J REV. CHARLES H. VAIL. MILITANT AND TRIUMPHANT SOCIALISM BT Rev. CHARLES H. VAIL cAuthor of "Principles of Scientific Socialism, "The Mission of the "Working Class," "Modern Socialism," Etc. Published by the CO-OPERATIVE PRINTING COMPANY HYDE PARK, CHICAGO, U. S. .A cAH Rights Reserved Copyright, 1913 by the CO-OPERATIVE PRINTING COMPANY HYDE PARK, CHICAGO, U. S. A. All Rights Reserved CONTENTS Introductory Definitions 7 PART I MILITANT SOCIALISM Prelude Two Vital Philosophic Theories 9 I. The Chief Factor in Social Evolution... 11 II. Economic Determinism in Ethics 15 III. Technical E-conomic Basis of Slavery.. 23 IV. Social Evolution to Reach Its Climax in Collective Ownership 28 V. The Socialist Theory of Surplus Value 36 VI. Exchange as a Productive Process 44 VII. The Class Struggle Inevitable 51 VIII. Scientific Versus Utopian Socialism.... 58 IX. Propaganda and Tactics 62 PART II TRIUMPHANT SOCIALISM Prelude. Fundamental Principle of the New Order 67 I. Abolishment of Exploitation 69 II. Industrial Depression to Cease 76 III. Prosperity for All Assured 86 IV. Proper Incentive to Industry Supplied.. 93 V. Political Corruption to Disappear 100 VI. Right to Life, Liberty and the Pursuit of Happiness Secured for All 108 VII. Social and Industrial Evils to Vanish... Ill VIII. Home and Family to be Preserved 116 IX. Socialism to Realize a Nobler Humanity 132 X. A New Social Spirit to Rule 137 XI. Concluding Arguments 142 Best Books to Read.. . 145 I INTRODUCTORY 5 DEFINITIONS We must distinguish between Militant So- cialism and Triumphant Socialism. Militant Socialism is a movement of the Militant and proletariat 1 class working with- Triumphant in the confines of the present Socialism system to bring about the rea- lization of Triumphant Social- ism a future state of society based upon the collective ownership and democratic manage- ment of the social means of production. Scientific Socialism includes both Militant and Triumphant Socialism. I wish to set forth the fundamental principles of these two phases of Scientific Socialism. 1 By proletariat is meant those deprived of property in the instruments of production the entire class of wage and salary workers, those engaged in "manual" and "intellectual" service. PART I MILITANT SOCIALISM PRELUDE Two Vital Philosophic Theories Militant Socialism is based upon two im- portant philosophical doctrines which owe their origin chiefly to Karl Marx, the economic theory of social progress and the theory of surplus value. The first is elaborated in chap- ters I-IV, the second in chapters V-VII. CHAPTER I The Chief Factor in Social Evolution The Socialist Theory of Social Evolution is called Economic Determination or the Materialistic Conception of History. These designations are not Economic strictly accurate, as the former Determinism might seem to imply economic fatalism, and the latter philo- sophical materialism. Economic Determinism might lead some to think that the theory over- looked the material and spiritual elements and made the economic influence the sole factor, while the Materialistic Conception of History might seem to overlook the economic element altogether. But this would be an entire mis- conception. The theory is not fatalistic in character and does not overlook the human factor with all the complex elements com- mon to man. It does not exclude ideas or ideals, which all will admit frequently exert a con- siderable influence in determining the changes in the social organism, although we need to trace these elements to their source in order to estimate aright their value. The theory merely teaches that social progress is chiefly deter- mined by a change in the economic conditions the methods of producing and distributing wealth. It is not claimed that the economic factor alone determines social progress, but only that it is the principal force back of the 12 MILITANT AND historical development. As stated by Marx, "The economic condition is the basis, but the various elements of the superstructure the political forms of the class contest, and their results, the constitutions the legal forms, also all the reflexes of these actual contests in the brains of the participants, the political, legal, philosophical theories, the religious views all these exert an influence on the development of the historical struggle, and, in many in- stances, determine their form." 2 Neither does the theory overlook the influ- ence of the geographical and historical condi- tions. It recognizes that a given system rest- ing upon differences in these respects will produce different social forms. To fully un- derstand a particular method of production at any given time we must study these natural conditions. A knowledge of the technical alone does not suffice. For example, the vari- ous forms of society which may arise on the peasant foundation are due to differences in the natural and social surroundings. How- ever, the technical factor is the most impor- tant. It is evident from the foregoing that the materialism here is not philosophical material- ism the theory that interprets all things in 2 Quoted by Seligman in The Economic Interpreta- tion of History, p. 142. TRIUMPHANT SOCIALISM 13 the terms of matter but Historical Material- ism. The theory, then, does not negative the dream of Tennyson that there is in human life one "Far off divine event To which the whole creation moves." It does not mean that there is no purpose, no aim, in social evolution. The law of Eco- nomic Determinism is the law of the Divine Method of human progress. The Socialist theory explains this method in history, as the Darwinian theory does in biology. 