Economic Classes and the Methods of Peacefully Aligning their Interests: The Technocratic view

The 19th century spawned numerous political ideologies from which the modern Left derives. While Marxism emerged from this period as the leading variant of socialism, focusing solely on Marxism entails ignoring great nuance among those who influenced, competed with, and rejected his violent ideology. The common belief of leftist ideologies that defined them as such was their characterization of economic progress as the harmonization of the interests of the economic classes. This paper studies those socialist groups which advocated nonviolent means of achieving this common goal, thus rejecting Marx. We will interpret the definition of the economic classes and the methods of non-coercively advancing their harmonization laid out in the economic philosophies of French “socialist utopian” Henri Saint-Simon and one sect of his intellectual heirs, the British Fabian Society, contrasting these with Marxian conceptions.

While the 19th and early 20th century saw the development of numerous distinct socialistic ideologies that rejected revolutionary Marxism, to deal with them all is too great a task for this paper. The three aforementioned ideologies remain after filtering the pool of potential subjects according to the following criteria. We will analyze only those thinkers who conducted positive economic analysis, and which thus fall properly within the history of economic thought, thereby weeding out mere social reformers from those who at least attempted positive social science. Narrowing our scope further still, we seek to separate out those entrepreneurial socialists, like Robert Owen or Charles Fourier, who established independent experimental communities in which they tried to align the interests of economic groups on a micro scale, because, for example, the leaders of such communities had some ability to control the conditions of their experiment to get an outcome that would not reflect the success of applying their communalist or central-planning policies on a larger scale. Additionally, on such a small scale, the effects of policy changes would be clearer and have fewer unintended consequences than a similar policy applied to the greater economy. For these reasons, the success or failure of particular communes little reflected economic progress even as nineteenth century socialists understood it.

Looking instead at some examples of the tradition of socialists who wished to advance macroscopic economic progress, though using only nonviolent or minimally-coercive means, we come to an a line of thought from the followers of French aristocrat Henri Saint-Simon, alternatively known as Technocrats or Saint-Simonians to the heirs of some technocratic ideas, the British Fabian Society. These groups distrusted that the harmonization of economic classes could be accomplished through market forces because, like Marx, they refused to recognize Adam Smith’s counterintuitive idea of spontaneous order. They shared the belief that the inherent antagonism between economic classes plays out in capitalism. Additionally, both groups glorified labor, both as an activity and as a class, though with nuanced interpretations. They also each believed that economic progress consisted of the ascent of the productive class over the exploitative classes. However these socialists rejected the Marxian call to violence as a means for realizing economic progress, whether used to carry out a revolution or to enforce state central planning, because they either preceded Marx and thus were the targets of his criticism on this point, or because they consciously opted for slow and peaceful socialism, believing in the inevitability of economic progress.

Though their proposed means of promoting it differed, 19th century socialists fundamentally agreed upon a basic understanding of economic progress, though with somewhat differing interpretations of that narrative. The followers of Saint-Simon sought “the reign of order over the entire globe, the territorial position of the great human family.” (Iggers, 1958, 71) “The exploitation of man by man describes the state of human relations in the past. The future offers a picture of exploitation of nature by man associated with man.” (Iggers, 1958, 72) “Man may then be divided into two classes,” they declared, “the exploiters and the exploited.”

“History tells us how this most numerous class constantly improve its relative position in society through the peaceful work to which it was dedicated. … Finally mankind will break all the chains with which antagonism has burdened it.”(Iggers, 1958, 73)

Saint-Simon, continued his followers, “has shown as the definitive goal towards which all human capacities must converge: the complete abolition of antagonism in the attainment of universal association by and for the constantly progressive amelioration of the moral, physical, and intellectual conditions of the human race.”(Iggers, 1958, 79) As a general rule, stages of productive arrangement characterized by the dominance, at first, of an unproductive class, and succeeded by a new order of dominance by the productive class constituted the socialist conception of economic progress.

