VJ 
 
WHAT IS SOCIALISM? 
 
 AN EXPLANATION AND CRITICISM 
 OF THE DOCTRINES AND PRO- 
 POSALS OF "SCIENTIFIC SOCIALISM" 
 
 BY 
 
 JAMES EDWARD L E ROSSIGNOL 
 
 Dean of the College of Business Administration, University of 
 
 Nebraska, Author of "State Socialism 
 
 in New Zealand,*' Etc. 
 
 NEW YORK 
 
 THOMAS Y. CROWELL COMPANY 
 PUBLISHERS 
 
COPYRIGHT. 1921. 
 BY THOMAS Y. CROWELL COMPANY 
 
 Printed in U. S. A. 
 
TO 
 MY SISTEB 
 
 ANNIE ELIZABETH LE ROSSIGNOL 
 
 708700 
 
PREFACE 
 
 The daring and dreadful experiments of the 
 Russian Bolshevists have called attention in a 
 striking way to the fact that they, as professed 
 followers of Karl Marx, are zealous adherents 
 of "scientific" socialism, though not of the later, 
 more evolutionary type. The revolution of 
 November 7, 1917, was not a spontaneous upris- 
 ing of the working class, but an insurrection 
 carefully planned and executed by a group of 
 conspirators who had long awaited an oppor- 
 tunity of putting their theories to the test on a 
 gigantic scale. 
 
 Moreover, the leading socialists throughout the 
 world, though for the most part evolutionists 
 and anti-Bolshevist, are Marxists of one kind or 
 another, and are watching, waiting and working 
 for the social revolution. As their gospel makes 
 a strong appeal to millions of people, it is a ques- 
 tion of more than academic interest whether the 
 Marxian theories are really scientific, or whether 
 they are only sophistries masquerading in scien- 
 tific garb. 
 
 Fortunately, the Marxian system arranges 
 itself in a series of propositions which proceed in 
 
vi PREFACE 
 
 logical order like the theorems of Euclid, and the 
 writer has taken advantage of that to examine 
 them one by one, and as closely related parts of 
 a single whole. A considerable part of an earlier 
 work, "Orthodox Socialism," now out of print, 
 has been included in the present volume, though 
 altogether revised and rewritten. 
 
 The writer desires to thank several of his 
 friends and colleagues, especially Professors F. 
 M. Fling, Guernsey Jones, Donald McFayden, 
 G. O. Virtue, J. E. Kirshman, P. W. Ivey, 
 T. T. Bullock, Mr. Leo Pasvolsky, Mr. J. A. 
 Cejnar and Mr. Maurice Smith, for helpful criti- 
 cism and suggestions. 
 
 J. E. LE ROSSIGNOL. 
 
 Lincoln, Nebraska, 
 August 25, 1921. 
 
CONTENTS 
 
 INTRODUCTION 
 
 Origin of Modern Socialism Socialism is a Caricature 
 Character of the Movement The Appeal of So- 
 cialism Page 1 
 
 I 
 THE CREED OF SOCIALISM 
 
 Types of Socialists The Founder of Modern Socialism 
 Higher Criticism Socialism is Not a Science Party 
 Unity Desired The Communist Manifesto Orthodox 
 Doctrines of Socialism The Partial Dis- 
 senters Page 7 
 
 II 
 THE SECTS OF SOCIALISM 
 
 Propaganda, and Tactics Christian Socialism Fabian 
 Socialism State Socialism Syndicalism Sabotage 
 The General Strike The Industrial Union The 
 I. W. W. Guild Socialism Bolshevism Marx a 
 Dual Personality Communism Anarchism Social- 
 ism Different in Every Country American Socialist 
 Parties Page 22 
 
 III 
 THE ECONOMIC INTERPRETATION OF HISTORY 
 
 The Hegelian Method The Marxian Theory Applica- 
 tions Modern Examples Contradictions Non-Eco- 
 nomic Instincts Marxian View Narrow Historical 
 Explanation Difficult Prophecy The Class Struggle 
 Economic Interpretation Rejected . . Page 51 
 vii 
 
viii CONTENTS 
 
 IV 
 THE MARXIAN THEORY OF VALUE 
 
 Ricardo's Labor-Cost Theory Adapted Marx's Adapta- 
 tion Importance of the Theory Fatal Exceptions 
 Where Theory Collapses The Factor of Scarcity 
 The Factor of Social Utility Mine and Farm 
 Costs Manufactured Goods Marx's Admission 
 Utility Brairf Work Labor-Cost Theory Discred- 
 ited Page 69 
 
 THE MARXIAN LAW OF INCREASING MISERY 
 
 Living Costs Determine Wages Socialist Interpretation 
 Marx Twists Theory of Malthus Pessimism and 
 Optimism of Marx Earlier Conditions of Working 
 Class Changes in the Conditions of Workers Labor 
 Conditions in the United States W.. I. King's Find- 
 ings Admissions of Socialists Marxism With Marx 
 Left Out Inconsistency of Socialists . . Page 85 
 
 VI 
 THE MARXIAN THEORY OF SURPLUS VALUE 
 
 A Concrete Example Labor and Capital Marx's Cele- 
 brated Puzzle Commercial Capital Distribution of 
 Wealth The Share of Labor Conditions in the 
 United Kingdom The Effect of Saving The Nation's 
 Income The Capitalistic Class Rcny Interest and 
 Prpfit Two Sides to the Picture The Benefits of 
 Capitalism ,'.". Page 102 
 
 VII 
 SOCIALIST ECONOMICS OF MACHINERY 
 
 Marx's Views on Machinery A Plausible Case Contra*- 
 dictions Machinery May Displace Labor Machinery 
 
CONTENTS ix 
 
 Makes for Shorter Day Machinery Not a Blight 
 Men Not Displaced by Women Domestic and Pro- 
 fessional Workers Page 127 
 
 VIII 
 THE SOCIALIST THEORY OF CRISES 
 
 Marxian View of Crises Foreign Commerce Socialist 
 Theory is False Self-Contradiction Socialist Proph- 
 ecy Groundless The Present Crisis Protective 
 Tendencies Page 144 
 
 IX 
 
 THE MARXIAN THEORY OF THE 
 CONCENTRATION OF CAPITAL 
 
 Marx Anticipated Agriculture Wholesale and Retail 
 Trade The Financial Power Manufacturing Dif- 
 fusion of Ownership Page 160 
 
 THE MARXIAN PROPHECY OF THE 
 ELIMINATION OF THE MIDDLE CLASS 
 
 The Middle Class Agriculture Manufacture Profes- 
 sions and Skilled Labor Middle Class Domin- 
 ant Page 173 
 
 XI 
 
 THE MARXIAN THEORY OF THE CLASS 
 STRUGGLE 
 
 Hegel and Darwin Theory of the Origin of Classes 
 Contradictory Historical Data Satisfaction in All 
 Society Modern Conditions Marx's Prophecy Un- 
 fulfilled The Triple Alliance in England Future of 
 the Class Struggle Page 181 
 
CONTENTS 
 
 XII 
 THE SOCIAL REVOLUTION 
 
 Method of the Revolution Marx's Contradictions Dar- 
 winism and Marx Biological and Social Evolution 
 How Revolutions Have Occurred Marx's Prophecies 
 Not Fulfilled Capitalism Evolutionary Prophecy of 
 Final Overthrow Strength of Capitalism Reason or 
 Passion? Emotionalists Page 193 
 
 XIII 
 
 BOLSHEVISM, OR THE DICTATORSHIP OF THE 
 COMMUNIST PARTY 
 
 The "Yellows" and the "Reds" Marx the Prophet of All 
 Sects Two Revolutions Expected The Revolution of 
 1917 Bolshevists Secure Control The Coup d'etat 
 The Central Executive Committee The Peasantry 
 The Industrial Workers Economic Breakdown 
 Individual Liberty Suppressed Civilization in Peril 
 Industrial Reconstruction Capitalism Coming Back 
 The Third International Bolshevism is Revolu- 
 tionary Marxism Page 208 
 
 APPENDIX 
 
 The Nonpartisan League Page 239 
 
 Selected List of Books in English .... Page 253 
 Index Page 261 
 
CTJOtf ; V 1 
 
 The purpose of the following chapters is to 
 present a brief exposition and criticism of the 
 chief points of Marxian socialism, also called 
 "scientific" socialism. That the fundamental 
 theories of socialism are far from scientific has 
 often been shown, yet many intelligent people 
 are not aware of the fact. Certainly, in these 
 days of discontent, when many panaceas -are of- 
 fered for social ills, it should be worth while -to 
 examine their claims before they are tried on the 
 patient, and it is found, by sad experience, that 
 the remedy is worse than the disease. 
 
 As we consider the place of socialism in history 
 and the development of socialistic thought from 
 Plato to Lenin, we see that four, if not five, 
 rather clearly marked types have successively 
 appeared. 
 
 The first socialists were philosophers, like 
 Plato and Sir Thomas More, who, deploring the 
 evils of their day, had visions of ideal states, but 
 never tried to create a working model. 
 
 In the second stage, which came with the in- 
 dustrial and political revolution of the eighteenth 
 century, socialistic ideas took hold of earnest but 
 visionary men, like Robert Owen in England and 
 Fra^ois Fourier in France, who believed that 
 they could actually construct and operate ideal 
 
 l 
 
2 INTRODUCTION 
 
 communities, and were .not convinced, by re- 
 peated failure, that their plans were unworkable. 
 
 Origin of Modern Socialism. In the middle 
 of the nineteenth century, when it was evident 
 that the twin revolutions had failed to bring per- 
 fect liberty, equality and fraternity to the world, 
 and when modern science had well begun its 
 great career, Karl Marx proclaimed the "scien- 
 tific" discovery that a revolution was latent in 
 the very constitution of capitalistic society, and 
 that, because of exploitation, increasing misery, 
 and the disaffection of the working class, the day 
 of socialism was at hand. 
 
 About the beginning of the present century, 
 when skepticism had undermined the faith of 
 theoretical socialists, and the rank and file began 
 to mutiny against the soft -handed "intellect- 
 uals," the direct actionists came to the fore, im- 
 patient, revolutionary evangelists, calling on the 
 workers to arise and spare not. 
 
 Finally, after the World War, and the revolu- 
 tions in Russia and Germany, we find in those 
 countries the administrative socialists, the social- 
 ists in office, who, having assumed large responsi- 
 bility, and with the lives of millions in their 
 keeping, are forced to compromise with the old 
 order, and, having driven capitalism out by the 
 front door, let it come back by the cellar window. 
 
 Socialism was in the world long before the 
 
INTRODUCTION 
 
 time of Marx, and will be, long after his theo- 
 ries have been discarded. "Scientific" socialism, 
 then, is but a passing phase of the eternal protest 
 against things as they are, which follows human 
 society like a shadow, and would, like Satan in 
 the Book of Job, play a leading part in the New 
 Jerusalem. 
 
 Such being the case, it might seem futile to 
 offer criticism of "scientific" socialism, but for 
 the fact that socialism, in its scientific garb, goes 
 about in borrowed prestige, authority and force 
 which do not belong to mere visions, Utopian 
 schemes, and bitter rebellion against the inevit- 
 able evils of every social system. If socialism 
 has a right to the cloak of science, it may wear it, 
 but if not, it must appear in its proper shape and 
 be judged according to its real character and 
 intentions. 
 
 Socialism Is a Caricature. Certainly, social- 
 ism, as a system of thought, is a remarkable 
 structure, the parts of which seem at first sight 
 to fit together so well as to prove that it must be 
 a real picture of capitalistic society, and a true 
 prophecy of coming change. And yet, a closer 
 examination shows that fallacy and half-truth 
 pervades every part and that the entire system, 
 with all its plausibility and apparent consistency, 
 is a mere caricature of the industrial world as it 
 really is. 
 
INTRODUCTION 
 
 Much of this critical examination has been 
 made by socialists themselves, the more scholarly 
 intellectuals, who are often called "revisionists," 
 because they wish to make the theories of Marx 
 square with facts. To such an extent has this 
 "higher criticism" undermined the faith, that the 
 most fundamental theories stand disproved or 
 discredited in the minds of many socialists. 
 
 These more enlightened leaders no longer 
 believe as once they did, and if they still proclaim 
 the orthodox creed, as some do, it is because the 
 old words come readily to the tongue, the old gos- 
 pel is preachable, and the old promises still have 
 power to stir the soul. Of course, most of the 
 agitation is done by the less intellectual, who still 
 believe. As to the rank and file, they are dis- 
 posed to believe and feel and do, without looking 
 too closely into the rational basis of their faith. 
 
 Character of the Movement. But if the ra- 
 tional basis is not there, it is surely well for all 
 concerned to known where they stand. If social- 
 ism as a system of thought is unscientific and un- 
 sound, then it is still where it was in the days of 
 Plato, More, Owen, Fourier, and the rest. And 
 if the economic analysis and doctrines are false, 
 upon what foundation of science or reason does 
 the proposed new system of social reconstruction 
 rest? 
 
 Socialism can still be, and is ? a denunciation of 
 
INTRODUCTION 
 
 capitalism, according to which most of the ills of 
 life are attributable to private property. 
 
 It is still a highly imaginary scheme of social 
 organization, which, socialists believe, would be a 
 panacea for most, if not all, the ills that flesh is 
 heir to. 
 
 It is still a murmur of discontent among the 
 poor, a movement toward a social revolution, and 
 a determination to carry out, on a national or 
 international scale, the plans which they hasre 
 seen in their dreams. 
 
 It is still a promise of a Golden Age, that 
 allures and blinds and disappoints, like the will- 
 o-the-wisp, or the pot of gold at the foot of the 
 rainbow. 
 
 The Appeal of Socialism. All this is left, and 
 socialism still appeals, and will appeal, to people 
 of a certain temperament the sanguine, emo- 
 tional, uncritical, visionary, credulous, impatient, 
 intemperate, explosive but surely not to sane, 
 rational, well-balanced men of common sense, 
 who are the only safe pilots in stormy and un- 
 charted seas. 
 
 It is not a useless task, therefore, to expose the 
 unscientific pretensions of "scientific" socialism, 
 unless it be true that man is not a rational 
 animal, but swayed to such an extent by emotion 
 and passion that he will be ready to break up the 
 present imperfect scheme of things industrial, on 
 
6 INTRODUCTION 
 
 the chance of being able to fashion out of the 
 wreck something nearer to the heart's desire. 
 
 Yet the experience of Russia makes one be- 
 lieve such childish folly possible, and there are 
 people in every country who wish to follow that 
 example. Also, there are those who are moving 
 in that direction, though they do not see the end 
 of the road. Professor Franklin H. Giddings, 
 of Columbia University, recently wrote these sig- 
 nificant words: "The whole world at present is 
 intellectually muddled and morally bedeviled. It 
 is trying to reconstruct society upon a hypotheti- 
 cal equality of all mankind. If it succeeds, it will 
 destroy historic achievement from the beginning, 
 and will send mankind to perdition." 
 
 Socialism may not stand for absolute equality, 
 but there can be no doubt that its trend is 
 strongly in that direction. It lays itself open to 
 ~-f~ the charge of Plato, who said, in substance, that 
 nothing is more unequal than the equal treat- 
 ment of unequals. The exploitation of the many 
 by the few is bad, no doubt ; but the exploitation 
 of the few by the many, the exceptional men by 
 the sluggish horde, the torch-bearers of civiliza- 
 tion by those who walk in darkness, means not 
 only the abolition of private property, initiative 
 and enterprise, but the destruction of our present 
 civilization and what will follow that, no man 
 knows. 
 
THE CREED OF SOCIALISM 
 
 Like every expression of human life and 
 character, socialism is new in form, but old in 
 spirit. Envy and pity are as old as happiness 
 and misery, and from such a soil in every age 
 has sprung a vigorous growth of protest and re- 
 bellion. The inequality of men is the most strik- 
 ing fact in human history. Always have there 
 been strong and weak, master and servant, rich 
 and poor, according to the law of the old-time 
 struggle: 
 
 "That they should take who have the power, 
 And they should keep who can." 1 
 
 Opposed to the fact of inequality and aristoc- 
 racy is the ideal of equality and democracy, 
 largely derived from Christianity. Creatures of 
 one God, children of a common ancestor, similar 
 in form and feature, intellect and appetite, why 
 should not the sons of men live together as mem- 
 bers of a single, loving family? Why should the 
 
 i William Wordsworth, Rob 'Roy's Grave. 
 7 
 
8 THE CREED OF SOCIALISM 
 
 good things of life belong to a few, and the 
 crumbs of the table to all the rest? 
 
 "When Adam delved and Eve span 
 Who was then the gentleman?" 1 
 
 Out of a strong desire for better things has 
 come the belief that better things are possible. 
 Man is a born dreamer. He puts a halo about 
 the past and sees the future in a golden mist. 
 The poor of this world, always rich in faith, have 
 conceived the thought of a perfect world, and the 
 desire of their heart they believe they will one 
 day attain. This desire and this faith is the spirit 
 of socialism. 
 
 Types of Socialists. There are at least three 
 kinds of socialists: the instinctive, the Utopian, 
 and the scientific. The socialist by instinct 
 merely, not knowing that he is a socialist, under- 
 estimating the strength of the propertied classes, 
 appeals to the crude and primitive rue of force, 
 commits acts of violence and terror, and in him 
 is fulfilled the significant prophecy: "They that 
 take the sword shall perish by the sword." The 
 passionate, short-sighted rebel dies before his 
 time, and his misguided followers sooner or later 
 realize that they have only discredited the cause 
 they hoped to serve. 
 
 The Utopian socialist, with his Plato, More, or 
 
 i Rhyme attributed to the "mad priest," John Ball, before the 
 Peasants' Rebellion of 1381. 
 
THE CREED OF SOCIALISM 9 
 
 Bellamy, comes to comfort the distressed with a 
 glowing picture of a golden age, a heaven on 
 earth, a New Jerusalem of peace and prosperity, 
 where the hungry shall eat, the thirsty shall 
 drink, and all tears shall be wiped away. How 
 alluring the scheme of perfect harmony, how 
 just the method of distribution, how attractive 
 to the imagination, how satisfying to the soul, 
 and yet how visionary, intangible, impossible a 
 city of dreams, a mirage of the desert! 
 
 The "scientific" socialist is the only socialist 
 worthy of the name. The philosophy of Hegel, 
 the economics of Ricardo, and the biology of 
 Darwin combine in him to produce a system of 
 social theory the most remarkable that the world 
 has seen. 
 
 The Founder of Modern Socialism. Hein- 
 rich Karl Marx (1818-1883), by birth a Jew, is 
 the Moses of socialism, its leader, lawgiver, and 
 prophet. His great book, "Capital," is often 
 called "the Bible of the working class." In this 
 and other works he expounded the principles of 
 scientific socialism, which are thought to give 
 such knowledge of past history and such insight 
 into present economic tendencies as to justify 
 the assertion that the revolution is at hand, and 
 the "millennium" about to be ushered in. 
 
 The "scientific" socialist of the orthodox type 
 is very sure of his ground, ^ The present has no 
 
10 THE CREED or SOCIALISM 
 
 mystery for him; the future is like an open book. 
 To him people are divided into three classes: 
 knaves, fools, and socialists. If you do not know 
 Marx you are a fool. If you know, and do not 
 believe, you are a knave, or, at best, a parasite. 
 If you know and believe you are a socialist, one 
 of the elect. 
 
 Yet nobody should be offended when such 
 epithets are used in the course of a scientific dis- 
 cussion, for it is quite proper to call men para- 
 sites, exploiters, robbers, and the like, so long as 
 it is done in a scientific spirit, which, as Marx 
 puts it, "deals with individuals only in so far as 
 they are personifications of economic categories, 
 embodiments of particular class interests and 
 class relations." l 
 
 Higher Criticism. Socialism has always had 
 its enemies among outsiders, but of late years a 
 sort of "higher criticism" has sprung up within 
 the fold, and many professed socialists have be- 
 gun to doubt doctrines formerly considered fun- 
 damental. For such opinions some have been 
 cast out of the synagogue, while others, suspect- 
 ed of heresy, have lost influence with their more 
 orthodox comrades, who demand rigid adherence 
 to old-line Marxism. "Better a declared enemy," 
 they say, "than a half-hearted friend." 
 
 The enlightened socialist, or "revisionist," un- 
 
 iKarl Marx, Capital, Vol. I, Author's Preface. 
 
THE CREED OF SOCIALISM 11 
 
 able to deny the validity of the newer criticism, 
 is careful to separate the wheat from the chaff of 
 Marxian doctrine. If Marx be shown to have 
 made a mistake, he will say that the point is not 
 essential, and will withdraw to the main line of 
 the Marxian system, which, he thinks, can never 
 be pierced. But if it were proved beyond a 
 doubt that the whole teaching of Marx is fal- 
 lacious, both in premises and conclusion, the con- 
 firmed socialist would, if necessary, abandon his 
 great teacher, holding that socialism, greater 
 than Marx or any ; other man, can stand on its 
 own foundations. 
 
 Finally, if it could by any possibility be shown 
 that socialism, as a system of thought is utterly 
 false, the true socialist would retreat to his last 
 stronghold and say that socialism, at bottom, is 
 not a system of thought, but a process of social 
 evolution, a law of the industrial world irresis- 
 tibly moving on toward its final destiny. 
 
 To say this is to substitute assertion for proof, 
 feeling for reason, faith for knowledge, mere 
 (messing for scientific demonstration. And yet, 
 dogmatism such as this appeals to people of a 
 certain type, who, when they have closed their 
 minds to doubt, are more vehement than ever in 
 proclaiming their opinions. And, strange to say, 
 their powerful suggestions carry conviction to 
 
12 THE CREED OF SOCIALISM 
 
 many hearers, with little support in logic or 
 reason. 
 
 It may be that feeling lies deeper than reason, 
 that faith is more reliable than science, that we 
 should believe in order that we may know; but 
 the Marxian socialist does not consciously enter- 
 tain such views as these and will not uphold them 
 except as a last resort. 
 
 If socialism is a science, how is it that social- 
 ists display so little of that openness of mind, 
 that love for truth, that indifference to contra- 
 diction, that sublime patience so characteristic of 
 the true scientific spirit? 
 
 Socialism Not a Science. In fact, socialism is 
 not a science at all, but a sort of faith, or religion. 
 Science for the socialist is a mere tool, a means to 
 an end, to be discarded 'after it has served its pur- 
 pose. For him science is but the handmaid to 
 religion. 
 
 In these days, when we have a psychology 
 without a soul, let it not be thought strange that 
 we have a religion without a god. Like most 
 religions, Socialism has its prophet and its book. 
 Like all religions, it has its creed, which the 
 orthodox hold with the utmost dogmatism and 
 intolerance. The twin passions of love and hate 
 supply the motive power, and a firm conviction 
 that the social revolution is at hand is a source of 
 
THE CREED OF SOCIALISM 13 
 
 great enthusiasm in the propaganda for the con- 
 version of the world. 
 