3 Some have thought that the principle would be better expressed by the phrase, "Economic Interpretation of History." But it is difficult to select any term that in itself covers the whole ground and is not liable to be misun- derstood. Let us now briefly consider just what the theory is. Frederick Engels, in the preface to the Manifesto of the Cornmun- Principle ist Party, states the principle Stated in the following words: "In every historical epoch, the pre- vailing mode of economic production and ex- change, and the social organization necessarily 3 The discovery of the method of progress does not warrant the conclusion that the process is with- out intelligent direction. Those who hold that evo- lution in the various departments of nature is guided following from it, form the basis upon which is built up, and from which alone can be ex- plained, the political and intellectual history of that epoch." From the production of the first tools, which, on the material side, differentiated man from the animals, down to the latest inventions, it is the change in the technic which constitutes the chief and material cause of economic and social progress. Intelligence, of course, is pre- supposed, for every step forward on the path of technical advance is a conscious endeavor of man to increase his power over nature. But intelligence must be embodied in technical appliances before it can produce a change in the economic structure of society. And often the direction of consciousness is determined by the economic structure and the needs of man the needs give rise to new discoveries which produce certain changes and new methods of life, which again produce new discoveries and lead in turn to new needs, etc. by the Divine Mind or the hosts of creative intelli- gences are not irrational in their position. The law of the survival of the fittest does not prove that in the vegetable and animal kingdoms intelligent pow- ers may not utilize the struggle for existence to bring about variations and new types in accordance with a definite plan. So in social evolution, eco- nomic determinism may be the law utilized to secure human progress. At least the Socialist theory does not negative this conclusion the theory is perfectly in accord with religious belief. CHAPTER II Economic Determinism in Ethics The law of Economic Determinism also throws light upon an important phase of the ethical problem.* But before Ethical considering this question di- Problem rectly let us note that all moral- Morality ity is relative it must be so be- Relative cause it is a question of rela- tions. The right relation is moral ; the wrong relation is immoral. The object of morality is to bring about happiness by the establishment of harmonious relations. What is good for one man may not be good for another, and what is good at one time may not be good at an- other time. Morality, then, is a relative sci- ence relative to the man himself and to his surroundings. *There are four recognized schools of morality Intuitional, Utilitarian, Scriptural, and Religious. The Intuitional bases morality upon intuition the dictates of conscience. The objection to this is that consciences vary with racial and national traditions, social customs and needs, individual development, etc., consequently it does not furnish a solid basis. The Utilitarian is based upon the greatest good to the greatest number. But this does not justify the exclusion of the minority from its canon and it fails to supply an impelling motive. Then the question of what is the greatest good to the greatest number is not self-evident but subject to debate, and so fails to furnish a sufficient guide. The Scriptural is based upon a claimed revelation from God. But there are many religions and many revelations and it is dif- 16 MILITANT AND However low or high an individual may be in the scale of evolution, the idea of duty con- veys the thought of an inner nature unfolding itself evolving from the imperfect to the per- fect. Now that is right which is in accord with the Divine Will in evolution, and that is wrong which impedes progress and hinders ficult to tell just which one is to be regarded as based upon Supreme authority. Then the record is by no means infallible. There is also a difficulty about moral standards founded upon a revelation given once for all. As a people evolve that which was suit- able at one time becomes unsuitable at another. The Religious is closely connected with the Scriptural, although it is not dependent upon or confined to any sacred writings, but rests upon occult knowledge attained by men who have reached an advanced stage of development, the Christs, Buddhas, etc. It affirms that the only basis of ethical science is to be found in religion in the great spiritual fact of the Unity of the Spirit. I believe this is true. Religion gives the ultimate data upon which a science of morality can be built. The basis of mor- ality is the recognition of the Unity, the unity of all souls, all selves, in the One Universal Self, and therefore right conduct consists in establishing helpful relations between all beings. It is in this, unity of ultimate interests and identity of nature that the sanction of morality lies. We find here the basis of Universal Brotherhood all separated selves are rooted in the Universal Self, are parts or reflec- tions of the One. This Brotherhood, then, is a spirit- ual fact. All the principles of general morality are founded upon the recognition of this Unity they are the rules of conduct designed to prevent us from in- TRIUMPHANT SOCIALISM 17 evolution. In the evolutionary process that which is right at one time becomes wrong at another. As to whether an act is right or wrong for any particular individual, depends on where he stands on the evolutionary ladder. And what is true of the individual is also true of social acts and social systems. As the ten- dency of evolution now is toward unity, it follows that that which makes for unity is right. Thus the standard of all true ethics is to unite and not to divide. Right and wrong, then, might be defined as a general rule thus : Right is that which helps another, wrong is that which injures another both are relative to surrounding circumstances. juring others and ourselves, and conversely to aid us in doing good to ourselves and others. Just in proportion as our conduct accords with this fact we are moral. Some might include in the above list the Evolutionist; but evolution is not a school of morality and it has no bearing on the special phase of the question we are considering. The modern Evolutionist in tracing the evolution of the moral sense has rendered much service, but he is only deal- ing with the conditions that aid or hinder its de- velopment the theory does not touch the origin of the moral sense or furnish a basis for ethics. In evolution we merely study the way in which the germ of life evolves. This life which comes from God contains everything in potency. The moral sense in common with all the powers of man has gradually developed through the process of evolu- tion step by step, these inherent qualities and powers have been brought out. Evolution is a study of the method of Divine procedure. 