school become militant. 7 In So far as the Verein had a common programme, it consisted of a rejection of the individualistic doctrines of Manchester and a reliance upon the state as the guardian of the national welfare. With minor exceptions, all the members of the Verein were nationalists, monarchists, and protectionists. From about 1890 until his death in 1917, the dominating influence in the Verein was Gustav Schmoller, whose social-politics may be described as 'reformist' state socialism and much of whose analysis resembled that of Karl Marx. 8
Like Marx, Schmoller -- writing in his famous Grundriss, which Ashley regarded highly 9 -- did not doubt the existence of 'contradictory' class interests and acknowledged the inevitability of class conflicts. Furthermore, again like Marx, Schmoller believed that legal institutions had been designed by the 'higher economic classes' to favour themselves. Such circumstances led to 'class abuse' and 'class dominance,' which Schmoller judged as 'degeneration' since it was 'a part of the essential idea of the sovereign power that it is to be used in the interest of the whole society, not in the special interest of a class.' Class dominance led to revolution and it was therefore in the interest of every state to protect the weaker classes. Class abuse could be reduced by a bureaucracy of high standards, standing above the class struggle, and by a vigilant, informed public opinion. To limit class abuse, to wean the working man away from the influence of the revolutionary demagogue and to educate him in the ways of practicable reform, Schmoller and the moderate members of the Verein called for state action to protect trade unions, to promote factory legislation, to encourage collective bargaining and arbitration, and to enact such social reforms as national insurance. The Verein has been
credited with having helped to formulate Bismarck's insurance scheme of the 'eighties.
The similarities of interpretation between the historical school and the Marxists were striking, and the KathederSozialisten, 'Socialists of the Chair,' as the members of the Verein were called, took great pains to differentiate themselves by denouncing both Marx's theory of surplus value (the theory of the exploitation of labour which was so crucial in giving to Marxism its revolutionary character) and working-class internationalism. Yet certain likenesses persisted: Schmoller even agreed with Marx as to the inevitability of socialism, though he saw its triumph as a consequence of an alliance between socialism and the German 'bureaucratic and military monarchy,' rather than by revolutionary action of an international proletariat. Schmoller was no defender of capitalism but saw it as a stage in historical development. The programme of the Verein was designed to insure that the following stage would be the outgrowth of peaceful evolution, rather than risk the dangers of foreign domination or military dictatorship which were inherent in revolution. Revolution Schmoller regarded as 'always the most precarious of all games of chance.' 10
A declaration of 'economic faith' recorded in a letter which Ashley wrote to his fiancée sometime between 1886 and 1888 corresponded substantially with the opinions of Schmoller and the Verein. The form which Ashley employed to describe his faith was itself significant: he constructed a list of those points of Marxist doctrine with which he agreed and those with which he disagreed. Ashley first described his differences with the socialists. (a) He believed that the theory of surplus value was false. (b) 'What they expect in ten years, I think possible in 100.' (c) He wished to emphasize the vices of all classes, not only those of the capitalists. (d) 'What they regard as obstacles to immediate carrying out of socialist changes, I look on as educating influences toward a socialization. . . far in
the future; such as factory legislation, trade unions, cooperation, wisely administered poor-law, sanitary aid, etc.' He believed revolutions 'for the present and for the next fifty years probably' were 'useless and therefore criminal.'
Ashley agreed with some of the contentions of the Marxists. (a) He thought their analysis of factory industry correct, believing it the same as that of Ricardo and Cairns: 'these argued that, given certain conditions, certain results such as the aggregation of capital, the destruction of smaller employers, the lowering of wages down to the standard of subsistence would follow.' For factory industry, these conditions -- 'complete freedom of competition, superfluity of labourers, etc.' -- are 'being progressively realized, and consequently the results are being created.' (b) He believed that the formation of 'great companies' accompanied by 'the increased importance of the managing director' and the clearer distinction between that part of profit due to skill, and that due to the mere possession of capital pointed toward 'ultimate socialization.' (c) He saw in the changing role of the state, as evidenced in the factory acts, employer's liability laws, and the parcel post, a 'clear tendency toward socialization.' In matters of practical policy, Ashley wished to organize government works on the basis of a fair rather than a competitive wage and to extend state ownership to railways, waterworks, and gasworks, as well as to increase municipal property in land and houses. 11
In another letter during this period, Ashley wrote with less hesitancy about the coming of socialism. He did not judge it as just 'possible,' he declared that the social organization of production and exchange was 'as certain as the rising of tomorrow's sun.' At this time, he called himself an 'evolutionary socialist,' and, in private conversation, retained this description of his views throughout his lifetime. 12 In later years, he told friends that his only choice had been to 'join the Conservatives and push them forward or join the Labour Party and hold them back.' 13 A proper dilemma for a Katheder-Sozialist, and properly resolved by joining the Conservatives.
