10 Rae: a journalist out of his depth - Part II: nineteenth-century British and continental critics

American Journal of Economics and Sociology, The,  Nov, 2003  by Aaron B. Fuller

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John Rae (1845-1915) was a successful British journalist and author who is best known to students of economics as Adam Smith's principal biographer. (1) For many years he was associated in an editorial capacity with The Contemporary Review, which was one of the leading British journals of fact and opinion. In addition to these activities and dozens of articles in The Contemporary Review and the British Quarterly, he wrote Eight Hours for Work (1894) and Contemporary Socialism (1884). It is in this latter work, which was so successful that it went through four editions (1884, 1891, 1901, 1908), that Rae turned his literary talents to describing and criticizing "the two main types of existing social democracy--the Centralist, which is usually known as Communism, Socialism, or Collectivism, and the Anarchist, which--though also Communist, Socialist, or Collectivist--is generally known as Anarchism or Nihilism." (2) An entire chapter was devoted to Henry George because "although he is not a socialist, ... his doctrines are in many respects closely allied with those of socialism, and because he has done more than any other single person to stir and deepen in this country an agitation which, if not socialistic, at least promises to be a mother of socialism." (3) This explanation provides us examples of Rae's great strength as an expositor and social critic and of his great weakness as a theorist. He was precisely correct that the agitation created by George's ideas would stimulate the growth of British socialism, but he was precisely wrong that George's doctrines were allied with socialism. It is characteristic of journalists to be long on social commentary and perception and short on conceptual analysis, and Rae is no exception. It is from the perspective that Rae was a journalist criticizing George an economist that we investigate the substantive contents of Rae's chapter, "The Agrarian Socialism of Henry George" in his book Contemporary Socialism. *

Overview

Rae devoted separate chapters to Karl Marx, Ferdinand Lassalle, and Carl Marlo in addition to Henry George, and this provides us with an index of the significance he attached to George's influence. Already in 1884 Marx's ideas were influential enough to require special attention in any survey of the status of contemporary socialism. Lassalle's famous phrase identifying an "iron law of wages" and his pivotal role in the formation of the General Association of German Workers (later to evolve into the German Social Democratic Party), qualify him as a major symbol of practical socialist activism. (4) Carl Marlo is no longer well known, but in the mid-nineteenth century his writings contributed much to the popular conception of competitive capitalism as an inherently oppressive system of organization, and his political recommendations of industrial nationalization and cooperative corporate organization strikingly resemble the commercial structure of Western Europe in the mid-twentieth century. (5) Rae's implied elevation of George's influence to an approximate equality with these three socialist standardbearers testifies to the seriousness with which he viewed George as a potential molder of British opinion.

Rae's criticisms of Henry George were uncompromising because he viewed George as a dangerous voice that had to be stilled to preserve the good order of British society. To achieve this purpose, it did not necessarily matter to Rae what the contents of George's theories were; whatever George said had to be refuted because it contributed to popular unrest. Discussing George's self-proclaimed search for an explanation of why poverty accompanies material progress, Rae clearly establishes his categorical rejection of George's reasonings.

   He first tormented his brain with imaginary facts, and has then
   restored it with erroneous theories. His argument is really little
   better than a prolonged and, we will own, athletic beating of the
   air; but since both the imaginary facts and the erroneous theories
   of which it is composed have obtained considerable vogue, it is well
   to subject it to a critical examination. (6)

Rae's critical examination is divided into three parts. In part one he challenges George on the empirical evidence of advancing poverty, denying that poverty was increasing and arguing that in proportion to population poverty was "considerably less in the more advanced industrial countries than in the less advanced ones." (7) Reasoning by analogy, Rae described George's view of advancing poverty amidst advancing wealth as like riding on a moving train that is passed by a faster train on a parallel track. The slower train seems to be moving backward only because the faster train is moving farther and farther ahead, but in fact both trains are moving ahead. Rae explained that like the motions of the two trains, the incomes of the poor and wealthy were both moving ahead, but the more rapid progress of the wealthy made it seem as if the poor were losing ground when in fact they were not. Phrased more precisely, Rae agreed with George that real income growth was disproportionate between high- and low-income classes, but disagreed with what he interpreted as George's view that the rate of growth was positive for the rich and negative for the poor.