 Socialists are optimistic to the last degree. 
 Unbounded is their faith in man; brilliant the 
 destiny they predict for him. The socialist is 
 essentially a prophet. Believing himself able to 
 read the signs of the times, he does not hesitate 
 to say that he can foresee, in outline, at least, the 
 changes that will take place in time to come. His 
 prophecy, as he says, is not Utopian, as of those 
 who merely dream and hope for a better world; 
 but scientific, like the forecasts of the weather 
 bureau, or the predictions of a chemist who 
 knows what is coming out of a combination be- 
 cause he knows what has been put into it. Scien- 
 tific prophecy, that is socialism. 
 
 Party Unity Desired. The International 
 Socialist Congress, which met in Amsterdam in 
 August, 1904, adopted the following resolution: 
 
 "The Congress declares that in order that the 
 working-class may develop its full strength in 
 the struggle against capitalism, it is necessary 
 that there should be but one socialist party in 
 each country as against the parties of the capital- 
 ists, just as there is but one proletariat in each 
 country. For these reasons it is the imperative 
 duty of all comrades and all socialist organiza- 
 tions to strive to the utmost of their power to 
 bring about this unity of the party, on the princi- 
 
14 THE CREED or SOCIALISM 
 
 pies established by the international congresses, 
 that unity which is necessary in the interest of the 
 proletariat to which they are responsible for the 
 disastrous divisions in their ranks." 
 
 In these days of independent thought it is 
 common to speak slightingly of creeds, but when 
 men unite for religious, moral, political, or eco- 
 nomic ends, they find that success cannot be 
 attained without a certain union in thought, feel- 
 ing, and purpose. In the words of the prophet, 
 "Can two walk together except they be agreed?" 
 
 In early times, when philosophers like Plato, 
 More, and Campanella saw visions of ideal 
 states, the question of uniformity in belief was of 
 no consequence to themselves nor to the world at 
 large. 
 
 When more zealous socialists, like Owen and 
 Fourier, began to establish their experimental 
 communities "duodecimo editions of the New 
 Jerusalem," as Marx called them unity in faith 
 was seen to be a matter of vital importance. 
 Associations of philosophers and literary people, 
 like Brook Farm Community near Boston, 
 speedily failed; while communities of simple- 
 minded believers, with a common religious creed, 
 like the Shakers and the Amana Community, 
 have continued to exist until the present day. 
 
 The Communist Manifesto. But when, in 
 the revolutionary agitation of 1848, socialists of 
 
THE CREED OF SOCIALISM 15 
 
 all countries and every sect began to be conscious 
 of a common purpose, the time was ripe for the 
 formulation of a creed that should unite the revo- 
 lutionary forces throughout the world. The hour 
 was come, and the man. The man was Karl 
 Marx, who with his friend Friedrich Engels, 
 drew up in London, in January, 1848, the 
 "Manifesto of the Communist Party," the first 
 formal utterance of the creed and program of 
 "scientific" socialism. 
 
 For some years thereafter the international 
 faith had few converts, but after the publication, 
 in 1867, of the first volume of "Capital" the 
 views of Marx spread with great rapidity. In 
 the election of 1912, German socialists polled 
 4,238,000 votes out of 12,188,000, and secured 
 110 seats in the Reichstag. At that time it was 
 estimated that the socialist voters of the world 
 numbered about 10,000,000, most of whom were 
 Marxians of one kind or another. 
 
 In the presidential election of 1912 in the 
 United States, Eugene V. Debs received, 
 roughly, 900,000 votes out of a total of 15,000,- 
 000 votes cast. In 1916, Allan T. Benson re- 
 ceived about 600,000 out of 18,500,000. In 1920, 
 Mr. Debs received less than 1,000,000 votes out 
 of about 28,000,000, including women voters, 
 which was a lower relative vote than in 1912. 
 Doubtless, the progress of socialism has been 
 
16 THE CREED OF SOCIALISM 
 
 much hindered by the disastrous experiment in 
 Russia, as well as the behavior of many socialists 
 during the war. 
 
 Orthodox Doctrines of Socialism. Orthodox 
 socialists throughout the world, with all the 
 variations due to nationality, local environment, 
 temperament, or other causes, hold more or less 
 strongly the following doctrines, which may be 
 briefly expressed in a series of propositions: 
 
 ( 1.) In a given period of the world's history, 
 the modes of production and exchange, or the 
 ways by which people get their living, determine 
 their whole political, social, intellectual, legal, 
 moral, and even religious life. Also, when the 
 economic foundations change, corresponding 
 changes are thereby brought about in the social 
 superstructure. This is the theory of economic 
 determinism, otherwise known as the material- 
 istic or economic interpretation of history. 
 
 (2.) The exchange value of commodities de- 
 pends upon the amount of socially necessary 
 labor-time required to produce them. This is 
 the labor-cost theory of value. 
 
 (3.) Although the working class, the prole- 
 tariat, create all wealth, their wages tend to equal 
 the bare cost of living. As the rich grow richer 
 the poor grow poorer, and ever sink deeper in 
 the slough of pauperism. This is the iron law of 
 wages or the theory of increasing misery. 
 
THE CREED OF SOCIALISM 17j 
 
 (4.) The capitalists, the bourgeoisie, take the 
 greater part of the values created by the prole- 
 tariat in the form of rent, interest, and profits. 
 This is surplus value, obtained by exploitation or 
 robbery. 
 
 (5.) The introduction of labor-saving ma- 
 chinery and improved methods of production 
 creates a vast reserve army of the unemployed, 
 and impoverishes the whole working-class, while 
 the capitalists accumulate a mass of commodities 
 which they can neither use nor sell. The result 
 is chronic over-production and under-consump- 
 tion, with periodical crises, which threaten the 
 very existence of the capitalistic system. This 
 is the theory of crises taught by Rodbertus, Marx, 
 and most orthodox socialists. 
 
 (6.) The unceasing improvement in machin- 
 ery and methods of production causes industry to 
 be conducted on a larger and larger scale, and 
 wealth to be concentrated in the hands of a few 
 magnates. This is the law of the concentration 
 of capital. 
 
 (7.) As this process goes on, the small manu- 
 facturers, shopkeepers, craftsmen, and peasants, 
 sink gradually into the proletariat, being ground 
 to pieces between the upper and the nether mill- 
 stone. This is the approaching elimination of 
 middle class. 
 
 (8.) Soon there will be only two classes left: 
 
18 THE CREED OF SOCIALISM 
 
 capitalists and laborers, bourgeoisie and prole- 
 tariat, the robbers and the robbed. But the pro- 
 letariat, the more numerous class, becoming con- 
 scious of their strength, will seize the political 
 power and inaugurate the social revolution. 
 
 (9.) When the proletariat have done this 
 they will gradually or speedily abolish capitalism 
 by organizing industry on the basis of a common 
 pwnership and management of the means of pro- 
 duction with an equitable distribution of the pro- 
 duct, so as to abolish poverty and all the other 
 evils of capitalism. 
 
 (10.) After the advent of socialism, human 
 character will adapt itself to the ideal environ- 
 ment ; all men, or nearly all, will be industrious 
 and virtuous ; and an era of peace, prosperity, and 
 happiness will prevail until the end of time. 
 
 (11.) The social revolution is coming and 
 nothing can prevent it. 
 
 The Partial Dissenters. The "higher critics" 
 of socialism among whom are Bernstein of Ger- 
 many, Vandervelde of Belgium, Tugan-Bara- 
 nowsky of Russia, Hardie and MacDonald of 
 England, Spargo and Hillquit of the United 
 States by no means accept all of the orthodox 
 creed, but reject certain doctrines and modify 
 others, until there is little difference between 
 them and the unbelieving reformer or the uncon- 
 
THE CREED OF SOCIALISM 19 
 
 verted professor of political economy. And yet, 
 in their public utterances, they often speak and 
 write like true believers, as though the rank and 
 file of the socialist army should not know how 
 little of the old faith remains intact. Much of 
 the propaganda literature contains the old crude 
 doctrines expressed in the old familiar way, mis- 
 leading but effectual in bringing about "class 
 consciousness" and "solidarity" among the work- 
 ing class. Truth is sacrificed to political tactics 
 and the end is used to justify the means and 
 that by socialists who know better. Thus the 
 Roman augurs used to wink at one another when 
 they met, but turned a sober face to the supersti- 
 tious common people. 
 
 For example, these enlightened socialists know 
 that economic forces are not the only factors in 
 social evolution, and that the class struggle is 
 not the only way to better things. 
 
 They admit that the wage-earners are not the 
 sole creators of wealth and productive ideas, and 
 that the bourgeoisie, as a class, render great ser- 
 vice to society in many ways. 
 
 They confess that the labor-cost theory of 
 value is unsound, and that much of "surplus 
 value" is but a fair return to capital and enter- 
 prise. 
 
 They find no law of increasing misery in capi- 
 
20 THE CREED OF SOCIALISM 
 
 talistic countries, as the condition of the working 
 class is steadily, if slowly, improving. 
 
 They suspect the accuracy of the orthodox 
 theory of crises, and no longer expect the capi- 
 talistic system to break down through overpro- 
 duction. 
 
 They see that the concentration of production 
 and wealth has its limits, and that the middle 
 class is not disappearing, but increasing in 
 numbers and wealth. 
 
 They are inclined to think that socialists may 
 safely work with unconverted reformers for the 
 half -loaf of partial betterment in social con- 
 ditions. 
 
 They often teach that the social revolution 
 may come, not as a sudden cataclysm, but rather 
 by gradual process of industrial evolution. 
 
 Finally, aghast at the terrible doings in 
 Russia, they repudiate the dictatorship of the 
 proletariat, and even disown the revolution, their 
 own child, as an untimely birth, and because it 
 has, contrary to expectation, both teeth and 
 claws. 
 
 But these intellectuals, with all their doubts, 
 still wish to remain within the fold, still hold to 
 what they consider as the essentials of socialism, 
 and, with possibly a little mental reservation, 
 could honestly repeat a formula such as this: "I 
 believe in economic evolution and the class 
 
THE CREED OF SOCIALISM 21 
 
 struggle. I recognize exploitation as the essen- 
 tial evil of capitalism. I believe in the prole- 
 tariat. I look for the social revolution, the re- 
 generation of man, and the peace and prosperity 
 of democratic collectivism." 
 
II 
 
 THE SECTS OF SOCIALISM 
 
 Although socialists of every belief have much 
 in common, they are by no means agreed on all 
 points of theory and practice, and there is serious 
 contention and division among them. The body 
 of doctrine which they profess has four main 
 parts or aspects: first, it is a criticism of the 
 present industrial order; second, a philosophy or 
 theory of social evolution; third, a plan or ideal 
 of a new social order ; and fourth, a propaganda 
 or campaign for the destruction of capitalism 
 and the setting up of the social commonwealth. 
 
 Practically all socialists are agreed in their 
 hatred of capitalism, the evils of which they de- 
 light to expose, as though it were the sum of all 
 iniquity and the cause of all the troubles that 
 afflict the world. To be sure, Marx regarded 
 capitalism as a necessary stage in social evolution, 
 even as some theologians regard Satan as a 
 necessary evil and part of the divine order when 
 seen from the long-time point of view. 
 
 Socialism, as a theory of social evolution, is 
 the materialistic or economic interpretation of 
 
 22 
 
THE SECTS OF SOCIALISM 23 
 
 history and the theory of the class struggle which 
 is part of it. This, together with the theories of 
 value and surplus value, forms the center and 
 core of "scientific socialism." A few years ago 
 the followers of Marx were generally agreed as 
 to this, but since it has been under fire of the 
 higher critics or revisionists, as well as the econo- 
 mists, some socialists have been much in doubt 
 as to the scientific basis once thought so secure. 
 
 But it is on the third point that socialists differ 
 most, for when they come to set up a social ideal, 
 the likes and dislikes of no two persons are the 
 same. "Concerning tastes there can be no dis- 
 pute" runs the proverb, because such questions 
 cannot be decided by argument but by personal 
 choice alone. 
 
 Some socialists prefer the fanciful schemes of 
 the Utopians; some love to think of the New 
 Jerusalem, the City of God; some glorify state 
 socialism; some swear by syndicalism, industrial 
 unionism, or national guilds; and some would 
 have so little of state control as to come very 
 near the ideal of anarchism. In these disputes 
 about the Golden Age, which every man creates 
 for himself, the scientific side of socialism goes 
 into the background, the Utopian comes to the 
 fore, and the imagination is given free rein. In 
 fact, the Russian socialist, Tugan-Baranowsky, 
 
24 THE SECTS or SOCIALISM 
 
 freely admits that socialism is more Utopian than 
 scientific, holding that its utopianism is the chief 
 source of its strength. x 
 
 Propaganda and Tactics. Finally, on the 
 fourth point propaganda and tactics there is 
 much difference of opinion, as there must be 
 among men of various types and temperaments. 
 Some, like the Utopians, think that the beauty 
 and attractiveness of their ideal plans will con- 
 vert the world. Others, like the Fabians, expect 
 the new age to come little by little, and are will- 
 ing to wait for the mills of the gods to grind out 
 their grist. Still others, like the evolutionary 
 Marxists, believe that the revolution will come 
 by the proletariat's peacefully voting themselves 
 to power; while the more impatient demand 
 direct action, and the violent-minded favor a 
 bloody insurrection. 
 
 The sects of socialism, then, though having a 
 common creed, differ widely in their ideals of the 
 future and in their selection of ways and means, 
 and there is no prospect of unity in plan and 
 purpose. 
 
 Utopian Socialism. Utopian socialism, as the 
 name implies, is something fanciful, and varies 
 with the imagination or caprice of the poet, 
 philosopher or prophet who dreams about a 
 better world. Utopia, or the land of nowhere, 
 
 i Tugan-Baranowsky, Modern Socialism, Preface. 
 
THE SECTS OF SOCIALISM 25 
 
 was an imaginary kingdom described by Sir 
 Thomas More, a great English scholar and 
 statesman of the sixteenth century. More got 
 his inspiration from the Greek philosopher 
 Plato, whose "Republic" was the first of the 
 Utopias. It is worth noting that Plato, realizing 
 the impossibility of his ideal, wrote another book, 
 "The Laws," in which he described a second-best 
 state, not very different from his own Athens, 
 which he thought might be successful with 
 human beings as they were. It might be well if 
 socialists of the present day were as wise as 
 Plato. 
 
 "Scientific" socialists are inclined to regard all 
 the predecessors of Marx as Utopians. Saint 
 Simon, therefore, in some respects a greater man 
 than Marx, is classed as Utopian, although he 
 anticipated the Marxian theory of social evo- 
 lution and was one of the founders of state social- 
 ism. Fourier, another French socialist, is put in 
 the same class, although he had many brilliant 
 ideas and was the father of internationalism in 
 that he suggested a federation of the world. 
 Robert Owen, who established a model factory 
 at New Lanark, in Scotland, and later spent his 
 time and money in promoting experimental com- 
 munities in New Harmony, Indiana, and else- 
 where, is called Utopian, although he was one of 
 the founders of the common school, did much 
 
26 THE SECTS OF SOCIALISM 
 
 for factory legislation, and was a pioneer in 
 efficient management. 
 
 Many other noted socialists are classed as 
 Utopian because, without a "scientific" basis for 
 their theories, they thought that they could in- 
 vent a workable scheme of social organization, 
 and put it into operation without waiting until 
 the time was ripe and the people ready for the 
 new order of things. All of these laboratory 
 experiments have failed, as might have been ex- 
 pected, and Marxian socialists have trouble in 
 explaining why they failed without suggesting 
 the probable failure of their own brand of social- 
 ism, when tried on a national or international 
 scale. 
 
 It is easy to call these men Utopians, and thus 
 condemn them with a name, but if all their con- 
 tributions to socialism were taken away, there 
 would be nothing left but a few discredited 
 "scientific" theories. On the other hand, when 
 the "scientific" part of Marxism is refuted or 
 explained away, it is the Utopian residue that 
 constitutes the chief strength or weakness of 
 modern socialism. 
 
 Christian Socialism. Christian socialism is 
 not socialism at all, from the Marxian point of 
 view, for the Christian does not believe in the 
 materialistic interpretation of history, nor in the 
 class struggle, nor in the social revolution, nor 
 
THE SECTS OF SOCIALISM ' 27 
 
 does he exalt the proletarian because he is poor, 
 nor condemn the rich because he is rich. The 
 Christian Church, in so far as it is like its 
 Founder, is the friend of the poor, but preaches 
 the gospel to rich and poor alike, laying chief 
 stress on character, though seeing also the need 
 of improved conditions of life. 
 
 Christian socialism goes back to the early 
 Church, when the disciples "had all things in 
 common," but the first great writer on the sub- 
 ject was Saint Thomas of Aquinas, who is a 
 high authority to-day, especially in the Roman 
 Catholic Church. He taught that in an ideal 
 state private property would be necessary, 
 first, because of the interest which the owner 
 takes in the management of his property; second, 
 because it tends toward a better organization of 
 production; third, because private industry is 
 carried on with less of that wrangling and con- 
 flict which results when property is held in 
 common. On the other hand, no man should re- 
 gard the fruits of industry as wholly his own, but 
 should share with his neighbor in the spirit of 
 true brotherhood and friendliness. According 
 to Saint Thomas, all property belongs to God, 
 and should be held as a trust for the glory of God 
 and the good of man. 
 
 Modern Christian socialists have not gone far 
 beyond the teachings of Saint Thomas, except in 
 
28 THE SECTS OF SOCIALISM 
 
 their application to present conditions. They 
 usually favor reasonable labor legislation, living 
 wages, and harmony between employer and em- 
 ployee based on mutual good will and fair play. 
 In other words, they are social reformers rather 
 than socialists, placing the emphasis upon char- 
 acter rather than material environment, though 
 recognizing the importance of both. 
 
 The followers of Marx do not conceal their 
 contempt for Christian socialism. In fact, they 
 are usually against the Church, and many, if not 
 most, are also anti-Christian. In the Com- 
 munist Manifesto Marx said: "Nothing is easier 
 than to give Christian asceticism a socialist tinge. 
 Christian socialism is but the holy water with 
 which the priest consecrates the heart-burnings 
 of the aristocrat." 1 
 
 The great German socialist, August Bebel, is 
 even more outspoken, thus: "We aim in the do- 
 main of politics at republicanism; in the domain 
 of economics at socialism; and in the domain of 
 what is to-day called religion at atheism." 2 
 
 The well-known English socialist, Belfort 
 Bax, designated the religion of socialism as 
 "atheistic humanism"; and another great Eng- 
 lish socialist, H. M. Hyndman, said: "Christi- 
 anity is anarchism, not socialism;" and again: 
 
 1 Manifesto of the Communist Party, by Karl Marx and Fred- 
 erick Engels, p. 45. (Ed. Kerr & Co.) 
 
 2 Towler and Ray, Socialism, Its Promise and Failure, p. 73. 
 
THE SECTS OF SOCIALISM 29 
 
 "Socialism is the only religion left; Christianity 
 is practically dead!" 
 
 The question is well summed up by Professor 
 Robert Flint, thus: "What is called Christian 
 socialism will always be found either un-Chris- 
 tian in so far as it is socialistic, or un-socialistic 
 in so far as it is truly and fully Christian." 
 
 Fabian Socialism. Fabian socialism is an 
 English variety, deriving its inspiration from 
 Marxism, but more evolutionary than revolution- 
 ary in character. The Fabian Society was 
 founded in the year 1884 by a number of lit- 
 erary people, and has had among its members 
 some notable men and women, including Mr. and 
 Mrs. Sidney Webb, G. Bernard Shaw, Frank 
 Podmore, Annie Besant and H. G. Wells some 
 of whom have since wandered rather far from 
 the fold. The name chosen alluded to the cele- 
 brated Roman general, Fabius Maximus, called 
 the "Delayer," who, in the war with Hannibal, 
 chose to retreat and avoid battle in the hope of 
 wearing down the enemy until he could strike 
 and strike hard. 
 
 The Fabians, questioning some of the Marx- 
 ian theories, and doubting the wisdom of Marx- 
 ian tactics, believe that socialism will come 
 through compromise as well as struggle, even as 
 
 iTowler and Ray, Socialism, Its Promise and Failure, p. 218, 
 2 Robert Flint, Socialism, p. 441. 
 
30 THE SECTS OF SOCIALISM 
 
 the British constitution has grown, little by little, 
 to the model of democratic government. They 
 wish to work through the regular political par- 
 ties, obtaining what concession they can, and 
 spreading socialist doctrines by "peaceful pene- 
 tration." 
 
 The Fabians hope to bring about socialism by 
 the gradual extension of municipal and national 
 activity, until all of the land and most of the 
 nation's capital shall be owned and managed by 
 the state through highly trained and competent 
 civil servants. Fabianism, therefore, is state 
 socialism, as conceived by a group of English 
 "intellectuals" who believe that socialism will 
 come gradually and peacefully, and that they, or 
 their kind, will be able, before and after the revo- 
 lution, to keep the unleashed proletariat well in 
 hand. 
 
 State Socialism. State socialism is of Prus- 
 sian origin, although, like Marx himself, it has 
 found a home in England. According to this 
 way of thinking society is to be so organized that 
 all or nearly all business will be carried on by the 
 state that is to say, by the local, state, or na- 
 tional government, as the case may be. 
 
 Most socialists deny that they favor state 
 socialism, but that is because they think of the 
 state as an undemocratic, exploiting minority 
 the capitalist state. When, therefore, they find a 
 
THE SECTS OF SOCIALISM 31 
 
 country like New Zealand, owning and operat- 
 ing the railways, the telegraph and telephone 
 lines, carrying on the business of insurance, coal 
 mining, the fixing of wages, and many other 
 activities usually left to private enterprise they 
 are inclined to suspect and condemn this sort of 
 thing, because, as they say, that state is still in 
 the hands of the capitalist class and the civil 
 servants appointed by them. 
 
 W. E. Walling says that this is not state so- 
 cialism at all, but "state capitalism;" and Hilaire 
 Belloc believes that the final outcome of that 
 would be a new and unbearable form of tyranny, 
 which he well names the "Servile State." 
 
 But when, in the revolution, the working class 
 seize the political power, and the capitalist state 
 "dies out," as Engels says, it must be replaced 
 by the organized workers, the new government 
 the socialist state. And in so far as the socialist 
 government, whether central or local, carries on 
 business affairs by public authority, there will be 
 a greater or less degree of state socialism. 
 
 Socialists are usually very chary about de- 
 scribing the probable activities of the socialist 
 state, not knowing what the workers will do after 
 the revolution, and fearing to indulge in Utopian 
 prediction. Yet some consideration of the sub- 
 ject is forced upon them, otherwise they must 
 
32 THE SECTS OF SOCIALISM 
 
 stand convicted of wishing to take a leap in the 
 dark. 
 
