As the social problem arises in all its terrible portent, Liberal individualism, whether egoistic or humanitarian, becomes liquidated by the forces generated in an era of imperialism and simply melts away in the hot furnace of class conflicts.

In all the main countries, big industry had already separated itself from Welfare-Liberalisms. In the United States it found refuge within the Republican Party; in England it joined hands with the aristocracy of the Conservatives. These industrialists were members of precisely those large corporate groups in the basic heavy industries where competition had given way to cartels, syndicates, and trusts. If there remained some big capitalist elements in the Liberal movement, they were rather merchants or manufacturers engaged in light industry, where to a considerable extent competitive conditions still remained. The vocation of these elements within Liberalism was to keep the movement under the control of capital. On the whole, the petty bourgeoisie was left to "hold the bag."

The dissolution of Liberalism had become apparent the moment it called in the government to protect the interests of small property. This was a sign that Liberalism was no longer the master but rather the victim of the new economic forces. Liberalism's hold on politics could not long endure after its loss of control of economics. On every side the little business man was being driven into dependence on trusts or into the ranks of labor. In the first instance, he tended to support the parties of imperialism, in the second, the parties of Labor. In the end the Welfare-Liberals could represent only historically dead material.

During this period it must not be supposed that welfare was a Liberal monopoly. We have already pointed out that in Europe this was far from being the case. In Germany, as far back as the eighteenth century, Frederick the Great could polemicize against Machiavelli and point out that even the benevolent despot had duties to the State. In all countries in the late nineteenth century, public officials and governmental publicists were arguing for complete social control and for a recognition of the supremacy of public interest and public property, and stressing the duty of the State to care for all its subjects.

Contrary to the Welfare-Liberals, these proponents of State supremacy took great pains to demonstrate that social responsibility, far from flowing from individual duty, was entirely distinct from it, and that the command of the State for social order had nothing to do with humanitarianism. For example, social reform and protection of the masses were being introduced by the government from the standpoint of procuring better soldiers for the army; and in proportion as the army expanded to take in the whole people, so did the State's obligation increase to insure a healthy, strong general' population. Militarism could work for social reform as well as pacifism, and compulsory military training could usher in an equalitarian spirit as well as political freedom of speech.

That Big Business, distinct from Liberalism, could be interested in welfare was amply demonstrated in the United States by the measures taken by large industrial concerns. These concerns initiated departments of personnel administration to systematize matters of employment and discharge, job analysis and specifications, transfers and promotions, and to look after such matters as grievances, health, comforts and conveniences, safety-first campaigns, recreation, vacations, and welfare services for their workers. Simultaneously they indulged in profit-sharing schemes, giving to their employees bonuses either in cash or deferred payments, and special issues of stock dividends. They spurred industrial education, vocational guidance, and set up a system of corporation schools and apprenticeships. They even introduced systems of co-operative partnership with the workers. (*1)

Under such circumstances, the practical distinctions between the social reforms of Big Business imperialism and those proposed by petty business Welfare-Liberalism tended to disappear. There did remain differences of rationale and approach. In the eyes of the conservatives, the State was an instrument to crush the class struggle, to put labor in its place. The State thus became supreme as the only mechanism to preserve capitalist society and to exact obligations from all classes. To imperialists, social reform was not a result of individual rights, but an act to maintain the social order.

With the Welfare-Liberals, the State was the instrument to harmonize classes. The State functions therefore were a secondary result of the need of class harmonization. With the Conservatives, however, the classes functioned only as part of the workings of the State. They existed as part of the social order. The State was no mere policeman, but the total of all classes and an end in itself. Complete fruition of such ideas is to arrive under Fascism, when the last preachers of Liberalism are thrown out with kicks and blows.

