I admit there would still remain the possibility that the developed countries would try to exploit the less developed , but I hold that the chief motive for doing this would disappear as soon as there ceased to be any difficulty of finding a market in consumption for everything that could be produced .sx That would necessarily be the position in a socialist society .sx And , with socialism , the motive which drives states towards imperialism would be so weakened as to be easily capable of international control , even if it did not , as I think it would , vanish altogether .sx IV .sx s. Well , you have given me something to answer .sx I will endeavour to do so .sx But remember , I am speaking on the spur of the moment , too , and I ate the same dinner as you !sx SIR ARTHUR SALTER'S CASE .sx s. I won't answer you directly .sx I want to suggest that there are four possible systems , two of them capitalist and two of them socialist .sx Under two of these four ( one capitalist , one socialist ) I believe that peace can be preserved .sx Under the other two I believe that it cannot be preserved .sx Here is my first system .sx It is a capitalist system in which the relations between government and private interests are firmly established on a proper basis .sx Internally in each country the political situation is such that no private interest ( such as oil or armaments ) can prevail over the public interest and dominate public policy .sx Externally the different governments agree upon the limits to their respective action in helping or hindering the competition of their nationals for world trade .sx This doesn't involve anything so drastic as the abolition of all tariffs .sx If a country decides to give an advantage in its home market to its own industrialists , that may be economically unwise , but it should not in itself be a cause of serious quarrels with other countries .sx Of course if changes are made abruptly , so that foreign interests are suddenly and seriously prejudiced , there will be friction .sx But what the interests of peace require is really only provision for a reasonable stability in tariffs .sx Subsidies to exporters , however , are on a very different footing .sx They are much more provocative than tariffs , because the government which gives them is not acting in its own national market , but making a raid ( with the aid of public funds compulsorily raised in taxation ) upon the general world market , which is no more theirs than anyone else's .sx International agreement to limit governmental subsidies for export is therefore of great importance .sx Thirdly , agreement is needed as to the conditions of export and import in the case of a dependent , non-self-governing Empire .sx The `open door' , or the `equality of treatment' provided in the mandates of the ex-German colonies in Central Africa are the safest principles .sx If the capitalist system could satisfy these three .sx conditions , it could to my mind continue indefinitely without threatening peace .sx Of course there would be trade quarrels between competing enterprises .sx But they would be the quarrels of individuals not of states ; they would not affect the relations of whole peoples .sx In contrast with this , if you have a socialist state competing with other similar states , or ( more probably and even worse ) one socialist state competing with private enterprises in other states , quarrels are much more dangerous , because they involve the action of governments and the reactions of whole countries .sx You then have the irresponsibilities of private quarrelling combined with the immense powers and forces involved in public quarrelling .sx c. How does this apply to Colonial Empires ?sx s. I agree that the Ottawa Conference marked a serious further step in the direction of a `closed' dependent Empire .sx The only safe principle in any large Empire is that of the open door and equality of opportunity .sx The British Empire used to be open to all countries .sx .. c. It isn't now .sx s. No .sx And this may ultimately endanger the peace of the world .sx However , let us stick to the point .sx That is my first system .sx I regard it as safer than any form of socialism because it would be subject to a framework of law in which the quarrels of individuals would remain the quarrels of individuals , and would not involve positive action by governments .sx c. If I might interrupt , I would suggest that the policy of the open door was never true of any other Empire than ours .sx s. It was true of the Dutch .sx c. But never of the French .sx I very much doubt if the idea of an open Colonial Empire is practical in the twentieth century .sx As competitive pressure increases in great imperialistic powers , the closed door seems to be the inevitable outcome .sx s. If that is so , then the danger of war arising from the possession of a dependent Empire is greatly increased , but I do not agree that it is so .sx c. Well , we have begun with Ottawa .sx And now the French are going to follow our example with a Colonial League Conference of their own .sx What I really want to say is this , that the vision that you have just painted is a vision of an effete Cobdenism .sx s. I agree that the movement has recently been in the opposite direction to the one I wish .sx But this is very recently ; and the movement may be reversed .sx c. But I think the very possibility of that sort of laisser-faire , open-door , imperial capitalism , stopped when capitalism developed from the selling of shirts to the construction of railways i.e. when governments were forced to intervene in political affairs .sx When you sell a man a shirt , you don't care what he does with it .sx When you sell him a railway , you have to , because he can only pay by instalments , or you stand over him with a gun to see that he is well behaved , and does go on paying .sx s. Let me come to my second system .sx It is the system of socialism which I think would not tend to peace .sx I regret to say that this sort of socialism , which I fear , is just the