18 MILITANT AND Now we will briefly consider the bearing of the law of Economic Determinism on ethics. The economic factor in morals Economic plays an important part in de- Factor in termitting the commonly ac- Morals cepted moral standards of every day practice frequently subordinating or perverting the higher ethical ideals to subserve personal or class ends. We have seen that economic conditions create certain social needs and that these needs in turn create certain new conditions. But these conditions and needs also create certain moral ideas. The demands of the individual in so- ciety are so persistent that they become a habit and in the course of time are popularly recognized as moral commands. Purely con- ventional customs and fashions may also es- tablish certain acts as moral, but the chief factor in determining conventional morality is the social needs. When rules are established as moral the conscience affirms obligation to obey. As economic development advances, new social needs are created which demand new moral laws. These special New Moral laws are thus chiefly the prod- Laws uct of the social nature of men the precepts arise out of the social needs. We may not always be able to trace the social forms from which these moral conceptions arise, for the social causes may TRIUMPHANT SOCIALISM 19 reach back to primitive times. Some of these tenets through habit continue to exist even after the cause that produced them has dis- appeared. The new social system gives rise to certain new moral precepts every form of society requires certain rules suited to its needs and this often produces much confu- sion and causes the moral philosopher trouble to harmonize the conflicting tenets. Certain elements, then, in the accepted moral codes are constantly changing. These relative and changing standards are not apt to be fully in accord with the ideal ethics, but the fact that it is Ideal Moral possible to compare and judge Standards a concrete code of morals evi- dences that there must be such a standard of comparison. As a matter of fact ideal standards of ethics have existed in the moral philosophies and religions of ancient and modern times, and they have been prac- tically identical in character. This of itself should evidence that there is something in man that transcends the material. Mr. Hill- quit says, "The Socialists of the Marxian school . . . fully recognize that the moral sentiment is implanted in the normal being and capable of very high development even under adverse conditions. Instances of men and women rising above their class interests and sacrificing their material welfare, some- 20 MILITANT AND times even their lives, in the service of their fellow-men, are of frequent, almost daily oc- currence, and cannot be accounted for on any economic or materialistic theory. The Social- ists also recognize that outside of the eco- nomic sphere of human activity, there is a large field of human interest, in which the in- dividuals of all classes meet on common ground, and in which the moral conceptions correspond to the actual welfare of all man- kind." 5 But this does not negative the fact that in a class organized and class ruled so- ciety the commonly accepted moral conduct is that which conserves the prevailing order. If we fail to recognize the class character of much of our ethics we shall be utterly unable to account for many curious Illustrations facts. For instance, in slavery Class Ethics days the system was regarded as a divine institution and the disloyalty of the slave was looked upon as re- bellion against God. The virtues and vices of slaves and masters were opposite in each class cowardice and humility were regarded as sterling virtues in the slave, while such traits in the master were a serious fault. We find an equally diverging standard today between the capitalist and laborer what one regards as right the other looks upon as wrong. The laborers in their unions resort to certain meas- Socialiim in Theory and Practice, Hillquit, p. 57. TRIUMPHANT SOCIALISM ures to serve their ends which the capitalists think wrong, and vice versa, the capitalists em- ploy means to further their interests which the laborers denounce as unjust. Both classes may be conscientious they are viewing things from their material interests, and the ethics they recognize is the ethics of their class. Business men permit things in business which they would not think of doing in private life, or if they did society would not hold them guiltless. The wealthy of our corporations can slay their thousands through neglect in introducing proper safety appliances, and so- ciety does not hold them responsible, but let one man suffer outside of business from such negligence and those responsible would not escape censure. These illustrations might be indefinitely multiplied, but this will suffice to show the class character of such morality. There is what has been called a distinct "class- conscience" determined by class interests. The proletariat morality which the modern labor movement has formed is as yet a class morality. However, it is Proletariat higher than the morality of the Morality capitalist class, because it is the ethics of the class whose in- terests are in accord with progress the class destined to supplant the present ruling class. We shall see later that the proletarian triumph will lead to the abolition of all classes and the realization of the ideal morality a morality based upon mutual service and social co-op- eration. Socialism will realize the ultimate standard of morality. We may say, then, that the economic struc- ture of society is in a large way the determin- ing factor in shaping the ac- General Law cepted moral standards of Stated practical business life. The laws, customs, public opinions and moral idas are largely molded by the eco- nomic conditions, or by the class which the economic system makes the ruling class, whether the Patricians of ancient Rome, the Feudal Lords of the Middle ages, or the Cap- italists of modern times. Whatever the ab- stract ideal standard may be, it is interpreted in accord with the interests of the ruling class. Thus the abstract ideas of justice, right, hon- or, etc., have ever varied in generally accepted meaning with the changing social systems. In every age the economic interests have per- verted the great universal ethical ideals and set up a class ethics instead. The law of Eco- nomic Determinism is important in its bear- ing on ethical problems. It enables us to ex- plain many curious anomalies that would otherwise be inexplicable. CHAPTER III Technical Economic Basis of Slavery Let us now return to the main proposition that each great historical change was pre- ceded by new technical condi- Main tions, a change in the economic Proposition foundation, and that this made Again possible the social and politi- cal change that divided the world's history into epochs. Let us note a few illustrations of the work- ing of this law as seen in the general sweep of human history. 