Since in all that follows we shall be concerned only with the methods to be employed and not with the ends aimed at, from now onwards it will be convenient to use the term socialism in this wider sense. In this sense it covers therefore any case of collectivist control of productive resources, no matter in whose interest this control is used. But while we need for our purpose no further definition of the concrete ends followed, there is still need for a further definition of the exact methods we want to consider. There are, of course, many kinds of socialism, but the traditional names of these different types, like communism, syndicalism, guild socialism, have never quite corresponded to the classification of methods which we want, and most of them have in recent times become so closely connected with political parties rather than with definite programmes, that they are hardly useful for our purpose. What is relevant for us is essentially the degree to which the central control and direction of the resources is carried in each of the different types. To see to what extent variation on this point is possible it is perhaps best to begin with the most familiar type of socialism and then examine to what extent its arrangements can be altered in different directions.
The programme which is at once the most widely advocated and has the greatest prima facie plausibility provides not only for collective ownership but also for unified central direction of the use of all material resources of production. At the same time it envisages continued freedom of choice in consumption and continued freedom of the choice of occupation. At least it is essentially in this form that Marxism has been interpreted by the social-democratic parties on the Continent, and it is the form in which socialism is imagined by the greatest number of people. It is in this form too that socialism has been most widely discussed ; most of the more recent criticism is focused on this variety. Indeed, so widely has it been treated as the only important socialist programme that in most discussions on the economic problems of socialism the authors concerned have neglected to specify which kind of socialism they had in mind. This has had somewhat unfortunate effects. For it never became quite clear whether particular objections or criticisms applied only to this particular form or to all the forms of socialism.
For this reason right from the outset it is necessary to keep the alternative possibilities in mind, and to consider at every stage of the discussion carefully whether any particular problem arises out of the assumptions which must underlie any socialist programme or whether they are only due to assumptions made in some particular case. Freedom of the choice of the consumer or freedom of occupation, for example, are by no means necessary attributes of any socialist programme, and although earlier socialists have generally repudiated the suggestion that socialism would abolish these freedoms, more recently criticisms of the socialist position have been met by the answer that the supposed difficulties would arise only if they were retained : and that it was by no means too high a price for the other advantages of socialism if their abolition should prove necessary. It is therefore necessary to consider this extreme form of socialism equally with the others. It corresponds in most respects to what in the past used to be called communism, i.e. a system where not only the means of production but all goods were collectively owned and where, in addition to this, the central authority would also be in a position to order any person to do any task.
This kind of society where everything is centrally directed may be regarded as the limiting case of a long series of other systems of a lesser degree of centralization. The more familiar type discussed already stands somewhat further in the direction of decentralization. But it still involves planning on a most extensive scale—minute direction of practically all productive activity by one central authority. The earlier systems of more decentralized socialism like guild-socialism or syndicalism need not concern us here since it seems now to be fairly generally admitted that they provide no mechanism whatever for a rational direction of economic activity. More recently, however, there has arisen, again mainly in response to criticism, a tendency among socialist thinkers to reintroduce a certain degree of competition into their schemes in order to overcome the difficulty which they admit would arise in the case of completely centralized planning. There is no need at this stage to consider in detail the forms in which competition between individual producers may be combined with socialism. This will be done later on. But it is necessary from the outset to be aware of them. This for two reasons : in the first place in order to remain conscious throughout the further discussion that the completely centralized direction of all economic activity which is generally regarded as typical of all socialism, may conceivably be varied to some extent ; secondly—and even more important—in order that we may see clearly what degree of central control must be retained in order that we may reasonably speak of socialism, or what are the minimum assumptions which will still entitle us to regard a system as coming within our field. Even if collective ownership of productive resources should be found to be compatible with competitive determination of the purposes for which individual units of resources are to be used and the method of their employment, we must still assume that the question, who is to exercise command over a given quantity of resources for the community, or with what amount of resources the different “entrepreneurs” are to be entrusted, will have to be decided by one central authority. This seems to be the minimum assumption consistent with the idea of collective ownership, the smallest degree of central control which would still enable the community to retain command over the income derived from the material means of production.