The need for social control developed also in the law courts definite trends unheard of in the early nineteenth century. Courts began to talk of the limitations on the use of property where this is anti-social, of limitations on the freedom of contract and on the right to do what one pleased, of limitations on the power of the creditor to exact satisfaction, of a theory of liability without fault and responsibility for the acts of agents employed. They transformed rights that belong to all or "to none" into "public rights." They tended to hold that public funds should respond for the injuries to individuals by public agents. They enunciated a theory of social interest in dependent members of the household, etc. (*2)

In connection with these changes there arises a whole school of sociological jurisprudence, whose program is to study the actual social facts of legal institutions, legal precepts and legal doctrines, who insist on a sociological preparation for law-making and a complete study of the means of making legal precepts effective in action and of the elements of law in society. This school advocates, in English-speaking countries, the formation of a Ministry of justice to carry out its program.

With their appeals to the government, naturally, Welfare-Liberals were not averse to getting State jobs, and when once on the payroll gradually tended to the view that the State was the highest blessing of mankind. Government functionaries, whether Liberal or not, strove to increase their power. In this respect differences among them could be but secondary. Both groups of officials, for example, were forced to interest themselves in the matter of crime, its causes, prevention and cure, and in the administration of the law and in principles of penology. The Liberal took the stand of being interested in the person of the criminal, calling for individual psychological study and individualization of punishment with attention paid to the matter of parole; the others claimed to be interested mainly in the social interest to be preserved, the punishment to be meted out in accordance with the seriousness of the social damage done, and whatever rehabilitation of the prisoner was effected was to be with the view of reestablishing him as a docile subject of the State. Whatever their differences, however, both groups put forth series of reforms in the criminal law that tended to make the State more ubiquitous than ever.

Similarly, on the question of prohibition and temperance, both the Conservatives and the Liberals tended to agree on governmental regulation, even to the extent of complete prohibition. Their differences became merely argumentative. In the United States it was the Democratic Party, the Liberal Wilson, who put over the Prohibition Amendment during the War. Primarily, his theory was to conserve national resources to win the War, but after the War it became a program to conserve the laborer against himself. Thus, while conservation of resources had been urged for the welfare of all the people, it now became a conservation of the lives of the people from their own reckless conduct, in violation of their former individual rights. In this way American Welfare-Liberalism, in its attempts to save mankind from itself, joined forces with Conservatives who had always maintained that public interest should control the most intimate personal life of every individual.

Big Business had always been of the opinion that the laborer was only a "hand," that is, another type of machine, that the laborer lived for the factory and that it was his duty to maintain himself in a state of productive efficiency. If the laborer would not take care of his labor power adequately enough, then the law would step in to compel him. The manufacturer thus developed his philosophy to include the theory that he should control the worker not only while at work but during the whole twenty- four hours of the day and regulate his consumption as well as his production. These efforts of the industrialists were buttressed by the humanitarian urging of the Temperance Societies who called attention to the social evils of alcoholism, especially its relation to the breaking up and brutalizing of the home, vice, prostitution, gambling, crime, etc. Like opium, alcohol and even smoking were harmful to the people. To prevent these effects the State was to be the instrument to enter into the homes of the people with an elaborate set of prohibitions.

It was the working class which took up the cudgels that Liberalism abandoned in the question of Prohibition. And this the workers in the United States did, not only because they were still affected by arguments of the individual's right to do whatever he pleased, at least with himself, but also from profound social and class reasons. It was necessary to fight the industrialists who insisted that Labor must keep itself efficient for factory work and their dictation to labor what it should do.

Prohibition was also construed as an attack against the standard of living, since it implied that certain things were necessities and others luxuries with which labor could easily be compelled to dispense. It made no difference that, in the beginning of Prohibition, wages did not fall but even rose, or that labor could spend its money on other goods instead of alcoholic beverages. What labor struggled against was the precedent for dictating to it what it should have and what it should not have.

The Prohibition Amendment also meant an increase in the police and revenue officers of the capitalist State. These armed forces could be applied not only to end alcoholism, but also in time of need to break up strikes and unions. Further, Prohibition entailed a tremendous increase in the possibilities of bribery, blackmail and frame up by governmental officials, and of their power in everyday life. Labor pointed to the immense number of arrests that took place under Prohibition, a flood dragging many workers into the maw of the prison system. Vagrancy and Prohibition were the two divisions of the criminal law bringing to the State a huge number of working class prisoners, providing the chain-gangs and prison sweat-shops with their forced labor. Prison work and peonage substituted for chattel slavery as a means of getting cheap labor.

