Emil Lederer: Discussion Contribution on Coal Mining (1920)

Emil Lederer’s recorded commission intervention, published in volume II, pages 540–542, addresses compensation for owners of enterprises undergoing socialization. Responding to Rathenau and Vogelstein, he moves from the criteria for compensation to its economic consequences, the continued employment of entrepreneurial expertise, and the limits of statutory formulas. His central argument is that compensation cannot preserve every feature of the capitalist position it replaces. Socialization necessarily changes the relationship between ownership, income, and productive activity; a workable settlement must acknowledge that change rather than attempt to reimburse owners for its entire consequences.

Lederer begins by challenging Rathenau’s proposed reliance on subjective distinctions among owners. Shares in a single industry may be held as speculative securities, investments, family property, or instruments for securing influence and a managerial position. These differences make individual motives difficult to translate into consistent compensation rules. When Rathenau interjects that the differences are not substantial, Lederer answers that they are precisely the criteria Rathenau has invoked. The problem is not that objective valuation guarantees justice: Lederer explicitly recognizes that a universally satisfactory objective standard may be unattainable. Nevertheless, assigning different compensation to classes of persons within one industry seems to him administratively unmanageable. His preference for an objective starting point thus rests on the difficulties of applying subjective criteria, rather than on confidence in a perfectly equitable valuation method.

Turning to Vogelstein, Lederer makes the political implications of compensation explicit:

Eine Entschädigung in dem Sinne, als ob der Kapitalismus oder als ob sämtliche Kapitalisten als Ganzes aus dieser Sozialisierung unversehrt und wieder als Kapitalisten hervorgehen könnten, ist unmöglich.

English translation: Compensation in the sense that capitalism, or all capitalists collectively, could emerge from this socialization intact and once again as capitalists is impossible.

This claim distinguishes compensation for property from preservation of an economic role. Entrepreneur-capitalists previously participated in cyclical profits and the growth of economic productivity through their ownership; socialization turns them, in that capacity, into recipients of rentier income. An individual can sell the income claim received as compensation and purchase industrial securities elsewhere, but this merely transfers the rentier position to another holder. It does not eliminate the aggregate transformation. Increased demand for the remaining industrial securities can restore equilibrium through higher prices, although withdrawing ten billion rather than one hundred million in assets from the capitalist market economy would produce much greater friction. Lederer’s point is that individual portfolio adjustments cannot make the systemic consequences disappear.

He therefore rejects an additional payment intended to compensate an owner specifically for becoming a rentier. Pursued consistently, that principle would require reimbursement for all entrepreneurial profits and even every future opportunity belonging to the enterprise. Such a burden could make the operation of socialized businesses impossible. Compensation must have limits if the transfer itself is to remain economically viable.

A related difficulty concerns changes in money’s value between the assessment and payment of compensation. Lederer acknowledges the discrepancy but treats it as a problem also encountered in ordinary economic transactions, rather than something a socialization settlement can necessarily remove. He then states the premise that a compensation formula must abandon:

Meine Ausführungen haben also den Zweck, zu zeigen, daß man, wenn man eine Entschädigungsformel sucht, den Gedanken ausschalten muß: ich will die Menschen nicht zu Rentnern machen. — Ich kann nicht umhin, sie zu Rentnern zu machen. Aber das ist auch gar kein Unglück, wie ich sofort begründen werde.

English translation: My remarks therefore aim to show that, when seeking a compensation formula, one must exclude the thought: I do not want to turn people into rentiers. — I cannot avoid turning them into rentiers. But this is no misfortune at all, as I shall explain immediately.

The justification depends on separating ownership from work. Passive shareholders already live from capital income; their variable returns become fixed income. Active entrepreneurs, however, combine capital ownership with work inside the enterprise. Socialization changes their status as owners without requiring that their productive contribution cease. Indeed, Lederer argues that compensation should not induce them to leave the socialized industry and become entrepreneurs elsewhere. That would deprive the reorganized sector of its experienced leadership and undermine socialization from the outset.

Nein, sie sollen wirtschaftlich führende Persönlichkeiten in diesem sozialisierten Wirtschaftszweige bleiben!

English translation: No, they should remain leading economic figures in this socialized branch of the economy!

This insistence gives the intervention its distinctive organizational emphasis. The alternative to preserving entrepreneurial ownership is not discarding entrepreneurial ability. Lederer seeks continuity of leadership within changed property relations, and assesses compensation partly by whether it supports that continuity. His argument therefore links the financial settlement to the practical task of keeping the industry functioning.

The final section shifts from economic substance to legal implementation. A formula eliminates adjudication only if it specifies compensation with enough mechanical precision for each claimant to calculate the exact sum directly from the law. Lederer offers book value, prescribed annual depreciation, and a multiple of a specified year’s earnings as examples of such accounting rules, not as a settled proposal. Otherwise, however elaborate the provisions, interpretation and decisions over marginal differences remain unavoidable.

Und wenn man dem Richter oder der Instanz, die darüber letzten Endes entscheidet, kein Vertrauen entgegenbringt, so würde auch eine noch so differenziert gebaute Formel nicht in der Lage sein, zu einem befriedigenden Ergebnis zu führen.

English translation: And if one places no trust in the judge or the authority that ultimately decides the matter, even a formula constructed with the finest distinctions would not be capable of producing a satisfactory result.

The intervention concludes without prescribing a definitive valuation formula. Its contribution is to identify what such a formula cannot accomplish: preserve capitalism unchanged, compensate every lost opportunity, or replace institutional judgment through detail alone. For the coal-mining debate, Lederer supplies a framework that joins ownership transformation, retention of productive expertise, and confidence in adjudication as interdependent conditions of workable socialization.