THE ECONOMIC THEORIES ADVANCED TO EXPLAIN THE STEADY INCREASE OF PUBLIC

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EXPENDITURE IN EUROPE.1

UR century, and especially the second half of it, may be distinguished by a series of characteristic facts. Every writer can easily find some fact which, by itself, leaves its imprint on our century, but among the many peculiar phenomena of our century some are far more conspicuous than others, and it is these distinguishing features which give the age its definite character.

Now the state, that greatest of social organisms, which in every age has had an immense importance in proportion to its organization and functions, has assumed in our century, and especially in the second half of it, a new phase which shows itself in a continuous expansion of its functions, and a corresponding increase of public expenditure and taxation. If, then, without examining the complex phenomenon of the manifold and increasing activities in which the life of the state develops, we confine our observation to the more simple phenomenon of the revenue which the state demands of its taxpayers to fulfill these functions, we are amazed at the continuous increase of these public expenditures.

The French government in 1820 levied taxes of 939 millions of francs; in 1840, this sum had risen to 1,235 millions; in 1860, to 1,962 millions; in 1880, to 3,130 millions, and in 1895, the sum reached 3,375 millions of francs. It has been calculated how much government in France has cost per hour at various periods in this century. Under Napoleon I the hourly expenditure was 150,000f.; under Louis XVIII, 119,000f.; under Louis Philippe, 150,000f.; under Napoleon III, 249,000f.; and in 1882, 463,000f.

Evidently we are far distant from the time of Charlemagne, that great and powerful sovereign who met the expenses of his

1 The Editors acknowledge their indebtedness to Mr. R. T. Holbrook of Yale University, who undertook the translation of this article from the Italian.

vast empire by selling the grain crops of his domains. It is a curious phenomenon: never did public expenditure increase so prodigiously and reach such colossal sums as when taxes could be imposed only with the consent of the taxpayer himself. Still more striking has this become now that the people's representatives themselves discuss and propose the need of new outlays. In our modern parliaments it seems more and more true that the progressive increase of public expenditure has no limits.

It is not possible to make close calculations. The political organization of the various European states varies greatly. But adding the annual expenses of local, national and federal governments in Europe, the result is about 25,000 millions of francs. That is to say, a sum which the human mind, in spite of every effort, cannot comprehend. Increase it further, and we shall enter more and more into the realm of the inconceivable. But it appears that neither the politicians nor the economists of our time stand in fear of the inconceivable. This, in fact, is how the matter stands: the politicians prefer to discuss as little as possible this phenomenon of a public expenditure steadily and irresistibly growing. The so-called Liberals call it fatal; the Radicals describe it complacently as democratic. Economists have given the phenomenon more attention. But it may be remembered that Thiers, from the standpoint of a practical man, frequently acute as practical men are, called economics a special branch of literature. Thiers exaggerated; but in the matter before us he hit the truth exactly. The far too numerous works of economists on the progressive increase of public expenditure are merely literary productions, with more or less merit, often with less, in which we seek in vain for an economic analysis and the true inwardness of the phenomenon which they pretend to study. Yet amongst them are economists who, through other works, have won a merited renown.

Thus Geffcken, Leroy-Beaulieu, Wagner, Gide, Pfeiffer, Czörnig, Wilson, Salandra, and even de Molinari, besides many others whom I might name, have gone no further than to state that the progressive increase of public expenditure is due to the intensive and extensive development of government functions,

of militarism, of public debts and so forth-a solution of the problem proposed by those economists which has many points of contact with the rejoinders of M. de Lapalisse. Other economists, like Jevons, Sax, Gersfelt, Kauffmann, and RiccaSalerno, have given an explanation of this phenomenon more scientific, and at the same time more reasonable.

They see in the progressive increase of public expenditure one of the many manifestations of the law of the economy of effort, and the ever increasing centralization of political administration, according to them, arises from the same economic causes as our modern organization of industry on a grand scale.