These wholesale arrests could result only in giving the victims a greater hatred for the State and its coercive apparatus. For every worker broken over the wheel by prison discipline, there were many more who emerged with a more rebellious spirit and bitter understanding of the class nature of the State. Some of them helped to swell the ever-increasing total of professional criminals; others were to save their resentment for political action. In the end, the Prohibition Amendment was repealed in America as too costly a social experiment and too dangerous to the social order.

On all the other important questions of the day, under imperialism, Liberals lost their distinguishing differences from the older ruling groups. In England, for example, the Liberals formed a coalition with the Conservatives to carry on the war and joined hands with them on the question of its conduct. They enforced conscription. They introduced a "Defense of the Realms Act" which aggressively attacked the rights of democracy. After the war they agreed to tariff legislation of a protective character, and in 1932 Great Britain became definitely Protectionist. The Liberals vigorously put down the rebellion in the Irish Free State and in India. They joined wholeheartedly in the movement for the building up of the Empire. They became responsible for the hated Versailles Treaty, which, in turn, only bred Fascism and further conflict throughout the world.

If big business abandoned Welfare-Liberalism on the one hand, labor was to do so on the other. As the line-up between labor and capital grew more severe, all middle-of-the-road groups lost their importance, became impotent and bankrupt. The class struggle permitted no neutrality. The decadent middle class, not able to stand on its own feet, followed now one side or the other. Under the blows of modern industry, labor had organized its own parties. Theories of the harmony of classes had been appropriate so long as the skilled worker remained the only mature section of labor; but congested masses of unskilled laborers, poorly paid, foot-loose, and bitterly exploited, came into being, and as the international competitive struggle for markets grew more intense, tending to decline the rate of profit and making social reform increasingly difficult to attain, labor became more and more belligerent and aggressive. In England, Lib-Labism gave way to out-and-out laborism. A Labor Party was now formed that definitely rested upon the trade unions and separated labor sharply from all propertied representatives, including the Liberals.

Before the World War, however, Laborism could not break entirely from Liberalism in England. In a sense, Laborism was a triumph of Liberalism in the camp of labor, since, contrary to that of Communism, the whole Laborite camp was thoroughly corrupted with Liberal ideas, denying the inevitability of class struggle and appealing for close class collaboration. This program was accompanied by an illusion that a capitalist State could be progressively reformed until it became transformed in the interests of labor.

Both Laborites and Socialists argued for a victory of labor from the point of view that only through labor's triumph would individualism really be protected and maintained. The trusts were crushing the individualism of the masses; Socialism or Laborism would restore it. The Laborites and Fabian Socialists stressed the fact that the Liberal slogans of liberty, democracy, equality, fraternity, etc., could be obtained only through Laborism or Socialism. These people took warmly to their hearts the entire theory of Meliorism, of a gradual improvement and betterment of the human race.

However, the contradictions of an imperialist era, with its cataclysmic World War crashing over the heads of all, soon ended this honeymoon period between the Labor Party and Liberalism. After the War, the Labor Party abandoned the principle of gradualness, declared a compromise with capitalism impossible, and demanded the immediate nationalization of the key industries with the slogan "Socialism in our time." Caught between the fires of imperialism and labor, Liberalism terminated its career in England, unwept and unsung. One section became the tail-end of the Labor Party; another section was swallowed up by the Conservatives.

Only in America does Welfare-Liberalism still play an important role. Before the World War it was concerned primarily with the claims of the interests of small property. After the War, the social problems of labor engrossed its full attention. Unemployment and social insurance, minimum wage standards and prices, old age pensions, and wealth distribution schemes become its care.

American Liberalism endures only because American labor has not as yet organized itself. Preceding the War, the skilled workers, the only ones considerably organized in the trade-union field, considered themselves as little business men and carried out their politics as the tail-end of the middle class Liberal. They could not reach even the stage of English Lib- Labism. And so closely did they follow their employers that, while they were content with the meager federal legislation protecting women and children, they actually fought against legislation for social insurance and minimum wages for men on the ground that they were able to take care of themselves without the help of governmental interference.

