[from:] „Czasopismo Prawnicze i Ekonomiczne” 1921, No. 3–4, pp. 1–9.
Inaugural lecture at the Jagiellonian University given on 5 January 1921
Humanity now faces a gigantic task, one of rationalising the global economy and formulating a plan for it. As a shorthand, we will refer to this task as internationalisation and regulation. To avoid any misunderstandings, I would like to note in advance that socialisation, nationalisation and syndicalism are concepts that are used to describe the same phenomena, but from a different point of view. I see a common trend towards imposing a single plan on the economy of the entire planet (production of goods as well as their distribution and consumption), towards creating the institutions required and finally implementing such a plan. Thus there is a trend towards regulation in the global economy. Each bag of grain or flour will be counted and delivered to the right recipient according to an order given by a higher authority. Each commodity will be weighed, measured and delivered according to the plan. Any labour (be it animal or human) will be used in the stipulated location and the result of its work will be given to an inhabitant of a neighbouring village or sent abroad in accordance with the plan.
I am not reading a passage from novels by Bellamy or Wells here. I am only sharing the results of my scientific investigations. The point of science is to generate unity from multitude. Its realm includes ideas, theories and constructs.
I will always regret that neither Taine nor Klaczko were mathematicians or physicists. They would then be able to tell the world how much artistic beauty and creativity there is in great physical theories. The only difference is that while Dante and Michelangelo always have on our knees, science tends to be ungrateful and cruel. As soon as merciless facts cannot fit into, or be explained by, the accepted theory, science forgets about its own creations of which it used to be so proud. A tragedy for these disproved theories is that they themselves help to detect those facts that cause them to die. This is because in science, the theory acts as a headlight, illuminating the road ahead. As a result, those researchers who follow this road in order to arrive at the truth are protected from straying and can see the phenomena that they are interested in; most importantly, however, the shaft of light produced by the theory gives them hope that they are already close to reaching that truth.
However, escaping the chaos of facts using a scientific theory is also essential in practice if our practical life is not to be lived from day to day and if we want to shape it in a longer term, even if this “longer” term is in fact very short. If it is even possible to speak of foresight in social life, such foresight is utterly unimaginable without a theory.
Why is it said that humanity has set itself the task of regulating the world economy and that this task guides its present ideas and activities? Are these ideas new? Certainly not. However, as a result of the war, they have became extremely pronounced and new tools have appeared that permit their implementation. So what did the war reveal? What did Europe look like before the war and what did the war do to it?
In his famous book Economic Consequencess of Peace, the Englishman Keynes says: “The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep; he could at the same moment and by the same means adventure his wealth in the natural resources and new enterprises of any quarter of the world, and share, without exertion or even trouble, in their prospective fruits and advantages; or he could decide to couple the security of his fortunes with the good faith of the townspeople of any substantial municipality in any continent that fancy or information might recommend. He could secure forthwith, if he wished it, cheap and comfortable means of transit to any country or climate without passport or other formality…”.
Keynes illustrates interdependences between states by using statistics that pertain to Germany. Germany was the best customer for Russia, Norway, Holland, Belgium, Switzerland, Italy and Austria-Hungary, the second best customer for Britain, Sweden and Denmark, and the third best customer for France. Germany was the most important source of exports for Russia, Norway, Switzerland, Holland, Denmark, Sweden, Italy, Austria-Hungary, Romania and Bulgaria, and the second most important source for Britain, Belgium and France. England alone exported more to Germany than to any country in the world bar India, and it bought more from Germany than from any other country in the world bar the United States.
Another Englishman, Norman Angell, the author of a well-known book entitled The Peace Treaty and the Economic Chaos of Europe stated: “It is a platitude that the road that turns iron and coal into bread is a straight one. Canada does not take our agricultural machinery in exchange for her wheat or bacon; she builds agricultural machinery herself. The process, on the contrary, looks approximately as follows: a German chemical factory sells its products in China and for the money thus obtained German workers eat Russian wheat harvested by an English agricultural machine, and the workers who built this machine buy bread in Canada”. This example is a great illustration of economic interdependence between nations. And what did the war do to it? It shook the entire system so violently, severed the ties that bound nations to one another, disrupted communications and exhausted sources of food so badly that the famous American Hoover did not hesitate to say that in Europe, 100 million were doomed to dying of hunger; as many as 15 million people are expected by the English and Americans to emigrate from Germany alone to look for bread. Where will they go and where will they find this bread?
In his book on Russia’s economic organisation, Alphonse Goldsmith proudly claims that he sent the first batch of German workers to Russia to supply the Soviets with qualified workers.
