND THE SOCIAL CRISIS

way all the world's great conquerors have con-
solidated their power ; and the workers will never
be able to carry through a successful revolution
until they understand it. For magnanimity dis-
arms opposition. But to preach the class war is
to court failure in advance, for it is to seek the
establishment of power, not on a basis of mag-
nanimity, but of suspicion ; and this robs victory
of its fruits by rendering politically impracticable
those very measures which, if enacted, would
make victory permanent. In such circumstances,
the defeated become desperate, are afraid to give
in, and, seeing no hope for themselves in the new
order, they band themselves together to restore
the old. It is thus that revolution is followed by
counter-revolution and the workers are defeated.
The right method, it seems to me, is not to
preach revolution, but to preach ideas. It is
necessary to form in the mind of the people some
conception of what the new social order will be
like. When the mind of the people is saturated
with such ideas one of two things must happen.
Either the Government must acquiesce in the
popular demand, or revolution will ensue. The
former is preferable because, as the change can
then be inaugurated with cool heads, it is more
likely to be permanent. It is no argument against
this method to say that the Labour Party has
failed. Firstly, because the Labour Party is an
insignificant minority and therefore cannot

THE CLASS WAR 81

exercise power ; and, secondly, because the
Labour Party never made up its mind what it
really wanted. This latter reason makes it fairly
safe to say that if the Labour Party should get
into power at the next election it would not be
able to effect radical change. In these circum-
stances our immediate work should not be to bully
the Labour Party, which, in the nature of things,
can only reflect opinion, but so to clarify our ideas
that unanimity of opinion will make its appearance
in the Labour movement. The danger is that
the people may succeed to power before ideas are
ripe. We might then expect a succession of
violent conflicts proceeding from the attempt to
realize an unrealizable thing. This is what
happened in the French Revolution, when the
Jacobins, obsessed with the idea of a democratic
centralized government, refused to tolerate any
other organizations within the State, thus opposing
the formation of those very organizations which
render a real democracy possible. The Neo-
Marxians by repudiating State-action altogether
seem to Guild Socialists to be falling into an error
the exact opposite to that of the French Revolu-
tionists. Their society would fall to pieces for
lack of a co-ordinating power ; if the present
order were thrown over in its entirety, it would be
impossible to improvise arrangements to meet the
situation which would be created. We should be
starved at the end of a fortnight.

6

82 GUILDS AND THE SOCIAL CRISIS

If starvation has been the fate of Russia, which
is an agricultural country, and where the class
war in the main has meant only the abolition of
landlords, how much more will it be the case in
a highly industrialized State like our own which
can be maintained only by a very high degree of
co-operation, and where the middle class forms
such a large proportion of the community. If
the working class of Russia could not abolish two
per cent, of the population without precipitating
social chaos, what chance have the working class
in this country after abolishing thirty per cent. ?
On the other hand, if the advice of Guild Socialists
is followed and industries are taken over in the
first place as they exist, the complete democratiza-
tion of industry could at the most only be a matter
of a few years, for the working class would be in
a majority in every Guild.

That a scheme calculated to have such an
effect should have originated among middle-class
Socialists only appears incredible to Mr. Newbold
and his friends because they will persist in approach-
ing every question from the point of view of class.
But it is not incredible when we realize that middle-
class Socialists are often as much " fed up " with
the existing system as members of the proletariat,
though perhaps for different reasons. The mis-
understanding and consequent suspicion which
Neo-Marxians have for middle-class Socialists is
largely due to the fact that different motives

