In 1936 Hilaire Belloc published An Essay on the Restoration of Property (New York: Sheed and Ward). His concern was that a society characterized by the lack of widespread, direct ownership of the means of production is a sick society, one contrary to human nature, and thus ill-suited to providing the proper environment within which human beings can become more fully themselves.
If society continued on its present course of increasingly concentrated ownership of the means of production in either a private elite or the hands of the State — and recall that Belloc was writing in 1936 — the social order would devolve in one of two ways. One, capitalist economies would transform themselves into the "Servile State," described by Belloc in his 1912 book of the same title. Two, socialism and its most aggravated form, communism, would attempt to alleviate the problems caused by concentrated private ownership of the means of production by abolishing private property and making the State the ultimate owner of everything.
Not mentioned by Belloc was the fact that the Servile State as he described it — really, the socialization of capitalism, so well implemented by the virtually global adherence to Keynesian economics — is, in its final stages, the transformation of private capitalism into State capitalism: socialism. The private elite of capitalism and the public elite of socialism merge their interests and become indistinguishable for all practical purposes.
Nor are the other major schools of economics, the Monetarist and the Austrian, any kind of antidote to the Servile State and the ultimate transformation of capitalism into socialism. Monetarism and the Austrian school, operating from within a seriously flawed paradigm, are merely attempts to maintain capitalism in a palatable form, an effort doomed to failure. Whatever their economic theories might tell them, a propertyless majority is politically — and financially — unstable and contrary to essential human nature.
Paralleling Aristotle's paradox about democratic behavior not always being the best or most effective way to maintain democracy (The Politics, V.v), maintaining capitalism requires that capitalism be modified for its own survival. Capitalism will necessarily transform itself into the Servile State because it must incorporate social programs to take care of those perceived as less fortunate and incorporate political aims and goals, or face economic collapse due to insufficient demand to keep the economy running, or political overthrow.
This is consistent with Walter Bagehot's analysis in The English Constitution (1867), and Lombard Street (1873). These are works that, while purporting to support democracy and capitalism, incorporate the totalitarian philosophy of Thomas Hobbes as detailed in Leviathan (1651), generally considered a work whose premises justify socialism.
In The English Constitution, Bagehot redefined "democracy" to mean rule of the British Empire by the "Upper Ten Thousand," the financial and commercial elite of England. This was through the elite's control of the House of Commons, running it as a private business venture. In Lombard Street: A Description of the Money Market, Bagehot explained how the financial and commercial elite control the economy for their private benefit. They base economic control on the redefinition of money put forth by the British Currency School and embodied in Sir Robert Peel's Bank Charter Act of 1844. (Vict. 7 & 8, c. 32.) The ideal arrangement was that imposed by the British East India Company on the Indian subcontinent, and which came crashing down with the Great Mutiny of 1857.
Where Bagehot makes his case that this arrangement of the political and economic orders is all for the best, if not ideal, Belloc describes the same situation in The Servile State, but takes the opposite position. Belloc concludes that "the tendency to the reestablishment of slavery as a necessary development of capitalism is patent wherever capitalism has power." (Hilaire Belloc, The Servile State. Indianapolis, Indiana: Liberty Fund, Inc., 1977, 35.)
Capitalism out of necessity transforms itself into the Servile State. The process involves making the great mass of people completely dependent on the elite for a wage system job, or on State programs instituted to redistribute wealth — often both at the same time. This dependency can be imposed directly, indirectly through the manipulation of monetary and fiscal policy for private or political ends, or via artificial job creation programs that are simply a more complicated and wasteful form of redistribution.
Similarly, socialism must inevitably implement what is often vaguely called "free market reforms." Socialist economies must add a veneer of capitalism in order to gain the somewhat dubious advantage of the restricted exercise of normal and healthy self-interest by a pre-selected elite. Those in charge of the socialist economy thereby hope to gain the ephemeral benefits of controlled competition and a limited profit motive.
At the same time, the vast majority of people remain trapped in a condition of utter dependency and unable to participate in the "new" economy except as subsidized labor and limited consumers. Even in those cases in which a socialist economy officially transforms into a capitalist economy, there is an inevitable backlash and a demand for a return to socialism as the cure for the capitalism that was implemented as the correction of socialism . . . .
The question becomes what to do about this seemingly endless pendulum swing back and forth between the greed of capitalism and the envy of socialism.