Note 55 — Chapter IV

This is true even of productive or distributive industries carried out by the State. The real Socialistic principle of production has never been applied by the State, or by any municipal authority; nor has any practical party so much as suggested that it should be. The manager of a State factory has just the same motive to save that an ordinary employer has: he can invest his money, and get interest on it. A State or a municipal business differs only from a private Capitalist’s business either in making no profits, as is the case in the building of ships of war; or of securing the services of Ability at a somewhat cheaper rate, and, in consequence, generally diminishing its efficacy. Of State business carried on at a profit, the Post Office offers the best example; and it is the example universally fixed on by contemporary English Socialists. It is an example, however, which disproves everything that they think it proves; and shows the necessary limitations of the principle involved, instead of the possibility of its extension. For, in the first place, the object aimed at—i.e. the delivery of letters—is one of exceptional simplicity. In the second place, all practical men agree that, could the postal service be carried out by private and competing firms, it would (at all events in towns) be carried out much better; only the advantages gained in this special and exceptional case from the entire service being under a single management, outweigh the disadvantages. And lastly, the business, as it stands, is a State business in the most superficial sense only. The railways and the steamers that carry the letters are all the creations of private enterprise, in which the principle of competition, and the motive force of the natural rewards of Ability, have had free play. Indeed the Post Office, as we now know it, if we can call it Socialistic at all, represents only a superficial layer of State Socialism resting on individualism, and only made possible by its developments. Real State Socialism would be merely the Capitalistic system minus the rewards of that Ability by which alone Capital is made productive.