THE CLASS WAR 88

bring them into the movement. Viewing every-
thing from a purely economic point of view, the
Neo-Marxians are unable to understand that men
may be very dissatisfied with the existing state
of society though they are in fairly comfortable
circumstances. They may dislike the work they
are compelled to do, or they may be interested
in the arts, or some other subject, and finding
commercialism opposed to all they want to do,
come to hate the system. The more educated
and the more imaginative a man is the more
restless he will become under the present system,
because the more he may find himself balked and
thwarted in life. Most men love to do good work,
and they learn to despise a system which compels
them to do bad. With the typical Fabian the
motive is apt to be purely philanthropic. It is
this that has led them astray. They came to
support bureaucracy because they wanted an
instrument with which to abolish poverty ; and
in regard to anti-sweating legislation they have
proved to be right. Their mistake was to advocate
as a general principle a form of organization which
is only to be justified under very exceptional cir-
cumstances for dealing with exceptional problems.
The idea that bureaucracy is a method of organi-
zation peculiarly acceptable to the middle class
is a romantic illusion which exists entirely in the
Marxian imagination. Some years ago (ten or
more) I attended a meeting of the Fabian Society

84 GUILDS AND THE SOCIAL CRISIS

and heard Mr. Webb, while protesting against
the attitude of certain Fabians who objected to
officials, affirm that under Socialism all men
would be officials. The announcement was received
in dead silence as something altogether incredible.
It was clear even then that Fabians did not alto-
gether relish the idea of society being organized
on a bureaucratic basis. Mr. Webb got his own
way, not because the feeling of the meeting was
with him, but because his critics could not at the
time offer any alternative. The triumph of Mr.
Webb in the Socialist movement was due entirely
to the fact that he was definite and knew exactly
what he wanted ; whereas those who were opposed
to him did not, and those who supported him were
entirely unconscious of where his policy was
leading. Many evil things come about this way ;
there are more fools in the world than rogues,
and, generally speaking, we are much more likely
to get at the truth of things by assuming that
most men are fools than by assuming they are
rogues. Let us not forget that the road to hell
is often paved with good intentions. If Marxians
would think more of psychology they would not
be so full of suspicions. They would begin to
understand that man is a many-sided and complex
creature and is not to be explained entirely in
terms of economics.

.Such an understanding would revolutionize
their policy. From being exclusive they would

THE CLASS WAR 85

seek to become inclusive. Instead of espousing
a doctrine which sets every man's hand against
his neighbour, they would seek the creation of
a synthesis sufficiently wide to be capable of
welding together different types of men in the
effort to establish a new social order. Their
present policy leads nowhere. Neo-Marxians may
begin by repudiating middle-class Socialists as
men whose interests are opposed to those of the
working class. But if I am not mistaken, it will
not end there. Before long they will be required
to repudiate the parasitic proletariat as dependents
of the rich ; after which they will have to repudiate
skilled workers as members of a privileged class.
Where will working-class solidarity be then ?
Nowhere, I imagine ; for the working c] iss will
be a house divided against itself. I say it will be.
Truth to tell, it already is.

II

While the Guild movement acknowledges a
different starting-point from that of the Neo-
Marxians, it moves towards a different goal. That
goal is symbolized in the word " Guild." I
wonder how many Neo-Marxians have ever
pondered over the significance of that word,
For it is a symbol of the past — a past to which
many Guildsmen hope to return. It was not
idly chosen. The right to use it had to be fought
for. It could not have been used by the National

•86 GUILDS AND THE SOCIAL CRISIS

Guild movement had not the formulation of its
policy been preceded by a movement or agitation
which for a generation sought to remove prejudices
against an institution in the past which an ever-
increasing number of men to-day are coming to
recognize as the normal form of social organization.
This battle was fought out among our much-
despised intellectuals — by historians, craftsmen,
architects and others, who realized that the pre-
judice which had been created by interested persons
in the past against Mediaeval institutions had
become a peril to society. Leading men to look
with suspicion upon all normal social arrangements,
it tended to thwart all efforts to reconstruct society
on a democratic basis by diverting the energies
of the people into false channels. How much
of the discord and ill-feeling which prevails between
the different sections of the reform movement
had its origin in prejudice against the past it is
impossible to say ; but it is a certainty that
Collectivism as a theory of social salvation could
only have been formulated by men whose minds
had been formed on a false reading of history.
And as the gospel of the class war owes its present
popularity to the disappointment which followed
attempts to reduce Collectivism to practice, the
popular misconceptions of history are to be held
responsible for much.

