Paul Leroy-Beaulieu: A Warning Voice About the Socialist Tragedy to Come

Published February 1, 2018

The Russian Revolution of November 1917, now being marked by its centenary, ushered in a hundred years of political tyranny and terror, economic suffering, exploitation and corruption, along with unimaginable mass murder, among the tens of millions of people who came under the control and command of Marxist inspired socialist regimes around the world.  But before this tragic episode occurred in human history, indeed, decades before Vladimir Lenin and his cohort of communist revolutionaries seized power in Russia, there were clear and insightful critics of socialism who explained much of what was to be in store in any attempt to implement and impose a collectivist utopia on humanity.

One of the leading such anti-socialist voices in the second half of the nineteenth century was the French classical liberal and free market economist, Paul Leroy-Beaulieu (1843-1916). In 1870, Leroy-Beaulieu won several awards for his book on Colonialism and Modern Man. While not openly opposing the French government’s colonial occupation of countries such as Algeria in North Africa, he argued that any colonial power, including France, should follow a policy of free trade within the colonial territories and between those colonies and the rest of the world, since this was the economic policy most likely to benefit the people of France and all those under French colonial administration.  He also stated the longer run goal of colonial policy should be eventual self-government by those initially under the control of those in power in faraway Paris.

In 1872, Leroy-Beaulieu was appointed professor of finance the Paris Institute of Political Studies, and in 1880 he was given a chair in political economy at the College of Paris, one of the oldest and most respected institutions of higher learning in France. True to the classical liberal ideals of the nineteenth century, Leroy-Beaulieu was a strong advocate of international peace, free trade and mutual prosperity among nations. In 1869, he published a study, Contemporary Wars, in which he dissected the financial and human cost of war in the middle decades of the nineteenth century.

The Myth of the State as a Thinking and Willing Entity

In 1889, Leroy-Beaulieu published, The Modern State in Relation to Society and the Individual. He argued against the Hegelian conception of the State as a higher and separate entity, more important that the individuals comprising it, and to which the individual was subservient. He emphasized that there is no such thing as “the State” in terms of actions demanded and undertaken. The State is a fiction that enables some to impose their control over others, and to bend the wills of the others to the wills of those in power.

“The State neither thinks nor wills of itself,” Leroy-Beaulieu said, “it thinks and wills only in and by the thought and will of the men who control” political power as agents of “the State.” Furthermore, those in political authority, “who control the State, who speak in its name, act in its name, and issue commands in its name, are not of an different physical or mental structure from that of other men. They do not rejoice in any natural superiority, either inborn or inoculated by the very profession they follow.”

The State, he insisted, was not the same as “society.” Society is the cumulative associations and networks of mutual relationships and actions undertaken by various individuals to further the common purposes and goals they have in mind. Said Leroy-Beaulieu:

Society and the State are two different things . . . Side by side with the political organization of collective force, proceeding by way of injunction and restraint, that is, the State, there arise on all sides other spontaneous forms of collective force, each created with a view to a precise and definite end, and acting with various degrees of energy, sometimes, very intense, but altogether without coercion. These are the various associations that answer to some sentiment or interest, some requirement or some illusion, the religious and philanthropic societies, civil, commercial, and financial companies. They simply swarm: the crop is inexhaustible.

Man is a being with a natural taste for association, not association of the fixed, immovable, rigid sort imposed from without [by the State] . . . We shall then begin to realize how the life of each one of us is intertwined in this enormous network of combinations formed for various purposes which touch upon our profession, our fortune, our opinions, our tastes, our relaxations, our general conceptions of the world, and our particular conceptions of the arts, literature, the sciences, education, politics, the work of helping others, and so on. . . . It is evident, therefore, that all kinds of collective requirements are not within the domain of the State. Let us hear no more from our philosophers of any such abstraction as the isolated individual.

Leroy-Beaulieu, however, warned that precisely due to the number and continuing growth of such intermediary institutions that separate the State from the individual, and through which individuals are able to better serve their ends and achieve their common goals and purposes through peaceful and voluntary association, “the State is at last beginning to feel jealous and to take alarm.” The continuing development and solving of social problems through these free associations raises the danger that people will come less and less to see any reason to rely on government for much of anything other than the securing of life and liberty. This is reinforced by the important moral consideration that all such institutions and associations of civil society have only one means of influencing people, “the force of persuasion,” while “what characterizes the State is its coercive power.”