6 In primitive times when one tribe conquered another it had no use for its captives and so killed them the cannibalistic Origin of tribe for food, the non-cannibal- Slavery istic merely to get them out of the way. But in the course of time men gained power over the forces of nature to produce more than their keep, and it was soon discovered that it was more profit- able to keep the captives alive and compel them to work, than to put them to death. Especially was this true in those advanced tribes that turned to the cultivation of the soil for subsistence. It was the economic change that led to the more humane treatment of 6 For specific instances I must refer the reader to the well known works of Marx, Engles, Kautsky, Spargo, Ghent, Simons, Hillquit, Seligman, Ferri, Bax and Loria. 24 MILITANT AND captives. The establishment of slavery was a decided step in advance, both economically and morally. 7 Slavery now became common. First, it was a tribal institution. But the tribal slavery fin- ally gave rise to the private ownership of man by man, a result of the tribal method of dis- tribution, undoubtedly, and this led to pri- vate exchange of the product and at last to the private ownership of land and the destruc- tion of the early Communist system. As a private institution slavery continued until the economic changes made it unprofit- able to own human beings as Cause of chattels. In the days of the Abolition decadence of the Roman Em- pire, slavery became unprofit- able on the great agricultural estates and thou- sands of slaves were liberated and others made tenants on the land. Finally, the invasion of the barbarians broke up the Roman civiliza- tion and made slavery impossible. The changed conditions resulting from the break-up of the Roman Empire gave rise to Feudalism, which became the European essential system of the Middle Feudalism and Ages, although chattel slavery Capitalism survived in certain quarters for centuries. There also ex- isted alongside of the Feudal estate a body of T For further discussion of this question see the author's little book. The Socialist Movement. Sec. 6. TRIUMPHANT SOCIALISM 25 free laborers craftsmen and peasants. The craftsmen organized into guilds and carried on production under strict rules. Again changes occurred the discharge of the feudal retainers, the forceful expropriation of the people from the soil, the destruction of the guilds, etc. which made possible the rise of the new order. The individual capitalist who had existed in embryo in the guild master now came into power. The economic changes made possible the supremacy of a new ruling class. Our American States furnish the best field for the study of the slave system and the transition to capitalism. This American country did not go through the Slavery and Feudal stage proper but passed Capitalism directly from slavery to capi- talism. We have a way of do- ing things in a hurry, even to repeating his- tory rapidly. In the United States we see plainly the working of economic forces which would have freed the slaves had their emanci- pation not been hastened as an incident of the Civil War. The economic change which would have led to this result was already ef- fected in the North. The rapid increase in the population and the development of the manufacturing system, rendered slavery un- profitable and unnecessary. The transforma- tion of industry resulted in the loss of control 26 MILITANT AND by tht workers over the means of their live- lihood. The vast cost of the new machinery gave rise to a capitalist class the owners of the instruments of toil. The laborers thus dispossessed and unable to employ themselves were obliged to sell their labor-power to the owning class or starve. This gave to the cap- italist class an abundance of cheap wage la- bor. The ownership of the tools was suffi- cient it carried with it the ownership of men. Wage labor was thus more profitable than slave labor, and consequently the North dis- posed of its slaves, giving Negro children away as soon as weaned. Owing to the scarcity of labor in the South and its backward industrial development slave labor continued to be an important factor. But it would have undoubt- edly disappeared ere this had not the war sum- marily abolished it. Mr. Spargo, in his ad- mirable little book, Capitalist and Laborer, cites the fact that "Many Southern slave- owners had come to the conclusion that slav- ery was unprofitable long before the Civil War began. Before the war was finished the question of slavery had become relatively un- important, so much so, indeed, that the Con- federate cabinet itself proposed to abolish slavery in order to win European friendship.'' 