In one crucial respect, Ashley's early declaration of 'eco-
nomic faith' did not conform to the Katheder-Sozialist pattern. The Katheder-Sozialist, while admitting the existence of class conflict, desired to have that conflict rendered harmless by such unifying forces as common heredity, language, morality, and religion; the German economists were 'national' socialists. Ashley's upbringing was Liberal; his father, a journeyman hatter of modest means, was a slice of nineteenth-century non-conformity -- a Baptist, a teetotaller, and a Free Trader. Ashley's background probably left him immune to the rash of nationalism which had infected so many of his associates; we know that he was one of the few Liberal Fellows at Oxford who did not shift party allegiance as a result of the Home Rule controversy. 14 Ashley's stay in North America, however, transformed the cosmopolitan Free Trader into a nationalist and protectionist and thereby a Liberal into a Conservative and Unionist. It was in the United States that Ashley abandoned his father's sect in favour of Episcopalianism, the American branch of the national church which, upon his return to England, he attended faithfully until death. He lived in the United States of the McKinley and Dingley tariffs and in a Canada in which reciprocity with the United States was the key political issue. When Chamberlain announced his programme of imperial preference in 1903, Ashley came actively to his support fearing, as he told J. H. Clapham, that 'were nothing done,' first 'the economic and then the probable political absorption of Canada by the United States was highly probable.' 15 While never an expansionist, he became a patriot and an imperialist. He asserted that the attitude which judged 'the nation as an indispensable instrument for the ultimate well-being of humanity' was 'consistent with a noble idealism,' 16 and he regarded the British Empire as 'the mightiest of instruments for good' and the 'fairest hope of humanity.' 17
The greater part of the Unionist party was soon converted to Chamberlain's Disraelian -- and Bismarckian -- programme of
protection, imperialism and social reform. The Liberal party and the organized labour movement swung into the defence of Free Trade. So, too, did the leading lights of British political economy, Alfred Marshall among them, who signed a petition denouncing the Chamberlain programme as 'detrimental to the material prosperity of this country.' 18 A few days later H. S. Foxwell wrote a letter to The Times noting that 'with scarcely an exception, the historical group of English economists declined to sign the manifesto.' 'The fact,' he continued, 'I venture to think, goes far to justify the position they hold as to the importance of historical study in economics.' 19 Shortly afterward, one by one, the leading British economic historians announced their adherence to Tariff Reform and lent their active assistance to Chamberlain's campaign. The arguments of the economic historians were not widely different from those of the sensationalist tariff press but they gave the tariff cause the kind of intellectual respectability which Free Trade derived from orthodox political economy. The economic historians did, however, defend the Chamberlain programme from different standpoints. Hewins' position, for example, was that of the iron and steel industrialists with whom he associated upon the new Tariff Commission: he was a fairly conventional industrial protectionist. 20 For Mackinder, the founder of geopolitics, the 'key' was power: he saw British predominance threatened by Germany and felt that Tariff Reform would protect Britain's industrial strength and preserve the vitality of her working classes, i.e. her 'man-power.' 21 Cunningham hewed faithfully to the Unionist party line in his polemics, but, beneath the rhetoric, he rested his position on the more solid base of conservatism's traditional conception of organic, national community, a view built upon Tudor and Stuart paternalism and mercantilism. 22
Ashley's summing-up of the economics of protectionism was certainly acceptable to the Tariff Reformers -- he was widely regarded as 'the leading academic defender' of the Chamberlain programme and as 'close' to Chamberlain 23 -- but his more individual views, especially those on the 'social' side, were so eccentric that they had to be ignored. 24 They did not fit into the type of campaign the Unionist party was fighting. For instance, his view that the industrial supporters of Chamberlain were acting from motives of self-interest and that it was necessary for the working class to safeguard the tariff from selfish abuse was most unusual. It was the Liberals who spoke of the 'selfish interests' of the manufacturers and the Tariff Reformers who responded by citing the national interest, imperial idealism, and the broadening of employment. Ashley, in equally unorthodox fashion, admitted that Tariff Reform 'may open the door to forms of protection that are unnecessary and undesirable,' and added that 'only a grave sense of the needs of the nation and empire could induce any of us to be ready to face the risk.' 25 Ashley discussed the attitude of the German historical school toward the German tariff:
'They have no illusions which blind them to the selfishness of the class interests involved -- whether of the great industrialists or of the agrarians; they realize the dangers, but feel that they have to be faced; that for a State to shirk a duty because it is difficult and can only be imperfectly performed, would be to abdicate its essential function.' 26