To better describe this generality, we will highlight Saint-Simon’s peculiar interpretation of it. Though he was no egalitarian, Saint-Simon is typically considered a leftist because he believed in an economic class struggle and a natural antagonism of interests. The idea of class struggle in particular pegs him as a socialist because the belief in economic antagonism alone, such as was held by Bentham, would not necessarily define one as a socialist per se. However, upon examining the key distinction Saint-Simon made in defining the economic classes, we shall see that his understanding of the class struggle is compatible with classical liberalism. His uniqueness came from viewing both workers and their employers as part of the same class: the industrial class. In other words he did not separate labor and capital into two distinct classes. ”There is a feeling of unity, of companionship, if you will, which binds together all the members of the industrial class, so that the lowliest workers in the factories … see themselves as the colleagues of their chiefs,” (Ionescu, 1976, 239). Even when conflict developed between these groups he continued to assert their shared status in one class:

“Before the [French] Revolution, the manual workers, who formed the mass of the industrial class, had some support because they made common cause with the bankers, merchants and manufactures. Today when they see themselves abandoned by all the powerful elements in their class, they are inevitably angry with the present political scene.”(Ionescu, 1976, 239)

His assertion that despite their differences, manual workers, bankers, merchants, and manufactures make up one economic class implies their economic interest is mutually beneficial. He also recognized that this class made up not some minority special interest, but a vast majority of the population, whose interest was essentially synonymous with the interest of the average citizen or of the citizenry in general. He even explicitly equated the terms “public opinion” and “industrial opinion.”(Ionescu, 1976, 117).

Maintaining a tripartite class structure, Saint-Simon identified the other two classes as the military class and the “feudal” or aristocratic class, whose wealth and power derived from warfare and birthright respectively, and neither of which produced value. As Saint-Simon favored peaceful meritocracy based on productivity, he could not abide these sources of power. Thus he agreed not with the “labor” theory of value but the industrial theory of value, also describable as the labor + capital theory of value, accurately recognizing that rent seeking and violence do not create value. His view is still arguably compatible however, with Marx’s later claim that all value is created by one economic class and that therefore that class ought to overtake the others and wield political power, yet ironically, Saint-Simon’s version of this claim is compatible with classical liberalism and private property. Even when attacking the feudal class, as we shall see below, he did not attack the idea of landed property, nor that payments should be made to landowners. He recognized the shared economic interest of all producers, land, labor, and capital, and combined them all into one class, separating out genuinely nonproductive members of society, such as aristocratic rent seekers whose wealth came from royal decree, often in payment for military service. Evidencing his belief that men should hold political power in proportion to their productivity, he wrote: “the only way to establish a calm and stable order of things lies in entrusting with the supreme administration of public wealth those who pour the greatest amount of money into the public treasury and who draw out the least; we invite them to call themselves industrialists,” (Ionescu, 1976, 199). Saint-Simon thus evidenced his inegalitarian streak by inviting the captains of industry to take the reins of power in his ideal meritocracy of productivity.

Economic progress in socialists’ view generally consisted of the productive class seizing political power one way or another. History tells the story, Saint-Simon argued, of the industrial class arising from under the yoke of the martial and noble classes, (Ionescu, 1976, 117–118). This freedom turned the industrial class, a phrase he used interchangeably with “proletarians,” into a distinct political entity. However, the other classes filled the ranks of the state and used it as a tool for expropriating English industry, which “allowed itself to be dominated by the feudal spirit, which is essentially a spirit of conquest,” (Ionescu, 1976, 119). Saint-Simon reaffirmed the solidarity of economic classes by asserting the English industrial class “was more closely bound by common interests to the industrialists of other countries than to Englishman of the military and feudal classes,”(Ionescu, 119). These economic troubles required removing the expropriative classes from power and replacing their distributive system with one directed by the productive class.

According to Saint-Simon, public funding will become relatively voluntary “the moment the industrialists- the people interested in public liberty and the economy- have won the exclusive right to vote taxes, they will only give what they really want to give,” he then asked, “what must be done in order to reach this point?”(Ionescu, 116) Marx later answered that only violent upheaval could give political power to the industrial class. Saint-Simon, however, desired ”to improve the social organization, using only loyal, legal and peaceful methods of attaining this goal,” specifically, he believed the industrial class needed political rights in the form of freedom from being “forced to give them a great part of the produce of their labor,” and freedom from “arbitrary rule,” as well as enfranchisement in Parliament, particularly with a large enough majority to control the system of taxation and budgeting (Ionescu, 199, 118). He believed that gathering support from industrialists and helping them to value their class identity would motivate this great mass of people to democratically vote more fellow industrialists into Parliament. His contemporaries like Owen, and his successors, the Fabians, among many other heterodox socialists, shared his foundational belief in the need for nonviolent empowerment of the productive class. ”Industry,” wrote Saint-Simon, “in spite of the outrages and harassment a every kind with which the military and feudal class oppressed it, succeeded in the end in enriching itself through work, patience and thrift,” (Ionescu, 119). When “Industry won a deliberative voice in parliament … from the military class,” this initiated “the beginning of a new era for mankind.” (Ionescu, 119)

