Socialism and the Welfare State

The following article is a condensed version of a pamphlet entitled Is This Socialism? recently published in England and written by G. D. H. Cole. Though clearly intended as part of the discussion preceding the Labor Party conference this fall, the pamphlet raises many questions of larger scope and interest, including a number that have been discussed in previous issues of DISSENT. Since Mr. Cole focuses exclusively on domestic policy, some sections of the pamphlet involve problems local to English politics; but most of those which are of general interest appear below. We are grateful to Mr. Cole and his publisher, The New Statesman and Nation, for permission to reprint.

A socialist, we used to be told, is “one who has yearnings for the equal division of unequal earnings.” This description neatly slurred over the fact that the inequalities the socialists were most intent on getting rid of did not arise out of earnings at all, but out of the possession of claims to income based on ownership and, above all, on inherited wealth. Socialists saw the gross inequalities of income as proceeding much more from the “rights of property” than from differential rewards in return for unequal services. Most of them did, no doubt, hold that the large disparities of earned incomes were due to a considerable extent to the existence of large unearned incomes, and that, if the latter were eliminated, it would become much easier to narrow differences in earned incomes. They denied the contention of many orthodox economists that differences in earned incomes corresponded to real differences in the value of services rendered, and were dictated by inexorable economic laws. They held, as against this view, that the high salaries and fees paid to professional and managerial workers were in part a reflection of the social inequality inherent in a social system which accepted unearned incomes based on property as legitimate and as carrying high prestige, and were in part due to the near-monopoly of higher education by the children of the well-to-do. They wished to diminish the inequalities of earned as well as of unearned income; but their main attack was concentrated on the inequality due to ownership. On that ground, in the main, they demanded the socialization of the means of production, distribution and exchange, and the elimination of the toll levied by individuals on the social product on the score of ownership.

In practice, however, Socialists—as exemplified by the Labor Government of 1945—have attacked inequalities of income much more than inequalities of property, and earned incomes almost, though not quite, as much as unearned. True, they have nationalized a number of industries and services; but they have compensated the owners, if not with generosity, at any rate so as to leave them with their claims to income broadly intact. As against this, they have taken over a structure of tax...