The British working class must therefore give the tariff a 'discriminating support' or it would be responsible if self-seeking protectionists set policy. 27 Selfishness would be minimized by
'the pressure of competent and well-informed criticism of particular measures.' 28
On questions of trade unionism and Tariff Reform, Ashley's views were in striking contrast to those of his colleagues in economic history and in the Unionist party. 29 On this matter, too, he was in agreement with the Verein. Gustav Schmoller had, we have seen, described the functions of the trade unions as most necessary ones. Many members of the Verein -- Brentano is a noteworthy example -- devoted themselves to the history of trade unionism. 30 From his earliest years, Ashley regarded the unions in this sympathetic light and displayed the greatest interest in their problems; unions were 'the only means' of 'remedying social inequalities.' 31 At Harvard during the violent Homestead Steel Strike of 1892 and the Pullman Strike of 1894, Ashley became seriously disturbed lest such armed clashes between capital and labour be reproduced in England. He became a leading advocate of unionism both in Canada and in the United States. 32 While at Harvard, he joined the Church Social Union (Episcopal) and, as chairman of its publications committee, prepared a pamphlet on the Pullman Strike which defended the right of the workers to strike in the absence of a system of arbitration. 33
Ashley urged those who were concerned about the future of trade unionism to consider international trade conditions. German and American steel exports were limiting the profits of British steel manufacturers, he argued, and British producers were already beginning to imitate the anti-trade union activities of their competitors. As international trade rivalry became more and more severe, employers 'will demand, and
will have a right to get, a freer hand' in order to compete more effectively. If the working class wished to maintain trade unions, Ashley warned, working men had better support Tariff Reform. 34
If the Tariff Reform programme were not adopted, British manufacturers in their frantic search for markets would, Ashley proclaimed, drive the country to war. British cotton manufacturers had waged war in 1839 in order to maintain their China trade and were capable of doing so again. If the British working man was interested in preserving the peace, the Birmingham economist once again warned, and it was to his interest to do so since the working man would do the actual fighting in event of war, he had better support Tariff Reform. 35
Social reform, too, would accompany the success of the tariff programme, Ashley asserted. This was not an unusual argument; one of Chamberlain's early pronouncements had promised old-age pensions derived from tariff revenues. Ashley's point was different; he did not see social reform as dependent upon the expansion of revenues. German national insurance was 'hardly less than a social revolution,' he argued, and Bismarck had only been able to weaken the opposition of German industrialists to insurance by simultaneously offering them a protective tariff. A system of national insurance was possible only 'with the acquiescence and co-operation of the employers' and that acquiescence 'can only be obtained when British employers feel that they can carry on their operations with a reasonable degree of commercial security.' Social reform and a tariff were not only not inconsistent, Ashley maintained, but, as the German example had demonstrated, the former was dependent upon the latter. 'This is a great comfort to those of us who are Social Reformers first and Imperialists afterwards,' Ashley continued, 'those of us who, in the present crisis of our national fortunes, are such ardent Imperialists that we are ready to risk even the real dangers of tariffs, and to do this just because we are Social Reformers.' 36
In these arguments to the working class, Ashley had, perhaps unawares, painted his portrait of contemporary capitalism. It was an odd picture for a Conservative: selfish industrialists seeking to pervert national policy to their advantage; a hard-pressed British capitalism, backed into a corner by its rivals, which would not hesitate to smash trade unionism and even to make war in order to better its competitive position; a capitalism willing to share some of the 'spoils' of imperial success, in the form of national insurance, in exchange for the working man's support of protection. It was a portrait of capitalism that might have been painted by a Marxist critic indeed Luxemburg and Hilferding saw capitalism, in its 'last stage of imperialism,' in much this light. 37 If we turn back to Ashley's early declaration of 'economic faith,' we recall his agreement with Marxist analysis of factory industry. He stated then that under conditions of complete freedom of competition -- in this instance, the freedom of German and American industrialists to compete with British industry -- and of a 'superfluity of labourers,' and so on, certain results -- 'the aggregation of capital, the destruction of smaller employers, the lowering of wages down to the standard of subsistence would follow.' Unlike the Marxists, and in the pattern of the KathederSozialisten, he advised not revolution, but class compromise and the blocking of foreign competition by tariffs and preference.