That the Neo-Marxians should consider the
Guild movement to be merely a variation of

THE CLASS WAR 87

Collectivism shows how completely they mis-
understand not only the underlying purpose of
the movement, but its history too. For not only
are the principles of Collectivism and Guilds
fundamentally opposed, inasmuch as the method
of the former is control from without by the
consumer, while the method of the latter is control
from within by the producer, but Guildsmen were
accustomed to attack Collectivism long before
Marxians came to suspect it. But it was not
until Socialists were disillusionized over Collectivism
that Guildsmen could get a popular hearing. When
in February 1906 my Restoration of the Guild
System, which contained a destructive analysis of
Collectivism, appeared, it was held up to ridicule
by the Socialist and Labour Press.1 And now
at last, when the current of opinion has turned
in our favour, Mr. Ncwbold tells us that the Neo-
Marxians regard the Guild movement as a variation
of bureaucratic Collectivism. This opinion they
arrive at, not from any careful economic analysis
such as we have a right to expect from men who
profess economic infallibility, but because, knowing

1 Here is an extract from a review iu ih^ Labour Leader,
July 20, 1906 : —

" Mr. Pcnty's criticism of Socialism might have been
written by a dweller in Cloud Cuckoo-Town. As the
German evolved from the depths of his inner conscious-
ness a camel which bore as much resemblance to the
real thing as a kangaroo docs to a cow, so Mr. Penty has
evoked from the vasty deeps a chimera equally grotesque."

88 GUILDS AND THE SOCIAL CRISIS

something about psychology, which they do not,
we refuse to join them in the class war ; just as
if the only differences which could possibly divide
Socialists were differences of policy and that
differences of principle were matters of no import-
ance. Twelve years ago they wanted to rend us
because we were not Collectivists ; to-day, because
they imagine we are.

The fundamental differences of principle which
separate Guildsmen from Collectivists and Neo-
Marxians alike will become more pronounced as
the Guild scheme unfolds. The New Age has
said that National Guilds " is rather the first than
the last word in national industrial organization."
It is in this light that the present proposals of the
movement should be regarded. If a fuller pro-
gramme has not hitherto been put forward it is
not because Guildsmen will be satisfied with the
present minimum, but because a general agree-
ment has not yet been reached with respect to
the more ultimate issues. Guildsmen have been
forewarned by the fate of Collectivists from advanc-
ing a wide and comprehensive programme which
has not been properly thought out, since only
disaster can follow such a course. All the same,
some unanimity of opinion is coming into existence
in regard to wider issues, and as, generally speaking,
it is in the direction I should like to see things
go, I will venture my opinion for what it is worth
as to our ultimate destination.

THE CLASS WAR 80

As I interpret the Guild movement, it is the
first sign of a change in thought which will seek to
solve the social problem, not by a further develop-
ment along present lines, which can only lead us
to fresh disasters, but by effecting a return to the
civilization of the Middle Ages. I do not mean
by this that we shall in the future recover every
feature of that era or that many things which
exist to-day will not be retained in the future.
I mean that in the first place we shall resume in
general terms the Mediaeval point of view and that
this will involve a return to Mediaeval ideas of
organization. My reasons for believing this are
that I think we are moving into an economic
cul-de-sac from which the only escape is backwards ;
and that if the interests of life are to take prece-
dence of the interests of capital we are inevitably
driven into a position which approximates to that
of the Mediaeval economists. The whole trend
of ecbnomic development from Renaissance times
onward, which has led to the enthronement of
capitalism, has been to reverse the Mediaeval
order.