 State socialists, at least, have a rather definite 
 idea in mind the collective ownership and op- 
 eration of all the means of production under the 
 direction of public authority, local, state, or na- 
 tional, according to the nature of the industry and 
 other circumstances. Naturally, the local gov- 
 ernment bodies would take over local industries, 
 and the national authorities would manage those 
 of national size and scope, as they do now to 
 some extent. State socialism involves merely 
 the extension of present governmental activities 
 until practically all business shall be carried on 
 by public authority, that is to say, by the state. 
 
 Then most workers would be civil servants 
 attached to the local, state, or national govern- 
 ments. Also, inasmuch as business activities are 
 closely related and tied together, there would 
 necessarily be a strong and highly centralized 
 national government to which the local authori- 
 ties would be subordinate otherwise there would 
 be conflict, disunion, and anarchy. For the same 
 reason, the central government must have the 
 power to tax, to draft men for the army and 
 navy, and to draft workers for the industrial 
 army. 
 
 As to the way of electing the officials of the so- 
 cialist state, there is much difference of opinion; 
 
THE SECTS OF SOCIALISM 33 
 
 but, as Hillquit says it is usually held that they 
 will not be elected by general popular vote, but 
 will be chosen by the members of each trade or 
 calling. 1 However that may be, the very idea of 
 state socialism carries with it the thought of a 
 vast bureaucracy of higher and lower civil ser- 
 vants, with departments, divisions and subdi- 
 visions, chiefs and subordinate officers, and a 
 great multitude of the rank and file whose place 
 and work would be assigned to them by authority 
 over which they would have little or no control. 
 
 It is hard to imagine and unsafe to predict in 
 such matters, but the more one thinks of state 
 socialism the less attractive it seems, until its 
 democratic features fade away, and it takes the 
 appearance of incompetent and insufferable tyr- 
 anny. Many socialists, seeing this, are alarmed 
 and disconcerted, and frequently turn to the 
 opposite extreme of syndicalism and anarchism. 
 
 Syndicalism. Syndicalism, or revolutionary 
 unionism, arose in France as a reaction against 
 the Prussian conception of state socialism and 
 the political methods connected therewith. It 
 got its name from the syndicates, or labor unions, 
 especially those composing the General Federa- 
 tion of Labor, the "C. G. T.," formed in 1895. 
 It derived its inspiration from the revolutionary 
 traditions of France, the writings of French 
 
 i Morris Hillquit, Socialism in Theory and Practice, p. 142. 
 
THE SECTS OF SOCIALISM 
 
 socialists, and the activities of the trade unions. 
 
 Trade unionists in France, as in other coun- 
 tries, constitute a minority of the working class, 
 and those who favored socialism naturally de- 
 spaired of obtaining it by political methods. 
 Also, they resented the leadership of the "intel- 
 lectuals," who, like Millerand, frequently lost 
 their revolutionary faith and fervor, and went 
 over to the bourgeois parties. Then, too, they 
 distrusted the intellectuals as mere theorists 
 and mild-mannered gentlemanly socialists, who 
 shrunk from violence and opposed revolution by 
 insurrection. 
 
 Political methods were too slow and compli- 
 cated for the revolutionary unionists of France, 
 who, preferring to play their own game, insisted 
 that more could be accomplished by "direct 
 action" sabotage, the boycott, the union label, 
 the general strike which, if repeatedly practised 
 by the united working class, would soon bring the 
 capitalists to their knees. 
 
 Sabotage. Sabotage is soldiering, going easy, 
 doing bad work, spoiling materials and machin- 
 ery, "striking on the job," and trying in every 
 way to make it impossible for the employer to 
 carry on business. 
 
 Boycotting is a concerted refusal to deal with 
 an offending employer, especially refusing to 
 buy his goods. The union label is a sort of nega- 
 
THE SECTS OF SOCIALISM 35 
 
 tive boycott, for unionists are advised to buy no 
 goods except those declared "fair" by the label 
 attached to them. 
 
 The General Strike. All of these are more or 
 less powerful weapons of union labor, but the 
 general strike is the most formidable of all, the 
 most perfect expression of the solidarity of the 
 working class. Realizing the futility of local and 
 occasional strikes, the syndicalists wish to bring 
 about, on call, a complete cessation of work, 
 which would, they believe, paralyze industry, 
 ruin the employers, make the working class su- 
 preme, and usher in the social revolution. 
 
 The general strike is a universal sympathetic 
 strike, and would, if carried out according to the 
 intention, be most disastrous to any country, es- 
 pecially to those having large cities dependent on 
 the continuous operation of industry for all the 
 necessaries of life. 
 
 However, the general strike, like the tradi- 
 tional boomerang, is a dangerous weapon for the 
 working class to use, as it would probably do 
 more harm to them than to the capitalists against 
 whom it might be directed. Also, it would be 
 foolish for the workers to use it as, if they were 
 in the minority, it would fail; and if they were 
 in the majority, they could attain their ends by 
 political means and set up socialism at any time. 
 For all that, the syndicalists expect to use their 
 
36 THE SECTS OF SOCIALISM 
 
 terrible weapon when the time comes and believe 
 that it will bring about the desired results. 
 
 After the revolution, the syndicalists think, the 
 unions, with their federations, will remain as the 
 structure and organization of industrial society; 
 so there will be no. radical change in the economic 
 system, but only a transfer of control. The ideal 
 society, then, as Levine puts it, is not a scheme or 
 a utopia, but something gradually evolved by the 
 unionist movement, and prepared by the social 
 struggles of to-day. 
 
 The Industrial Union. The trade union or- 
 ganization is, of course, not a scheme or utopia, 
 because it exists to-day as a part of the industrial 
 system ; but the assumption that the structure of 
 future society will be along the same lines would 
 be decidedly Utopian if it were not so lacking in 
 imagination. 
 
 At any rate, the syndicalists, in view of recent 
 economic development, especially in America, 
 have been obliged to change their views. Instead 
 of making the trade union the basic unit of the 
 collective commonwealth they now say that the 
 industrial union will be the primary organization, 
 with local chapters and trade unions subordinate 
 to it much as now. 
 
 If this prophecy is fulfilled, the farm laborers 
 will manage the farms, the miners the mines, the 
 railway employees the railways, the steel workers 
 
THE SECTS OF SOCIALISM 37 
 
 the steel business, the sailors and dock laborers 
 the shipping, the factory hands the factory, the 
 wholesale and retail clerks the business of 
 merchandising and so on. To quote Levine ; 
 again: "Their idea is to transform society into 
 a federation of self-governing productive groups 
 working together for the benefit of all with in- 
 struments belonging to society as a whole and 
 under the supreme control of the community." l 
 
 Just how the community would exercise this 
 supreme control, especially in case of conflict be- 
 tween the productive groups, the syndicalists do 
 not clearly explain. Indeed, the problem is for 
 them very difficult, if not quite unsolvable. If 
 all power is to belong to the industrial unions, the 
 results will be nothing short of anarchy. If, on 
 the other hand, the community is to be really 
 supreme, it will involve a high degree of central- 
 ization and state socialism. Between these ex- 
 tremes the syndicalist has great trouble in find- 
 ing the golden mean. But the traditions and 
 sympathies of the syndicalists lean strongly to- 
 ward decentralization and anarchy. 
 
 The I. W. W.The Industrial Workers of 
 the World are American syndicalists. The or- 
 ganization was formed in Chicago in the year 
 1905 by a group of insurgent unionists, social- 
 
 i Syndicalism, Louis Levine, North American Review, July, 
 1919. 
 
38 THE SECTS OF SOCIALISM 
 
 ists and anarchists, including W. D. Haywood, 
 C. H. Moyer, W. E. Trautman, C. O. Sherman, 
 Daniel De Leon (Loeb), A. M. Simons, Eugene 
 V. Debs, Ernest Untermann, Vincent St. John, 
 "Father" Thomas Hagerty and "Mother" Mary 
 Jones. 
 
 The original idea was to have a double-bar- 
 reled organization which should carry on the 
 class struggle along both political and industrial 
 lines. There was to be one great industrial union 
 with subdivisions representing national and inter- 
 national industries and crafts. This was intend- 
 ed, evidently, to supersede the American Federa- 
 tion of Labor in the industrial sphere, and the 
 socialist parties in the political field. 
 
 The socialistic character of the organization is 
 clearly seen in the preamble to the constitution, 
 which reads, in part, as follows: "The working 
 class and the employing class have nothing in 
 common. . . . Between these two classes a 
 struggle must go on until all the toilers come to- 
 gether on the political as well as the industrial 
 field, and take and hold that which they produce 
 by their labor, through an economic organization 
 of the working class, without affiliation with any 
 political party." * 
 
 The direct actionist in the I. W. W. presently 
 
 iPaul Brissenden, The Launching of the Industrial Workers 
 of the World, p. 46. 
 
THE SECTS OF SOCIALISM 39 
 
 antagonized the more conservative socialists, like 
 A. M. Simons, and before long got rid of De 
 Leon and other socialists of the left wing also, 
 who seceded and formed the Detroit, or "yellow" 
 I. W. W., later known as the Workers' Inter- 
 national Industrial Union. The Chicago, or 
 "red" I. W. W., is now a syndicalist or semi- 
 anarchist organization opposed to political ac- 
 tion, favoring sabotage, the general strike, and 
 other forms of direct action, and standing strong- 
 ly for industrial as opposed to craft unionism. 
 
 Formerly, they attacked the American Feder- 
 ation of Labor from without, but of late years 
 some of their leaders, like Wm. Z. Foster, have 
 joined the regular unions for the purpose of 
 "boring from within" and gradually converting 
 them to socialist principles and tactics. 
 
 Guild Socialism. Guild socialism is a typical- 
 ly English compromise between syndicalism and 
 state socialism. It is in part an academic and 
 Utopian scheme of ideal society, in part a shrewd 
 guess or prophecy, based on the supposed trend 
 of political and industrial events. 
 
 The argument runs about as follows : We have 
 in every country two sets of powers : the political, 
 based on geographical or sectional lines, and the 
 economic, resting on industrial divisions under- 
 lying and crossing the geographical. Therefore, 
 we have a parliament or congress, elected by 
 
40 THE SECTS OF SOCIALISM 
 
 states and districts, and an invisible industrial 
 power or set of powers behind the scene, influenc- 
 ing and even controlling the political. These are 
 the dark forces moving mysteriously in the back- 
 ground, about which Veblen has so much to say. 
 
 Why not, says the national guildsman, recog- 
 nize the dual character of our government and 
 freely admit that the industries of the country 
 are as much entitled to representation in congress 
 as the geographical or regional divisions? Let 
 all the industries . be federated into national 
 guilds and let the guilds elect a guild congress 
 which shall have control over the organization of 
 production and related matters. Then let there 
 be a regional congress, as now, representing the 
 people as a whole, especially in their capacity as 
 consumers or users of goods and services. 
 
 According to this arrangement, the guild con- 
 gress, through the national guilds, will attend to 
 production; and the other congress, presumably 
 the supreme power, will see to it that the people 
 are not robbed by particular guilds, and that the 
 guilds do not quarrel too much with one another. 
 All this will involve the fixing of wages and 
 prices, equalization by taxation, and all the other 
 features of state ownership and control. 
 
 Mr. G. D. H. Cole, one of the leading apostles 
 of this movement, says: "The National Guilds- 
 man believes that industry ought to be controlled 
 
THE SECTS OF SOCIALISM 41 
 
 by the workers engaged in it; but he believes also 
 that the State ought to own industry, and that 
 popular control must be established over the 
 machinery of State" * 
 
 Here Mr. Cole lets the cat out of the bag and, 
 when free from its syndicalistic and anarchistic 
 disguise, guild socialism appears in its proper 
 shape as Fabian State Socialism. 
 
 Guild socialism appeals strongly to many 
 people, not so much because they favor socialism, 
 as because they feel that the manufacturing and 
 commercial interests of the country, the trade 
 unions, churches, charitable societies, and the like, 
 should have direct and acknowledged represen- 
 tation in Congress, and not be obliged, as now, 
 to hover in the background, trying to persuade 
 the representatives of the people that theirs is 
 the only point of view. 
 
 Perhaps it would be well to bring the so-called 
 "dark forces" out into the open light of day, 
 although it must be clearly understood, as in the 
 national guildsmen's scheme, that the regional 
 congress, representing the people as a whole, 
 must be supreme. Apart from that, the pro- 
 posed national guilds are not very different, in 
 form and function, from the Russian Soviets. 
 
 Bolshevism. Bolshevism is an outgrowth of 
 the Russian Social Democratic Party, which in 
 
 i G. D. H. Cole, Guild Socialism, "Living Age," July 26, 1919. 
 
42 THE SECTS OF SOCIALISM 
 
 the year 1903, split into two branches: the Bol- 
 sheviki (meaning the majority) and the Menshi- 
 viki (meaning the minority). The Bolsheviki, 
 who were really in the minority from the revolu- 
 tion of 1905 to that of 1917, were the more radi- 
 cal group and held that Russia could have social- 
 ism without first passing through the industrial 
 stage could leap over the wall, as it were, with- 
 out going through the gate of capitalism. 
 
 The Menshiviki, on the contrary, many of 
 whom were "intellectuals," held to the typical 
 Marxian view that Russia, or any other country, 
 must pass through the preparatory stage of cap- 
 italism before it would be "ripe" for the revolu- 
 tion, and that a premature revolution would 
 perish like an untimely birth. 
 
 After the revolution of March, 1917, the in- 
 fluence of the Bolsheviki in the army and in the 
 Petrograd Soviets constantly increased, until, on 
 November 7, they seized the reins of government, 
 and, under the leadership of Lenin and Trotzky, 
 they set up the soviet government, or the "dicta- 
 torship of the proletariat." 
 
 Since that time a bitter dispute has been going 
 on between the moderate socialists and the Bol- 
 shevik revolutionists as to which are the true and 
 orthodox followers of Marx. The Bolsheviki 
 regard the moderates as reactionaries, and perse- 
 cute them as traitors to the revolution. 
 
THE SECTS OF SOCIALISM 43 
 
 The moderate socialists, on the other hand, re- 
 gard the Bolsheviki as dangerous heretics, car- 
 ried away by revolutionary fervor. Their chief 
 error lies in thinking a permanent revolution 
 possible in Russia at the present time; but they 
 are also accused of denying democracy in that 
 they have dissolved the Constituent Assembly, 
 suppressed freedom of the press and free speech, 
 persecuted their socialist comrades, and, finally, 
 set up a dictatorship of the proletariat different 
 from the Marxian model. The moderates say 
 that the Bolsheviki are the true reactionaries, be- 
 cause they have brought ruin to their country 
 and indefinitely postponed the coming of real, 
 permanent, successful socialism. 
 
 Marx a Dual Personality. It is interesting 
 to find the pot calling the kettle black, as the con- 
 spirators blame one another for the failure of 
 their plans. As to their spiritual father, Marx, 
 the truth is that he was a dual personality, whose 
 writings are both evolutionary and revolution- 
 ary, and are susceptible of diverse and even 
 contradictory interpretation, according to the 
 disposition and purpose of his readers. As Mo- 
 hammedans of every sect appeal to the Koran, 
 so socialists of every faction find texts in Marx, 
 with or without the context, to support their 
 views. 
 
 For example, in the "Critique of Political 
 
44 THE SECTS OF SOCIALISM 
 
 Economy," published in 1859, M,arx affirms? 
 "No social order ever disappears before all the 
 productive forces for which there is room in it 
 have been developed; and new and higher rela- 
 tions of production never appear before the 
 material conditions of their existence have ma- 
 tured in the womb of the old society." * 
 
 The Communist Manifesto, on the other hand, 
 published in 1848, breathes the spirit of conspir- 
 acy for a violent and sudden revolution; and in 
 the Neue Rheinische Zeitung, in the year 1849, 
 he wrote: "When our time comes, revolutionary 
 terrorism will not be sugar-coated. . . . There 
 is but one way of simplifying, shortening, con- 
 centrating the death agony of the old society, as 
 the bloody labor of the new world's birth revo- 
 lutionary terror." 2 
 
 The Bolsheviki, then, may be taken to repre- 
 sent the earlier and more revolutionary form of 
 Marxian doctrine, while the moderate socialists 
 represent the later and saner Marx, who had 
 toned down and even repudiated some of his 
 former teachings. Once he said, half in jest: "I 
 am not a Marxist." It is no wonder, then, that 
 there are Marxists and Marxists of numerous 
 factions, all taking from Marx what suits them, 
 
 iA Contribution to the Critique of Political Economy. Au- 
 thor's Preface. 
 
 2Cf. V. G. Simkhovitch, Marxism versus Socialism, p. 194. 
 
THE SECTS or SOCIALISM 45 
 
 and rejecting and even denouncing what they do 
 not like. 
 
 Notwithstanding all that the moderate social- 
 ists have said in repudiation of the Bolsheviki, 
 there can be no doubt that Professor Ely is right 
 in saying: "There is no mystery about the nature 
 or the intellectual authority of Bolshevism. It 
 is simply Marxian socialism, as Lenine and his 
 associates have told us innumerable times." * 
 
 Comrmmism. Communism, as the name im- 
 plies, is opposed to private ownership of prop- 
 erty, holding that practically all property should 
 belong to the community and be administered for 
 the good of all, whereas the more moderate social- 
 ists favor the socialization of capital only, leav- 
 ing personal property in private hands. Com- 
 munism is the extreme form of socialism, but 
 there is also a form of anarchism known as com- 
 munist-anarchism, which includes most of the 
 anarchists. 
 
 Socialists usually object to being called com- 
 munists, but it is noteworthy that Marx and his 
 associates called themselves communists, that the 
 Bolsheviki of Russia, the Spartacans of Ger- 
 many, and many radicals in the United States 
 and other countries call themselves by that name. 
 
 The first use of the word "socialism" in Eng- 
 
 iR. T. Ely, "What is Bolshevism?" "Review of Reviews," 
 November, 1920. 
 
46 THE SECTS OF SOCIALISM 
 
 lish is found in the Poor Man's Guardian in 1833, 
 after which it was commonly used to designate 
 the followers of Owen and Fourier. The word 
 "communism" is said to have been first used in 
 Paris in the year 1840 as applied to the follow- 
 ers of Babeuf, then called "equalitarians." In 
 the Communist Manifesto of 1848, Marx and 
 Engels apply both names to their predecessors, 
 but seem to have preferred to call themselves 
 communists. 
 
 Later the word socialism became more popu- 
 lar, perhaps because of its milder meaning, while 
 the word communism was applied to extreme 
 socialism and to those socialists who, like Owen 
 and Fourier, favored the trying of collectivism in 
 small experimental communities before launch- 
 ing it on a national or international scale. Now, 
 however, socialists of the extreme left every- 
 where call themselves communists, and there can 
 be no doubt that most forms of socialism have a 
 strong leaning toward communism. 
 
 Anarchism. Anarchism is the name given to 
 the theory that all governments are wrong and 
 unnecessary. Anarchism is extreme individual- 
 ism, and its advocates are bitterly opposed to the 
 forcible control of man by man, whether by gov- 
 ernment or by the power of property. 
 
 The anarchist-communists, who are the most 
 common kind of anarchists, especially in Russia, 
 
THE SECTS OF SOCIALISM 47 
 
 would abolish the State and all forms of private 
 property. In place of the State they would 
 have voluntary associations, and even federations 
 of associations, but with no compulsory powers. 
 People could be trusted to act wisely and to do 
 right because man is by nature a rational and 
 moral animal. 
 
 As to work and production, there is to be no 
 compulsion ; but most anarchists, like Kropotkin, 
 believe that it could be made pleasant and desira- 
 ble. Property is to belong to the community, the 
 members of which may take such goods and ser- 
 vices as they can use. "From every one accord- 
 ing to his ability; to every one according to his 
 needs." 
 
 Socialists say that they have little in common 
 with anarchists, but this is not altogether true. 
 Not only do they agree in their condemnation of 
 capitalism, but in their thought of the ideal so- 
 ciety they are not so far apart as may appear. Of 
 course, state socialism and anarchism are as far 
 apart as the poles. 
 
 At any rate, many socialists and all syndical- 
 ists abhor state socialism, and would organize 
 society on the basis of unions, guilds, Soviets or 
 other associations, with a maximum of voluntary 
 cooperation and a minimum of state control. 
 There are strong anarchistic tendencies in social- 
 ism, which make it hard to tell, in the examina- 
 
48 THE SECTS OF SOCIALISM 
 
 tion of ideals, where socialism ends and anarch- 
 ism begins. Anarchism is the despair of 
 socialists, but state socialism is their nightmare. 
 
 Socialism Different in Every Country. So- 
 cialism or collectivism for the words have the 
 same meaning is a religion of many sects, but 
 when all of them are mentioned and described, 
 the story is only half told. Socialism is different 
 in every different country, according to racial 
 temperament, national ways of thinking, person- 
 al peculiarities, economic conditions, and all that. 
 
 In Germany there is a leaning toward state 
 socialism of the Prussian type. In France social- 
 ism is revolutionary, idealistic, and anarchistic. 
 In England it is cautious, compromising, and ex- 
 perimental. In Belgium it is largely co-opera- 
 tive. In Spain and Italy it is extreme .and 
 violent. In Russia it is revolutionary, visionary, 
 and anarchistic, although the Soviet government 
 is a centralized dictatorship resembling state 
 socialism. 
 
 The varieties of socialism in every country are 
 numerous and perplexing, with a tendency to 
 divide and subdivide on slight provocation. In 
 Russia, for example, there were before the revo- 
 lution two main divisions, the Social Democrats 
 and the Socialist Revolutionists, each split into 
 several sections. Of the Social Democrats there 
 were the Bolsheviki and the Mensheviki, the lat- 
 
THE SECTS OF SOCIALISM 49 
 
 ter being in two groups, the Nationalists and the 
 Internationalists. Trotzky was formerly an 
 International Menshevik. There were also the 
 Unified Social Democrats and the Populist 
 Socialists. 
 
 Similarly, the Socialist Revolutionists, orig- 
 inally a peasants' party, were divided into the 
 Right, the Center, and the Left. Kerencky was 
 a Socialist Revolutionist of the Right, or conserv- 
 ative wing. Katherine Breshkovskaya was a 
 Revolutionist of the Left, or extreme wing, ad- 
 vocating violence and terror. Strange to say, the 
 "Grandmother of the Revolution" refuses to ac- 
 knowledge her grandchildren, the Bolsheviki. 
 
 American Socialist Parties. In the United 
 States there were formerly two main socialist 
 parties the Socialist Labor Party (1877-) and 
 the Social Democratic Party (1898-), later 
 merged in the Socialist Party (1901-), now by 
 far the larger body. The war caused a split in 
 the Socialist Party, the pro-war minority resign- 
 ing and forming the Social Democratic League. 
 In 1919 the Socialist Party again split into two 
 parts the Left Wing forming itself into the 
 Communist Party. Presently this gave birth to 
 the Communist Labor Party, after which both 
 parent and child became affiliated with the Mos- 
 cow or Third International. The Socialist Party 
 also has leaned toward the Soviet government, 
 
50 THE SECTS OF SOCIALISM 
 
 especially since it lost its best "intellectuals," in- 
 cluding Spargo, Walling, Ghent, Stokes and 
 Russell, but of late it has lost most of its enthu- 
 siasm because of the intolerance of the Moscow 
 International. 
 