8 We do not deny the great work of Garrison, 8 Reference given to Rhodes, History of the U. S., V. 66-67. TRIUMPHANT SOCIALISM 27 Phillips, Brown, Lovejoy, and others, but this alone would never have The Moral wrought the abolition of the Ideal system had not the change in Recognized the method of production laid the foundation for the new order. Even the moral conviction that slav- ery was wrong did not become general in the North until the changed conditions had made it unprofitable to own human beings as chat- tels. But the moral ideal when perceived did much to arouse public sentiment and hasten the struggle between the North and the South, one representing the interests of the capi- talist class, the other the interest of the slave- owners. In this struggle the class more in accord with soqial progress naturally sur- vived. Slavery gave way to capitalism. CHAPTER IV Social Evolution to Reach Its Climax In Collective Ownership Today capitalism rules supreme. But the so- cial evolution is not completed. The condi- tions have materially changed Development since the supremacy of the cap- of Capitalism italist class. In the beginning of the capitalist era there was individual ownership of the tools of produc- tion, next came the joint-stock or corporation stage, and this was followed by the trust stage. In the strict sense a trust is effected by the stockholders of different corporations trans- ferring their stock to trustees. The Trust This was the way the Standard Oil trust was formed in 1882. But the term has now come to be used in a wider sense to denote every act, agreement or combination made for the purpose of restrict- ing competition and controlling trade by fax- ing prices, etc. Some trades begin with the mere agreement as to prices and then pass on into some form of association, and finally into a full consolidation of interests and manage- ment. In one form or another the trust is found today in every civilized country. The move- ment has gone further in the Growth United States than elsewhere, but England, Germany, France, Belgium, Austria, etc., are rapidly following TRIUMPHANT SOCIALISM 29 our lead. There is not a capitalist country where competition in the old sense is not rap- idly disappearing if not practically already ex- tinct in all the great industries. In spite of State and Federal legislation the trust move- ment in this country has gone on at a very rapid rate. Mr. John Moody, the author of publications consulted daily in Wall Street as a guide to securities, gives the statistics of the growth of trusts in this country from 1904 tc 1908. He shows that in 1904 the consolida- tions of industrial, franchise and steam rail- road corporations aggregated in round num- bers, $20,000,000,000. In 1908 the same lines aggregated over $31,000,000,000 an increase of over $11,000,000,000, or 55 per cent. Mr. Moody gives the trust consolidation and capitalization January 1, 1908, in detail as fol- lows : Seven greater industrial trusts, Amal- gamated Copper Co., American Smelting and Refining Co., American Sugar Refining Co., American Tobacco Co., International Mer- chant Marine Co., Standard Oil Co., U. S. Steel Corporat ; on, controlling 1,638 plants, capital- ized at $2,708,438,754; 451 lesser industrial trusts, controlling 5,038 plants, capitalized at $8,243,175,000, total of 458 industrial trusts, controlling 6,676 plants, capitalized at $10,951,- 613,754^ franchise trusts, controlling 2,559 plants, capitalized at $7,789,393,000; great steam railroad groups, controlling 745 plants, 30 TRIUMPHANT SOCIALISM capitalized at $12,931,154,000; grand total of all trusts, industrial, franchise, transportation, etc., controlling 10,020 plants, capitalized at $31,672,160,754. Of the industrial trusts 15 have a capitalization $100,000,000 or over, 33 have $50,000,000 or over, 165 have $10,000,000 or over, and 451 have $5,000,000,000 or over. Of the franchise trusts 16 exceed $100,000,000. 41 exceed $50,000,000 and 156 exceed $5,000,- 000. Of the 6 greatest railroad groups, all exceed $1,000,000,000 capital. All efforts upon the part of the government to prevent this concentration have proved fu- tile. The Interstate Commerce Government Act and the Sherman Anti- Restriction Trust Law have proved dismal Futile failures so far as restricting combinations are concerned in fact, nearly all the great trusts have been formed since the enactment of these laws. Almost every state has passed laws against the trusts but ways have been found to evade the law. When the Standard Oil trust was de- clared illegal in Ohio, it merely changed its name and kept right on doing business at the old stand. It ought to be self-evident by this time that great industrial interests cannot be compelled to compete by law. Some have supposed that these combina- TRIUMPHANT SOCIALISM 31 tions are due to special privileges, such as the tariff or the shipping discrim- Combinations inations of railroads, but the Natural low tariff of England and the governmental ownership of Germany have not prevented industrial or- ganization in those countries. The supposed special privileges have been greatly exag- gerated. To be sure such favors have often facilitated the organization of industry but such is not the cause. Business interests combine because it is more profitable to combine than to compete. Competition goes on until the small businesses are driven from the field, and then the larger ones either fight to a finish, thus leaving the strongest one in control, or else realizing the disastrous results of com- petition for competition among great busi- nesses is a costly affair they combine for self-protection and greater profits. Competi- tion always ends in combination. Trusts are natural and inevitable. The development of .the trust marks the beginning of the end of the capitalist system. This change of economic conditions, in the method of producing and distributing wealth, again necessitates a Socialism new order of society. The trusts Demanded by have systematized and unified Changed industry and prepared the way Conditions for the final stage of social evo- lution. The trust era of pro- duction not only makes possible the socializa- MILITANT AND tion of industry, but necessitates it as a pre- requisite to further social progress. Just as the ownership of men became an obstacle to progress, so the ownership of the social tools has become a hindrance. The interests of society and the interests of the capitalist owners are now antagonistic. Society wants a large product but the capital- ists want high values, and values are opposed to abundance. The purpose of every com- bination is to regulate production and limit the supply to the commercial demand. So- ciety can never fully satisfy its wants except by owning .the instruments of production and carrying on industry for the purpose of satis- fying human needs. The economic changes that precede and re- quire a new order have already been effected. The tools of modern production are social. The private ownership of these great social tools is