Following the War, organized labor still refused to organize its labor party. Social concessions it left to the Liberals to enact. Yet this inactivity by no means implies that the American working man does not understand the true situation. Should the social concessions not be forthcoming, there is no doubt but that American labor would at once step forward in mighty revolutionary formations. If it refuses to form a labor party, it is not only because the American worker is more backward than the English, but also because he is more advanced. In the fourth decade of the twentieth century he has become thoroughly aware of the futility of the Liberal methods of the Labor Party. When the American worker organizes his class politically, it will be to break out with immense violence for the seizure of power.

That the petty bourgeoisie can swing to the Right is illustrated by the manner in which Liberalism paves the way for Fascism in the post-war period, both in theory and in practice. Both Liberalism and Fascism get their supporters from the same class, the petty bourgeoisie. If Liberalism is the philosophy of hope in a competitive period when capitalism is going up, Fascism is the philosophy of despair of the same elements now harnessed to the chariot of industrial imperialism. Class roots being the same, mutual connections cannot be far apart.

Nineteenth-century Liberalism had believed in free competition whereby the winner, the stronger, got the spoils and the loser, the weaker, was eliminated. With free competition went individualism, and the Liberal had worshiped the strong individual capitalist who could win in free competition. He could easily change this worship to one for a strong political hero of the type of Hitler or Mussolini. The Liberal had never objected to the dictatorship of the capitalist within the factory. This made it easier for him to agree to the dictatorship of the capitalist agent in the State, particularly when shop and State were more and more fusing into one.

Liberalism had often translated the term "liberty" to mean "cheap government," or lessened taxation. Cheap government is one of the principal reasons for the victory of Fascism, which strives hard to wipe out the heavy costs of social insurance and high wages. Fascism thus attempts to realize the dream of the Liberal, the cheap State, at the expense of the workers and poor toilers generally. As for "liberty," indeed it is only through Fascism that the capitalist can retain his liberty and independence and stave off the demands of the workers.

Welfare-Liberalism had urged class peace and fought the doctrines of Marxism. The same principle motivates the Fascists, with this difference, that whereas the Welfare-Liberal worked in the name of peace, Fascism proceeds violently. Yet the difference is of not too antagonistic a nature, for Liberalism's inaction is meant to paralyze the lower orders, while Fascist militancy is designed to destroy the activity of the workers whenever it arises.

The Liberal believes in seeing both sides to every case. He cannot, therefore, refuse to see the side of the Fascists. Since there are two sides to every question, there must also be a good side to Fascism, which can be recognized in proportion as one is truly free and impartial, that is, Liberal. Believing abstractly in free speech and liberty for all, the Liberal cannot deny these blessings to the Fascists who actively oppose such liberties and threaten to terminate them for the Liberals as well. Here, then, is an outlook on life that can easily transform Liberalism into a "maedchen fuer alle."

The sense of losing one's way and the realization of the petty bourgeoisie that it has no future and that it can lead no one, not even itself, is prettily illustrated in the American philosophy of Pragmatism. Pragmatic eclecticism fits in exquisitely well with a movement that knows not what will happen from day to day and that is whipped, now to one side, now to the other, by overpowering events. Pragmatism is but another word for "no perspective," and is a philosophy of purposeless action. Peaceful Pragmatism thus could well become the philosophy of Mussolini as it may yet be the philosophic link to connect Liberalism with American Fascism when it appears.

Paradoxically, it is the Communists who, as Liberalism disappears, adopt the slogans of Liberalism and use them for revolutionary purposes. Where colonial peoples are struggling against imperialism and are building up democratic nationalist movements, as in India, China, and elsewhere, the Communist works hand in glove. with the revolutionary democrats. He uses the slogan of national independence and self-determination for the colonial peoples (or for the Negroes of the United States), not because he believes in the efficacy of these slogans as ends in themselves, but because by means of them he can rally the people to a struggle against world imperialism which is the central obstacle on the road to Communism.