 In addition to these groups, which might 
 change at any time, are the I. W. W., represent- 
 ing American Syndicalism; the Nonpartisan 
 League, 1 inclining toward state socialism or 
 state capitalism; the National Labor Party 
 ( 1919- ), representing insurgent or socialistic 
 unionism; and the Farmer-Labor Party (1920), 
 a semi-socialistic alliance of the National Labor 
 Party with several other radical groups. 
 
 It would be possible to give a similar list of so- 
 cialist factions in every country, which would 
 merely serve to emphasize the unscientific char- 
 acter of "scientific" socialism. With all their 
 pretensions to scientific spirit, method and re- 
 sults, the socialists' stock in trade consists 
 chiefly of intemperate criticism of things as they 
 are, and a glowing description of the future 
 world as they see it in their dreams. 
 
 i See Appendix. 
 
Ill 
 
 THE ECONOMIC INTERPRETATION 
 OF HISTORY 
 
 What student of history has not felt the need 
 of an interpreter? History is frequently little 
 more than a chronicle of events that follow one 
 another like moving pictures, operated by ma- 
 chinery that we do not see, controlled by motives 
 that we cannot understand. Karl Marx, with 
 his materialistic or economic interpretation, pro- 
 fesses to admit us behind the scenes, where we 
 may get a glimpse of the power that runs the 
 show, and understand the moving principle of 
 social evolution. 
 
 But why should the procession of the ages be 
 intelligible to man? Evidently, says the philoso- 
 pher Hegel, because the world itself is the ex- 
 pression of that reason which is the essence and 
 soul of it. The mind of man is the reflection or 
 counterpart of universal reason. Man is the 
 measure of all things, because he was made in 
 the image of God the absolute. History is the 
 unfolding of the divine thought in the world, 
 which man can understand because his own 
 thought develops in the same way. 
 
 51 
 
52 ECONOMIC INTERPRETATION OF HISTORY 
 
 Logic, with Hegel, is the universal science, for 
 the process of thought is the process of evolution. 
 Thought advances by a series of denials, strug- 
 gles and compromises. We discover a truth, 
 and then another truth so different that it seems 
 to contradict and quarrel with the former. 
 Presently, getting more knowledge, we see that 
 both are opposite sides of a larger whole. Then 
 the new principle guides us until we find it 
 opposed by another, which again leads to the 
 discovery of a still higher law and thus knowl- 
 edge grows from more to more. 
 
 The Hegelian Method. This way of think- 
 ing is the celebrated dialectic method of Hegel, 
 which consists in looking for apparent contradic- 
 tions in truth, and then finding a compromise or 
 reconciliation in a broader and higher principle. 
 The first thing is the thesis; the second the anti- 
 thesis; and the third the synthesis. "Thesis, anti- 
 thesis, synthesis" is at once the formula for men- 
 tal development and for the general process of 
 human evolution. History, therefore, according 
 to Hegel, can be a science, a rational explanation 
 of social life and progress. 
 
 Karl Marx was a disciple of Hegel and at the 
 same time an opponent of his system. Hegel's 
 views concerning the ideal development of so- 
 ciety were foolishness to Marx. By Hegel 
 reason was placed at the beginning of things; by 
 
ECONOMIC INTERPRETATION OF HISTORY 53 
 
 Marx it was placed at the end of material evolu- 
 tion, reflecting the world because it is the product 
 of the world. Thus Marx turned the dialectic of 
 Hegel upside down, placing it, as Engels says, 
 upon its feet instead of on its head. Thus Marx 
 says: "It is not the consciousness of men that 
 determines their existence, but, on the contrary, 
 their social existence determines their conscious- 
 ness." 1 
 
 Material evolution, then, is the foundation of 
 social evolution, and the key to the interpreta- 
 tion of history. Yet while Marx rejects the ideal- 
 istic philosophy of Hegel, he does not get rid of 
 the Hegelian dialectic way of thinking, but is 
 always looking for negations, contradictions and 
 conflicts, not only between the ideas in his own 
 mind, but between opposing forces in society 
 from the earliest times until the present day. 
 The theory of the class struggle, therefore, is the 
 most vital part of the materialistic interpretation 
 of history. 
 
 The Marsclan Theory. According to Marx, 
 every state or stage of human society, like the 
 rest of the universe, is unstable and forever 
 changing, because it has within it all the elements 
 of its own destruction, opposing forces that will 
 break it up, only to form a new and higher con- 
 
 i Contribution to the Critique of Political Economy. Author's 
 Preface. 
 
54 ECONOMIC INTERPRETATION OF HISTORY 
 
 dition, until contradictions and conflicts shall 
 cease in the perfect harmony of democratic 
 collectivism. 
 
 Perhaps the best statement of the Marxian 
 theory of history is that given by Engels, who 
 puts it thus: "In every historical epoch, the pre- 
 vailing mode of economic production and ex- 
 change, and the social organization necessarily 
 following from it, form the basis upon which is 
 built up, and from which alone can be explained, 
 the political and intellectual history of that 
 epoch; that consequently the whole history of 
 mankind ( since the dissolution of primitive tribal 
 society, holding land in common ownership) has 
 been a history of class struggles, contests be- 
 tween exploiting and exploited, ruling and 
 oppressed classes." * 
 
 Here, as Seligman, Skelton and others have 
 shown, are two quite distinct interpretations of 
 history: the one a general theory that all social 
 events may be traced to economic causes; the 
 other a particular application of Hegelian meth- 
 od the theory of the class struggle. 
 
 The theory of Marx is really an extension of 
 the theories of writers like Montesquieu and 
 Buckle who laid stress on geography, climate, 
 and other features of man's physical environ- 
 
 i Preface to the Communist Manifesto, by Frederick Engels, 
 January 30, 1888. 
 
ECONOMIC INTERPRETATION OF HISTORY 55 
 
 ment. It is but a step, of course, from the ma- 
 terial environment to the methods of production 
 and distribution which, according to Marx, are 
 the chief factors in determining man's social, 
 political, legal, philosophical, scientific, literary, 
 artistic and religious life. 
 
 Applications. Unquestionably, the principle 
 of economic interpretation throws much light 
 upon the pages of history. As Morgan has 
 shown, the life of primitive man was largely de- 
 termined by certain economic factors the dis- 
 covery of fire, the invention of pottery, the 
 domestication of animals, the use of tools and 
 weapons of various kinds. Historians speak of 
 the ages of stone, bronze and iron; of the hunt- 
 ing and fishing, the pastoral, agricultural, com- 
 mercial and industrial stages of civilization; and 
 it is clear that these are to be regarded as primary 
 features of social evolution. 
 
 A few illustrations will show the application 
 of economic interpretation to the explanation of 
 the facts of history, by socialists and other ad- 
 herents of the theory. 
 
 When people lived by hunting and fishing, 
 they wandered about in small bands under the 
 leadership of chiefs whose authority was very 
 slight. They lived in caves or temporary shelters, 
 and their family life was most primitive. They 
 carried on ferocious wars, usually slaughtering 
 
56 ECONOMIC INTERPRETATION OF HISTORY 
 
 their prisoners. Their moral and religious life 
 was determined by the necessities of their physi- 
 cal environment. 
 
 Pastoral tribes are more numerous than those 
 in the lower stage, because they have more to eat. 
 They are migratory, because they must find 
 pasture for their sheep and cattle. They go in 
 large bands, under chiefs or patriarchs, and often 
 have slaves whom they can use and control. 
 They worship the heavenly bodies, for they 
 usually live in the open plains. 
 
 Agricultural people, on the other hand, live in 
 one place, build houses and fenced cities, own 
 land, are peaceful, and carry on chiefly defensive 
 wars. They maintain standing armies, have 
 kings or other permanent rulers, pay taxes, and 
 keep many slaves. They are strongly bound by 
 custom and tradition, develop a complicated re- 
 ligious system, and in time acquire a knowledge 
 of arts and sciences, accumulating civilization as 
 they accumulate property. 
 
 The migrations of ancient times, it is said, 
 were chiefly for the sake of acquiring hunting 
 grounds and pastures for cattle; for lands, 
 houses, slaves, and plunder of every other kind. 
 The decline of the Roman Empire was due to 
 excessive taxation and the ruin brought upon the 
 small farmers by the latifundia or great estates. 
 The Crusades were caused by the interference of 
 
ECONOMIC INTERPRETATION OF HISTORY 57 
 
 the Turks with the Eastern trade of Venice and 
 Genoa. 
 
 Modern Examples. Similar economic inter- 
 pretations could be multiplied without end, usu- 
 ally containing a modicum of truth, but showing 
 little appreciation of the complexity of social 
 forces. The English constitution, in this view, 
 was the result of resistance to taxation on the 
 part of the barons and the free cities. The Re- 
 vival of Learning was the economic awakening 
 of western Europe. The Protestant Reforma- 
 tion was a rebellion of parts of Europe against 
 the sale of indulgences and other exactions by 
 the Church. The Spanish, French, and English 
 alike came to America in search of gold. The 
 American Revolution was fought as a protest 
 against arbitrary taxation, and for liberty of 
 trade. The French Revolution was the rebellion 
 of the people against the tyranny of the landed 
 aristocracy. 
 
 The War of 1812 was fought to secure freedom 
 in neutral trade. The invention of the cotton 
 gin fastened slavery upon the South for more 
 than two generations. The people of the North 
 objected to slavery because it was not profitable 
 there. The protective tariff and the slavery 
 question were the chief causes of secession senti- 
 ment in the South. The Cuban War, it is said, 
 was promoted and provoked by the sugar inter- 
 
58 ECONOMIC INTERPRETATION OF HISTORY 
 
 ests for their own advantage. An underlying 
 cause of the late World War was a commercial 
 struggle between Germany and England. The 
 foreign policy of all modern nations is governed 
 chiefly by considerations of commerce, and every 
 one of them is, in the words of Napoleon, "a 
 nation of shopkeepers." 
 
 Within a given nation, socialists say, the gov- 
 ernment and the whole legal system has been 
 created by the ruling classes for their own ad- 
 vantage. The prevailing system of morals is 
 merely "bourgeois morality," designed con- 
 sciously or unconsciously for the protection of 
 property and the personal rights of the capitalist 
 class. The Church, the schools and most so- 
 cieties are bulwarks of capitalism; and most 
 clergymen, teachers, physicians, lawyers, and 
 other professional people, are mere parasites or 
 hangers-on of the capitalist class. Religion, 
 even, has been invented as a shrewd trick of the 
 ruling classes to keep the people humble and 
 patient for the sake of rewards in heaven, while 
 in this world they live on the crumbs that fall 
 from the rich man's table. 
 
 Complexity of Social Forces. The economic 
 interpretation of history, then, in its more gen- 
 eral form, is an attempt to apply the methods 
 of physical science to the study of history, by 
 tracing all movements and events back to their 
 
ECONOMIC INTERPRETATION OF HISTORY 59 
 
 causes, and by reducing all the secondary causes 
 to a single force the economic. Because of 
 this there is some reason for calling the Marxian 
 system "scientific," as distinguished from the 
 utopianism of earlier writers. 
 
 It reminds one, however, too strongly of the 
 "economic man," that fiction of certain English 
 economists by which they thought to make of 
 economics a purely theoretical and exact science, 
 like mathematics. This brave attempt was bound 
 to fail, as it did, because the imaginary economic 
 being, controlled almost wholly by the desire for 
 gain, did not correspond to men as they are, even 
 among such keen business men as Greeks, Jews, 
 Armenians, Scotch and Yankees. 
 
 In laying so much stress upon economic mo- 
 tives, Marx lays himself open to the charge of 
 taking a narrow and unscientific view of life, of 
 trying to explain the whole of life by what is 
 at most, only a part of it. "Is not the life more 
 than meat, and the body than raiment?" The 
 instinct of self-preservation is more fundamental 
 than the economic instinct. Men desire economic 
 goods for the sake of life, not life for the sake of 
 the means of life. 
 
 Contradictions. Indeed, when we consider 
 man as he is, we find him a complex being of 
 numerous instincts, which cannot be reduced to 
 a single principle of feeling and action. The 
 
60 ECONOMIC INTERPRETATION OF HISTORY 
 
 reproductive instinct, certainly, is not economic 
 in its character, and frequently, if not usually, 
 takes first place in human thought and behavior. 
 And yet, a philosophy of history based on the 
 study of population and family life alone, how- 
 ever important, would be most one-sided and 
 inadequate. 
 
 The religious instinct cannot be traced to an 
 economic origin, and often, in the history of 
 individuals and communities, it has determined 
 life and action in opposition to obvious economic 
 interests. The history of religious persecution is 
 full of such instances, not to mention the positive 
 effects of great religious movements on the 
 course of history. 
 
 Instead of tracing Christianity, Buddhism, 
 Mohammedanism, and other world religions, to 
 economic causes, it would be more profitable to 
 note the economic and political effects which have 
 proceeded from them, as in the work of mission- 
 aries in undeveloped countries. Worth mention- 
 ing, too, is the effect of religious rest days upon 
 industrial development, the taboo on meat on 
 fast days in its relation to the fishing industry, 
 and so on. One could almost invent a religious 
 interpretation of history if one wished to carry 
 the "scientific" method to such absurd extremes. 
 
 Non-Economic Instincts. Other impulses, 
 too, exist side by side with those already men- 
 
ECONOMIC INTERPRETATION OF HISTORY 6i 
 
 tioned, and have much to do with the determi- 
 nation of human conduct. Such are the fighting 
 instinct; the instinct of play; the love of orna- 
 ment, of power, of place, of praise; ambition, 
 pride and self-esteem; the artistic, musical, lit- 
 erary and dramatic instincts the whole gamut 
 of instincts, emotions and impulses which make 
 up human nature. 
 
 Then there are racial characteristics, the dy- 
 namic energy of exceptional men, the conserva- 
 tive influence of custom, the stimulating power of 
 eloquence, the suggestibility of the crowd, and a 
 thousand and one other circumstances of which 
 the historian must take note, although they do 
 not agree with any single rule or formula. Life 
 is highly complex, both in individuals and in 
 society, and cannot be explained on a single 
 principle, whether economic or otherwise. In- 
 deed, in any true history, the human being as he 
 is, with all the complexity of his nature, must 
 occupy the center of the stage, as a force to be 
 reckoned with, and any attempt to explain his 
 action by any one single motive or cause must 
 result in failure. 
 
 The very examples which the Marxians give 
 may be used to show that their main proposition, 
 while containing a large measure of truth, gives, 
 at best, a partial explanation of historical facts 
 and movements. The social life of primitive 
 
62 ECONOMIC INTERPRETATION OF HISTORY 
 
 peoples is by no means exhausted when we have 
 fully described the way they get their living, nor 
 can their behavior be altogether traced to eco- 
 nomic conditions. In fact, economic conditions 
 are often changed by human thought and effort, 
 for man is not the passive recipient of progress, 
 but the active creator of it. 
 
 Migrations, like those of the Germanic tribes 
 who invaded the Roman Empire, while probably 
 due chiefly to over-population of the northern 
 lands and the pressure of enemies from behind, 
 were perhaps inspired as much by the love of 
 adventure, fighting, and military glory as by the 
 desire to plunder the treasures of the civilized 
 world. The decline of Rome may have been due 
 to the loss of her best men in wars, to vice, dis- 
 ease, and the decay of the ancient religious and 
 moral standards. The Crusades cannot be ex- 
 plained without taking account of religious 
 enthusiasm; nor can the Reformation be under- 
 stood without an appreciation of the power of 
 religious motives. 
 
 The growth of the British constitution is a 
 riddle to all who do not understand the sturdy, 
 bulldog breed, that would not submit to the 
 tyranny of either king or baron. Often, too, 
 questions of taxation, both in England and 
 America, were mere pretexts for self-assertion 
 and rebellion. 
 
ECONOMIC INTERPRETATION OF HISTORY 63 
 
 The Revival of Learning was principally an 
 intellectual awakening, the economic benefits of 
 which, like the discovery of America, were effects 
 rather than causes of the new spirit that animated 
 the western world. The progress of science, art 
 and literature proceeds chiefly from impulses 
 scientific, artistic and literary. 
 
 Marxian View Narrow. Government surely 
 does reflect economic conditions to a great ex- 
 tent, whether it be monarchy, aristocracy, tyr- 
 anny or democracy, but the ruling class must 
 allow the main body of freemen to share its 
 power, else its rule is likely to be of brief dura- 
 tion. Also, the masses usually obtain political 
 power as soon as they are ready for it, and even 
 sooner, as in the case of Mexico, Russia and other 
 premature democracies. 
 
 Standards of morality cannot be separated 
 from the actual conditions of human life, but to 
 say that they always represent class interests is 
 to take a very narrow view of age-long and 
 world-wide principles. Of course, there can be 
 no theft where there is no property; no murder 
 where human life is not sacred; no adultery 
 where there is no marriage; no wrongs where 
 there are no rights. 
 
 To say that clergymen, teachers, and all other 
 educated people are mere parasites and blood- 
 suckers, is to make a grotesque caricature of 
 
64 ECONOMIC INTERPRETATION or HISTORY 
 
 these torch-bearers of civilization, without whom 
 the world would still be in the darkness of bar- 
 barism. 
 
 Humanitarianism is non-economic, and even 
 anti-economic, in its character. Socialism itself, 
 as a system of thought, and as a social movement, 
 has proceeded from the aristocracy and the bour- 
 geoisie, to whose economic interests it is bitterly 
 opposed. 
 
 As to comparatively recent events in world 
 history, while economic interpretation throws 
 much light upon them, it is often misleading as 
 well as partial in its explanations. There is no 
 evidence to show that the sugar interests brought 
 on the Cuban War, nor that the manufacturers 
 of munitions were an important cause of the 
 World War. Germany and England were busi- 
 ness rivals, no doubt, and the economic interests 
 of Germany and Russia clashed in the Balkans ; 
 but the war cannot be explained on these grounds 
 alone. There were quarrels of long standing, 
 racial animosities, dynastic ambitions, national 
 aspirations, personal characteristics and many 
 other factors in the situation. 
 
 Historical Explanation Difficult. So com- 
 plicated, indeed, is any historical combination, so 
 variable the human and physical factors, so 
 powerful and even explosive the forces, that 
 there is no telling what will come out of it, and 
 
ECONOMIC INTERPRETATION OF HISTORY 65 
 
 no complete explanation of the results. Consider, 
 for example, the probable course of the war if 
 Germany had won the Battle of the Marne, if 
 the cruisers Goeben and Breslau had not escaped 
 from Messina, if the British had captured Gal- 
 lipoli, if the Lusitania had not been sunk, if 
 Kerensky had been a strong administrator, if 
 Lenin and Trotzky had not been allowed to go 
 to Petrograd, if the policy of the United States 
 had been governed wholly by economic motives. 
 
 In view of such complexity, of the tremendous 
 latent forces involved, of the influence of men, 
 great and little, of great events arising by slight 
 occasion, like a conflagration from the lighting 
 of a match, in view of all that is involved, 
 practically no historians defend the crude eco- 
 nomic interpretation of Marx and Engels; and 
 some take the ground that the mechanical method 
 of physical science is not applicable to history, as 
 an historical combination is always new and 
 unique, the result always containing something 
 more than the sum of all the causes. Evolution, 
 as the philosopher Bergson would say, is creative, 
 and the explanations of the socialists do not 
 explain. 
 
 And when we come to prediction, in which 
 Marx and his school so freely indulge, the taking 
 of such liberties with the future, the present be- 
 ing unknown, is neither historical nor scientific. 
 
66 ECONOMIC INTERPRETATION OF HISTORY 
 
 Professor F. M. Fling goes so far as to say: "It 
 should be noted that prediction in natural science 
 has nothing historical in it; natural science can- 
 not predict the unique. History never repeats 
 itself." * 
 
 Prophecy. The future, if not absolutely dark, 
 is so obscured that it is safer and more scientific 
 not to prophesy. No doubt, if we knew all about 
 the seed, we might predict the character of the 
 tree, but how can we prophesy concerning seed 
 that we do not understand, or a tree the like of 
 which we have never seen? 
 
 If history repeats itself, progress is not to be 
 expected; and if we are to hope for progress, 
 how can we tell what kind of progress it will be. 
 Besides, we are involved in the flow and whirl of 
 things, and cannot gain a point of view from 
 which to see the direction in which we are mov- 
 ing. The economic interpretation of history may 
 throw some light upon the past, but the future 
 is shrouded in mist, which those dim and partial 
 rays cannot penetrate. 
 
 Economic prophecy, at best, is mere conjec- 
 ture, and has not yet attained the dignity of 
 scientific demonstration. A degree of proba- 
 bility might be claimed for it. But prophets do 
 not all agree. The socialist may prophesy in a 
 voluble and plausible way, while the capitalist, 
 
 i F. M. Fling, The Writing of History, p. 23. 
 
ECONOMIC INTERPRETATION OF HISTORY 67 
 
 with equal plausibility, may prophesy against 
 him, and the future alone can settle the un- 
 scientific conflict of opposing probabilities. 
 However, the capitalist has the advantage of de- 
 fending a workable and working system, while 
 the socialist, with childlike faith, is ready to take 
 a leap in the dark. 
 
 The Class Struggle. If the general theory of 
 economic interpretation so poorly fits the facts 
 of history, what shall be said of the more narrow 
 Marxian theory that history is to be interpreted 
 almost altogether in terms of the class struggle? 
 The more general theory, as Professor Seligman 
 has shown, might be held by an out-and-out 
 opponent of socialism, but the theory of the class 
 struggle is one of two main pillars of the Marx- 
 ian temple the other being the theory of ex- 
 ploitation or surplus value. 
 
 The general economic interpretation, with all 
 its limitations and exaggerations is a fruitful 
 conception; but the theory of the class struggle 
 is a mere caricature of historical facts. As Pro- 
 fessor Skelton puts it: "Just as the economic 
 field is not as wide as human life, so within this 
 field class struggle is not the sole form in which 
 the influence of economic conditions is exerted." * 
 
 Economic Interpretation It ejected. Marx's 
 view of history was always narrow, crude, and 
 
 iO. D. Skelton, Socialism, a Critical Analysis, p. 110. 
 