incompatible with the character of the tools and their methods of social use. This condition is due to an anachronism a sur- vival of the method of ownership and wealth distribution that belongs to the individual stage of production. It is evident that the so- cial character and use of the tools of industry require their social ownership and control. The abolition of private ownership is thus de- manded by the changed methods of produc- tion. TRIUMPHANT SOCIALISM 33 We have seen how a change in the method of wealth production resulted in a change in the social system the laws, institutions, and even moral conceptions being transformed to meet the needs of the new economic condition. We are now facing a new social transforma- tion. An economic change from individual to social mechanical production has been effected. This social production, and especially its de- veloped trust form, demands a transformation in the political and social system to meet the needs of this new method of industry. This transformation in the social, political and ju- dicial superstructure will realize Socialism. Socialism is the next stage of social and economic evolution. As individuals have com- bined into corporations and corporations into trusts, so trusts will combine into the great trust the Nation. This is logical and inevi- table. It is only in universal combination that a complete consummation of social evolution can be attained. The time is now ripe for the change. We do not need to wait for competition to crush out all small industries before Time Ripe the change is made. The de- for Change velopment in any industry of sufficient large production to enable the concentration of production in these more efficient plants would enable the Social- ist State to eliminate the remaining small in- 34 MILITANT AND dustries at once. The ripeness of any indus- try for socialization, as pointed out by Karl Kautsky, does not depend so much on the elimination of small industries as on the or- ganization of large ones. 9 Small industries may remain or even increase, but if large ones exist there is the requisite condition for social ownership. We need not wait, then, for the complete trustification of all industries, al- though we gladly welcome such organization as it is doing the work for us. Not only is capital organizing industry, it is also organ- izing and disciplining the workers and thus laying the "psychological foundation" for the new order of society. Let the good work go on we bid it Godspeed. 10 Space will not permit further consideration of this law of Social Evolution. Suffice to say that scarcely a move is made Knowledge socially or politically, either na- of Law tionally or internationally, but Important can be traced to economic con- siderations. It is beginning to be realized by others besides Socialists that economic conditions form the real basis of >See The Social Revolution, Kautsky, p. 144. 10 The religious believer sees in this the working out of a Divine plan. As biological evolution cul- minates in man, so social evolution is destined, by economic necessity, the Divine method of social progress, to culminate in Socialism. TRIUMPHANT SOCIALISM 35 society and explain, in the last analysis, the social superstructure. These conditions are the soil out of which grow so largely the life and character of mankind. The manner, then, in which wealth production and distribution is carried on, or rather the ruling class which the economic system forces to the front, de- termines the kind of laws, customs and social arrangements at any given time. It is not claimed that this is the only factor in the equa- tion, but that it is the chief factor is evident. Other forces play their part, but the principle force is economic. The change in the eco- nomic base necessitates a readjustment in the social and political realm to correspond. In other words a new method of gaining a liveli- hood creates a new civilization. A knowledge of this law is necessary to a clear understand- ing of the course of human history. CHAPTER V The Socialist Theory of Surplus Value The Socialist theory of surplus value deals with capitalist production and exploitation. In order to understand this proc- Capitalist ess we need to understand the System capitalist system of industry. The capitalist exchanges his money capital for labor-power and the means of production, which commodities now become productive capital, and in the productive process are transformed into commodity prod- ucts products of greater value than that of the constituted elements composing it and this commodity capital is retransformed into money. The first and third stages of this process the transformation of money into commodities or purchase, and the reverse process, the trans- formation of commodities into money or sale (however sale is also implied in the first stage upon the part of the holder of the commodity and purchase in the third stage upon the part of the buyer) are called circulation. 1 This process creates no value or surplus value these are produced in the second stage, called the productive. The process of circulation is interrupted at 1 We follow Marx' terminology here but the word "transformation" would seem to us much better. TRIUMPHANT SOCIALISM 37_ the end of the first phase of the rotation of capital by the productive process, which makes the commodities, labor-power and the means of production, parts of the substances and values of productive capital and consumes them. The result of this process is a new com- modity which is of different composition and value than the commodities entering into the process. The interrupted process of circula- tion must be completed by the exchange of money for the new product. The basis of this second and concluding phase is a commodity of different composition and value than the first. The process of circulation, therefore, ap- pears first as the exchange of money for com- modities, then as the exchange of commodities for money the commodities in the second in- stance representing a greater value due to the intervening productive process. The change of value is due exclusively to the process of production which thus appears as a natural metamorphosis of capital, as compared to the merely formal metamorphosis of circulation. Capital, then, appears as a value which goes through a series of connected changes condi- tioned on one another and representing so many phases of the total process. Two of these phases belong to circulation and one to productive consumption the transformation of the purchased commodities, labor-power and 38 MILITANT AND the means of production. 