In believing thus that capitalism will reach a
climax in its development beyond which it can
proceed no farther, I am at one with Marx in his
interpretation of the evolution of capitalism. It
seems to me that Marx predicted very accurately
the trend of capitalist development. He foresaw
that industry would tend to get into fewer and

90 GUILDS AND THE SOCIAL CRISIS

fewer hands, but it cannot be claimed that the
deductions he made from this forecast are proving
to be correct, for he did not foresee this war.1
Not having foreseen this war, Marx did not
foresee the anti-climax in which the present
system seems destined to end. And this is fatal
to his whole social theory, because it brings
into the light of day a weakness which runs
through all that he says — his inability to
understand the psychological factor, and hence
to make allowances for it in his calculations.
Marx saw the material forces at work in society
up to a certain point very clearly and from this
point of view he is worthy of study. But he never
understood that this was only one half of the
problem and finally the less important half. Al-
though Marx clearly foresaw the trend of economic
development, he did not see that it had been
accompanied by a loss of spirituality, and that
simultaneously with the concentration of attention
upon material things, religion and art had lost
their hold over men. From this historical con-
sideration it may be affirmed that the spirit of
avarice grows in inverse ratio to the interest and
activity in religion and art. And as both of these

1 The circumstance that Marx gave it as his opinion
that the annexation of Alsace and Lorraine by Germany
would lead at a later date to a European war does not
acquit him, for the war he had in mind was a war of
revenge, not an economic war, which this one certainly is.

THE CLASS WAR 91

activities were undermined by the changed outlook
towards life and the forces set in motion by the
Renaissance, the spirit of avarice became triumphant.
In the same way that an epidemic to which healthy
people are immune tends to spread rapidly among
people of a low physical vitality, so avarice claims
its victims among people to-day because, owing
to the separation of religion and art from life, the
mass of the people live in a state of low spiritual
vitality.

An understanding of what I may call " the
spiritual interpretation of history " will bring us
nearer to an understanding of the Guild movement.
It has been well described as a religion, an art
and a philosophy, with economic feet. That is
really what it is. For its aim is nothing less than
to restore that unity to life which the Renaissance
destroyed. Recognizing that every social system
is but the reflection of certain ways of thinking
—certain ideas of life — it seeks to change society
by changing the substance of thought and life.
But, unlike other movements which have aimed
at spiritual regeneration, it deems it advisable to
begin at the economic end of the problem in the
belief that it is only by and through attacking
material and concrete evils that a spiritual awaken-
ing is possible. For to quote the words of Mr. de
Maeztu l " men cannot unite immediately among

1 Authority, Liberty, and Function, by Ramiro de Maeztu
(George Allen & Unwin, 45. 6d.).

92 GUILDS AND THE SOCIAL CRISIS

one another ; they unite in things, in common
values, in the pursuit of common ends."

We can agree with the Neo-Marxians in recog-
nizing that under the existing economic system
the interests of capital and labour are irreconcilably
opposed, and that no compromise is possible.
Where we differ from them is in respect of issues
about which we are not prepared to compromise.
They envisage the problem primarily in the terms
of persons and as a warfare between the classes.
We, on the contrary, see this conflict of interests
as the inevitable accompaniment of a materialist
ideal of life which rejects religion and art with their
sweetening and humanizing influence. Tracing
the existence of the problem to a different origin,
we naturally seek for it a different solution. We
meet the Marxian affirmation that the problem
is material by affirming that it is both spiritual
and material. And we part company by reminding
them that " man does not live by bread alone."

Finally, I would plead for a more generous
attitude of mind among the various sections of
the Socialist movement. If the existing economic
s}7stem based upon competition is to be replaced
by one based upon co-operation, the communal
spirit must be substituted for the present indi-
vidualist one. But the no-compromise policy of
the Neo-Marxians tends to postpone the arrival
of that spirit indefinitely by sowing the seeds of
discord and suspicion everywhere. All move-

THE CXASS WAR 93

ments rest upon trust and confidence, and these
are impossible apart from a certain charity of
spirit which will make some allowance for human
weakness and mistaken judgments. For all men
at times are apt to err. Would it not be wiser,
therefore, instead of always accusing others of
interested motives, to try first to understand them
—to see whether difficulties are not to be explained
on other grounds ? If Neo-Marxians refuse such
counsel and still maintain that their suspicions
are justified and that only self-interests prevail,
then in the name of logic I do not see how even
they can claim to be an exception to this rule.
What guarantee have we that they, like others, are
not on the make ? How are we to know that they
are not seeking the support of the working classes
for their own selfish ends ? I do not say that this
is so. What I do say is that it is the logical deduc-
tion from their position. And it is a deduction
from the consequences of which they may not
be able finally to escape. For if, by some chance,
power should pass into their hands, they will be
expected to live up to their promises. When
they are in difficult circumstances, as all men
in power find themselves at times, and have to
choose between two evils, they must not be sur-
prised if those whom they have had no option
but to disappoint apply the same standards to
themselves. It will be no use for them to
plead extenuating circumstances, for extenuating