To the peasants in the agrarian countries, the Communists carry the Liberal slogans of individual ownership of land in order to mobilize them against their landlords and to ally them to the workers.

In the industrial countries, the Communist does his utmost to show that imperialism cannot co-exist with real democracy, that the masses are in fact disfranchised, and that democracy is and can be only a sham. He who controls the job controls the vote, and those in possession of the means of life control the politics of the nation. In the name of democracy, therefore, the revolutionist tries to mobilize sections of the lower middle classes to overthrow the wealthy. Even where democracy has been the widest possible under capitalism, the Communist takes advantage of the democratic opportunities opened to him to expose the limited nature of democracy and to put forth the larger democracy of the rule of labor.

The Dictatorship of the Proletariat itself can also be placed in a democratic light by the Communist, if need be, in order to win over middle class elements. The Communist points out the wide extension of the franchise that will be given to the mass of people and how the termination of the liberties of the capitalists to exploit others must mean the realization of liberty for humanity.

Not only in his general strategy, but in his day-to-day tactics, the Communist cleverly uses democratic middle class Liberal ideals and traditions for labor's own use. He takes his side with the movement for the payment of a bonus to the war veterans in order to further his plan for weakening the concentrated wealth of capital and to ally the soldiers to his cause. He steps forward in periods when banks are locking out depositors, with demands that the owners of small accounts should be paid in full at the expense of the large depositors. In all taxation schemes he fights against the taxes being placed on the lower orders and insists that they be concentrated on the higher brackets. In the foreclosure of homes, he helps to make up the groups that resist the sheriff and prevent the dispossession. In a thousand and one ways, therefore, he connects the principles of middle class Liberalism with his principles of Communism.

And this he can do precisely for the basic reason that capitalism cannot hold to itself indefinitely all the layers of the lower middle class. Some of them are bound to find their aims and aspirations closely linked up with those of labor. Or, to restate the matter in political terms, capitalism in its evolution cannot realize the democratic ideals which it called forth. The development of capitalism does not lead to the goals of democracy, prosperity, opportunity, private ownership for all, and a general classlessness which it pretended to secure. Thus, it is not only the proletarian revolution that must be accomplished; it is the democratic revolution that remains to be completed. And the Communist is astute enough to proclaim that only the proletariat can complete the democratic revolution and make it permanent!

The victory of capitalism was preceded by a long prenatal period. Capitalism first flourished in the interstices of an agrarian society formed by a fusion of the barbarians with the culture of ancient civilization. It was the Catholic Church that carried within its bosom the arts and crafts of the old and introduced its superior technique everywhere as a method of proving the superiority of Christianity over the old pagan religions. With the development of this Church praxis there slowly sprang into being a surplus product that became the object of trade and of wealth. Naturally, the Catholic Church concentrated this moveable wealth into its hands and disposed of it in such a way as greatly to expand and intensify the circulation of commodities. The Crusades marked the high point of this process and raised the prestige and power of the Catholic Church to unprecedented heights.

The torch of progress was then handed to the merchants and money- men who spread trade everywhere, making it an indispensable part of the civilized world. They brought in the inventions of the East, gunpowder, compass, etc. The clock and printing press appeared with the rise of towns and cities. At first the center was the Mediterranean Sea, but, with the rise of the factory system, especially of weaving, another center opened up in France which then became the battleground upon which the forces of progress fought their way. The weaving centers became the object of long wars between France and England.

The rise of commerce led to the commercialization of the world, of labor relations, of land, of the church. Humanism was the first expression of these new elements who, within the Catholic Church, timidly stressed the past of Rome and Greece rather than openly preaching revolt. The Renaissance followed, with its joyous opening up of new paths and breaking from the old. As the capitalists grew stronger, they supported the Absolute Monarchy against the Church, they laid the basis for nationalism, and developed their national languages. As trade shifted to the Atlantic, the importance of the Mediterranean withered away and new centers opened up. With the advance of the merchants and traders in the sixteenth century, there occurred a great growth of the factory system, and the manufacturer grew to great importance side by side with the merchant.