2 Marx says, "The process of production, therefore, appears to us as an interruption of the process of circulation of capital-value." 3 Industrial capital, then, passes through the forms of money capital, productive capital, and commodity capital and performs in each stage its own particular function. Some portion of the industrial capital the individual capital is in each form simultaneously and rotates side by side, when one portion leaves one stage another portion enters so that the entire cir- culation is a unit with the three forms. Marx sums this up as follows : "One part of capital, continually changing, continually re- produced, exists as a commod- Marx ity capital, which is convert- Summary ed into money; another as money capital converted into productive capital; and a third as productive capital converted into commodity capital. The continuous existence of all these forms is brought about by the rotation of the aggre- gate cycle through these three phases. Capital, as a whole, then, exists simultaneously side by side in its different phases. But every part passes continuously and successively from one phase and functional form into the next one and performs a function in all of them." The 2 Capital, Marx, Vol. II., pp. 58, 59. Ibid, p. 51. TRIUMPHANT SOCIALISM 39 process of production thus mediates the process of circulation and vice versa. We are now ready to trace the origin of sur- plus value. We have stated that surplus value is not created in the process of circulation the transformation of money into commodities and vice versa. Surplus value is created only in the field of production. We will consider first the process of manufacture. The three factors that enter into the manu- facturing process are the machinery, the raw and auxiliary materials, and Manufacture the labor-power. The capital- ist buys these factors in the open market, or rather authorizes their pur- chase by an agent into whose hands he places his capital, for the purpose of utilizing these factors in the creation of profits. This act constitutes the first phase of circulation. The factors now enter the labor process, but the values of these factors are no greater after they are joined together than they were before. Out of the mere addition of existing values no new value can arise. The capitalist can realize no surplus value if he pays in full for the fac- tors of the labor process. It is evident that he must pay in full for the raw materials and the instruments of labor these can only transfer to the finished product such value as they pos- sess. These factors change their shape during the process of manufacture, but their value 40 MILITANT AND does not change it disappears in one form only to reappear in another, but with no in- crease. That which the capitalist pays for these factors is simply transferred to the new product. It is evident, then, tUat the labor- power must be the source of surplus value. This is the fact. The laborer being unable to employ himself must sell his labor-power for less than its real or use value. We have already pointed out that the transformation of the for- mer limited instruments of production into mighty powers, costing vast sums of money, and the social character of the new methods of industry, reduced the once independent handicraftsmen to the level of wage workers. In this condition they must compete with one another for an opportunity to live. Their labor- power is a commodity which the capitalist is able to buy at its exchange value, which is de- termined like other commodities by its cost of production the cost of maintaining the worker and his family in normal efficiency. This wage has practically nothing to do with the productivity of his labor the amount of value which his labor-power adds to the prod- uct. Here, then, is the secret of capitalist ex- ploitation. He buys labor-power for less than its real value and appropriates the difference between the price of the labor-power and that which the laborer produces. Labor-power is the factor which adds to the product more TRIUMPHANT SOCIALISM 41_ value than its cost it creates the new value, and it is this new value that constitutes the capitalists' profits. This unpaid labor, the difference between the cost or exchange value of labor-power and its value in use, the value that the labor creates, is called surplus-value. This is the source of the capitalist income and it is for this increment that he invests his cap- ital. To illustrate the process suppose the prod- uct of a factory employing a certain number of men for a certain period of Illustration time amounts to $100,000. If the employer pays $60,000 for the raw and auxiliary materials, $15,000 for labor-power (including wages of superinten- dence), and $10,000 for the wear and tear of machinery and plant and miscellaneous ex- penses, $85,000 in all, he would thus make a clear profit of $15,000. Where did this profit come from? He cannot make anything on the raw materials or the machinery. The value of these factors consumed merely passes over and is embodied in the new product. But if we look at the labor-power we shall find that the laborers produced the value of their wages in half the time in which they worked. The other half they produced an equal value but received nothing in return. This surplus labor the amount over what was necessary to produce the wages received goes gratuit- 42 MILITANT AND ously to the capitalist. The appropriation, how- ever, is made each day, the day being divided into two parts the necessary and surplus labor time. The necessary labor is that which is requisite to create the wages ; the surplus labor is the unpaid labor embodied in the product. The percentage, of course, is not fixed ; it varies a little at different times, and the amount of this surplus value which the capitalist receives as profits also varies. The capitalist figures are not always reli- able and the statistics are so compiled that it is sometimes difficult to find Statistics out the exact facts. In 