94 GUILDS AND THE SOCIAL CRISIS

circumstances are no part of the Neo-Marxian phil-
osophy. And they must not expect more generosity
from their supporters than they have extended to
others. Out of fear of them they will be driven
from one act of desperation to another, until finally
they bring into existence a circle of enemies suffi-
ciently strong to encompass their downfall. And
their enemies will show them no mercy. Such
was the fate of the uncompromising Jacobins
of the French Revolution, and if I am not mistaken
it will be the fate of Lenin and Trotsky to-morrow.
It is the fate of all political extremists who seek
to establish power on a basis of suspicion.

Ill

Though the criticisms which Mr. Newbold has
made against middle-class Socialists can be easily
refuted, it is possible they have not been finally
disposed of, inasmuch as the differences are much
more fundamental than a mere misunderstanding.
As always happens in respect of issues of a funda-
mental nature, people find it extremely difficult
to say exactly what they mean, and it may be
that the Neo-Marxians in their relations with
the middle-class Socialists feel an instinctive
antipathy which so far they have been unable to
define.

Whatever may be the explanation of the anti-
pathy shown by Mr. Newbold, I can scarcely think

THE CLASS WAR 95

he really means what he says when he questions
the right of middle-class Socialists to take part
in Labour activities ; for on that basis not only
would he, as a middle-class person, be excluded,
but it may be said that nearly all Socialist literature
has been written and all the pioneer work has been
done by middle-class persons, so that but for their
assistance the Socialist movement would never
have come into existence. I conclude, therefore,
that he must mean something else.

It has been suggested that the secret of the
trouble may be that Labour has " come of age,"
and in consequence the advice of middle-class
Socialists is resented much in the same way that
a son is apt to resent the advice of a father who
fails to realize that his son has grown up. The
father's advice may be right, but it is necessary
for the son to act on his own initiative in order
that he may feel his feet in the world.

Though this is an explanation of the estrange-
ment, it does not satisfy me. I can scarcely think
that the Labour movement is so shortsighted as
to resent advice given by those outside of its class
if it found such advice really helpful. The trouble
is, I think, that until quite recently, when the
Guild propaganda began to make headway, the
intellectual leadership of the Socialist movement
was entirely in the hands of the Fabians, and I
fear they have queered the pitch for us. For their
sympathies were not really democratic. It was

96 GUILDS AND THE SOCIAL CRISIS

poverty rather than wage-slavery they were
anxious to abolish, and so, instead of seeking to
interpret the subconscious instincts of the workers
and to direct them into their proper channels,
they sought to impose an economic system upon
them which left human nature entirely out of
account. As might have been expected, human
nature has rebelled. The workers, having thrown
over Collectivism, are trying to grope their way
towards a solution of their problems. Left to
their own resources, the workers have undoubtedly
seized upon an important truth — that any solution
of the economic problem must come as the result
of a struggle — a truth that Guildsmen alone among
intellectuals have recognized. Meanwhile, the
repudiation by Labour of its leaders is not to be
interpreted as a denial of the necessity for leader-
ship, but rather as a protest against leaders who
cannot lead, because their eyes are turned in the
wrong direction.

