Emil Lederer, Grundsätzliches zur Sozialisierungsfrage (1920)

Emil Lederer’s economic essay, published as a newspaper article in two installments, makes socialization a condition of postwar reconstruction rather than merely a socialist aspiration. Its structure follows three questions: why socialization is necessary, which industries should undergo it first, and how they should be organized. The first installment connects the collapse of the prewar economic order to the need for democratic reconstruction and a strategic choice of sectors. The second distinguishes socialization from bureaucratic state management and argues for genuine economic self-government. Together, they present a transition that must mobilize popular energies without sacrificing industrial competence.

Lederer begins with the war’s destruction of the conditions under which capitalism had reproduced itself. Economic regularities have loosened, social relations have been overturned, and the state’s previously unquestioned authority has collapsed. Restoration cannot simply mean returning to inherited rules:

Eine wirtschaftliche Neuordnung ist notwendig, die ökonomischen Gesetze der Welt vor dem Kriege aber gelten nicht mehr als verbindlich.

English translation: An economic reorganization is necessary, but the economic laws of the prewar world are no longer regarded as binding.

This rupture is political and moral as well as economic. Larger populations now participate consciously in shaping their collective future. Reconstruction therefore requires democratizing the economy and appealing to the constructive capacities of the masses. Capitalism, Lederer argues, can no longer command the moral commitment needed for such an undertaking: wartime and revolutionary profiteering have elevated socially discredited figures, while capitalist interests have become entangled with prolonging the war. Socialization is necessary because recovery depends on extraordinary collective efforts that the existing system cannot inspire. The alternative is not comfortable continuity but potentially deepening misery, civil conflict, and destruction of the remaining material basis for recovery.

Lederer acknowledges that these circumstances differ from the abundance and developed productive organization associated with Marx’s anticipated transition. Socialization now confronts scarcity, widespread impoverishment, and dislocated production. Yet he preserves a deeper continuity: socialism emerges as the unavoidable response to an elemental crisis that cannot otherwise be mastered. His suggestion that catastrophe might release the psychological energies needed to create a new society remains explicitly tentative. Necessity does not guarantee success; the issue is whether democratic reconstruction can turn crisis into organized effort.

The choice of industries follows from the vulnerability of that effort within its surrounding economy. Lederer accepts the prevailing emphasis on coal and ore mining, large landed estates, forestry, and large-scale iron production, but rejects the usual justification that routine production and existing bureaucratic tendencies make these sectors suitable for state administration.

Entscheidend ist vielmehr, daß sich die Sozialisierung mitten in einer kapitalistischen Welt, in einer Volkswirtschaft, die noch überwiegend kapitalistisch, und in einer Weltwirtschaft vollziehen muß, welche ausschließlich von dem Gesetz des Profits regiert wird.

English translation: What is decisive, rather, is that socialization must take place in the midst of a capitalist world, in a national economy that is still predominantly capitalist, and in a world economy governed exclusively by the law of profit.

The decisive problem is resistance from capitalist organizations, especially through discrediting socialized enterprises and undermining their access to capital. Primary production offers a comparatively defensible starting point during raw-material shortages: some branches need little credit, while others can obtain it because their position is relatively independent of cyclical fluctuations. Sectoral priority is thus a strategy for protecting the transition, not a judgment that technical development occurs automatically or that bureaucratic management is harmless. Once socialization has begun, more differentiated industries can follow.

The second installment examines precisely that bureaucratic danger. An administrative authority can act through its authority alone and consequently requires controls against arbitrary action. A private enterprise, in Lederer’s account of normal conditions, must instead accommodate itself to the economic environment. Transferring administrative controls into industrial management risks immobilizing production. Bureaucracy also rewards obedience to directives and attracts personalities suited to rule-bound administration rather than economic initiative.

Yet public ownership need not produce this result. Lederer distinguishes the authoritarian power-state, whose wartime economic controls served military concentration, from Anton Menger’s “popular state of labour.” The state’s social character is changeable; nationalization does not settle how an enterprise will function.

Die Sozialisierung des „volkstümlichen Arbeitsstaates“ ist weit entfernt von der Schaffung neuer Behörden. Im Gegenteil, sie ist: Demokratisierung, Organisation der Volkswirtschaft durch und für die werktätige Bevölkerung.

English translation: Socialization in the “popular state of labour” is far removed from the creation of new administrative authorities. On the contrary, it is: democratization, organization of the national economy by and for the working population.

Democratic organization nevertheless requires specialized organs and capable leaders. Neither profit-maximizing entrepreneurs nor officials satisfied with formal compliance provide the appropriate model. Lederer’s crucial institutional claim is that leadership oriented toward the common economy must be selected and formed within an organization that requires it.

Existing “parity” self-governing bodies fail this test. Entrepreneurs retain operational responsibility, ownership interests, and superior knowledge; worker and public representatives depend on their explanations even to understand the relevant facts. Formal equality therefore conceals substantive dependence.

Damit der Selbstverwaltungskörper wirklich ein lebensfähiges Organ der Sozialisierung wird, muß der Gegensatz, der heute den Selbstverwaltungskörper zerreißt und aktionsunfähig macht, durch Ausschaltung des Unternehmer-Profitinteresses aufgehoben werden.

English translation: For the self-governing body truly to become a viable organ of socialization, the antagonism that today tears it apart and renders it incapable of action must be overcome by eliminating the entrepreneur’s profit interest.

Lederer endorses Proposal I of the German Socialization Commission as a transfer of productive resources into society’s hands. His conclusion is immediate but bounded implementation in the previously identified sectors. The essay’s lasting conceptual contribution lies in linking democratic legitimacy, economic resilience, and institutional formation: socialization requires more than altered ownership or consultative representation, but it must also avoid reproducing the machinery of the coercive state.