So what did the war reveal in fact? Two highly important demands: firstly, comitas gentium is to be restored, extended and developed; and secondly, I would like to stress the fact that wherever and whenever scarcity emerges, the idea of equal division is always put forward. The latter cannot be done without regulation and without coercion. Therefore I believe that the two trends that are a common feature of present-day social life (regulation and internationalisation) are rooted in hunger.
Both trends have been hugely supported by Bolshevism. What is the essence of Bolshevism from an economic point of view? Bolshevism is basing production not on the company’s profitability but on the idea of obtaining goods regardless of this profitability. The difference between Bolshevism and the capitalist system may also be described as follows: the latter aims to sell products, while the former to produce them; capitalism is all about money, while Bolshevism can do without it. All who understand this difference and examine it thoroughly will certainly realise why Bolshevism must necessarily be global and why it must necessarily rely on regulation and on the strictest coercion. Anyone who does not treat profitability as the prime mover and who sets up companies not in order for them to be profitable but rather in order for them to produce goods cannot succeed without plan and without coercion that prohibits free competition, since he will not be able to withstand such competition either domestically or abroad. Bolshevism may conclude treaties with capitalist states, it may produce goods in a capitalist manner and it may well exploit workers like no capitalist could. All this does not bring much comfort. Bolshevism only does it because it needs skilled workforce, it needs machines and because it wages wars and clutches at all straws. However, it always does these things temporarily, being fully aware that it would cease to be what it is if it did not seek to conquer the whole world.
It is also quite understandable that the Second Bolshevik Congress in 1919 adopted the following resolution: “The collapse of the capitalist form of state and its replacement with the socialist one is now being realised. This determines the direction of social development all over the world and in each individual country. The establishment of the dictatorship of the proletariat and of the Soviet system in other countries will facilitate the tying of the closest economic bonds between countries and will also facilitate the deliberate division of labour between nations and the creation of international economic administration authorities”.
I do not want to decide here which Marx is the real one: the Marx of the Communist Manifesto who understood revolution as violence or the Marx of the Amsterdam speech who allowed for evolution; I do not want to decide either who remained faithful to Marx: Lenin or perhaps Kautsky whom Lenin branded a renegade. I do, however, understand one thing: that the Bolshevik programme, which does not base production on profitability, is truly a revolution, and that it must treat socialism, which introduces reforms into the capitalist system, as something completely opposed to it.
Here, I must tell you something about my fellow economists. When I see them, I experience the feeling that the Germans call Schadenfreude. If my domain of private law, as I will demonstrate, is shrinking, what about their economy, which is based on the principle of cost efficiency? Their heroes – Smith, Ricardo and Mill – will be gathering dust somewhere in the corner of a library.
This is the substrate – this is today’s social life. What does private law look like against this background? How did it change during the war and what is its future?
The aforementioned two trends have certainly had an effect on it. Internationalisation has already resulted in some measures having been taken, and regulation has manifested itself in private law as the transfer of whole areas from the field of private law to the field of public law. I would like to discuss a few examples.
The first of these trends is clearly evidenced by the International Labour Organisation as established under Part XIII of the Treaty of Versailles. The ILO is the proof of the internationalisation of law not only in connection with its positive characteristics; the discussion that preceded the enactment of this part of the Treaty also throws some light on future trends.
According to Article 388 of the Treaty of Versailles, the International Labour Organisation consists of the General Conference and of the International Labour Office headed by the Administrative Board. Each state that is a member of the League of Nations sends four representatives to the Conference, two of whom are designated by the government of the state in question and one each is elected by employers and workers’ organisations. Delegates enjoy individual voting rights, i.e. delegates from the same country are not bound by solidarity. If we analyse the meaning of these provisions, we will be struck by the fact that certain rules that appeared inviolable to date have been broken. States are represented in international relations not only by governments but also by representatives of individual social classes. Delegations are not bound by solidarity, and thus coalitions not only of countries, but also of certain classes from different countries are possible. We can see how far the internationalisation of labor relations has progressed as a result. It would have been complete if certain states had prevailed and a requirement had been introduced that resolutions of the Conference must be ratified by the governments of the countries of the League of Nations. This would have made the Conference a regular assembly of international legislators. However, internationalisation is being reinforced and enhanced by the capacity to refer matters to a permanent international court of justice in some cases. Although the procedure in this respect involves numerous conditions, it is clear that – to a certain extent at least – the sovereignty of individual states has been sacrificed on the altar of internationalisation. The future will show whether the International Labour Organisation fulfils the hopes of its proponents, but one thing is already clear – the Treaty abandoned the principles on which a state should be based according to our entire thinking on the public sphere.