Once the productive class has gained political control the task remained for its members to better organize economic interests so as to improve quality of life, productivity, equality or other goals. The question then needed confronting: would the alignment of economic interests be directed from a central body, allowed to emerge in market a exchange, or through some combination of the two. In the former case, would the central planner use the threat of force to carry out its plan? The utopian socialists opposed the use of violence for enforcing the productive class’s economic plan just as they had opposed its use for bringing that class into power. Technocrats in the early part of the 19th century and Fabians toward its conclusion favored a central direction of resource allocation. The specific policy tools we shall look at for planning the economy without resorting to the force that characterized Saint-Simon’s military class, while instead seeking to channel the productivity of the industrial class, are those which carried consistently from the Technocrats to the Fabians. They would do this by partially mimicking the function of a private firm: raising revenue from the production of goods and services, and distributing it in such a way as to promote some normative meritocratic goal.

Saint-Simon, because he opposed the use of force, opposed using command-and-control policies to carry out his economic plan. Laying the foundations for Fabian indicative planning, he would not order private producers how they must direct they resources, though he would attempt to influence them with positive economic inducements to follow the central plan. Preempting F.A. Hayek’s later objections, and once again evidencing his stark contrast to other socialists, Saint-Simon seemed to recognize the importance of using local tacit knowledge in the government’s economic decision-making process by using local-level agents to determine the specifics of implementing any particular project within their jurisdiction. However, he failed to realize what public choice economics would later show with regard to his method of distributing public funds among these local agents. His assertion that local agents will act in the interest of public efficiency failed to realize the central tenet of public choice economics, that bureaucrats are self interested, and that they cannot be made altruistic by enlightening them about their class identity. Thus they will seek to maximize their allotment to a greater degree than is efficient. These local agents also have asymmetric knowledge about the actual cost of their projects compared to their funding committee, so they can induce greater-than-efficient appropriations from the legislature. Saint-Simon thus fails to solve the problem of determining to which of these local agents it would more efficient to grant limited funds.

One element of Saint-Simon’s peculiar take on economic planning later adopted by Fabians was his treatment of public accounting as ideally subject to the same drive for efficiency faced by a private company, thereby placing the state in the role of a market actor. “A nation, if it is to acquire prosperity,” he wrote,

“must proceed in the same way as the manufacturers, the merchants, and everyone engaged in some industry, and that, consequently, the budget of a nation which ones to become free and rich, should be drawn up on the same principles as the particular budget of any industrial enterprise; that the only sensible goal that a nation should pursue was to produce as much as possible, with the least possible administrative expense.” (Ionescu, 122–3)

Again, however, he placed too much trust in the altruism of the bureaucracy, which lacks the incentive to economize due to the lack of competitive pressure upon the government’s provision of services like that which exists between private actors. Nevertheless, having seen how Owenite communities maintained internal central planning while still participating as distinct entities in the larger market economy, Saint-Simon sought to apply the entrepreneurial socialists’ idea of running the government and society like a business to the large scale. The Fabians later mimicked the Technocratic attempt to run the nation like a business:

“The master table in the annual plan is therefore that which estimates the national income for the coming year, and proposes its distribution between consumption, investment, and public expenditure. … The consumption table breaks up the global sum, and shows first how people would like to distribute their expenditure between different commodities and services. It then estimates how much of each of these commodities is likely to be available, from home production, from imports and from stocks, with a view to spotting major shortages and surpluses. From these, four other sets of table follow; a budget for each industry which seems likely to be in serious disequilibrium, a budget for each raw material that will be in short supply, setting demands against availabilities, a manpower budget, and a foreign trade budget. These subsidiary budgets- for unbalanced industries, scarce raw materials, manpower and foreign trade- … show where the gravest shortages will lie, and therefore where action is most needed.” (Lewis, 1969, 108–109)

By attempting to allocate resources to their most-highly-valued uses, the planners mimicked the role of the entrepreneur. However, it was the pretense of knowledge to believe that the central planning board could forecast disequilibria any better than the market participants on the ground, and any action the planners took would likely have unintended effects in other markets.

He presented plans aimed at both efficiency in public expenditure and relief of poverty:

“How can [the proletariat’s] just claims be satisfied? The answer is to take steps to ensure that they have employment; such a measure demands first of all a considerable sinking fund and the only way to procure the money needed for this is to cut other expenditure. Above all, the heaviest expense must be cut: and the upkeep of the Army is undeniably the greatest expense. The disbanding of the Army is then, the first measure to take to appease the people, … [M]oney spent by the Ministry of war is utterly lost to the nation, while that used to provide work for the impoverished class would augment the national income, if the choice of work were made intelligently and, above all, if it were known how to direct this work so that it could be supervised by those who have a personal interest in it.” (Ionescu, 240).