1900 the average annual wage of all workers (men, women and children) is given as $437, and the average net product per worker (not including those listed as salaried officials and clerks, and after deducting cost of materials used, miscellaneous expenses, etc.) is given as $872. The salaries of those listed as salaried officials, clerks, etc., averaged $1,017, each the officials probably getting the lion's share. The average wage of the adult man was $490, but we do not know the value of his individual product separate from the other workers. If the salaried officials are included, the average sum received by each adult wage worker and official would be $536, and the net product would be aproximately $1,027. Thus allowing the salaries of the officials, many of TRIUMPHANT SOCIALISM 43 whom receive large sums and render no serv- ice, the laborers are seen to be exploited out of a goodly portion of the wealth they create they are compelled to work at least four hours, and more likely nearer five hours, every day gratuitously for others. CHAPTER VI Exchange as a Productive Process What is true of manufacture is equally true of exchange. Exchange is a part of the pro- ductive process those engaged Exchange in transporting goods, etc., be- ing producers as much as those engaged in the primary, extractive, and forma- tive industries. The purpose of production is to supply human wants and the process is not complete until goods are brought to the con- sumers. The process here begins with the first phase of 'Circulation, the transformation of money into commodities, the commodity capi- tal of the manufacturer becomes the product- ive capital in exchange, and together with the other elements of production (the means of transportation, labor-power, etc.) passes through the productive process of change in time and place, and with the augmented value thus acquired passes again through the process of circulation. Exchange assumes the means of the process as existing store houses, transportation facilities, retail stores, etc., in fact, all the means necessary to get goods from the manufacturer to the consumer. Circula- tion in the field of exchange, as in manufac- ture, is merely incidental it introduces and closes the productive process. It consists simply in the transformation of money into commodities and vice versa. Strictly speak- TRIUMPHANT SOCIALISM 45 ing, the process of circulation is not a func- tion of a special class excluding the specu- lator but an incidental function of the indus- trial class as a whole. The conversion of money into commodities and vice versa is a necessary function in the process of the re- production of capital, but the function does not create value or surplus value. If these operations were not performed the capitalist could not use his capital in the process of production, and consequently could not reap the profit of such industry. Industrial production, then, is divided into two cycles manufacture and exchange. The final stage in the first cycle is Two the first stage in the second Cycles cycle. In both cycles the process of production inter- venes midway between the two opposite phases of the circulation of capital. Each cycle begins with money-capital. This fact is not altered by the manufacturer carrying on the process of exchange himself, for he must receive the money value for his product to begin with in order to continue the process of manufacture uninterrupted. This would necessitate an additional capital, for, while his commodity capital goes to the market another capital is needed to continue the process of production capital would have to be ad- vanced in order to begin anew the first cycle. 46 MILITANT AND He would also need a still further sum to se- cure the means necessary to carry on the second cycle. It is generally advantageous for the manufacturer to confine his activity to the first cycle and turn over the second to an- other class. The result of this division of labor is to facilitate both processes the man- ufacturer converts his commodities more quickly into money, and the exchanger se- cures the final sale of the commodities more quickly. However, if the manufacturing cap- italist performs this function he obtains ad- ditional profit which otherwise would go to others. It is thought by some that the second cycle is merely the circulation of commodity capital, the augmented capital value of the first cycle in the form of commodities, in which there is no increase of value or surplus value. But we hold that the money capital in the second cycle, as in the first, is trans- formed into productive capital. Transporta- tion is a productive process. Marx truly says, "Transportation, as an industry, sells this change of location. This utility is inseparably connected with the process of transportation, which is the productive process of transporta- tion. Men and commodities travel by the help of the means of transportation, and this travel- ing, this change of location, constitutes the production in which these means of transpor- TRIUMPHANT SOCIALISM 47 tation are consumed. The exchange value of this utility is determined, like that of any other commodity, by the value of the elements of production (labor-power and means of pro- duction) plus the surplus value created by the surplus labor of the laborers employed in transportation." 4 Marx then gives the formula for the transportation industry which is the same as for manufacture. It is the process of production itself here which is paid for and consumed, not a product separate from it. The field of exchange, then, is not merely buying and selling in which the merchant buys of the manufacturer and sells direct to the final consumer without any intervening function. Before the manufacturer's product can reach the final consumer it must pass through the productive process of exchange. We use the word merchant here to cover the entire process of exchange, although, strictly speaking, the term is limited to The the first and last stages of the Merchant process the wholesale and re- tail dealers. But the cost of exchange (expressage, transportation, etc.), the expense of all the objective materials of commerce must be advanced by the merchant, and, although the function appears as a special business, still the merchant recovers the con- rt a o a U a