68 ECONOMIC INTERPRETATION OF HISTORY 
 
 harshly economic, but Engels, in his later years, 
 had to confess that he and Marx had made too 
 much of the economic factor in social evolution. 
 He wrote: "Marx and I are partly responsible 
 for the fact that younger men have sometimes 
 laid more stress on the economic side than it 
 deserves. In meeting the attacks of our op- 
 ponents it was necessary for us to emphasize the 
 dominant principle denied by them; and we did 
 not always have the time, place or opportunity to 
 let the other factors which were concerned in the 
 mutual action and reaction get their deserts." * 
 But Engels and all other orthodox socialists 
 call their system "scientific" because of its eco- 
 nomic interpretation, which, they believe, unveils 
 the past, reveals the future, and assures the reali- 
 zation of their dearest hopes. Yet historians re- 
 ject it; the higher critics explain it away; while 
 the orthodox blindly hold it fast, not knowing 
 what else to do. The case is well summed up by 
 Professor Simkhovitch thus: "To-day, such is 
 the irony of fate, the economic interpretation of 
 history, while of great value to the historical 
 student, is an unyielding and merciless steel trap 
 in which so-called scientific socialism is caught 
 and held." 2 
 
 i Frederick Engela, letter dated September, 1890. Cf. Ma- 
 zaryk, Philosophische u. sociologische Grwndl. d. Marxismus, p. 
 104. 
 
 2V. G. Simkhovitch, Marxism versus Socialism, p. 46. 
 
IV 
 THE MARXIAN THEORY OF VALUE 
 
 It has often been claimed that the labor-cost 
 theory of value has no vital relation to the gen- 
 eral body of socialistic doctrine, but, as L. B. 
 Boudin, of New York, one of the most orthodox 
 socialists, rightly says: "The Marxian theoreti- 
 cal system is one solid structure and cannot be 
 properly understood unless viewed as a whole 
 from foundation-stone to roof-coping. The 
 system must be examined as a whole and accept- 
 ed or rejected in its entirety, at least as far as 
 the structural parts are concerned." * 
 
 In Marx's great book, "Capital," which should 
 have been translated "Capitalism," he gives from 
 his peculiar point of view the point of view of 
 economic or materialistic interpretation an ex- 
 amination of capitalistic society designed to show 
 the "prevailing mode of economic production and 
 exchange," the particular form of robbery or 
 exploitation belonging to capitalism, and the 
 kind of class struggle which must arise out of the 
 conflict of interests between the employers and 
 
 i L. B. Boudin, The Theoretical System of Karl Marx, p. 49. 
 
 69 
 
70 THE MARXIAN THEORY OF VAI.UE 
 
 the employed. In early times, Marx would say, 
 we had slavery; later, serfdom; and now, under 
 capitalism, we have "wage slavery," which will 
 continue with increasing misery until the social 
 revolution. 
 
 What Marx is really trying to show, then, 
 under cover of certain teachings of Adam Smith, 
 Ricardo and other English economists, is that the 
 proletariat, the working class, do practically all 
 the work, create all commodities and values, and 
 yet pay an outrageous tribute to the bourgeoisie, 
 the capitalists, who do practically nothing, yet 
 live upon surplus value stolen from the 
 proletariat. 
 
 Bicardo's Labor-Cost Theory Adapted. In 
 casting about for a weapon with which to smite 
 the Philistines, Karl Marx found ready to hand 
 the labor-cost theory of Ricardo, which, after 
 some trimming and sharpening, he used against 
 the economists themselves and other defenders 
 of capitalism. Ricardo says: "The value of a 
 commodity or the quantity of any other com- 
 modity for which it will exchange, depends on the 
 relative quantity of labor which is necessary for 
 its production." * 
 
 Marx expresses the same idea in slightly dif- 
 ferent words and with a more narrow connota- 
 
 i David Ricardo, The Principles of Political Economy and Tax- 
 ation, 1817, Chap. I, Sect. 1. 
 
THE MARXIAN THEORY or VALUE 71 
 
 tion when he says : "Commodities in which equal 
 quantities of labor are embodied, or which can 
 be produced in the same time, have the same 
 value." 1 
 
 The problem is, to explain why commodities 
 exchange, as they do, in certain ratios, quantity 
 for quantity; why ten yards of cotton cloth ex- 
 change for one hat, four bushels of wheat, eight 
 bushels of corn, five ounces of silver, or a quarter 
 of an ounce of gold. Value is ratio in exchange, 
 a relation of quantity, and any correct theory of 
 value must show who or what it is that creates 
 value, why commodities tend to exchange in 
 certain ratios, and why market values fluctuate 
 above and below the normal. 
 
 Marx's Adaptation. It is clear, says Marx, 
 that the cause and measure of value must be 
 something which all commodities have in common 
 but in varying quantities. They all have size, 
 weight, color, and other physical properties, but 
 these have no direct relation to value in exchange, 
 but only to use-values. They all have use-value 
 or utility, but this cannot be the cause of value, 
 for "one use-value is just as good as another, pro- 
 vided only it be present in sufficient quantity." 
 Therefore, there is only one other property which 
 all commodities have in common, the fact that 
 they are all produced by human labor. 
 
 i Capital, p. 6, Swan Sonnenschein, publisher. 
 
72 THE MARXIAN THEORY OF VALUE 
 
 Labor, then, must be the cause and measure of 
 value. But the measure of labor is its duration. 
 Therefore, the exchange values of commodities 
 are determined by the amount of labor-time in- 
 corporated or materialized in them. But labor 
 may be misdirected. Therefore, the labor which 
 creates value must be "socially necessary," or 
 properly applied to the creation of utilities. 
 Thus Marx arrives at the conclusion that : "value 
 is determined by the socially necessary labor- 
 time that is required to produce an article under 
 the normal conditions of production and with the 
 average degree of skill and intensity prevalent 
 at the time." l 
 
 Importance of the Theory. Such is the cele- 
 brated labor-cost theory of value, one of the 
 foundation stones of the Marxian system. 
 Orthodox socialists are deeply concerned to prove 
 it true, for if it can be shown that all values are 
 measured by labor-time, or are proportional to 
 the quantity of labor used in producing them, it 
 must follow, they think, that labor is also the 
 cause or creator of values. And if this is true, 
 the employers and all the rest of the capitalist 
 class are nothing but parasites and blood- 
 suckers, drawing nourishment from the pro- 
 ducers and giving nothing in return. 
 
 It should be noted, however, in passing, that 
 
 i Capital, p. 6. 
 
THE MARXIAN THEORY OF VALUE 73 
 
 the Marxians may be wrong in this chain of 
 reasoning, for labor might be the measure of 
 value but not the cause, or it might be the cause 
 of value, but not the measure of it. In fact, now 
 that the labor-cost theory is discredited, many 
 socialists say that it has no essential connection 
 with the proposition that labor is the chief factor 
 in the creation of wealth and values. 
 
 At first glance the labor-cost theory has the 
 appearance of a self-evident truth, but the more 
 one considers it the more unsatisfactory and one- 
 sided it appears. Certainly, it is not a general 
 law of value explaining the exchange ratios of 
 all things bought and sold, for Marx himself 
 expressly excludes from the scope of his theory 
 certain things which, by his own definition, must 
 be classed as commodities. 
 
 Fatal Exceptions. The theory may partially 
 explain the value of factory products and other 
 reproducible goods, but it certainly does not 
 account for the value of land, particularly un- 
 improved city lots. Such land can be exchanged 
 for cotton, wheat, corn, hats, silver or gold, and 
 must therefore have some property in common 
 with them all, which is the cause and measure of 
 their value. But it cannot be labor-cost, for 
 land is a gift of nature. 
 
 True, land would have no value if people did 
 not live and work in the neighborhood, but in so 
 
74 THE MARXIAN THEORY OF VALUE 
 
 far as the particular land in question is con- 
 cerned, no labor-time has been applied to it, and 
 society, which gives it a value, stands to it in the 
 relation of consumer rather than of producer. 
 Marx himself is conscious of this difficulty and 
 tries to evade it by saying that land is not a com- 
 modity, and by the still more absurd statement: 
 "An object may have a price without having 
 value; for instance, the price of uncultivated 
 land, which is without value because no human 
 labor is incorporated in it." * 
 
 The Marxian theory is equally incompetent to 
 account for the value of labor-power itself, which 
 is a commodity, in so far as it is bought and sold, 
 and stands with wheat, silver, and all other com- 
 modities in the infinite network of exchange re- 
 lations. Marx says : "The value of labor-power 
 is determined, as in the case of every other com- 
 modity, by the labor-time necessary for the pro- 
 duction, and consequently also the reproduction 
 of this special article in other words, the value 
 of labor-power is the value of the means of sub- 
 sistence of the laborer." 2 
 
 But cost of subsistence, while it has its influence 
 on the average wages of unskilled labor, has little 
 to do with the wages pf particular workers of un- 
 usual attainment. Native ability, the power and 
 the will to work, is the chief factor in the deter- 
 
 i Capital, p. 75. 2 IUd., p. 149. 
 
THE MARXIAN THEORY OF VALUE 75 
 
 mination of earnings, especially in the case of 
 men of talent and genius, whose rewards are 
 usually out of all proportion to the cost of their 
 bringing-up. Marx tries to evade this difficulty 
 by giving a common but erroneous explanation 
 thus: "All labor of a higher or more compli- 
 cated character than average labor is expendi- 
 ture of labor-power of a more costly kind, labor 
 power whose production has cost more time and 
 labor, and which therefore has a higher value, 
 than unskilled or simple labor-power." x 
 
 Where Theory Collapses. The scqialist 
 theory of value fairly collapses when it comes to 
 explain the value of "intangible things such as 
 conscience and honor" which are sometimes 
 bought and sold, as when a citizen sells his vote, 
 an alderman his conscience, or a merchant his 
 good name. Clearly, such intangibles as honor, 
 influence, good-will, trade-marks, franchises and 
 the like, have exchangeable value, but Marx 
 asserts that such things "have a price without 
 having a value, the price in that case, being 
 imaginary, like certain quantities in mathe- 
 matics." 2 
 
 Doubtless, a politician's conscience may be 
 imaginary, but he seldom sells it for imaginary 
 gold, and so with all intangibles that are bought 
 and sold. They have a value in exchange, not 
 
 ^ Capital, p. 179. *IUd., p. 75, 
 
76 THE MARXIAN THEORY OF VALUE 
 
 because of any labor-cost of production, but be- 
 cause they are useful to the people who are will- 
 ing to pay the price. 
 
 The Factor of Scarcity. When we consider 
 material tangible commodities other than land, 
 we find innumerable exceptions to the supposed 
 law that exchange value is materialized or 
 crystallized or congealed labor-time. Scarce 
 articles, such as old coins, stamps, manuscripts, 
 autographs, birds' eggs, fossils, pictures, statu- 
 ary, and the thousand and one objects dear to the 
 heart of collectors, are rightly called commodi- 
 ties, although there is no discoverable relation 
 between their market value and their cost of 
 production as measured in labor-time. 
 
 Of course, such articles are not reproducible 
 by labor, and it is said that Marx never intended 
 his theory to apply to them. This only shows, as 
 Spargo admits, that the theory is not all in- 
 clusive, but strictly limited in its application. In 
 other words, it is not a general theory of value at 
 all, but an attempt to explain the value of a 
 particular class of articles, produced at a given 
 time and place, under special conditions, and 
 with all the other factors remaining unchanged. 
 Surely, with all these limitations and qualifica- 
 tions the scope of the theory rapidly approaches 
 the vanishing point. 
 
THE MARXIAN THEORY OF VALUE 77 
 
 The Factor of Social Utility. The works of 
 authors, artists, and inventors, must also be ex- 
 cluded, because they are not freely reproducible, 
 and there is no definite relation between their 
 value and the time spent in creating them. A 
 great painter may receive $50,000 for the work 
 of a few weeks or months, while a mere dauber 
 might spend years on a picture which his best 
 friends would not accept as a gift. The incom- 
 petent one has not been able to create a work of 
 social utility, so his time has been wasted and has 
 no relation to the value of the product. Social 
 utility, then, is the prime factor in the determi- 
 nation of value, and labor-cost is a matter of 
 secondary importance. 
 
 Mine and Farm Costs. When at last we 
 come to commodities that are freely reprodu- 
 cible and produced under competitive conditions, 
 we find that even here the labor-cost theory does 
 not strictly apply. The value of gold and silver, 
 for example, has slight relation to their cost of 
 production because of the varying richness and 
 depth of the ore deposits, and for other reasons. 
 In some mines gold is produced at a cost of $10 
 worth of labor, in others $20, in others $50 or 
 more, and yet all of the metal, produced at 
 various costs, sells at the same mint price of 
 $20.67 per ounce. 
 
 Every farmer knows that the labor-cost theory 
 
78 THE MARXIAN THEORY OF VALUE 
 
 fails to explain the value of agricultural produce. 
 On the best lands wheat may be grown at a labor- 
 cost of $1.00 a bushel; on poorer lands at $1.25, 
 $1.50 or $1.75; and yet the total supply is very 
 likely to be sold at $1.75, which economists 
 usually call the "marginal" cost. This rule of 
 varying costs applies to the production of all raw 
 materials: grain, meat, leather, cotton, wood, 
 sugar, lumber, iron, clay, gold, silver, and the 
 rest, because of the fact that land, from which 
 they are all derived, is limited in quantity and 
 diverse in quality. 
 
 Manufactured Goods. Finally, the value of 
 staple manufactured articles, which Marx has 
 chiefly in mind such as shoes, cotton and woolen 
 goods, refined sugar, furniture, steel rails, jew- 
 elry is not determined chiefly by their labor- 
 cost. 
 
 In the first place, the value of the raw ma- 
 terials of which they are composed is not so 
 determined. 
 
 In the second place, the labor employed in pro- 
 duction varies greatly according to the kind and 
 amount of land and machinery used, the skill of 
 the workers, the efficiency of the management. 
 
 In the third place, the value of manufactured 
 goods is not determined solely by cost, which 
 limits supply, nor by utility, which controls de- 
 mand, but by both of these factors together. In 
 
THE MARXIAN THEORY OF VALUE 79 
 
 fact, utility and scarcity are the prime factors of 
 value, and cost is secondary, as one of the limita- 
 tions of nature which make things scarce. 
 
 The manufacturer, whose profits arise from 
 an excess of revenue over expenditure, and 
 whose losses come from an excess of expenditure 
 over revenue, knows well that the value of his 
 goods depends far more upon the demand of the 
 market than upon the cost of production to him- 
 self or his competitors. In fact, if the demand 
 is weak he must cut down his costs, for if the 
 mountain will not come to Mahomet, Mahomet 
 must go to the mountain. 
 
 The manufacturer must supply an article that 
 will satisfy some human want, and at a suitable 
 price, else he will not be able to sell. For this 
 reason, intelligence, foresight, will-power, and 
 all the other mental and moral qualities of men 
 have much more to do with the final result than 
 the undirected or misdirected expenditure of 
 labor-power. As the brain is the center of action 
 in the human body, so the direction and manage- 
 ment of business enterprise is what gives value 
 to the product, which may or may not be pro- 
 portional to the hours or days or years of labor 
 spent upon it. 
 
 Marx's 'Admission. Of course, Marx knew 
 all that, and even admitted it here and there in 
 his writings, though he did not give it the proper 
 
80 THE MARXIAN THEORY OF VALUE 
 
 place in his system, because he wished to exag- 
 gerate the importance of unskilled labor, the 
 labor of the proletariat. In the very first chap- 
 ter of "Capital" he says: "Nothing can have 
 value without being an object of utility. If the 
 thing is useless, so is the labor contained in it; 
 the labor does not count as labor, and therefore 
 creates no value." l 
 
 This is a very significant admission, quite in- 
 consistent with the basic contention of Marx that 
 labor-time, and that alone, is the cause and 
 measure of value. If there can be no exchange 
 value without utility, then utility must be the 
 cause or a vital part of the cause of value, and 
 it must have something to do with the measure- 
 ment of value also. 
 
 In another place Marx says: "A useful 
 article has value only because human labor in the 
 abstract has been embodied in it." 2 
 
 Apart from the misapplication of the word 
 "abstract" to something so concrete as labor- 
 time, this statement is quite untrue, as has been 
 shown in the numerous illustrations given above. 
 The very reverse of it is true, and it should be 
 changed to read as follows: "An article in 
 which labor has been embodied has value only 
 because it is a useful article." 
 
 Not all commodities which cost labor have 
 
 i Capital, p. 8. 2 Hid., p. 5, 
 
THE MARXIAN THEORY OF VALUE 81 
 
 value, but all useful commodities have value, if 
 they are sufficiently limited in quantity. Utility, 
 therefore, is more essential to value than labor- 
 cost, as in the case of land, which has utility and 
 scarcity, but no labor cost. Of course, the value 
 of reproducible commodities is related to their 
 labor-cost, though not in the direct and exclusive 
 Marxian sense. 
 
 Utility. Socialists who lay chief stress on cost 
 of production as the origin and measure of value, L 
 are placing the cart before the horse. All com- 
 modities have one common property utility 
 without which they would not be commodities, 
 for they would not be bought and sold. Most 
 commodities have another common property 
 labor cost which aids in the determination of 
 value by limiting supply. 
 
 But labor is the means, and utility, or the 
 power to satisfy human needs, is the end of the 
 productive process and, practically as well as 
 logically, the end is more important than the 
 means. It is utility that arouses desire and de- 
 mand, sets in motion the wheels of production, 
 and gives value to the land, capital, and labor 
 which are the means to the final end and purpose 
 of economic activity. 
 
 So it is utility that is the test of value, and not ' 
 the expenditure of a certain amount of labor- 
 time. The measure of labor is not its duration, 
 
82 THE MARXIAN THEORY OF VALUE 
 
 but its efficiency, and the measure of efficiency 
 is the quantity and quality of the output, the 
 extent to which it ministers to human wants. It 
 is not time that counts, but what is done in time. 
 It is not cost that must be first considered, but 
 the ultimate goal the welfare of the human race. 
 
 Brain Work. Marx grudgingly admits the 
 unequal efficiency of labor, as though he realized 
 that the admission was a denial of the theory. 
 He wrote: "Just as in society, a general or a 
 banker plays a great part, but mere man, on the 
 other hand, a very shabby part, so here with mere 
 human labor. Skilled labor counts only as 
 simple labor intensified, or, rather, as multiplied 
 simple labor, a given quantity of skilled being 
 considered equal to a greater quantity of simple 
 labor." ^$41+ 
 
 If Marx had followed this line of thought he 
 would have seen that an increase in the efficiency 
 of labor in a given industry, while it generally 
 increases the value of the total product, often, 
 if not usually, decreases the exchange value per 
 article produced. 
 
 He would also have seen that, as in war, a 
 competent general is a host in himself, so, in the 
 industrial army, a great captain of industry, by 
 the power of his thought, his imagination, fore- 
 sight, judgment, organization, direction, deter- 
 
 i Capital, p. 11. 
 
THE MARXIAN THEORY OF VALUE 83 
 
 mination, courage and incessant activity, is the 
 dynamic center of industrial life, with a creative 
 force out of all proportion to the duration of 
 effort, and of greater social value than thousands 
 of hours of "simple average labor-time." 
 
 Labor Cost Theory Discredited. Enlight- 
 ened socialists of the present day, being obliged 
 to abandon the strict Marxian theory of value, 
 qualify and explain it away, until it has little re- 
 semblance to its original form. Engels said that , 
 the law of value was valid from early times down 
 to the fifteenth century. Untermann says it does 
 not work well now, but will be in good going 
 order after the social revolution. Sombart says 
 it is not a fact of experience but a fact of thought. 
 Veblen says that Marx was not trying to explain 
 exchange value at all, but to interpret value in 
 terms of the "unfolding life of man in society." 
 
 Others, like Kautsky, insist that the Marxian 
 theory of value has nothing to do with socialism, 
 and that it has no vital relation to the other 
 Marxian doctrines, especially the theory of 
 surplus value. But, as Professor Skelton has 
 well shown, Marx was trying to give an analy- 
 sis or examination of capitalism in order to show 
 within it the conflict of opposing forces, and the 
 theory of value was an essential part of that 
 analysis. 
 
 At any rate, Marx himself thought the theory 
 
84 THE MARXIAN THEORY OF VAI^UE 
 
 important, for he said: "The recent scientific 
 discovery that the products of labor, so far as 
 they are values, are but the material expressions 
 of the human labor spent in their production, 
 marks an epoch in the development of the human 
 
 race." 
 
 Without doubt a common economist might 
 accept the labor-cost theory of value without 
 going on to socialism, but can the followers of 
 Marx deny so important a part of their master's 
 teaching and still call themselves "scientific" 
 socialists? Can they reject the labor-cost theory 
 and still hold to the theory of surplus value? If 
 so, they must be taking surplus value on faith or 
 setting it upon a new foundation. 
 
THE MARXIAN LAW OF, 
 INCREASING MISERY 
 
 The Reverend Thomas Robert Malthus, in the 
 year 1798, published an attack upon the Utopian 
 socialism of the day entitled, "An Essay on the 
 Principle of Population," and thus became the 
 godfather of the celebrated or notorious theory 
 that bears his name. To be sure, he did not 
 originate the theory, and Karl Marx calls his 
 work a "school-boyish superficial plagiary of De 
 Foe, Townshend, Wallace, etc." But to how 
 many is it given to create a new idea? Even 
 Marx might be accused of borrowing ideas, for 
 all of his distinctive doctrines may be found in 
 the writings of his predecessors, although the 
 combination was the work of Marx alone. In the 
 words of the Preacher: "There is nothing new 
 under the sun;" or, as Chaucer puts it: 
 
 "For out of olde feldes, as men seith, 
 Cometh al this newe corn fro yeer to yere, 
 And out of olde bokes in good feith 
 Cometh al this newe science that men lere." * 
 
 i Chaucer, The Parlement of Foulea. 
 85 
 
86 MARXIAN LAW OF MISERY 
 
 Population, says Malthus, tends to increase 
 faster than the means of subsistence. The natu- 
 ral resources of the earth are limited, but there 
 is no definite limit to the multiplication of popu- 
 lation other than the supply of food and the 
 other means of subsistence. Therefore, unless 
 the growth of population be checked in some 
 way, poverty and misery will prevail in every 
 country. This is the Malthusian theory of popu- 
 lation, with its dismal shadow, the iron law of 
 wages, for which Ricardo usually gets the credit 
 or discredit. 
 
 Living Costs Determine Wages. The rate of 
 wages, according to this so-called law, is deter- 
 mined by the cost of living of the working class, 
 the quantity of commodities necessary to keep the 
 laborers alive and enable them to raise families 
 to take their places after they are disabled or 
 dead. Wages, it is said, cannot permanently 
 fall below this limit, for if they do the death rate 
 will increase, the marriage rate and the birth rate 
 will decline, and the working class will diminish 
 in numbers until wages rise to their natural level. 
 
 On the other hand, according to this theory, 
 wages cannot permanently exceed the subsistence 
 of the laborer and his family, for if they do, the 
 marriage rate and the birth rate will increase, 
 the death rate will decline, and the working class 
 will increase in numbers until wages fall to their 
 
MARXIAN LAW or MISERY 87 
 
 natural level. The "natural level," of course, 
 is the cost of subsistence of the working class. 
 
 It was this doleful theory, with its gloomy out- 
 look, that led Carlyle to call political economy 
 "the dismal science," and it is this melancholy 
 point of view, somewhat shifted, which many so- 
 cialists take when they magnify the evils of the 
 present industrial system, and say that "increas- 
 ing misery" must follow in the wake of capital- 
 ism until the social revolution shall sweep it all 
 away. 
 