Both Geffcken and other economists after him carried out this theory in the following way. They said: to assign to the state many functions is desirable from the standpoint of social progress. Among less civilized nations the need must first be seen before it can be provided for; in our civilized countries, however, the state foresees the rise of the need itself, and, therefore makes preparations to satisfy it. But one must have only elementary notions of physiology to see that human needs cannot arise before being felt; and then it is plain what a tremendous error is concealed in that so-called scientific theory. Then, on the other hand, if the people of to-day are very discontented, the fact is that they have many needs without the means of satisfying them. The state then, by causing new needs simply increases this their discontent. The state would be madly stimulating the progress of wants among the less prosperous classes, though to-day the economic means of satisfying those wants are so insufficient. It is useless to deceive oneself in this matter, it is useless to keep praising the progress of this century, because, however great it has been, humanity is still very far from contentment and well-being. Élisée Réclus, who is an authority to whom the socialists will not object, has calculated the world's production of sugar at 5,300,000 metric tons; of wine at 150 millions of hectoliters; coffee, 1,200 metric tons; cocoa, 90,000 metric tons; 590,000 tons of tobacco; 2,680,000 tons of cotton; 215,000 kilograms of gold; 3,975,000 kilograms of silver; 223,000 tons of copper; 535 millions of tons

of coal. Now these figures, it is true, refer to a very limited number of commodities; yet, if these statistics extended to a much larger number, these other statistics would give the same result, that is they would show us that if we wished to provide all men with these commodities, there would fall to each man's share a part so mean and insignificant that with this form of distributing wealth human economy would appear much more wretched than it does to-day.

In man new needs appear and take on gigantic proportions too easily for it to be necessary or even fitting that the action of the state should also tend in this direction. The action of the state in spurring on human needs, already so active and so numerous, results only in arousing violent and thoughtless outbreaks among the masses of the people, whose desires and deprivations have become only harder to bear because of the unsuccessful attempt to satisfy their many needs. Draper Lewis very fittingly finds a measure of the progress of civilization in the development of new wants, which appear in an élite, and then are communicated to the masses,1 and Lewis is quite right. First appear new wants, and not until later are measures taken to discover sufficient means of satisfying them.2 But when you promote the development of new wants too much, the discovery and invention of the means adapted to satisfying them follow very slowly upon the advance and increase of those wants, and thus, in this unstable equilibrium of human wants, especially in the masses, and of the means sufficient to satisfy the wants, you see that there arises a real social crisis; that is to say, about what we have to-day. Socialism, as has been so many times well shown by de Molinari,3 far better than by any other economist, originated in an effort to counteract the incessant crisis produced by the fall of the old industrial order and before the new one was fully established. In such a period 1 Annals Am. Acad. Pol, and Soc. Sc., June, 1894.

The inverse process is quite rare and altogether exceptional.

3 See chiefly the recent work of de Molinari: Comment se résoudra la question sociale? Paris, 1896. This partly sums up, in part also completes, other valuable works of the author: L'évolution économique; La morale économique; Les lois naturelles de l'économie politique.

of transition the condition of the laboring classes becomes worse and worse until a state of misery is reached, debasing for some, revolutionary for others. To-day socialism would have no reason for existence because the economic condition of the laboring classes grows wonderfully better, all the time, so that already it may be affirmed that never was the economic condition of the masses so good and satisfactory as in our times.

The socialism of to-day, under whatever aspect of its various forms it shows itself, is purely and simply a manifestation of discontent and of disillusion in the hopes conceived and fostered by its adherents-hopes for economic welfare, which the new economic régime and the many technical and mechanical inventions of the second half of this century were to give to humanity. Through socialism the masses hope to gain that economic welfare and that complete satisfaction of their wants which they have not found under the new régime and the progress of industry. What is that struggle of classes that the disciple of Marx harps upon? The socialists themselves make no mystery of it: it is the scheme of coercion adopted by the socialism of Marx to confiscate the property of the actual owners of economic wealth. The masses ask only one thing of socialism: a fuller satisfaction of their needs, a genuine improvement of their actual economic condition. Now here is a characteristic fact: socialism appears most threatening in the great centers; in fact, it is there that the new wants are most easily called forth and developed, while the socialistic gospel meets deaf ears in the country districts, though it is here that the most wretched conditions prevail among the poor.

Socialism, according as its hopes are more or less revolutionary and violent, or christian and peaceful, is like a coiled spring, and presses toward the attainment of the unsatisfied needs and desires of the masses.1 Whoever in any way whatsoever

1 When Sicily, toward the end of 1893, was given up to violent socialistic and revolutionary disturbances, as I stood near two young workmen in the street, I overheard one of them say: "Why do you go to school? Hereafter Defelice (one of the socialist leaders) will be in power; and the good time is coming; we shall get everything cheaper, and even with smaller wages we shall be able to have meat and fish every day—which up to now only the rich have had." In its vulgarity the idea that this young man had of socialism remains the essence of Marx's socialism, even when befogged with Hegelian abstractions.