The principle already postulated, that the state must undertake the production and distribution of wealth wherever private enterprise is dangerous, or inefficient, clarifies somewhat the problem of the industrial organization of the Socialist régime, which is a vastly more difficult problem than that of its political organization. Socialism by no means involves the suppression of all private industrial enterprises. Only when these fail in efficiency or result in injustice and inequality of opportunities does socialization present itself. There are many petty, subordinate industries, especially the making of articles of luxury, which might be well allowed to remain in private hands, subject only to such general regulation as might be found necessary for the protection of health and the public order. For example, suppose that the state undertakes the production of shoes upon a large scale as a result of the popular conviction that private enterprise in shoemaking is either inefficient or injurious to society in that the manufacturers exploit the shoemakers on the one hand, and, through the establishment of monopoly-prices, the consumers upon the other hand. The state thus becomes the employer of shoeworkers and the vender of shoes to the citizens. But A, being a fastidious citizen, does not like the factory product of the state any more than he formerly did the factory product of private enterprise. Under the old conditions, he used to employ B, a shoemaker who does not like factory work, a craftsman who likes to make the whole shoe. Naturally, B was not willing to work for wages materially lower than those he could earn in the factory. A willingly paid enough for his hand-made shoes to insure B as much wages as he would get in the factory. What reason could the state possibly have for forbidding the continuance of such an arrangement between two of its citizens?
Or take the case of a farmer maintaining himself and family upon a modest acreage, by his own labor. He exploits no one, and the question of inefficiency does not present itself as a public question, for the reason that there is plenty of farming land available, and any inefficiency of the small farmer does not injure the community in any manner. What object could the state have in taking away that farm and compelling the farmer to work upon a communal, publicly owned and managed farm? Of course, the notion is perfectly absurd.[188] On the other hand, there are things, natural monopolies, which cannot be safely left to private enterprise. The same is true of large productive and distributive enterprises upon which great masses of the people depend. Land ownership[189] and all that depends thereon, such as mining, transportation, and the like, must be collective.