This passage may be interpreted two ways. Those with a personal interest may in fact be private sector industrialists who receive public funds to increase their workforce, effectively a wage subsidy. However, they may merely be government functionaries with pet projects. This is an example of the type of ambiguous language that clouds Saint-Simon’s placement between favoring influencing private entities with financial incentives as in an indicative plan on one hand, and favoring simply a large bureaucracy with many local offices on the other. To generate the necessary funding, the Technocratic government would collect revenue from the sale of government services. Saint-Simon said reading the Wealth of Nations taught him that “governments … tended constantly to ruin the people, because they only consumed; whereas the only way to create wealth is to produce,” (Ionescu, 1976, 122). Adam Smith showed him that “the people [needed] to change the principles and the nature of their governments, if they wanted to put an end to their poverty-stricken existence and to enjoy peace and the fruits of their labour.”

Regardless of the degree to which the Technocrats directly influenced the Fabians, the latter carried on support for indicative central planning and public corporations, and both believed in using the existing democratic system to enact these policies. One Fabian application of the principle of public production of value was through nationalized corporations. In that vein, the Fabians intended the state to generate income through the sale of goods and services by government corporations. Some products mentioned by one later Fabian, Sir W. Arthur Lewis, as suitable for production by government corporation include minerals, agricultural products, telephone service, electricity, railways, steel, banking, chemicals, radio, coal, automobiles, and wholesale outlets of various kinds. Lewis argued that any industry with great potential economies of scale would produce most efficiently through a monopoly, which would avoid all the costs of branding and advertising, and that such a monopoly ought to be controlled by the government. “Nationalization is advocated for an industry where efficiency depends on unitary control,” he wrote (Lewis, 1969, 111). The fact that he made this argument on grounds of efficiency implies that these industries will be more profitable if monopolized, and thus garner significant revenue for the state. He also argued for government corporations to help some producers compete against dominant firms, which might be done by offering business loans through a publicly-owned finance corporation (Lewis, 1969, 96).

Other relatively light-handed tools in the Fabians’ policy toolkit included guaranteeing all or part of all investments made in particular industries, or simply directly subsiding such investments to increase the supply of their final product.

“First, there will be action to increase supply; this is the most important kind of action, and the primary justification of planning. The secondary justification, and the second kind of action, which is needed only if supply cannot be expanded sufficiently to meet the demand, is to have some means of allocating the short supply, whether by price, or by quota. This leads to the third stage in planning which is to estimate the equilibrium that these two types of action will achieve; that is to say, to fix the targets. … For at this third stage these targets are used to make final allocations in the budgets for unbalanced industries, scarce raw materials, manpower and foreign trade, … Over large items the planners have but small control- the price of imports, the volume of exports, the output of agriculture- and over others all they can hope to do is exercise an influence in the right direction.” (Lewis, 1969, 108–109)

These forms of merely indicative planning, which found their origin in the early socialist utopians, sought to correct supposed market failings for the benefit of the members of the productive class, in this case labor. The Technocrats and Fabians both aimed at distributing public revenue to benefit the productive over the destructive classes. Saint-Simon, for example, would have the state provide productive capital to industrialists who met a meritocratic standard:

“Every member of the chamber of deputies should have an income of at least 25,000 francs from landed property. … property makes for stability of government, … The government must therefore include and allow a share of property to those men of outstanding merit who do not have property, so that talent and the possession of property will no longer be separated.” (Ionescu, 1976, 90).

Similarly, the Fabians rewarded labor, which they considered meritorious, by choosing not to tax incomes, even those of the wealthy. They sought to raise revenue through estate taxes and “capital levies,” because these did not, in their view tax real productivity. Thus, through their methods of mimicking private industrial organization and channeling the productivity of the creative class by directly seeking to produce value, and by then distributing the revenue from that production in a way that honors that class’s characteristically peaceful and productive methods, Technocratic and Fabian polices sought, somewhat hubristically, to align the interests of the most numerous class with that of their government, and advance the state of economic wellbeing.

Works Cited

Ekelund, R. B., & Hébert, R. F. 2014. A history of economic theory and method. Long Grove, IL: Waveland Press.

Iggers, Georg G. 1958. The Doctrine of Saint-Simon: an exposition; first year, 1828–1829.

xlvii, 286 p. 21 cm. New York, Schocken Books

Ionescu, Ghița, Valence Ionescu. 1976. The political thought of Saint-Simon. London ; New York : Oxford University Press.

Lewis, William Arthur. 1969. The principles of economic planning: a study prepared for the Fabian Society. Allen & Unwin | 3rd ed.