Looking at the situation from this point of
view, our immediate need is to ^define our position
in regard to industrialism in terms that admit
of no ambiguity. As a means towards this end
it is imperative that we should in the first place
not only look round and take stock of the situation
which is developing, but anticipate within certain
limits the situation which will have to be faced
after the war. In this connection everything
points to the coming of a great struggle between

THE CLASS WAR 97

Capital and Labour. At the moment Labour has
Capital at a disadvantage. But after the war
Capital intends to get even again. According to
all reports capitalists are everywhere sharpening
their knives, determined, if they must die, that
they will die fighting. Though I doubt not that
in the long run Labour will be triumphant, I am
by no means sure that victory will follow the first
encounter — unless the Army makes common
cause with Labour when it returns from France,
which is not at all unlikely when we consider
the bitter resentment which has been caused
by the utterly inadequate pay and separation
allowances. But in any case the outlook is not
immediately very promising whichever side wins.
If Capital is victorious we shall- be committed to
tin industrial policy .which can only eventuate
in further wars ; for a state of things in which war
is an ever-present contingency must be the inevit-
able consequence of the insane policy of for ever
seeking to effect an increase in the volume of pro-
duction, remembering that markets were already
filled to overflowing before the war. On the other
hand, if Labour wins, the immediate prospects
are no more reassuring. There is a danger that in
such an event we may pass through all the phases
common to social revolutions ere sanity will prevail.
I say there is this danger. I do not, however,
think it is inevitable. Whether or no we pass
through all these phases depends upon the extent

7

98 GUILDS AND THE SOCIAL CRISIS

to which we can intelligently anticipate possible
happenings in the future and can guard ourselves
against pitfalls. This task should not be impossible,
considering that we have the experiences of the
Russian Revolution to draw upon. In our antici-
pated revolution, as in the Russian, the moderate
party will come first. For we may be assured
that whenever the Labour Party arrives with a
majority in the House of Commons it will be com-
posed of moderate men. It is the very moderation
of the Labour Party that will be its undoing, for
it will be unable to act decisively in any direction.
This is easily understood when we remember
that its members are held together by no common
bond of principle. It is only necessary to read
the reports of the Labour conferences to realize
that the Labour Party does not know where it
stands. Though Collectivism as a social theory
is entirely discredited, the Labour Party is still
vaguely Collectivist in one direction, while in
the other its members are simple trade unionists
with no general social theory — vaguely Liberal
if they are anything at all.

Naturally it will be impossible for such a hetero-
geneous body to act with any unanimity and
decision. It will be the old story over again.
Just as after 1906, when the workers were dis-
appointed with the doings of the Labour Party,
they turned against it in violent disgust and
inaugurated an internecine warfare which con-

THE CLASS WAR 99

tinned almost until the outbreak of war, so it
may be expected that a similar disgust will follow
the establishment of a Labour Government. For
it will dilly-dally with things, and all its actions
will be feeble. Then the great crisis will arrive,
and our future history will depend entirely on
the way it is met. Once confidence is destroyed
in moderate men, there is a danger of things rushing
to the opposite extreme. The Neo-Marxians (our
Bolsheviks) will get their chance. They will
point to the impotence of the Labour Party,
accuse its leaders of lack of courage and a desire
to make terms with the enemy and conspire to
seize power and inaugurate the class war. If
they succeed we shall go the way Russia has gone
— to anarchy. But there is no reason why they
should succeed. It will be our fault if they do.
The situation could be steadied by a vigorous
propaganda which would change the basis of the
struggle from a warfare about persons to a warfare
about ideas or things. Let me explain.

It is apparent, when we think about it, that the
anticipated failure of a Labour Government could
be accounted for in one of two ways. It could be
ascribed to the corruption and moral cowardice of
its members, or it could be attributed to lack of
ideas — the absence of a social theory adequate
to the situation which confronted them. The
Neo-Marxians, envisaging the problem primarily
in the terms of persons as a warfare between classes,

100 GUILDS AND THE SOCIAL CRISIS

would doubtless seize upon the personal aspect
of the failure. Guildsmen, I hope, would be more
generous in their criticisms. They should not
accuse the Labour men of being knaves when they
are transparently as innocent as fools. For who
but fools would imagine it possible to find a solution
to a political and economic problem the like of
which has never been seen in history merely by
means of a parliamentary majority united not
by the possession of common principles but only
in common aspirations ? Who but fools could
imagine that a majority so constituted could stand
for one moment the shock of actuality ? Realizing
that the failure of a Labour Government may
safely be predicted from its entire absence of
social principles, Guildsmen should take every
opportunity of driving this point home, insisting
that goodwill is no substitute for ideas. They
should, moreover, be careful to point out that
Neo-Marxians differ from the Labour Party only
to the extent of substituting ill will for good will
inasmuch as the Labour Party and the Neo-
Marxians have alike occupied their minds entirely
with the problem of how power may be won to
the utter neglect of the problem how it may be
retained and used.