The development of manufacturing in the sixteenth century dealt the death blow to those countries, like Spain and others, who relied merely upon seizure of gold mines in the New World. It also caused the trade shift to the Atlantic to become a permanent one and made possible the utilization of the raw materials of the new continents discovered by the Western nations directly. As France, Holland, and England advanced, the interior of Europe, to the North and East, further decayed, a process accelerated by the advance of the Turks following that of the Tartars.

In Germany, two classes reacted to the increasing decay: the peasantry, striving for a return to the old Communistic regime, and the Princes, who freed themselves from the Catholic Church and, with the help of the West, carried forward the Reformation in Central and Northern Europe. In England and Germany, the struggle for nationalism led to a break with the Catholic Church, but in France this was effected within the folds of that church and, therefore, the Huguenots were not able to succeed in linking up the claims of commerce and business with the claims of the Reformation.

The seventeenth century saw the victory of England on the seas, and this country now became the most highly developed in the modern sense. The dominance of the merchants and business men in economics compelled a revolution in politics, and the Great Rebellion and Glorious Revolution, with their Liberal philosophy and movements, were the results. By the eighteenth century, the bourgeoisie energized the social scene as the most active historical class, especially when in the middle of that century there took place the start of the industrial revolution. Liberalism also took hold in America and France through the Revolutions in those countries.

The nineteenth century was a period of mighty unfolding of the revolution. The old Liberalism of merchants and traders was now insufficient in two directions. In the first place, there were the new industrialists who were becoming far more important economically but who had no place in the scheme politically. They turned to a sort of "Philosophic Radicalism' in England and headed a number of discontented movements. Bourgeois ideals dominated Radicalism, Anarchism, and Socialism in this period.

By this time the petty bourgeoisie was becoming articulate and arising to stress its claims. It linked up its forces with those of the industrial bourgeoisie and entered the Liberal movement. The industrialists were able to force the other ruling sections of big property to make way and give to industry its political due, but no sooner was this done than the petty bourgeoisie was left abandoned. Now the latter must stand alone in opposition to the wealthy groups.

This result led to an efflorescence of petty bourgeois ideology and claims which came to a head in the middle of the nineteenth century. The petty owner now dominated Liberalism, turning it into welfare-Liberalism, or Anarchism, changing it into mutualism, or Socialism, transforming it into schemes for democratic social reform and co-operation. The lower middle classes took the workers under their wing and developed them as independent forces. The little owners went in heavily for Radicalism and threatened revolution. In the end, the bourgeoisie was forced to share the power with the "little men" and Liberalism took on a social character.

By the end of the nineteenth century, it had become the turn of the skilled workers to speak up and demand their share. At first they were part of the petty bourgeois movements but, as these latter were taken into the bourgeois Liberal camp, the skilled workers built their own movements. They took over Anarchism and Socialism and gave such a threatening character to Liberalism that the bourgeoisie began to flee the Liberal camp so that, with the opening period of imperialism, the industrialists joined forces with the conservatives and abandoned Liberalism to the middle class. However, these "middle bodies" could no longer operate alone but were reduced to following either the big employers or the workers and, as the workers took to Socialism and the bosses to Conservatism, the Liberals faded out. With the turn of the century, the lower middle classes began to penetrate the labor movement; although they secured places in the bureaucratic apparatus then set up, yet the movement remained dominated by the skilled workers. Liberalism, under the pressure of these workers, became Laborism, individualism was displaced by collectivism, Anarchism was abandoned and gave way to Syndicalism.

One final party remains to be heard, namely, the unskilled workers in the heavy, basic industries of the country. As Socialism and Syndicalism broke down with the World War, the unskilled took to Communism and began to enmesh the skilled workers in their train. The bourgeoisie turned to Fascism; the petty bourgeoisie vacillated between the two, going to Fascism only when labor could not achieve Communism. The future holds in store a battle for power between these two final forces, Fascism and Communism.

1. See G. S. Watkins: An Introduction to the Study of Labor Problems.

2. See R. Pound: Outlines of Lectures on Jurisprudence, pp 25-28. (1928 edition)