Is it necessary to provide proof of regulation that manifests itself in private law by abolishing the freedom of contract and replacing it with coercion? Here, it is sufficient to look at the activities of our Parliament in the last two years. Do I need to remind you of sequesters, quotas, maximum prices and the compulsion to lease land in certain cases? All these statutes are generally known. A civil lawyer looks at them and tries to find any traces of sale or lease contracts there. My aim is not to renovare dolorem [reopen the wounds] of the landlords present here. If we can now feel a gust of wind in this room, these are the sighs of longing for those times when they were really in charge of their houses and derived income from them. But a civil lawyer will ask again – what happened to the rental contract and what happened to the freedom of contract in general? Obviously, it still exists and we discover it whenever illegal trade and usury disgust us.
Private property! We hear that property has become a social function and whoever has rights, must have duties as well. I agree with this, but I do not think that this construct corresponds to a legal environment in which rights cannot be seen for the obligations. I do not want to enumerate all so-called restrictions on private property here, I will just point out the most important ones. Whether the owner manages his own land well or not depends on the opinion of his fellow citizens who sit on land committees. If they decide that the land is mismanaged, the owner is expropriated. The Act of July 1920 does not provide any criteria for determining whether the land is mismanaged or not. I do not think I need to comment on this.
And is family law free from regulation? A few days ago, we read that mothers in Russia demanded to be released from the burden of motherhood and wanted the state to bring up their children. We could consider it a symptom of moral decline, but let us instead ask: who will bring up the children of a married couple where the husband cannot bear all the burdens alone and where the wife is working all day outside the home just like the husband?
We can finish here. I set out to present the direction in which private law has moved following the war. I stated that it was becoming internationalised and that it was losing whole areas to compulsory regulation, i.e. public law. (I am not going to go any further. In a communist state, there are supposed to be no laws at all). However, the question that needs to be asked here is whether this must necessarily be the case. I have already attempted to discuss the reasons why this is so, but I did not say that it must be so. I cannot leave my listeners uncertain about my opinion here. I have no doubt that neither internationalisation nor regulation as the Bolsheviks understand it will be successful. First of all, it will not fill stomachs – it will not deliver on its promises. It will not be able to because it is not humanly possible – no human has the mind or energy to completely regulate a single state, let alone the entire globe. It will not be able to because costs will be so great that the remainder will not satisfy the needs. It will not be able to because like a single broken cog in a watch prevents it from functioning, something will necessarily be broken in this huge global machine all the time and this will cause it to grind to a halt as a whole. But most importantly, it will not be able to because humanity cannot be transformed into a stable where people will be fed together and toil under a common yoke like animals. Freedom is the most valuable thing we have and this will never cease to be true.
Yes, but – I hear this charge being levelled – you yourself said that what is happening is the result of scarcity and hunger. Therefore you are obliged to point to a remedy if you reject the one that has been recommended by others. I do not want to leave anyone here in doubt – I do have a remedy. However, it is as simple as a rural Sunday school lesson or as a priest’s sermon. I am really ashamed to present this remedy here so that you do not think that I started splendidly yet finish with a platitude. Maybe it will help somewhat that my naïve recipe has a foreign passport. Vanderlip, a famous American banker, says that he was struck by the laziness that has enveloped Europeans, and Norman Angell, whom I have already mentioned, writes: “There is no other means to overcome hunger but to revive all these economic factors that are required to increase production (I repeat: to increase production)”.
Let us follow this advice. Hunger leads to slavery and it can only be defeated by increasing production, and thus primarily by eliminating the state of affairs that was so succinctly and frankly described by Vanderlip. Then it will also become obvious that the old private law and the old political economy should be restored to their former position and respected, since they are based on freedom.
 Edward Bellamy (1850–1898) – American writer and journalist, contributor to the New York Post, The Nationalist and New Nation. His most famous novel was Looking Backward (1888) whose protagonist wakes up in 2000 when the United States has become a socialist utopia.
 Herbert George Wells (1866–1946) – British writer, author of famous science-fiction novels: The Time Machine (1895) and The War of the Worlds (1898). He was a member of the socialist Fabian Society, which he left as a result of his conflict with Bernard Shaw. During his journey to Soviet Russia, he met Lenin and Stalin several times (and interviewed the latter in 1934).