Socialists Fail to Understand the Spontaneous Market Order

The great counter-revolution against individual freedom, the voluntary associations of civil society, and the growing prosperity resulting form free enterprise and free trade is found in the modern demand for centralized control and command of all of social life under the banner of socialism. Analyzing and criticism this threat to human liberty was the theme of Paul Leroy-Beaulieu’s most important and profound work, Collectivism. Originally published in French in 1885, and translated into English in a slightly abridged edition in 1908, it is one of the most detailed and devastating studies of socialism and central planning before the First World War, and all explained more than thirty years before the great socialist “experiment” began in Russia.

A leading error in the socialist argument, insisted Leroy-Beaulieu, is the inability to appreciate the workings of the spontaneous order that emerges from the voluntary interactions of a multitude of people following their respective individual interests.

“A force is not necessarily unregulated because it acts automatically, on the contrary,” he pointed out, “it is most probably more regular, more uniform and more purposeful in its action, than a force which is entirely directed by volition – a fundamental truth which is quite disregarded by collectivists.” He reminded his readers that without State regulation or directed planning, great cities like Paris and London are daily provisioned with all the necessities and conveniences of everyday life.

“Persons who are absolutely ignorant of the general welfare, are nevertheless completely successful in supplying these great cities with the required quantities of all the innumerable commodities demanded by the inhabitants . . . This wonderful automatic adjustment of supply and demand is far from being incoherent and anarchic, as asserted by the collectivists,” he explained.

Market prices are what integrate and coordinate all of the goings-on of the multitude of market participants. “‘Price’ is the sure guarantee of an adequate supply, and is thus the guardian of the subsistence of humanity . . . ‘Price’ is the guide, and in response to its unerring directions, enterprise, spurred on by personal interest, acts with extreme rapidity and certainty” to assure adaptation to constantly changing circumstances.

Socialist Planning vs. the Market Price System

But all this would come to an end with the abolition of private property in the means of production, and central determination and direction of all economic activity in the hands of the State. How will those in charge of centrally planning the economy know what to do? The government planners will have to rely upon the collection of statistics about supply and demand conditions prepared by “committees of inquiry” for that purpose, he suggested.

Yet, statistics, Leroy-Beaulieu said, can never serve as an effective substitute for the fluctuations in prices that always are “more rapid and certain indication of the required amount of production than statistical abstractions.” Imbalances and mismatching between supplies and demands would constantly be open to occurring under socialism, “which would cause terrible disorder and confusion, with effects infinitely more serious than mistakes made by private enterprise, which, as a whole . . . shows a marvelous quickness of adoption; mistakes committed by the State would not only be more serious, but far more difficult to remedy.”

The introduction of socialist central planning, therefore, would threaten serious and dire consequences in any society following the collectivist path:

We see then, that the momentous problem of the adjustment of supply and demand under a collectivist regime, in all localities and in all industries, remains unsolved. The play of prices would vanish with the disappearance of private trade, as would that variation of profit that, although apparently unjust, is in reality the instrument by means of which harmonious interaction between production and [consumer] requirements is maintained.

In place of these potent and benign forces, the only safeguard against disaster would be infallibility on the part of the economic administration of the socialist state; but history and experience show that state administration, so far from being infallible, is, on the contrary, far inferior to private administration in respect of certainty and promptitude of conception and execution.

On the one side is private interest, always alert and active; on the other, officials hampered by rigid regulations imposed by a bureaucracy, slaves of red tape, capable of dealing with normal conditions only, and impotent when confronted with the exceptional difficulties and unexpected vicissitudes to which the economic world is always liable. Again, on the one side, we have the energies of millions of men freely and actively engaged in work which they understand, on which their living depends, and which, therefore, they perform with the greatest keenness; and on the other, the cool indifference of administrators, who would be quite as much benumbed as stimulated by the responsibilities thrown upon them.

The very distortions and failures of socialist central planning, Leroy-Beaulieu warned, would soon generate systemic corruption and black marketeering, as people throughout such a socialist system would try to find ways to better fulfill their needs and wants in the face of shortages of desired goods and superfluous amounts of unwanted commodities. “However severe the regulations might be, it would be impossible to suppress this [illegal] private commerce,” he anticipated.