 Socialist Interpretation. Indeed, socialists 
 often speak and write as though poverty and 
 pain, vice and crime, disease and death, had no 
 place in the world before the coming of capital- 
 ism, and would be quite unknown in the perfect 
 day of collectivism. Strange, that they should be 
 so pessimistic about the present and so optimistic 
 about the future, that they should have so much 
 and so little faith in human nature under differ- 
 ent conditions and circumstances. All this, of 
 course, was quite foreign to the thought of Mal- 
 thus, who with more show of reason, traced most 
 social evils to the multiplication of population. 
 
 The great socialist agitator of Germany, Fer- 
 dinand Lassalle, had much to say of the "iron" or 
 "brazen" law of wages. In one place he says: 
 "The average wage always remains reduced to 
 the necessary subsistence which national custom 
 
88 MARXIAN LAW OF MISERY 
 
 demands for the continuance of life and propa- 
 gation." 1 
 
 In the Communist Manifesto, Marx and En- 
 gels say: "The average price of wage-labor is the 
 minimum wage, i. e., that quantum of the means 
 of subsistence which is absolutely requisite to 
 keep the laborer in bare existence as a laborer." 2 
 
 And again: "The modern laborer, instead of 
 rising with the progress of industry, sinks deeper 
 and deeper below the conditions of existence of 
 his own class. He becomes a pauper, and 
 pauperism develops more rapidly than popula- 
 tion or wealth." 3 
 
 In "Capital," Marx says that the "value of 
 labor-power is determined by the sum of the 
 means of subsistence necessary for the produc- 
 tion of labor-power." 
 
 In another passage of the same work he says : 
 "In proportion as capital accumulates, the lot 
 of the laborer, be his payment high or low, must 
 grow worse. The law that always equilibriates 
 the relative surplus population or industrial re- 
 serve army to the extent and energy of accumu- 
 lation, establishes an accumulation of misery, 
 corresponding with accumulation of capital. Ac- 
 cumulation of wealth at one pole is, therefore, at 
 
 1 Cited in Ensor, Modern Socialism, p. 38. 
 
 2 Communist Manifesto, p. 32. 
 sj&tU, p. 29. 
 
 * Capital, p. 150. 
 
MARXIAN LAW OF MISERY 89 
 
 the same time accumulation of misery, agony of 
 toil, slavery, ignorance, brutality, mental degra- 
 dation, at the opposite pole. Along with the 
 constantly diminishing number of the magnates 
 of capital grows the mass of misery, oppression, 
 slavery, degradation, exploitation." 
 
 Marx Twists Theory of Mcdthus. Marx, it 
 is true, ridicules the Malthusian theory of pop- 
 ulation. It would be disastrous to socialist 
 theory to admit it. If population must increase 
 with every improvement in economic conditions, 
 the realization of the socialist ideal will only re- 
 sult in greater population and more hopeless 
 misery. Marx, therefore, rejects the theory of 
 population, but accepts the iron law of wages. 
 He denies the cause while affirming the effect. 
 The effect, then, must be due to some other 
 cause. 
 
 It is not, says Marx, absolute overpopulation 
 that depresses wages, but the very nature of 
 capitalistic development which, by the continual 
 introduction of machinery and other improved 
 methods of production, creates a relative surplus 
 population, an industrial reserve army, the army 
 of the unemployed, who are willing to work for 
 any wages that will save them from starvation. 
 Thus we have, according to Marx, "a law of 
 
 i Capital, p. 661, 
 
90 MARXIAN LAW or MISERY 
 
 population peculiar to the capitalistic mode of 
 production." 
 
 Pessimism and Optimism of Marx. This 
 variation of the iron law is even more pessimistic 
 than the views of Malthus and Kicardo. Not 
 only may there be a population too great for the 
 resources of a country, but there must always be, 
 in every progressive country, an active army of 
 workers who receive starvation wages, and a re- 
 serve army of the unemployed ever ready to 
 step into their shoes. 
 
 Such is the celebrated "law" of increasing 
 misery, according to which economic "progress" 
 necessarily involves the progressive degradation 
 of the working class and increasing exploitation 
 by a diminishing number of capitalists. It is one 
 of the foundation stones of the Marxian system 
 because upon it is based the central doctrine, the 
 theory of surplus value, and the socialists' hope 
 of approaching revolution. Fortunately, it is 
 theoretically unsound, and it is contradicted by 
 the facts of history. 
 
 Socialists frequently glorify the past, especial- 
 ly the far-distant past of our primitive ancestors, 
 when there was neither business enterprise, nor 
 machinery, nor exploitation, neither capitalists, 
 feudal lords nor slave owners, when people were 
 near to nature and every man did what seemed 
 good in his own eyes. They forget that in those 
 
MARXIAN LAW OF MISERY 91 
 
 days man was engaged in a terrific struggle with 
 nature, that nature killed most of those who were 
 born, and that, as the philosopher Hobbes well 
 said, the life of man in the primitive social order 
 was "poor, mean, nasty, brutish, and short." 
 
 Socialists also like to dwell upon economic life 
 in the Middle Ages and the early modern period, 
 before the Industrial Revolution brought ma- 
 chinery into the world and all the evils that came 
 in its train. With Thorold Rogers, they speak of 
 the fifteenth century as the "golden age of the 
 English laborer," forgetting the famines and 
 diseases which plagued him, his coarse food, his 
 miserable clothing and shelter, and the fearful 
 death rate which kept the population of England 
 below 3,000,000; whereas now, largely because 
 of machinery and modern science, that country 
 supports about 34,000,000 people. 
 
 Earlier Conditions of Working Class. Of 
 that very time the historian Cunningham says: 
 "In so far as regularity of employment and short 
 hours are a test of the well-being of the work- 
 man, the fifteenth-century day-laborer was badly 
 
 off and the masses of the population 
 
 were not only poor, but also miserable." * 
 
 Similarly, Sir Walter Scott, writing of leprosy 
 in Scotland, a disease now unknown there, says: 
 
 iW. Cunningham, The Growth of English Industry and Com- 
 merce, Vol. I, pp. 349, 350. 
 
92 MARXIAN LAW OF MISERY 
 
 "Filth, poorness of living, and the want of linen, 
 made this horrible disease formerly very common 
 in Scotland; Robert Bruce died of the leprosy." x 
 
 Similar conditions existed at the beginning of 
 the seventeenth century. In the year 1615 a 
 census was taken of the town of Sheffield, show- 
 ing that, out of a population of 2,207, no less 
 than 725 people were unable to live without the 
 charity of their neighbors, while 60 per cent of 
 the remainder were so poor that "a fortnight's 
 sickness would drive them to beggary." 2 
 
 In the year 1688 it was calculated by Gregory 
 King that out of England's total population of 
 5,500,000, about a fourth were more or less de- 
 pendent on parochial relief. Writing of the con- 
 dition of affairs on the eve of the Industrial 
 Revolution, Cunningham says: "There seems to 
 be abundant evidence that the artisan of a hun- 
 dred years ago was less regular in his work, and 
 less steady in character than the skilled artisan of 
 the present day. . . . The first introduction 
 of machinery was accompanied by many evils, 
 but in so far as it tended toward regular habits 
 of daily work it has been eventually beneficial." 
 
 Changes in the Condition of Workers. The 
 eminent British statistician, Sir Robert Giffen, 
 
 i' Scott, Minstrelsy of the Scottish Border. Note on the Ballad 
 of Sir Hugh Le Blond. 
 
 2 W. Cunningham, op. cit., Vol. II, p. 206, n. 
 Vol. II, pp. 474, 475. 
 
MARXIAN LAW OF MISERY 93 
 
 in 1883 showed that the money wages of British 
 workmen had increased in 50 years "in most cases 
 from 50 to 100 per cent," while the cost of living 
 had decreased, except in regard to meat and rent. 
 
 Another authority, Mr. A. L. Bowley, has 
 shown that, in the 30 years ending 1891, wages 
 in England increased from 15 to 76 per cent, 
 being an average increase of 40 per cent. 
 
 In the 35 years ending 1895, according to 
 Mulhall, the population of the United Kingdom 
 increased from 29,000,000 to 39,000,000, or 34 
 per cent, while in the same time the total wealth 
 increased from $34,992,000,000 to $57,348,000,- 
 000, or 64 per cent, and the wealth per head in- 
 creased from $1,210 to $1,458, or 20 per cent. 
 If, then, average wages have increased 40 per 
 cent, while average wealth has increased only 20 
 per cent, the improvement of the working classes 
 in Great Britain in those years more than kept 
 pace with the increase in general wealth. 
 
 Similar testimony is given by the well-known 
 socialists, Sidney and Beatrice Webb, who, in 
 their great work, "Industrial Democracy," show 
 that from 1850 to 1896 the purchasing power of 
 the wages of three typical workmen in England 
 and Scotland, measured in bushels of wheat, in- 
 creased by 80 per cent, 160 per cent and 250 per 
 cent respectively. In the Preface to Hutchins 
 and Harrison's "History of Factory Legisla- 
 
94 MARXIAN LAW OF MISERY 
 
 tion," written in 1910, Mr. Webb says: "The 
 Lancashire cotton spinner, once in the lowest 
 depths of social degradation, now occupies, as re- 
 gards the general standard of life of a whole 
 trade, perhaps the foremost position among 
 English wage-earners." * 
 
 Professor Alfred Marshall, in his "Principles 
 of Economics" (1907) states that, since 1873, 
 "the standard of living among the working 
 classes has been rising rapidly, perhaps more 
 rapidly than at any other time in English history ; 
 their household expenditure, measured in money, 
 has remained about stationary, and, measured in 
 goods, has increased very fast." 2 
 
 Many other figures could be given to show that 
 the condition of the working class in England 
 during the 'nineties, and up to the outbreak of 
 the World War in 1914, was vastly better than 
 ever before. All the evidence, therefore, flatly 
 contradicts the so-called "law" of increasing 
 misery. True, improvement went on at a slower 
 rate during the early years of the 20th century, 
 because of the well-known tendency of wages to 
 lag behind rising prices, but even so, the gains of 
 the latter half of the 19th century were well 
 maintained, and prospects were good when the 
 war began. 
 
 i Cited in Towler and Ray, Socialism, p. 286. 
 
 a Marshall, Principles of Economics, fifth edition, p. 191. 
 
MARXIAN LAW OF MISERY 95 
 
 Labor Conditions in the United States. The 
 history of labor conditions in the United States 
 tells the same tale, though with local variations. 
 It is easy to idealize the independence of the 
 colonial pioneers, but, as Professor Warner Fite, 
 of Princeton University, says, "The good old 
 days, especially our own pioneer days, were 
 mainly days of privation, of unremitting toil 
 for the bare necessities of life; days, not of 
 spiritual leisure, but of abject slavery to the 
 needs of the body." * 
 
 McMaster, in his "History of the People of 
 the United States," gives a most interesting 
 account of a typical American laborer's life at 
 the close of the Revolution. He writes: "Sand 
 sprinkled on the floor did duty as a carpet. There 
 was no glass on his table, there was no china in 
 his cupboard, there were no prints on his wall, 
 what a stove was he did not know, coal he had 
 never seen, matches he had never heard of. ... 
 He rarely tasted fresh meat as often as once a 
 week, and paid for it a much higher price than 
 his posterity. ... If the food of an artisan 
 would now be thought coarse, his clothes would 
 be thought abominable." 2 
 
 Adams and Sumner, in a chapter on "The 
 
 1 Warner Fite, The Old Individualism and the New Situation, 
 in Friedman's America and the New Era, p. 100. 
 
 2 J. B. McMaster, History of the People of the United States, 
 Vol. I, pp. 96-97. 
 
96 MAKXIAN LAW or MISERY 
 
 Material Progress of Wage-Earners," state that 
 in Massachusetts, in the year 1672, carpenters 
 received 33 cents a day, tailors 27 cents, and 
 common laborers 27 cents, without board, and 
 that when wheat was selling at 81 cents a bushel, 
 corn at 48 cents, and oats at 25 cents. 
 
 The same authors show that the rise in "real" 
 wages, or wages measured in purchasing power, 
 went on, despite occasional interruptions, until 
 the beginning of the 20th century. For every 
 $70 worth of goods that the worker received in 
 1866 he received $121 in 1902, an increase of 73 
 per cent in 36 years. 1 
 
 W. I. King's Findings. W. I. King, in his 
 excellent book, "The Wealth and Income of the 
 People of the United States" (1915), gives a 
 series of index numbers showing the purchasing 
 power of hourly wages in all industries from 
 1850 to 1912. If the number 46.8 be taken to 
 indicate the purchasing power of an hour's 
 wages in the year 1850, the purchasing power 
 was 48.1 in 1860, 58.2 in 1870, 69.9 in 1880, 94.9 
 in 1890, 104.8 in 1897, 101.6 in 1900, 110 in 
 1906, and 103 in 1912. 2 Here, also, as in the case 
 of England and other countries, the rise in "real" 
 wages during the early years of the 20th century 
 was retarded because of the rise in the cost of 
 
 i Adams and Simmer, Labor Problems, Chap. 13, pp. 502-547. 
 2W. I. King, The Wealth and Income of the People of the 
 United States, p. 189. 
 
MARXIAN LAW OF MISERY 97 
 
 living, the increase of population and other 
 causes. 
 
 Of course, the progress of the working class 
 is not to be measured in wages alone, as many 
 other circumstances must be considered. The 
 death-rate, for example, per thousand persons, in 
 England and Wales, declined from 20.8 in the 
 year 1850 to 15.2 in the year 1905, which is surely 
 no evidence of "increasing misery." 
 
 The disappearance of illiteracy, too, is worth 
 considering; also the development of public 
 parks, playgrounds, libraries, baths and other 
 signs of increasing well-being. 
 
 Nor is such progress confined to England and 
 the United States. It is found in all the other 
 capitalistic countries of the world. Only in de- 
 clining countries, and in non-capitalistic coun- 
 tries, such as China, India and Central Africa, 
 are wages kept down to the bare cost of living. 
 In such countries it looks as though the law of 
 Malthus were in operation, but in capitalistic 
 countries national wealth seems to increase faster 
 than population, and there is no other "law" of 
 increasing misery which the working class has to 
 fear. 
 
 Admissions of Socialists. It might seem use- 
 less to dilate upon this, were it not that socialist 
 missionaries still preach the "law" of increasing 
 
MARXIAN LAW OF MISERY 
 
 misery, as though they did not know that their 
 leaders had abandoned it or explained it away. 
 
 Kautsky said at the Liibeck Congress of 1901 : 
 "Increasing misery is to be understood only as a 
 tendency, and not as an unconditional truth." * 
 
 In reply to him, Dr. David, a progressive 
 socialist, said: "If one alters one's opinion one 
 should have the courage and strength to say, 
 'We made a mistake.' " 2 
 
 In reply to both Kautsky and David, Bebel 
 asserted that Marx never taught the theory of in- 
 creasing misery, but only the doctrine that "the 
 gap between the working class and the rich class 
 today is greater than ever before," and that for 
 this reason the class struggle is ever growing 
 more intense and bitter. 
 
 Marx himself, in 1864, admitted the beneficial 
 effects of the English ten-hour law, thus contra- 
 dicting his own theory of the inevitable and pro- 
 gressive degradation of the working class under 
 capitalism this while he was writing his great 
 work, "Capital," which appeared in 1867. 
 
 Even Boudin abandons his guns when he says: 
 "The present condition of the working class is 
 not merely the result of the tendencies of capi- 
 talistic accumulation, but of the tendencies of 
 
 1 Cf. Ensor, Modern Socialism, pp. 187-189. 
 
 2 Ibid. 
 
MARXIAN LAW OF MISERY 99 
 
 capitalistic accumulation as modified by the 
 struggle of organized labor against them." 
 
 Franz Mehring, a German Marxist, says that 
 the theory of increasing misery is but a relic in- 
 herited by Marx from the bourgeois political 
 economy. Spargo and Arner freely admit that 
 "some of the evils of poverty can be relieved 
 without disturbing the present social order." 
 Finally, Laidler, in his "Socialism in Thought 
 and Action" (1920), suggests that misery is a 
 "psychic condition," and sums up the general 
 conclusion thus: "Most modern socialists do not 
 claim that the physical degradation of the 
 worker is becoming increasingly greater, but 
 that the worker's recognition of injustices is in- 
 creasing while his share in society's product is 
 decreasing." 2 
 
 Marxism With Marx Left Out. Comment- 
 ing on these fatal admissions, Simkhovitch says : 
 "And yet the true-blue Marxists are unwilling 
 to drop. this theory. They realize that in drop- 
 ping it they are dropping Marxism, but they do 
 not realize that in interpreting it away they are 
 interpreting Marxism away. The whole con- 
 struction of Marx's 'Capital' leads up to the 
 doctrine of increasing misery. In rejecting this 
 theory one rejects also Marx's theory of popula- 
 
 i Boudin, The Theoretical System of Karl Marx, p. 228. 
 2H. W. Laidler, Socialism in Thought and Action, p. 111. 
 
100 MARXIAN LAW OF MISERY 
 
 tion, his theory of wages, his theory of accumula- 
 tion of capital. And if what is left be Marxism 
 it is Marxism with Marx left out. Not only is 
 his theory shattered, but what rational founda- 
 tion is there left for his vision and hope, his goal 
 and inspiration the breakdown of capitalism 
 and the social revolution? These conceptions of 
 Marx, as well as his idea of the general crisis are 
 based upon the progressively increasing misery 
 of the working class." * 
 
 Inconsistency of Socialists. But why should 
 socialists wish to uphold the law of increasing 
 misery? If the working class are daily and 
 yearly sinking deeper into the slough of misery 
 and degradation, what hope can there be of their 
 ever getting out of it? It is freemen, and not 
 slaves, who most desire the blessings of liberty. 
 The working class of civilized countries, like pro- 
 gressive people everywhere, are never satisfied. 
 The more they have, the more they want, for 
 desires always outrun the means of satisfaction. 
 Kautsky says : "We all agree that the emancipa- 
 tion of the proletariat is to be expected, not from 
 its increasing decadence, but from its growing 
 strength." 
 
 But if socialists, having ceased to believe in in- 
 creasing misery, take comfort in the improve- 
 ment of the working class, much more should 
 
 i Simkhovitcbj Marxism versus Socialism, p. 127. 
 
MARXIAN LAW OF MISERY 101 
 
 T r-r-4 -.rr 
 
 those be encouraged who hope that industrial 
 evolution will bring about, not the destruction of 
 private property and private enterprise, but the 
 continual and beneficent utilization of those 
 powerful forces, which have had so much to do 
 with the creation of modern civilization. 
 
VI 
 
 THE MARXIAN THEORY OF 
 SURPLUS VALUE 
 
 The theory of surplus value is a combination 
 or synthesis of the labor-cost theory of value and 
 the "law" of increasing misery. It is, therefore, 
 the third link in the chain of argument designed 
 to prove that capitalism is a system of exploita- 
 tion or robbery and has within it the seeds of 
 its own destruction, chiefly because of the class 
 struggle thereby engendered. 
 
 It is the working class, of course, that is sup- 
 posed to be exploited, and this includes all em- 
 ployees, unskilled and skilled, hard-handed and 
 soft-handed, working with hand and brain, for 
 wages and salaries. Yet Marx usually seems to 
 have in mind "unskilled average labor," furnished 
 by the proletariat, who have "nothing to lose 
 but their chains." They are the chief victims of 
 the capitalists, to whom they sell their sole pos- 
 session, their labor, and always at a forced sale. 
 This is his definition of labor power: "By labor- 
 power or capacity for labor is to be understood 
 the aggregate of those mental and physical 
 
 102 
 
MARXIAN THEORY OF SURPLUS VALUE 103 
 
 capabilities existing in a human being, which he 
 exercises whenever he produces a use value of 
 any description." * 
 
 The typical exploiter, then, is an employer of 
 labor, especially a manufacturer, and surplus 
 value is the difference in value between what the 
 laborers create and what they receive as wages, 
 the assumption being that the whole product of 
 industry is created by them alone. 
 
 A Concrete Example. Take, for example, 
 a manufacturer of bricks, employing 100 labor- 
 ers in a rather old-fashioned brick-yard. He 
 pays the laborers the market value of their 
 services, which, according to the law of increasing 
 misery, is barely enough for the subsistence of 
 themselves and their families at some low stand- 
 ard of living say $60 per laborer per month, 
 making $6,000 for the whole force. The bricks, 
 however, after deducting the cost of materials 
 and other costs, sell for $12,000. The difference 
 of $6,000 available for rent, interest, dividends 
 and surplus, is regarded by Marx as surplus 
 value, stolen from the laborers who created it. 
 
 If we ask why the bricks sell for $12,000, 
 although the labor-cost measured in money was 
 only $6,000, Marx replies that the value of the 
 bricks does not depend on wages and other ex- 
 penses of production, but on the average number 
 
 i Capital, p. 145. 
 
104 MARXIAN THEORY OF SURPLUS VALUE 
 
 of hours of "socially necessary labor-time" em- 
 ployed in their production. Moreover, labor 
 power, Marx says, has the "peculiar property of 
 being a source not only of value, but of more 
 value than it has itself." The employer thus has 
 the great advantage of buying labor-power at 
 its value and yet selling a product the value of 
 which is much greater, probably two or three 
 times as great. 
 
 Labor and Capital. The labor day, therefore, 
 is composed of two parts: "necessary labor-time," 
 in which the laborer creates value enough for 
 subsistence wages, and "surplus labor-time" in 
 which surplus value is created. The laborer, like 
 the serf of feudal times, works part of the time, 
 say five hours, for himself, and the rest of the 
 day for his master, the robber baron of cap- 
 italism. 
 
 The employer's capital, too, is composed of 
 two parts: "variable capital," consisting of 
 money or goods paid to labor; and "constant 
 capital," consisting chiefly of buildings, ma- 
 chinery and raw materials. Now, since surplus 
 value is derived from the exploitation of living 
 labor, it follows that it must be proportional to 
 the quantity of variable capital used in the busi- 
 ness, and not to the quantity of constant capital. 
 Constant capital, says Marx, merely creates its 
 own value, because it is the product of past labor, 
 
MARXIAN THEORY OF SURPLUS VALUE 105 
 
 whereas living labor only has the "peculiar 
 power" of creating surplus value. 
 
 Yet there may be in the same business another 
 manufacturer who, with a better plant, employs 
 only 50 laborers at a cost of $3,000 per month, 
 spends another $3,000 on account of superior 
 equipment, but makes the same profit of $6,000 
 through a totally different arrangement or com- 
 position of his capital. In other words, a given 
 capital could be invested so as to use much labor 
 and little machinery, or little labor and much 
 machinery, and might yield the same rate of 
 profit on the total capital employed, although it 
 would probably yield a higher rate of profit than 
 the old-fashioned concern. 
 
