This confiscation of private property incomes for public pur poses without any pretence of compensation, which is now pro ceeding on a scale inconceivable by Victorian ministers, has destroyed the integrity of private property and inheritance; and the success with which the confiscated capital has been applied to communal industries by the municipalities and the central Government, contrasted with the many failures and comparative costliness of capitalist industrial adventure, has shaken the super stition that private commercial management is always more effective and less corrupt than public management. In particular, the British attempt to depend on private industry for munitions during the World War of 1914-18 nearly led to defeat; and the substitution of national factories was so sensationally successful, and the post-war resumption of private enterprise, after a brief burst of illusory prosperity, was followed by so distressing a slump that the reversal of the relative efficiency prestige of Socialism and Capitalism was vigorously accelerated, leaving Capitalism unpopular and on the defensive, whilst confiscation of private capital for communal enterprise and nationalization of the big industries grew steadily in popularity in and out of Parliament.
This change in public opinion had already deeply penetrated the middle class because of the change for the worse in the posi tion of the ordinary employer. He, in the 19th century, was admittedly master of the industrial and, after the reform of 1832, of the political situation. He dealt directly and even domi neeringly with the proprietary class, from which he hired his land and capital either directly or through agents who were his servants and not his masters. But the sums required to set on foot and develop modern industrial schemes grew until they were out of reach of ordinary employers. The collection of money to be used as capital became a special business, conducted by professional promoters and financiers. These experts, though they had no direct contact with industry, became so indispens able to it that they are now virtually the masters of the ordinary routine employers. Meanwhile, the growth of joint-stock enter prise was substituting the employee-manager for the employer, and thus converting the old independent middle class into a pro letariat and pressing it politically to the left.
With every increase in the magnitude of the capital sums required for starting or extending large industrial concerns comes the need for an increase in the ability demanded by their man agement; and this the financiers cannot supply: indeed, they bleed industry of middle class ability by attracting it into their own profession. Matters reach a point at which industrial man agement by the old-fashioned tradesman must be replaced by a professionally trained and educated bureaucracy ; and as Capi talism does not provide such a bureaucracy the industries tend to get into difficulties as they grow by combination (amalgama tion), and thus outgrow the capacity of the managers who were able to handle them as separate units.
This difficulty is increased by the hereditary element in busi ness. An employer may bequeath the control of an industry involving the subsistence of thousands of workers, and requiring from its chief either great natural ability and energy or con siderable scientific and political culture, to his eldest son without being challenged to prove his son's qualifications, though if he proposes to make his second son a doctor or a naval officer he is peremptorily informed by the government that only by under going an elaborate and prolonged training, and obtaining official certificates of qualification, can his son be permitted to assume such responsibilities. Under these circumstances, much of the
management and control of industry gets divided between routine employers who do not really understand their own businesses, and financiers, who, having never entered a factory nor descended a mine shaft, do not understand any business except the business of collecting money to be used as capital and forcing it into indus trial adventures at all hazards, the result being too often reckless and senseless over-capitalization, leading to bankruptcies (dis guised as reconstructions) which reveal the most astonishing technical ignorance and economic blindness on the part of men in high repute as directors of huge industrial combinations, who draw large fees as the remuneration of a mystical ability which exists only in the imagination of the share-holders.
All this steadily saps the business prestige of Capitalism. The loss of popular faith in it has gone much farther than the gain of any widespread or intelligent faith in Socialism. Consequently, the end of the first third of the loth century finds the political situation in Europe confused and threatening: all the political parties diagnosing dangerous social disease, and most of them proposing disastrous remedies. National governments, no matter what ancient party slogans they raise, find themselves controlled by financiers who follow the slot of gigantic international usuries without any public aims and without any technical qualifications except their familiarity with a rule-of-thumb city routine quite inapplicable to public affairs, because it deals exclusively with stock exchange and banking categories of capital and credit. These, though valid in the money market when conducting exchanges of future incomes for spare ready money by the small minority of persons who have these luxuries to deal in, would vanish under pressure of any general political measure like—to take a perilously popular and plausible example—a levy on capital. Such a levy would produce a money market in which there were all sellers and no buyers, sending the Bank Rate up to infinity, breaking the banks, and bringing industry to a stand still by the transfer of all the cash available for wages to the national treasury. Unfortunately, the parliamentary proletarian parties understand this as little as their capitalist opponents. They clamour for taxation of capital; and the capitalists, instead of frankly admitting that capital as they reckon it is a phantom, and that the assumption that a person with an income of L5 a year represents to the State an immediately available asset of Lioo ready money, though it may work well enough as between a handful of investors and spendthrifts in a stockbroker's office, is pure fiction when applied to a whole nation, ignorantly defend their imaginary resources as if they really existed, and thus con firm the proletariat in its delusion instead of educating it.