Democracy and Exchange

Democracy and Exchange

Schumpeter, Galbraith, T.H. Marshall, Titmuss and Adam Smith

David Reisman

Democracy is the rule of the people. Exchange is supply and demand. Individualism, agreement, tolerance and choice are the underlying values that make possible the productive collaboration of the market and the state. This book assesses the theories of democracy and exchange of five interdisciplinary thinkers who tried to unite political and economic reasoning into a single theory of moderation and pragmatic management.

Chapter 7: T.H. Marshall: Citizenship and Social Thought

David Reisman

Subjects: economics and finance, economic psychology, history of economic thought, institutional economics, social policy and sociology, economics of social policy

Extract

Schumpeter’s socialism is economic planning and post-competitive controls. Together with the Marxists who believe that market coordination will selfdestruct and the Fabians who advocate the nationalisation of the commanding heights, the Schumpeterian vision is one which anticipates a transition into what T.H. Marshall calls ‘Socialism A’ (Marshall, 1963: 271). Socialism A, Marshall says, is full-bodied socialism. It is ‘real socialism’, the hard-line dogma that is the inspiration for ‘all schools of thought which set out to transform the social and economic system by abolishing capitalism, whether by violence or by peaceful penetration’ (ibid.: 271–2). Marshall’s ‘Socialism A’ looks forward to a future that has evolved beyond gain-driven enterprise. Marshall’s ‘Socialism B’, social-ism and not preponderantly economics-ism, is ‘milder and less alarming’ (ibid.: 272). Socialism B raises no objection to the free market which it accepts will contribute much to allocative and dynamic efficiency. Its thesis is simply that there are high social values such as security and justice which the invisible hand, uncorrected, would leave in a state of intolerable neglect. Marshall’s ‘Socialism B’ is the material embodiment of the ‘humanitarianism associated with the so-called Tory Socialists, combined with some emergent principles of social policy developed by the more advanced Liberals, and a readiness to rely on government action which had a definitely Socialist, or as Dicey would say, “collectivist” flavour’ (ibid.: 272). Macmillan was a socialist since he did not believe that ignorance and destitution should lie where they fall. Asquith was a socialist since he was convinced...

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