Roscher on socialism
With Roscher, in contrast to Marx, it is liberalism and not socialism that is ‘produced’ by ‘capitalist’ development (or, more exactly, it is a slightly mixed economy). For the process of industrial concentration remains partial and, owing to the development of professional industrial managers, the middle class is increased and not diminished by ‘capitalist’ development.
Furthermore, socialism as such is devastatingly criticized by Roscher (from 1854 onwards) in a large section of his ‘theory’ text in one of the most breath- takingly prescient forecasts ever written in economic literature.The only comparable (in length and time of publication) treatment of socialism is the somewhat earlier one of John Stuart Mill in his Principles (1848). But while both Mill and, later, Marx consider property relationships in the narrow legal sense as essential to the understanding of socialism, Roscher thinks of property rights in the much wider modern sense, including the whole incentive structure as well as determinate responsibilities and the remunerations corresponding to them, as the keys to understanding socialism. While both Mill and Marx are naively convinced of the selflessness of socialist man, Roscher, in spite of his frequent statements that one ought to consider the communitarian spirit of man just as much as his egoism, uses only the notion of the self-centred average man so typical of Adam Smith. Finally, while Mill treats socialism as merely a form of distribution, Roscher analyses it in the production part of his book: property arrangements are to be considered akin to a factor of production in a wider sense.
Roscher starts out with an argument in political theory: as communists are only interested in economic organization, they are basically indifferent between kinds of political organization as long as they serve their aim of economic revolution.
In general, however, they will opt, if possible, for relentless despotism, because that will serve their aims best. He then asks whether community of property, once it is established (and without considering the ‘terrible revolution destroying all culture’ of its establishment), will be viable. Yes, he says, among either ‘animals or angels’, but also among human beings bound by true love. After all, every ‘exemplary’ family is a kind of community of property. In larger societies, however, such love is to be found only in the case of the ‘highest religious enthusiasm’ (he refers to the Acts of the Apostles), which enthusiasm seldom lasts long. Roscher explicitly states the free-rider argument: in general, every member of a community of property will try to work as little and to enjoy as much as possible; among 100 000 members, his own inactivity only concerns him to the amount of one in 100 000, which is ‘as much as not at all!’. Perceptively, he adds that all self-interest will therefore be channelled into fights over distribution. Thus, under socialism, everyone will always harm the common good, while under the present economic system he does so ‘only under exceptional circumstances’.Roscher explains that because of this most theoreticians of a community of property add the idea of ‘central planning of production and consumption either by an existing public authority or one newly to be established’. But this would imply ‘a despotism which as yet has scarce ever had its equal in the world: a Caesaropapism which would also usurp the role of the private householder’. (Roscher, the concerned Protestant, identifies socialism with a kind of religion which demands the whole man and therefore leaves no space for religious freedom.) But even such an economic dictatorship will not assure ‘active labour and thrift’ because there are no incentives to motivate supervisors. ‘At best, supervision will be lax’, the term ‘at best’ implying that, most likely, the supervisors will be corrupt and bribable.
He then argues that political freedom is historically closely linked to free modes of production. And what would be gained by socialism? The economic equality, once established, will not last long: ‘in spite of all laws’, human diversity both in abilities and preferences will soon re-establish inequality of wealth. Therefore, in the course of economic development, all forms of communal property have been progressively shed. Basically, then, socialism is an attempt to return to economic primitivism. The proximity of Roscher’s argument to Friedrich von Hayek’s Road to Serfdom is evident. Roscher, who always sees countervailing forces as well, ends on another note, however. There is also another ‘no less important tendency’: in the course of economic development the demand for public goods also increases, and private property owners cause an increasing amount of external effects on others. Therefore the ‘realm of public responsibilities’ is also extended. Roscher sees no essential conflict between increasing property rights and at the same time an increasing provision of public goods and increasing controls in the interest of other private individuals. Typically of German nineteenth-century tradition and of Rau’s subtle reinterpretation of Adam Smith, the government of a liberal state to Roscher is also a strong government.
Roscher’s analysis of socialism can be seen as an essay on the futility of legal establishments not supported by economic development. He repeats this theme again and again.