Ashley gave much consideration to the growth of industrial combinations while at Harvard. Pre-war England had been less affected by the trust movement than either Germany or the United States, and English Liberal economists associated her comparative freedom from trusts with Free Trade, warning that the adoption of Tariff Reform would end this immunity. Defenders of the tariff appeared to agree with this view and preferred not to deal with this charge. Ashley attacked the problem boldly; for him, as for the Marxists, trusts were no 'merely temporary' phenomenon, not simply a consequence of protection, they were an inevitable part of capitalist develop-
ment. He saw gigantic trusts looming in England's industrial future whether or not protection were adopted. Competition led to crises and unemployment; crises, for Ashley as for the Marxists, were produced 'automatically, by the "normal" working of the competitive system.' At the present stage of capitalist development, Ashley wrote, the normal crises were made even sharper by -- and once more the Marxists would have agreed -- 'the increasing use of fixed capital.' These crises led unfailingly to industrial combination. 38
Yet Ashley's attitude toward the trust was hardly Marxist or that of British and American middle-class opinion. He described trusts, in the light of the agonies of competition in America, as 'simply an attempt to lessen and, if it may be, avert altogether the disastrous and harassing effects of cutthroat competition.' 39 Schmoller wrote similarly of trusts as both inevitable and, if regulated by statute and guided by informed public opinion, beneficial. 40 Ashley adopted a moral position on the trust which he felt 'proceeds from the good side of humanity, the impulse toward mutual assistance and the desire for stability, as well as from the less attractive side, the pursuit of gain.' 41
Industrial combinations were beneficial to the working class, Ashley asserted. Competition -- both internal and external -- was driving wages to the subsistence level and was responsible for unemployment. International competition would be restricted by the programme of Tariff Reform. After that, 'our main hope must rest,' Ashley reported, 'in the limitation of internal competition among employers by the growth of capitalistic combination.' 42 Combination would guarantee for the working man that 'continuity of employment and steadiness in the rate of remuneration' which were 'really more important than temporary high wages.' 43 In one respect, the workers would be disadvantaged. It would be more difficult to
bargain with the industrial combination than it had been with the small concern. Ashley's solution was that the working men, too, should form combinations.
For Ashley, as for Schmoller, there was no doubt concerning the existence of contradictory class interests. Cunningham and other 'advanced' Conservatives were at this time, backing schemes of co-partnership and profit-sharing. 44 Although Ashley wished social reconciliation, not conflict, he rejected as unrealistic all attempts to bring about class harmony which took as their starting point the identity of interest between employer and employee. Trade unionism, based as it was on 'a solidarity, or community of interest, between all the workmen of a trade, face to face with, if not in opposition to, all the employers of the trade' -- that was the true principle and the sound one since it did not attempt to detach employees from 'the common interests of their class.' Ashley warned employers not to attempt to destroy this principle of unionism. 'The weakening of unionism,' Ashley insisted, 'paradoxical as it may sound, weakens the necessary basis for industrial peace in the only direction in which it is likely to be secured nowadays, i.e. the direction of collective agreement.' 45
Ashley puzzled about the form which the national economy of the future would and should take. In discussing the Standard Oil monopoly in the United States, he admitted that development had reached the point where 'on the purely economic and administrative side, there could be little objection to the Government taking over the business,' but added significantly, 'if only there were a Government politically capable of the task.' 46 The future society he did see was based upon the corporative theories which were being revived and widely discussed on the continent and which Ashley, alone among the English economists, upheld. Ashley believed that the future would see great national organizations of employers engaged in collective bargaining with great national organizations of working men. Such a situation already existed in certain British industries and would become more general. This
Ashley regarded as the 'natural response to economic conditions. 47 'Society,' Ashley wrote in 1914, 'is feeling its way with painful steps towards a corporate organisation of industry on the side alike of employers and employed; to be then more harmoniously, let us hope, associated together -- with the State alert and intelligent in the background to protect the interests of the community.' 48 It was a natural conclusion for this English Katheder-Sozialist, working with tools of economic analysis wielded by the Marxists but toward the non-revolutionary goals of the German historical school.
Many of Ashley's arguments to persuade the working class to accept Tariff Reform were bad politics and consequently ignored. British Conservatism eschewed specious theory and turned more naturally to Hewins' industrial protectionism, Mackinder's warnings concerning German might, and Cunningham's 'national' economics. Although he acknowledged himself a disciple of German historical economics, Ashley never did publicly call himself a disciple of KathederSozialismus as well. Such an admission might easily have further limited his political influence in pre-war Britain. Although Ashley had a much more profound understanding of the importance of orthodox economic analysis than had Schmoller and the German school, 49 it was to the Germans that he owed that special point of view which differentiated him from his English colleagues and it was largely from them that he derived the insights which enabled him to prophesy our present age of oligopoly.
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