Paul Leroy-Beaulieu, it can be seen, anticipated essential elements of the later “Austrian” critique of central planning developed by Ludwig von Mises and Friedrich A. Hayek. Collecting and collating statistical data about the types, quantities and qualities of the available means of production, and an attempt to survey the vast array of forms and varieties of consumer demands could not and would not in any way serve as an effective substitute for the market-based price system.

There was and is no alternative to a functioning price system that indicates easily and adaptively all and every change in market supplies and demands, which serves as the information and incentives for individuals to use their abilities and resources to orient their activities for the satisfaction of consumers’ demands, based upon the profit margin differentials offered by shifting production from one direction into another.

The Tyranny and Slavery of Socialism

Paul Leroy-Beaulieu also understood that with government centralization and control over the means of production would come the greatest threat to human liberty ever experienced in modern history. He expressed astonishment that so many socialists insisted that their collectivist system would provide a greater degree of individual freedom and dignity than under the market system.

How could liberty exist in a society in which everyone would be an employee of the state brigaded into squadrons from which there would be no escape, dependent upon a system of official classification for promotion, and for the amenities of life . . . The employee (and all would be employees) would be the slave not of the state, which is merely an abstraction, but of the politicians who possessed themselves of power.

A heavy yoke would be imposed upon all, and since no free printing presses would exist, it would be impossible to obtain publicity for criticism or for grievances without the consent of the government. The press censure exercised in [Czarist] Russia would be liberty itself compared to that which would be the inevitable accompaniment of collectivism. However numerous the dissentients, they would be condemned to silence and subjected to injustice under the [socialist] regime, and a tyranny such has never been hitherto experienced would close all mouths and bend all necks . . .

Intellectual liberty would suffer equally . . . The human mind would thus be subjected to a yoke more terrible than it has ever known – the practices of Torquemada and the Inquisition would be mild in comparison . . . Again, what would become of art when the work of the artists would be subject to the dictation of the directors of production and the state would be the only purchaser?

The destruction of individuality would be the inevitable result of such a system, and the position of the laborer under it would be worse than that of a serf in the middle ages . . . Again, what dignity could exist in a society when state obligations would be substituted for all moral duties? Parents would not longer direct the bringing up of their children . . .

How can human progress continue in a society subject to universal constraint and authority? . . . An immense bureaucracy would be established, and individuals who are exceptional in any way would be shouldered on one side and crushed by its complicated machinery.

Paul Leroy-Beaulieu’s Warnings About Socialism

How amazingly prescient was Paul Leroy-Beaulieu about the reality of socialism-in-practice as experienced in Soviet Russia and anywhere else where it was more or less fully implemented. The Soviet state determined your education and indoctrinated your mind through monopolization of all means of communication and information; determined your occupation and employment and therefore your life opportunities; commanded where you would work and live, down to an assigned apartment in government housing (and there was no other) from which you could not move without permission.

The socialist regime viewed all dissent as threats to the system, and therefore brought down the wrath of the State on anyone through those in the hierarchy of power having virtually total control over your fate – including sending you to a labor camp or simply killing you. Corrupt officials and bureaucrats abounded all through the socialist planned economy, with whom “connections” were needed, and to whom loyalties and bribes of many sorts had to be paid to survive in the society.

The creative men of the mind – writers, artists, musicians, scientists – all were commanded and coerced into applying their abilities and talents only in those ways useful and demanded by the State to further the aims and goals of the socialist leadership – all in the name, of course, of building the utopia of the future. To resist meant losing your government job, and being classified as an unemployed “social parasite,” which made you subject to arrest, imprisonment and removal to a forced labor camp in the frozen wastelands of Siberia or burning deserts of Soviet Central Asia.

And all the while, Soviet socialist reality, due to the unworkability of the central planning system, left the mass of the society waiting on long lines for poor, shoddy and highly limited quantities of everyday goods in the “people’s” retail stores, which were the only legal outlets to get any of the necessities of life.

How naïve and blind were so many people as to what was waiting in store from the great experiment in building socialism, when it began a hundred years ago in Soviet Russia. But it is not as if people had no warnings as to what socialist reality might look like if implemented. Paul Leroy-Beaulieu had anticipated and explained most of its worrisome and dangerous features and characteristics three decades before the Russian Revolution began. He also reminded any readers that might have picked up his great book on Collectivism in the years before 1917 that if freedom and prosperity were, indeed, desired, there was no institutional alternative to individual liberty, private property, free markets, and the competitive price system.

[Originally Published at the Future of Freedom Foundation]