 Hippolyte Adolphe Taine (1828-1893) – French historian and writer, proponent of positivism, professor at the École des Beaux Arts in Paris and member of the French Academy, author of, inter alia, Les philosophes français du XIXe siècle (1856) and Philosophie de l’art (1865).
 Julian Klaczko (1825–1906) – columnist, literary critic, politician and historian of art. He gained Europe-wide fame as a contributor to the influential Revue des Deux Mondes. Particularly popular were his articles criticising British politics and Pan-Slavism and, above all, the German Chancellor Bismarck. Main works (dates of Polish editions): Poeta bezimienny [Poet without a Name] (1862), Aneksja w dawnej Polsce [Annexation in Ancient Poland] (1901), Studia dyplomatyczne. Sprawa polska – sprawa duńska [Studies in Diplomacy: the Polish and Danish Causes] (1903), Dwaj kanclerze [Two Chancellors] (1905), Wieczory florenckie [Evenings in Florence] (1881), Rzym, i Odrodzenie. Juliusz II [Rome and the Renaissance. Julius II] (1900).
 Dante Alighieri (1265–1321) – Florentine poet and thinker associated with the anti-Papal Ghibelline faction, proponent of the unification of Italian states. He was an author of not only the famous Divine Comedy but also of the political treatise De Monarchia, in which he presented the concept of universal monarchy.
 Michelangelo Buonarroti (Michelangelo di Lodovico Buonarroti Simoni) (1475–1564) – Italian sculptor, painter, draftsman, architect and poet, one of the most eminent Renaissance artists and creator of many famous sculptures, including Pietà (1498–1500), David (1501–1504), Moses (1513–1516), and paintings, including Doni Tondo [Holy Family] (1503), frescoes on Sistine Chapel vault (1508–1512), Last Judgment (1536–1541).
 John Maynard Keynes (1883–1946) – British economist, columnist and government advisor. He was made famous by his book Economic Consequence of Peace, published in 1919, in which he criticised the peace treaty with Germany. His subsequent works also gained recognition, but were criticised by some as well. Those included: End of Laissez-Faire (1925), Treatise on Money (1930) and General Theory of Employment, Interest and Money (1936). Keynes headed the British delegation during the Bretton Woods negotiations in 1944.
 Ralph Norman Angell Lane (1872–1967) – British politician, diplomat and political writer, 1933 Nobel Peace Prize laureate for his work on the Executive Committee of the League of Nations.
 Herbert Hoover (1874–1964) – U.S. politician, Republican Party activist, President of the United States 1929–1933. During his term, he struggled with the Great Depression; it is believed that it was in fact he who launched some measures that allowed the collapse of the U.S. economy to be effectively averted – measures that are commonly associated with his successor Franklin Delano Roosevelt to whom he lost when running for re-election.
 Comitas gentium (Latin) – international courtesy; customs adopted in international relations which do not have the force of laws.
 Karl Marx (1818–1883) – German philosopher, economist, founder of Marxism and co-founder of the First International, author of, inter alia, Der 18. Brumaire des Louis Bonaparte (1852), Zur Kritik der politischen Ökonomie (1859) and the unfinished Das Kapital (1867).
 Vladimir Lenin (1870–1924) – Russian politician and Bolshevik revolutionary, one of the leaders of the Social-Democratic Labour Party of Russia who initiated a split within the party and headed the so-called Bolshevik faction; the leader of the October Revolution and the first leader of Soviet Russia, he co-founded its murderous political system and state apparatus.
 Karl Kautsky (1854–1938) – German political thinker, founder and long-time (1883–1917) editor of Die Neue Zeit magazine, which was the press organ of the Second International. He was the author of the SPD’s 1891 Erfurt Programme. He rejected Bolshevism as a way to realising the principles of socialism, and instead promoted the idea of implementing them through the evolution of existing relationships rather than through revolution.
 Adam Smith (1723–1790) – philosopher, ethicist, professor of the University of Glasgow, founder of classical economics, author of The Theory of Moral Sentiments (1759) and An Inquiry into the Nature and Causes of the Wealth of Nations (1776).
 David Ricardo (1772–1823) – British economist, co-founder of classical political economy. His most important work was On the Principles of Political Economy and Taxation (1817).
 John Stuart Mill (1806–1873) – philosopher, sociologist and English economist, one of the most influential liberal thinkers of the 19th century, author of, inter alia, On Liberty (1859), Considerations on Representative Government (1861) and Utilitarianism (1863).
 Frank A. Vanderlip (1864–1937) – U.S. banker and journalist, President of the National City Bank of America (1909–1919, currently Citibank) and co-founder of the Federal Reserve Bank.