Not only are the Neo-Marxians without any
social theory in the sense that they have never
applied themselves to the task of elaborating the
principles upon which a democratic and communal

THE CLASS WAR 101

society must rest, but they appear to be unaware
that one is necessary. All they see is that power
to-day is in the hands of capitalists, and they
want to see it transferred into those of the workers.
That is very good so far as it goes. But it is
insufficient for the purpose of reconstructing
society, which they would be called upon to do
if ever they succeeded to power ; because if
industry suddenly changed hands and the salariat
were banished, as they propose, everything would
not go on sweetly as before. The centre of gravity
of industry would have completely changed. This
change would introduce a host of problems that
would demand immediate solution. It is vain
to suppose that without clearly defined principles
to guide them men unaccustomed to power would
prove equal to the task. They would be like
amateurs in possession of a powerful and unfamiliar
weapon which, mishandled, would be much more
likely .to destroy them than the enemy.

As herculean a task as the solution of the econo-
mic problem is for any Government, its difficulties
will be increased a thousandfold for the Neo-
Marxians if ever they get into power ; for their
class-war policy carried into execution will com-
plicate the economic problem by a psychological
one of equal magnitude which, like the Bolsheviks,
they will have no idea how to meet except by force.
Now force in the hands of materialists always
produces the very opposite effect to that which is

102 GUILDS AND THE SOCIAL CRISIS

intended, for materialists never understand psy-
chology. But I fear it is useless to reason with
Neo-Marxians about such things. They will never
know anything about these problems until they
are up against them, when they will be the most
siirprised people in the world.

Recognizing, then, the danger which would follow
the success of the Neo-Marxians in such a crisis,
Guildsmen should, by an intelligent anticipation
of events, take measures to protect their flank.
They should inaugurate a vigorous propaganda
against the impossibilism of the Neo-Marxians.
If in such an effort they are to succeed, it is essential
before all things that the good faith of the Neo-
Marxians be taken for granted, and that Guildsmen
should seek to discredit them by carrying Neo-
Marxian ideas to their logical conclusion, showing
how their excess of zeal must defeat their own
ends by provoking reaction, since the mass of the
people will become so weary of the anarchy which
must follow the inauguration of the class war,
that they will come to welcome a return of the old
regime merely for the sake of peace and quietness.
It should not be difficult to drive these truths
home considering that both the Russian and the
French Revolutions provide abundant illustrations
of how class warfare fails to achieve its ends.

Further, Guildsmen must show the Neo-Marxians
that their ideas are not only subversive of others
but of themselves. Neo-Marxians are very fond

THE CLASS WAR 103

of insisting " that the method prevailing in any
society of producing the material livelihood deter-
mines the social, political and intellectual life
of men in general," but it never apparently occurs
to them to make the deduction that in that case
they and their gospel also become a part of the
disease of society — a deduction which is not only
evidenced by the fact that the Neo-Marxian gospel
finds its warmest supports in those districts where
industrialism is most highly developed, but that
Neo-Marxians are so much a part of the system
as to be incapable of imagining any other. They
do not propose to change the system, but only
its ownership.

From this point of view, it could easily be shown
that in comparison with Guildsmen the Neo-
Marxians are merely Conservatives ; for Guildsmen
have not only questioned industrialism, they have
some idea of what to put in its place. They realize
that as its retention must involve society in suc-
cessive wars they must destroy it, or it will destroy
them. It is the clear recognition of this fact
that inclines an ever increasing number of Guilds-
men to look back to the Middle Ages for inspiration
and guidance. They do this not as romanticists
but in soberness and truth.

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