 What, then, becomes of the theory of value if 
 profits tend to be an average return upon the 
 whole capital invested, instead of a return pro- 
 portional to the amount of variable capital only, 
 or to the number of laborers directly employed? 
 Obviously, in the first case the rate of exploita- 
 tion is 100 per cent, and in the second case 200 
 per cent ; that is to say that in the second case 50 
 laborers create as much surplus value as the other 
 100, although they all were, presumably, men of 
 average labor power. To the ordinary mind it 
 looks as though half of the profits in the second 
 case were due to the employer's intelligence, but 
 Marx could not admit this without abandoning 
 
106 MARXIAN THEORY OF SURPLUS VALUE 
 
 his theory that all value is created by labor alone. 
 
 Marx's Celebrated Puzzle. This is the cele- 
 brated puzzle suggested by Marx in the first vol- 
 ume of "Capital" and which was to be explained 
 in the later volumes. In the year 1885, two years 
 after the death of Marx, Friedrich Engels chal- 
 lenged his critics to: "show how an equal aver- 
 age rate of profit can and must come about, not 
 only without a violation of the law of value, but 
 by reason of it." * 
 
 The third volume of "Capital" appeared in the 
 year 1894, when orthodox Marxians were sur- 
 prised and disconcerted to find that Marx ad- 
 mitted that commodities in actual circulation ex- 
 change, not at their value, but in accordance with 
 their "price of production," that is, cost price 
 plus the average rate of profit. This is the 
 "great contradiction" pointed out by Bohm- 
 Bawerk and other critics, and it is evident that 
 Marx, finding his two theories quarreling with 
 one another, and wishing to save the theory of 
 surplus value, threw the labor-cost theory over- 
 board. 
 
 Without going into the disputes and hair- 
 splittings that have centered about this notorious 
 puzzle, it must be evident to any business man 
 who considers the matter that the profits of brick- 
 
 i Capital, Vol. II, Preface by Friedrich Engels. Cf. Bohm- 
 Bawerk, Karl Marx and the Close of His System, p. 25. 
 
MARXIAN THEORY OF SURPLUS VALUE 107 
 
 making, or of any other competitive business, are 
 not determined by the amount of variable capital 
 used, nor by the number of laborers employed, 
 but rather and chiefly by the skill and courage 
 and leadership of the captains of industry who 
 launch the ships of business and who, by constant 
 attention and unremitting vigilance, keep them 
 above water as going concerns. 
 
 According to Marx, the business man is a mere 
 exploiter and parasite, whereas he is, in fact, the 
 very mainspring of industrial activity. Pro- 
 fessor Skelton well says: "One of the most 
 astounding gaps in the Marxian theory is the al- 
 most total neglect of the function of the entre- 
 preneur in modern industry, in seeking out the 
 opportunities for development, in bringing to- 
 gether the various requisites of production, in 
 the direction of operations and marketing the 
 product." l 
 
 Moreover, it is not true that labor power, as 
 Marx says, has the "peculiar" or magic power of 
 creating surplus value, as thousands of unsucces- 
 ful capitalists and employers know to their cost. 
 If that were true, the most incompetent employer 
 could make money, although competition would 
 soon take it all away and give it to the magic- 
 working laborers. Undirected or misdirected 
 labor creates no surplus value, even when com- 
 
 i 0. D. Skelton, Socialism, a Critical Analysis, p. 128. 
 
108 MARXIAN THEORY OF SURPLUS VALUE 
 
 bined with abundance of capital, both variable 
 and constant. 
 
 Commercial Capital. It should be noted, in 
 passing, that the theory of surplus value quite 
 fails to explain the origin and nature of commer- 
 cial capital, as Marx himself admits. Referring 
 to a transaction in which a merchant buys goods 
 for $100 and sells them for $110, Marx says: 
 "This increment or excess over the original value 
 I call surplus value," * but he is unable to explain 
 how the surplus value, in this case, is created, 
 except by suggesting that a two-fold advantage 
 over both buyer and seller is gained by the mer- 
 chant, "who parasitically shoves himself in be- 
 tween them." 2 
 
 When Marx says, in effect, that merchants are 
 thieves, he ignores the important social service 
 which they render in the creation of time and 
 place utilities. In fact, the merchant is a pro- 
 ducer as truly as the farmer, the miner, the 
 fisherman, or the manufacturer, for the process 
 of production is not completed until the goods 
 are in the hands of the final consumler. As 
 though quite unaware of this, Marx says: "If 
 commodities or commodities and money, of equal 
 exchange-value, and consequently equivalents, 
 are exchanged, it is plain that no one abstracts 
 more value from, than he throws into, circulation. 
 
 i Capital, p. 128. 2 Hid., 6141. 
 
MARXIAN THEORY or SURPLUS VALUE 109 
 
 There is no creation of surplus value. Turn and 
 twist them as we may, the fact remains unaltered. 
 If equivalents are exchanged, no surplus value 
 results, and if non-equivalents are exchanged, 
 still no surplus value. Circulation, or the ex- 
 change of commodities, begets no value." l 
 
 Nor can the theories of Marx explain the 
 nature of banking, nor the creative power of 
 credit. To him the making of loans and the tak- 
 ing of interest have nothing to do with the 
 creation of value, except in that they involve 
 taking what others have produced. He even 
 quotes with approval the ancient error of the 
 Greek philosopher Aristotle, who held that the 
 taking of interest, unlike the rent of land and 
 the increase of cattle or sheep, was contrary to 
 nature because money was barren. 
 
 All this confusion of thought evidently pro- 
 ceeds from the basic assumption of Marx that 
 all values are materialized or congealed or 
 crystallized labor-time, from which it is inferred 
 that capitalists and employers create nothing. 
 Many socialists admit that the basic assumption 
 is false, yet still hold to the opinion that capital- 
 ism, with exploitation as its ruling principle, con- 
 tains within it the seeds of its own destruction. 
 Unless the wish is father to the thought, such an 
 opinion, lacking scientific basis, is probably trace- 
 
 i Capital, p. 141. 
 
110 MARXIAN THEORY or SURPLUS VALUE 
 
 able to discontent arising from the unequal dis- 
 tribution of wealth. 
 
 Distribution of Wealth. Certainly, the 
 wealth of the world is not equally divided, and 
 socialists are quick to infer that a distribution 
 so unequal must be inequitable as well. Pro- 
 fessor W. I. King, in "The Wealth and Income 
 of the People of the United States" (1915), 
 estimates that the richest 2 per cent of the people 
 of Wisconsin in the year 1900 owned 57 per cent 
 of the total wealth, and that in the United King- 
 dom, France, and Prussia in the year 1909, the 
 corresponding figures were 71 per cent, 60 per 
 cent, and 59 per cent, respectively. Doubtless, 
 the wealth of all capitalistic and most non-capi- 
 talistic countries is highly concentrated." * 
 
 Fortunately, the incomes of the people, which 
 control their expenditure, are more evenly dis- 
 tributed. In the same book Professor ;King 
 estimates that in the year 1910 the total income 
 of the people of the United States was, in round 
 numbers, $30,500,000,000, of which wages and 
 salaries amounted to $14,300,000,000, or 46.9 
 per cent, while interest was 16.8 per cent, rent 
 8.8 per cent and business profits, distributed and 
 undistributed, were 27.5 per cent. 
 
 This is a marked improvement over the year 
 1850, when the share of wages and salaries was 
 
 iKing, op. cit., pp. 79, 96. 
 
MARXIAN THEORY OF SURPLUS VALUE 111 
 
 but 35.8 per cent of the total national income, 
 and profits absorbed no less than 44 per cent. 
 The relative share of employees increased 
 steadily until the year 1890 when it was 53.5 per 
 cent of the total national income, since when it 
 has declined slightly, probably, as Professor 
 King believes, because of the enormou3 immigra- 
 tion of unskilled labor which continued until the 
 outbreak of the war. l 
 
 Of course, as the volume of capital increases 
 from year to year, the proportion of the total 
 national income going to capital as interest 
 should increase, as must be clear to anyone who 
 considers the state of affairs in primitive times, 
 when there was practically no capital and no 
 interest. In those days labor received the whole, 
 though a very scanty whole, of the product of 
 industry. If, again, the process of civilization 
 could be reversed, and rent, interest, and profits 
 could be taken away, we might easily go back to 
 a condition in which, receiving the whole product 
 of industry, the working class would be on the 
 verge of starvation.^ 
 
 The Share of Labor. When we consider the 
 share of labor in particular industries we find 
 it to be far larger than most socialists are willing 
 to admit. Dr. F. H. Streightoff in "The Dis- 
 tribution of Incomes in the United States," 
 
 iKing, op. tit., p. 160. 
 
112 MARXIAN THEORY OF SURPLUS VALUE 
 
 (1912), says: "Recent available figures for 
 eight large American industries, employing over 
 three million laborers, give to capital a return in 
 dividends and interest of $1,276,419,050, and to 
 labor in salaries and wages of $2,031,402,210, a 
 total income of $3,307,821,260, of which the 
 share of labor is sixty-one per cent, and that of 
 capital thirty-nine per cent. That these figures 
 are typical of the whole field of American in- 
 dustry is questionable." x 
 
 The most recent figures on this subject are 
 those of Professor Friday, of the University 
 of Michigan, in "Profits, Wages and Prices" 
 (1920), based on the United States census re- 
 ports, in which he states that the employees of 
 mining, manufacturing, railroad and public util- 
 ity corporations in the year 1913 received 63.9 
 per cent of the "value added" by these industries, 
 while 3.8 per cent went in taxes, 8.9 per cent in 
 interest, and 23.4 per cent in dividends and sur- 
 plus. Professor Friday says: "The assertion so 
 frequently made nowadays that only 20 or 25 
 per cent of the nation's output goes to the laborer 
 as wages has clearly no foundation in fact." 
 
 A typical exaggeration of the "degree of ex- 
 ploitation" is given by the well-known British 
 socialist, H. M. Hyndman, in "The Economics 
 
 1 Columbia University Studies, Vol. LIT, No. 2, p. 44. 
 
 2 David Friday, Profits, Wages and Prices, p. 124. 
 
MARXIAN THEORY OF SURPLUS VALUE 113 
 
 of Socialism" (1896). He says: "The worker, 
 for every hour he works for himself, works three 
 or four for the benefit of other people who may 
 or may not do any useful social work at all." 1 
 
 Conditions in the United Kingdom. British 
 as well as American statistics absolutely contra- 
 dict this and similar statements. The Census of 
 Industrial Production of the United Kingdom 
 (1907), as analyzed by Professor A. L. Bowley, 
 shows that, out of a net production valued at 
 $3,100,000,000, wages and salaries amounted to 
 $2,000,000,000, depreciation and taxes absorbed 
 $340,000,000, and the share of capital, in rents, 
 royalties and profits was less than $800,000,000. 
 Thus, for every $1.00 going to capital, labor 
 received about $2.50, a distribution quite the re- 
 verse of that imagined by Mr. Hyndman. 2 
 
 Such figures as these, too, are quite at variance 
 with the views of single-taxers of the school of 
 Henry George, who claim that all the benefits 
 of progress are absorbed by the land owner. Pro- 
 fessor King's figures show that in the year 1910 
 only 8.8 per cent of the national income was 
 taken in rent, and this chiefly by the small land 
 owners so common in the United States. In the 
 United Kingdom, also, where large estates are 
 the rule, the portion of the national income going 
 
 1 Hyndman, The Economics of Socialism, p. 85. 
 
 2 Mallock, Social Reform, p. 203. 
 
114 MARXIAN THEORY OF SURPLUS VALUE 
 
 to rent is relatively small. Mr. W. H. Mallock, 
 in "Social Reform" (1914) says: "In the year 
 1801 the land-rent of England and Wales 
 amounted to 20 per cent of a total income of 
 $870,000,000. To-day out of a total income of 
 more than $9,700,000,000 it barely amounts to 
 as much as 4 per cent." 
 
 The Effect of Saving. Finally, in estimating 
 the actual consumable income of the capitalist 
 class, a considerable deduction should be made 
 from their money income on account of corporate 
 and personal savings. This part of income, in- 
 stead of being enjoyed by the owners, is saved 
 and invested, and constitutes a sort of revolving 
 fund, most of which goes to labor. Professor 
 King makes a conservative estimate of $2,000,- 
 000,000 as the national saving for the year 1910. 
 Professor Friday says that the annual savings 
 of England and Germany were generally esti- 
 mated at $2,000,000,000 each before the war, 
 and he states that the corporate savings of the 
 United States were three-fourths of this amount. 
 
 If to these corporate savings be added personal 
 savings out of distributed income, the total is 
 probably in excess of the savings of England or 
 Germany, notwithstanding the fact that Ameri- 
 cans, both rich and poor, are most improvident 
 people. Part of their savings, of course, come 
 from wages and salaries, although most of the 
 
MARXIAN THEORY OF SURPLUS VALUE 115 
 
 saving and investment is done by the rich and 
 the well-to-do. Indeed, it is often said, and with 
 a measure of truth, that there would be far less 
 of saving and more of spending if the wage- 
 earners had more and the capitalists less of the 
 national income. Mr. J. M. Keynes says, rather 
 ironically: "The immense accumulations of 
 fixed capital which, to the great benefit of man- 
 kind, were built up during the half century be- 
 fore the war, could never have come about in a 
 society where wealth was divided equitably." 1 
 
 The Nation's Income. After all deductions 
 and allowances have been made, it still remains 
 true that a considerable part of the nation's in- 
 come, probably not less than 40 per cent, goes to 
 capitalists large and small, in the form of rent, 
 interest and profits, and that a large part, though 
 not the whole, of that income is spent by them 
 in consumable goods and services. These people, 
 numbering from a fifth to a fourth of the popula- 
 tion, constitute the so-called "exploiting" class, 
 while the remaining four-fifths or three-fourths 
 constitute, roughly, the so-called "exploited" class 
 or "proletariat." The "proletariat," or working 
 class, are supposed to do all the work, while the 
 capitalists live as parasites on the ever-increasing 
 mass of surplus value. Marx says "Capital is 
 
 i J. M. Keynes, The Economic Consequences of the Peace, p. 19. 
 
116 MARXIAN THEORY OF SURPLUS VALUE 
 
 dead labor, that, vampirelike, lives by sucking 
 living labor." * 
 
 A rough classification like this may easily lead 
 to false conclusions, if one thus assumes that all 
 capital is owned by capitalists and that all labor 
 is done by workers of the propertyless class. In 
 fact, thousands and even millions of American 
 laborers have modest savings invested in some 
 productive way: a house, a piece of land, a small 
 mortgage or bond, an insurance policy, a de- 
 posit in a savings bank. The insecurity of their 
 position is due to the fact that they have so little 
 capital, and are so much dependent upon a single 
 source of income the labor of their hands. 
 
 Statistics of savings banks, building and loan 
 associations and insurance companies, while they 
 do not separate the holdings of wage-earners 
 from those of large capitalists, indicate the exist- 
 ence of a large number of small property owners. 
 For example, in the year 1918 there were no less 
 than 11,379,553 depositors in the savings banks 
 of the United States, and their aggregate de- 
 posits amounted to $5,471,579,949. In the year 
 1917 there were 3,838,612 members of building 
 and loan associations, the total assets of which 
 amounted to $1,769,142,175. In the same year 
 there were 11,581,701 life insurance policies in 
 force, and the total assets of the companies con- 
 
 i Capital (Sonnenschein), p. 216, 
 
MARXIAN THEORY OF SURPLUS VALUE 117 
 
 cerned were $5,940,622,780. 1 However, the to- 
 tal property holdings of the working class are 
 not large, for, according to King, the poorer 65 
 per cent of the population of Wisconsin in the 
 year 1900 owned but 5.2 per cent of the total 
 wealth of the state. 2 
 
 The Capitalist Class. There are many labor- 
 ers who are capitalists, though in a small way, 
 and it is equally true that there are many capital- 
 ists who are workers and creators of wealth. 
 Capitalists are of two classes: those who are ac- 
 tively engaged in business, and those who have 
 retired from business or have never entered it. 
 The latter class is composed of administrators of 
 estates and benevolent endowments, retired busi- 
 ness men and men of leisure, widows, orphans, 
 professional people, and, in general, people of 
 the middle class, who, owning more or less 
 capital, and unable or unwilling to manage it 
 profitably, put it into safe investments at low 
 rates of interest. 
 
 The former class, on the other hand, is made 
 up of active capitalists, young men and men in 
 the prime of life, using their own capital and that 
 of others in the management and promotion of 
 enterprises old and new, taking all the risks of 
 business, guaranteeing interest to the bondholder 
 
 1 Statistical Abstract of the U. S., 1918. 
 
 2 King, op. cit., p. 79. 
 
118 MAKXIAN THEORY OE SURPLUS VALUE 
 
 and wages to the laborer, bearing the losses that 
 occur, and taking to themselves the lion's share 
 of the profits. Farmers are men of this class ; so 
 also are manufacturers and merchants, bankers 
 and brokers, and the small but influential class 
 of people who control the railways, telegraph 
 companies, and other great business corporations. 
 
 According to King, these people, together 
 with the stockholders who back them up and 
 share the risk, received in the year 1910 about 
 $8,400,000,000, and the land owners, perhaps the 
 least active of all, received only $2,700,000,000 
 out of the total national income of about 
 $30,000,000,000. 
 
 How can it be said that the active business 
 men of the country do no work? The work that 
 they do is both difficult and important, requir- 
 ing ceaseless activity, great strength of body and 
 mind, and, with some minor exceptions, promot- 
 ing the material welfare of society in a very high 
 degree. Under competitive conditions, which 
 Marx assumes, neither the laborers nor the con- 
 sumers are exploited by them, for wages rise and 
 prices fall, while new fields of labor are opened 
 up, new and varied products are created, and 
 under such leadership the country is able to main- 
 tain a large and increasing population. 
 
 Every community can point to a few men of 
 this kind, to whom, in large measure, its pros- 
 
MARXIAN THEORY OF SURPLUS VALUE 119 
 
 perity is due. When one contemplates the vast 
 and complicated mechanism of modern industry 
 and realizes the need of incessant activity and 
 eternal vigilance, one finds it hard to see how it 
 could be operated by society itself, without the 
 aid of private enterprise and the motive power 
 of private profit. 
 
 It should be noted, also, that according to the 
 figures of Professor King, the portion of the na- 
 tion's income going to profits declined from 44 
 per cent in the year 1850 to 27.5 per cent in 1910, 
 and there is reason to expect a still further de- 
 cline, as the country is more fully developed, the 
 number of competent business men increases, 
 and competition becomes more keen. 
 
 In the year 1850, when business profits ab- 
 sorbed 44 per cent of the total national income 
 of $2,200,000,000, well-meaning reformers might 
 have tried to limit profits by taxation or by con- 
 trol of prices, but the effect of such action would 
 probably have been injurious to the prosperity 
 of the country, by cutting the mainspring of busi- 
 ness activity. Instead of doing this, the business 
 men of the United States were given a free hand, 
 with the result that this country was rapidly de- 
 veloped, consumers in every country benefited 
 from the abundance of American raw mate- 
 rials, and the business men in the year 1910 re- 
 ceived but 27.5 per cent of a national income of 
 
120 MAKXIAN THEORY OF SURPLUS VALUE 
 
 $30,000,000,000. While a policy of let-alone has 
 its defects, an effort to reduce profits and control 
 prices in any drastic way might easily produce 
 effects the very opposite of those intended. Cer- 
 tainly, such action by the government of any 
 great exporting country, like England, would in 
 all probability have the most disastrous effects. 
 
 Kent, Interest and Profits. So it must be ad- 
 mitted that active capitalists, as a class, are not 
 parasites, and that the profits of business, under 
 competitive conditions, are the earnings of busi- 
 ness men, and not a surplus value stolen from 
 the proletariat. But what must one think of the 
 idle capitalists: landowners, bondholders and 
 mortgagors, who do no work at all, but merely 
 lend their property to active capitalists, who use 
 it productively and return to the owners a part 
 of the product in the form of rent or interest? 
 Surely here is a class of exploiters and parasites, 
 useless and even injurious to society, reaping 
 where they have not sown and gathering where 
 they have not strawed. 
 
 Plausible as this line of reasoning is, it over- 
 looks the fact that the taking of interest is in- 
 separably connected with the institution of pri- 
 vate property. The use of property for a given 
 time is something which has value in exchange. 
 Active capitalists are glad to get it, expecting to 
 use it so as to earn the stipulated interest and a 
 
MARXIAN THEORY OF SURPLUS VALUE 121 
 
 * 
 
 net profit besides. Laborers are not exploited, 
 for the greater the accumulation and investment 
 of capital the lower the rate of interest, the 
 greater the product and the higher wages will be. 
 Moreover, the payment of interest encourages 
 savings and investment, the benefits of which 
 accrue to the whole community, and chiefly to 
 the laborers themselves. 
 
 There is, in fact, no reason why the owners of 
 property should lend it without interest that is 
 not at the same time a reason why they should 
 give it all away without equivalent or considera- 
 tion. If the taking of interest is robbery, the 
 whole institution of private property is robbery, 
 and that is exactly what the socialists say. 
 "Property is theft," says Proudhon, and if he 
 is right, the taking of interest is theft also. But 
 if he is mistaken, and private property is socially 
 beneficial, then he who lends his money at interest 
 is no more a thief than he who receives $100 for 
 an acre of land or $1 for a bushel of potatoes. 
 
 Mr. Edward F. Adams, of San Francisco, 
 puts the case very strongly and justly thus: 
 "The accumulating man is essential to social sav- 
 ing. Social saving is essential to the support of 
 an increasing population. Therefore, socialism 
 by eliminating the capitalist would make life 
 impossible to many who now live." * 
 
 i Edward F. Adams, The Inhumanity of Socialism, 1913. 
 
122 MARXIAN THEORY OF SURPLUS VALUE 
 
 While defending private property, with the 
 consequent taking of rent, interest and profits, 
 and asserting that the essential feature of busi- 
 ness activity is not exploitation but fair exchange 
 of material things and personal services, it would 
 be absurd to say that there are no abuses con- 
 nected with capitalism, no exploitation, robbery, 
 parasitism, nor any oppression of man by man. 
 
 Two Sides to the Picture. Where there is so 
 much smoke there must surely be more or less 
 fire. Laborers complain of low wages, long 
 hours, and frequent unemployment. Farmers 
 say that they are robbed at every turn by rail- 
 roads, bankers, grain dealers, millers, packers, 
 and commission merchants. The so-called mid- 
 dle class of the cities, finding it increasingly 
 difficult to make ends meet, cry out against 
 the "profiteering" of landlords, merchants and 
 "trustified" manufacturers. Manufacturers and 
 merchants themselves complain of excessive rail- 
 way rates, cut-throat competition and confisca- 
 tory taxation. Investors denounce unscrupulous 
 promoters, who, by lying devices, sell worthless 
 "securities," or, from the milk of promising 
 enterprises, skim off the cream of the profits and 
 add much water besides. 
 