one that is likely to come .sx It will be a national and bastard socialism .sx It will be bastard because it will not be planned by real socialists but will .sx come as a result of yielding to the demands of what I might call capitalist socialisticism the demand by an organized private interest for a form of state control which will increase their own powers of exploitation .sx c. I am strongly opposed to socialisticism !sx s. I think this form of socialism would be dangerous because it would involve the whole people in each economic quarrel .sx If the coal industry were nationalized in that way , and if it had the whole power of the state behind it , and if , for example , we were trying to wrest the iron market from Sweden , such a quarrel , which under the present system would be a quarrel of individuals , would become a quarrel of the whole nation .sx c. To which I should reply `Corruptio optimi pessima' .sx s. Now for the third system , that is your own form of socialism , which grows up on an international basis .sx I agree that under all your ideal conditions , you would have a system compatible with peace .sx My objection is not that such a form of socialism would endanger peace ; but that it is not the kind of socialism that is coming , and that it is not practicable .sx Difficult as it is to get my three conditions , it would be immensely more difficult to get yours , because your system implies an evenness of development over a very large part of the world which is animated by many conflicting ideals .sx Apart from that , it seems to me that you are implying motives which are as illusory as those of William Morris in his Utopia , where man works to give and takes no care about his reward .sx I cannot see Morris's Utopia in our world .sx And therefore , I cannot see your Utopia either .sx I cannot for example visualize a society where Great Britain would send 10,000,000 worth of cotton to China without recompense or any expectation of recompense .sx I have been within an ace of seeing my `ideal system' .sx You are not within a hundred years of seeing yours .sx My fourth system can be described in a very few words .sx Unhappily it is the system which on the whole tends to prevail to-day .sx If armaments interests are allowed to dominate public policy , if the Empire is to be closed , and if it is impossible to restrain governments from the competitive subsidizing of private enterprise in world markets , we are likely to have war and world chaos .sx But this existing system can be more easily transformed into my ideal system than yours .sx c. I would like to take you up on several points in your first system , your ideal capitalism .sx Because I believe that even if all your conditions were realized , they would not necessarily establish peace .sx Even supposing you could limit capitalism so that it would be forced to abide by national rules , it would break down because of its inability to distribute in each society the resources of its production .sx s. I don't follow you .sx c. The system of capitalist production leaves you with a supply of goods which , obviously , you can produce , but which you cannot market at home .sx The system leads inevitably to a surplus of saving among a large section of the community .sx And saving is valueless without an extension of consuming power .sx And obviously you cannot extend consuming power indefinitely .sx s. Why not ?sx To simplify the argument let us .sx imagine a self-sufficient state the United States for example , ringed round and completely shut off from the rest of the world .sx You would naturally have an accumulation of saving .sx What would happen ?sx The return on capital would go down and down until a half per cent would be a very high rate of interest .sx In this and other ways surplus saving would spread out indefinitely with it because of correspondingly increased purchasing power and therefore consuming demand .sx c. I think you are making an unjustified assumption by suggesting a series of isolated economic systems .sx Isn't it impossible ?sx However , let us go on to your second assumption .sx If you assume an isolated economy , you obviously assume a drive to economic nationalism and national socialism .sx You don't get stable capitalism .sx And with regard to the third system .sx .. my system .sx I agree that men won't be socialists until it has been definitely proved that capitalism will not work .sx I wouldn't myself hope to establish socialism if I thought that capitalism could be made a going concern .sx But I think that history proves that it has worked only under exceptional circumstances .sx It worked for Great Britain during the industrial revolution .sx It worked for America while America was still undeveloped .sx Where are we to find any set of circumstances in any country even vaguely resembling the circumstances which produced the heyday of capitalism ?sx I have definitely given up hope of rescuing the capitalist world from chaos .sx You haven't .sx You say that your ideal system was within an ace of realization .sx I say that my system was nearly realized .sx s. When ?sx c. In 1919 .sx If the German social democrats and the British socialists had known how to use their chances then , we could have had the real beginning of a system of international socialism .sx The argument ended with these characteristic observations :sx c. I feel the fundamental difference between us is that I feel instinctively that economic equality is right .sx s. I do not know that I would agree that absolute equality of income is desirable .sx But my ideal society would be based upon a certain fundamental personal and social equality .sx It would recognize differences in quality , and an ability that would not exaggerate them or add to them there would be the kind of equality which existed , say , between the late Lord Balfour and the most stupid member of his family .sx c. The kind of equality I want is a civilization where I can ask my cook in to dinner without her feeling more uncomfortable than I do .sx