 Professors of political economy, even, usually 
 content to take the world as it is, for better or 
 worse, are obliged to admit that all is not well 
 
MARXIAN THEORY or SURPLUS VALUE 123 
 
 with the body economic. They see that in the 
 midst of free competition, so-called, are many 
 opportunities for the robber barons of industry 
 to levy toll upon the weak and blackmail upon 
 the strong. As moderate progressives and quali- 
 fied supporters of capitalism they are accused 
 of intellectual parasitism, and it is hinted that, in 
 some quarters, academic freedom is not without 
 its limitations. 
 
 Journalists, too, and the press, as a whole, are 
 accused of pandering to the wealthy, and it is 
 often said that editorial opinion is the handmaid 
 of capitalism, and that the streams of news are 
 either suppressed or poisoned at the source. Leg- 
 islators, also, and men in high executive positions, 
 are said to be the representatives of capitalism, 
 and even the highest courts in the land are ac- 
 cused of tampering with the scales of justice. 
 The Church, finally, founded by Jesus the car- 
 penter, is included in the general indictment as 
 engaged in the impossible task of trying to serve 
 God and Mammon. 
 
 So many and so great are the evils connected 
 with or attributed to capitalism, that if one looks 
 only at the shady side of it, as socialists commonly 
 do, one finds it very dark. If, on the other hand, 
 one looks at the silver lining of capitalism, one 
 finds that it is bright with great achievements and 
 with promise of still better things. 
 
124 MARXIAN THEORY OF SURPLUS VALUE 
 
 The Benefits of Capitalism. Capitalism has 
 been the chief cause of the vast improvement 
 in social conditions that has made the 19th 
 century notable in the history of mankind. It 
 has explored and settled the wilderness, has im- 
 proved land, and developed mines. It has built 
 roads, bridges and canals. It has unified the 
 world by steamships, railroads and telegraph 
 lines. It has built great cities where millions of 
 people are fed, clothed and sheltered in a degree 
 of comfort unknown to the aristocrats of former 
 times. It has created schools, colleges, libraries, 
 hospitals, parks, playgrounds, and a thousand 
 agencies for the betterment of social conditions. 
 
 Capitalism has increased wages, decreased 
 hours and improved conditions of labor in many 
 ways. It has greatly reduced the death-rate, 
 thus increasing the average duration of human 
 life. It has improved morality, abolished famine 
 and pestilence, and mitigated the horrors of war. 
 It has elevated the working class to the level of 
 the middle class of two hundred years ago, and 
 the middle class it has raised to the level of the 
 nobles and princes of those days. 
 
 The countries where capitalism has most pre- 
 vailed are the countries where the laboring man 
 receives the highest wages and maintains the 
 highest standard of living. The countries where 
 capitalism has done least, such as China, India 
 
MARXIAN THEORY OF SURPLUS VALUE 125 
 
 and Russia, are the countries where wages are 
 lowest, where the laboring man is ever on the 
 verge of starvation, and where he is most exploit- 
 ed by the merchant, the money lender and the 
 government official. 
 
 Capitalism, with all its faults, has done great 
 things for the western world, and will do still 
 more, unless the social revolutionists, running 
 amuck, succeed in breaking up the system. If 
 they do, there will be no land owners, no capi- 
 talists, no business men, neither rent, interest, 
 profits, nor surplus value of any other kind. The 
 old economic order, the product of centuries of 
 industrial evolution, will be gone, and the prole- 
 tariat will set itself to the laborious, slow and 
 painful task of creating a new social order out 
 of the ruins of the old. While this work of recon- 
 struction is going on, doubtless millions of people 
 will die of starvation, but, as the revolutionists 
 would say, what will that matter in a thousand 
 years? 
 
 If, on the other hand, the working class listens 
 to counsels of moderation and prudence, they 
 will refuse to destroy what they may not be able 
 to build again. They will watch and wait for the 
 outcome of the great Russian experiment, and 
 for the results of governmental and co-operative 
 effort in their own countries. If governments 
 and co-operative societies show themselves able to 
 
126 MARXIAN THEORY OF SURPLUS VALUE 
 
 compete with private enterprise in producing 
 better results at a lower cost, then these associa- 
 tions, controlled, no doubt, by the working class, 
 will possess the field, by virtue of superior effi- 
 ciency, and the socialist ideal will be realized by 
 a process of slow and continuous evolution. 
 
 But if not, capitalism will continue to exist, 
 and the working class will find it to their advan- 
 tage to preserve and foster it, while at the same 
 time doing their utmost to remove abuses and to 
 secure as large a share in the joint product as 
 they can without injury to the industrial system 
 of which they are a part. The working class, no 
 longer the exploited, will protect and cherish 
 capitalism as they would a cow for its milk, or 
 the fabled goose for its golden eggs. 
 
VII 
 
 SOCIALIST ECONOMICS OF 
 MACHINERY 
 
 The use of machinery is the most characteristic 
 feature of modern industry. Countries like 
 China, where nearly everything is done by hand, 
 are still, in so far as industry is concerned, in the 
 ancient or mediaeval period of their history. In 
 fact, modern industry is of very recent origin, 
 dating from the Industrial Revolution, which 
 began in England toward the end of the 18th 
 century, and presently spread to other western 
 countries. 
 
 The change was brought about by the inven- 
 tion of such machines as the spinning- jenny, the 
 power loom, the cotton gin and the steam engine. 
 Since that time revolutionary changes have been 
 made in almost every field of industry by the in- 
 vention of the steamship, the locomotive engine, 
 the steam hammer, the steam shovel, the tele- 
 graph, the telephone, the sewing machine, the 
 mowing machine, the printing press, the type- 
 writer, the linotype, the calculating machine, the 
 gas engine, the automobile, the elevator, the 
 machine drill, the steam turbine, the bottle-blow- 
 
 127 
 
128 SOCIALIST ECONOMICS OF MACHINERY 
 
 ing machine, and a host of other labor-saving 
 machines, with innumerable methods, processes, 
 devices and systems of organization closely con- 
 nected therewith. Wherever possible and profit- 
 able, machines are used instead of men, and it 
 almost looks as though the time were coming 
 when human labor would be no longer needed 
 and machine-owning capitalists would possess 
 the earth. 
 
 Marx's Views on Machinery. Orthodox so- 
 cialists profess themselves unable to see any 
 benefit to the laboring class arising from the use 
 of machinery, so long as it remains in private 
 hands. Their views are substantially the same as 
 those of Marx as expounded in the first volume 
 of "Capital," and may be stated as follows: 1 
 
 (1) Machinery increases the product of in- 
 dustry, but the surplus goes to the employer in 
 the form of larger profits and not to the laborer 
 as higher wages. Wages are determined by the 
 cost of subsistence of the working class and not 
 by the productivity of their labor; therefore, to 
 increase the product of industry is to increase 
 exploitation without improving the condition of 
 the working class. Marx says: "Like every 
 other increase in the productiveness of labor, 
 machinery is intended to cheapen commodities, 
 and, by shortening that portion of the working- 
 
 i Capital, Part IV. 
 
SOCIALIST ECONOMICS OF MACHINERY 129 
 
 day in which the laborer works for himself, to 
 lengthen the other portion that he gives, without 
 an equivalent, to the capitalist. In short, it 
 is a means for producing surplus value." * 
 
 Again, wages are paid out of "variable 
 capital," consisting of food, clothing, shelter, 
 and other consumable goods. Now, to increase 
 machinery is to multiply "constant capital," 
 which cannot be used in payment of wages, 
 while variable capital relatively declines. If, 
 then, the fund out of which wages are paid 
 relatively decreases, while the working popula- 
 tion goes on increasing, as women and children 
 are thrown on the labor market, it is clear that 
 wages per worker must fall, and only the toil 
 of several members of his family can save the 
 laborer from destruction. 
 
 (2) Machinery constantly displaces labor, 
 creating a vast number of unemployed workers, 
 the "industrial reserve army," whose desperate 
 struggle for work depresses the wages of the 
 employed, thus increasing the misery and deg- 
 radation of the whole working class, and recruit- 
 ing the ranks of paupers and criminals. With 
 regard to the introduction of the power loom, 
 Marx says: "History discloses no tragedy more 
 horrible than the gradual extinction of the hand- 
 loom weavers." 2 
 
 i Capital, p. 365. 2 Hid., p. 431. 
 
130 SOCIALIST ECONOMICS OF MACHINERY 
 
 He thinks, too, that capitalists wish to perpet- 
 uate this fearful condition of affairs in order 
 that they may have abundance of cheap labor. 
 He says again: "The whole form of the move- 
 ment of modern industry depends upon the 
 constant transformation of a part of the labor- 
 ing population into unemployed, or half-em- 
 ployed hands." 
 
 (3) "Machinery," says Marx, "is the surest 
 means of lengthening the working day," since it 
 is unproductive while idle, and the capitalist 
 naturally desires to keep such expensive equip- 
 ment working all the time. Machinery also in- 
 creases the intensity of labor, thus reducing 
 necessary labor-time, or the time needed to pro- 
 duce the laborer's means of subsistence, and in- 
 creasing surplus labor-time and the product of 
 it, which is surplus value. 
 
 (4) Machinery is the chief cause of the ex- 
 treme specialization of labor, which makes a man 
 the slave of a machine, increases the monotony 
 of labor, and has a narrowing influence on the 
 laborer, both physically and mentally. 
 
 (5) Machinery, by reducing the importance 
 of muscular power, makes possible the employ- 
 ment of women and children, thus displacing 
 men and reducing the wages of the family as a 
 whole to the level of the former wages of the 
 man alone. At the same time three or four 
 
SOCIALIST ECONOMICS OF MACHINERY 131 
 
 workers are exploited instead of one, so that 
 surplus value is greatly increased. 
 
 (6) Machinery increases the number of "un- 
 productive" laborers, such as domestic servants, 
 clergymen, physicians, teachers, actors and musi- 
 cians, the "modern domestic slaves," who render 
 personal services to the rich, but do little or noth- 
 ing for the public good. 
 
 (7) Machinery creates a mass of products for 
 which there is no demand, because the working 
 class, with their decreased wages, are unable to 
 buy them, and this is the chief cause of the 
 periodical crises so characteristic of modern 
 capitalism. 
 
 (8) These evils belong not to the use of ma- 
 chinery as such, but to the private ownership of 
 it, and will disappear when machinery and all 
 other capital are owned and operated by the 
 working class. 
 
 A Plausible Case. Such are some of the ar- 
 guments used by socialists against the "capital- 
 istic employment of machinery." In every case 
 there is a certain amount of truth in their con- 
 tention, enough to give the entire argument an 
 appearance of truth without the substance of it. 
 In fact, Marx's treatment of this important sub- 
 ject is full of contradictions, his interpretation of 
 the facts being colored and perverted by his pre- 
 
132 SOCIALIST ECONOMICS OF MACHINERY 
 
 conceived theories of value, surplus value and 
 increasing misery. 
 
 No doubt, the use of labor-saving machinery 
 has enriched many enterprising capitalists, espe- 
 cially those who have first introduced the various 
 improvements. While doing this, however, it 
 has brought great and permanent benefits to the 
 laboring class, enabling them to maintain a stand- 
 ard of comfort possible only to those who live 
 in highly capitalized countries. A brief exami- 
 nation of the socialists' arguments will show the 
 essential weakness of their position. 
 
 Contradictions. When socialists admit, 
 though grudgingly, that machinery increases the 
 product of industry, they admit, in effect, that 
 the employers cannot keep all of the values there- 
 by created. The product per laborer being in- 
 creased, the market value of labor tends to rise, 
 inasmuch as demand for labor, which proceeds 
 from the supply of the product, has increased 
 more rapidly than the supply of labor. 
 
 Except where machinery is temporarily mo- 
 nopolized, as by patents or trade secrets, competi- 
 tion between employers causes prices to fall and 
 wages to rise, so that much of the increased prod- 
 uct goes to the laborers in the form of increased 
 money wages and reduced cost of living. To say 
 that the income of the laborer's family must re- 
 main the same and even diminish, regardless of 
 
SOCIALIST ECONOMICS OF MACHINERY 133 
 
 the volume of the product, the labor of wife and 
 children, or the increased efficiency of labor, is 
 to appeal to the subsistence theory of wages and 
 the "law" of increasing misery, back of which 
 is the Malthusian theory of population, which 
 Marx ridicules. 
 
 The distinction made by Marx between con- 
 stant and variable capital is very important, but 
 leads to conclusions quite contrary to those 
 drawn by him. Buildings, ships, railways, ma- 
 chinery, and other constant capital, cannot in- 
 crease without a corresponding increase in wheat, 
 flour, bread, cattle, beef, fish, building materials, 
 houses, cotton, woolen and leather goods, and all 
 the forms of variable capital available as food, 
 clothing and shelter for the working class. Con- 
 stant capital exists for the sake of producing 
 variable capital; it is a means to that end. 
 
 Moreover, it is in the production of cheap 
 cottons, woolens, shoes, and other staple articles, 
 such as the poor consume, that machinery is most 
 used, and not in producing luxuries for the rich, 
 which are more commonly made by hand. If, 
 then, variable capital increases more rapidly than 
 the number of laborers, it follows that the value 
 of labor must rise, while the value of commodi- 
 ties relatively falls. In other words, a given 
 quantity of labor must exchange for a larger 
 quantity of commodities than it did before. 
 
134 SOCIALIST ECONOMICS OF MACHINERY 
 
 Marx practically admits this when he says: 
 "In proportion as capitalistic production is de- 
 veloped in a country, in the same proportion 
 does the natural intensity and productivity of 
 labor there rise about the international level; 
 therefore, nominal wages will be higher, but not 
 necessarily real wages." * 
 
 Now it is clear that real wages also will be 
 higher, since the price of machine-made com- 
 modities will fall. In fact, barring abnormal 
 price movements, such as those caused by the 
 World War, real wages, or the purchasing power 
 of wages, have risen in England, Germany, the 
 United States, and all machine-using countries, 
 while stagnation and poverty characterize the 
 more backward countries, like most parts of Asia, 
 where nearly everything is done by hand. 
 
 This is so well understood in England that the 
 socialist writers Sidney and Beatrice Webb, say 
 in their "Industrial Democracy:" "It is not the 
 individual capitalist, but the trade union which 
 most strenuously insists on having the very latest 
 improvements in machinery." 2 
 
 Machinery May Displace Labor. Labor-sav- 
 ing machinery is labor-displacing, but usually 
 only for a time. As a rule, when improved 
 machinery is introduced in a given industry, 
 
 1 Capital (Sonnenschein, publisher), p. 571. 
 
 2 Industrial Democracy, p. 413. 
 
SOCIALIST ECONOMICS OF MACHINERY 135 
 
 such an expansion of the business results that 
 presently more workers are employed than ever 
 before. Thus, in the year 1820 there were about 
 111,000 operatives employed in the cotton-spin- 
 ning mills in England, and in the year 1880 
 about 240,000 were thus employed, and at much 
 higher wages. 
 
 In 1880 there were in the United States 
 3,800,000 persons engaged in manufacturing and 
 mechanical pursuits, and in the year 1910 there 
 were 10,800,000 persons employed in those in- 
 dustries. In 1880 there were 72,700 printers, 
 lithographers and pressmen in the United States, 
 and in 1910 they numbered over 206,000, in spite 
 of the introduction of the linotype and other 
 labor-saving machines. 
 
 It is often said that the trusts, by their labor- 
 saving organization, have displaced thousands 
 of commercial travelers, but the United States 
 census seems to show that there were 58,000 com- 
 mercial travelers in 1890, and no less than 163,- 
 000 in the year 1910, being an increase of 180 
 per cent, while the population of the country has 
 increased by only 65 per cent. 
 
 No doubt there has been great hardship con- 
 nected with the destruction of handicrafts by 
 machine methods, but such revolutionary changes 
 are neither so frequent nor so important as they 
 were at the beginning of the 19th century. 
 
136 SOCIALIST ECONOMICS or MACHINERY 
 
 Even then, much of the misery that the hand 
 workers of England suffered might have been 
 prevented had they known how to adapt them- 
 selves to the new conditions, as organized workers 
 are usually able to do. While in certain districts 
 hand-loom weavers were starving, in other places 
 there was a growing demand for workers in the 
 new cotton and woolen factories, particularly in 
 the north and west of England. The Webbs go 
 so far as to say: "The really cruel stages of all 
 
 this suffering are needless We have 
 
 failed to discover a single instance of superses- 
 sion by machinery in which it would not have 
 been possible for the superseded handicraft at 
 least to have died a painless death. There are 
 industries which have been changed by machinery 
 as thoroughly as weaving, but in which, owing 
 to the enforcement of a different policy by the 
 trade unions concerned, the hand-workers have 
 not only survived, but are to-day busier, more 
 highly paid, and more skillful than ever they 
 were before." * 
 
 Nor can it be shown that employment is more 
 irregular than formerly. During the Middle 
 Ages all classes of society were dependent upon 
 the crops, which depended upon the weather, 
 than which nothing could be more variable and 
 irregular. Famines were common, so that not 
 
 i Industrial Democracy, p. 417. 
 
SOCIALIST ECONOMICS OF MACHINERY 137 
 
 only was there frequent stagnation of business 
 and scarcity of employment, but myriads of 
 people died of starvation and pestilence. 
 
 In these days of improved transportation, 
 when the world produces for a world market, 
 famines are almost unknown, except in non-capi- 
 talistic countries, and most of the workers in the 
 industrial army are employed most of the time, 
 while practically all of the unemployed, the un- 
 employable excepted, are unemployed only a 
 small part of the time. 
 
 The best figures on this subject are those of 
 the British trade unions, which show that the 
 mean annual percentages of unemployed union- 
 ists in four principal industrial groups varied 
 from 1.15 per cent in 1873 to 10.70 per cent in 
 1879, the most common percentages being in 
 the neighborhood of 4s or 5 per cent. In the 
 early years of the 20th century, the percentages 
 varied from a minimum of 2.85 in 1900 to 6.80 
 in 1904 and 4.30 in 1907. 1 
 
 Statistics of unemployment in the United 
 States are incomplete and unsatisfactory, but 
 such as there are seem to show that fluctuations 
 in employment in the State of New York and in 
 Massachusetts are much greater than in Great 
 Britain, perhaps because of extreme climatic and 
 
 i W. H. Beveridge, Unemployment, p. 39. A. C. Pigon, Unem- 
 ployment, p. 28. 
 
138 SOCIALIST ECONOMICS OF MACHINERY 
 
 seasonal changes, and the congestion of popula- 
 tion, especially recent immigrants, in the eastern 
 cities. The Massachusetts statistics as to em- 
 ployment of organized workers show that from 
 1909 to 1918 unemployment varied from 3 per 
 cent for the quarter ending June 29, 1918, to 
 18.3 per cent for the quarter ending December 
 31, 1914. 1 
 
 Certainly, unemployment is all too prevalent 
 in this country, especially in the winter months, 
 but it cannot be attributed to the use of ma- 
 chinery nor to conspiracy on the part of employ- 
 ers. As Marx himself says, capitalists desire to 
 have their capital constantly employed. Capital 
 seeks labor just as labor seeks capital, and the 
 fact that they do not always meet must be due 
 to imperfect organization of industry and im- 
 perfect foresight of future industrial conditions. 
 
 As production becomes more scientific and 
 organization more perfect, there will doubtless 
 be less idle capital and fewer idle workers, and 
 improvements in machinery and methods will be 
 introduced without the loss and distress that so 
 often accompany them at the present time. 
 
 Machinery Makes for Shorter Day. What 
 Marx says about machinery in relation to the 
 hours of labor is but a half-truth, neglecting the 
 
 i F. T. Carlton, The History and Problems of Organized Labor, 
 pp. 507-510. 
 
SOCIALIST ECONOMICS OF MACHINERY 139 
 
 influence of trade unions and other forces mak- 
 ing for a shorter working day. In fact, ma- 
 chinery has made possible the shorter day, and 
 in many lines of business both employers and 
 employees work together to that end. It is fre- 
 quently unprofitable to run machinery day and 
 night, but in any case it is usually better to work 
 shifts than to prolong hours. 
 
 A man, week in and week out, can do more in 
 ten hours than in twelve or fifteen, and in many 
 industries he can do as much in eight hours as in 
 ten. An English manufacturer, Lord Lever- 
 hulme, has introduced a six-hour day in his soap 
 factories at Port Sunlight, and believes that 
 many other manufacturers will find his system of 
 two six-hour shifts preferable to a single shift of 
 eight hours. 
 
 Machinery Not a Blight. The narrowing in- 
 fluence of machinery upon the worker has been 
 greatly exaggerated. A higher degree of intel- 
 ligence is required to operate complicated ma- 
 chinery than to work with simple tools. The 
 locomotive engineer is a man of broader gauge 
 than a cab-driver, and a farmer who runs a mow- 
 ing machine requires more intelligence than his 
 predecessor who used to cut hay with a scythe. 
 
 The specialist may have a small task to per- 
 form, but he may be a good workman in several 
 other lines, and often has a general mechanical 
 
140 SOCIALIST ECONOMICS OF MACHINERY 
 
 training as well. Besides, the life of a worker in 
 a great factory is in many respects broader than 
 that of the handicraftsman in his little shop. The 
 modern workman, too, often enjoying consider- 
 able leisure, has the broadening influence of the 
 public school, the library, the trade union, the 
 lodge, the institutional church, and the athletic 
 club, so that, both mentally and physically, he is, 
 or may be, the superior of the artisan of former 
 times. 
 
 Men Not Displaced by Women. Women and 
 children, while they may displace men in certain 
 fields of work, can never displace them from the 
 industrial army so long as most occupations de- 
 mand strength, endurance, and other qualities 
 which men possess in a pre-eminent degree. 
 
 Machinery has increased the demand for men, 
 while at the same time making places for women, 
 with the result that the total product of industry 
 has been greatly increased. Wages are paid 
 out of the product of industry, and women 
 workers, creating at least as much as they receive, 
 have not diminished the share receivable by men. 
 
 In the year 1890 the number of women and 
 girls engaged in gainful occupations in the 
 United States was, in round numbers, 4,000,000, 
 and in the year 1910 they numbered 8,000,000. 
 If these women could not earn their own living, 
 in whole or in part, they would be a burden upon 
 
SOCIALIST ECONOMICS OF MACHINERY 141 
 
 their male relatives, and the nation's income 
 would be reduced by the amount of the commodi- 
 ties produced and the services rendered by them. 
 That men have not been displaced by the in- 
 creased employment of women is shown by the 
 fact that in the year 1910 there were 30,000,000 
 males engaged in gainful occupations, as against 
 19,000,000 in the year 1890. In the year 1910, 
 therefore, there were over 38,000,000 people en- 
 gaged in gainful occupations out of a total 
 population of 91,000,000, or an average of about 
 two bread-winners to every five persons. * 
 
 The theory that the income of a family is no 
 greater when several members work than when 
 the burden of their support falls on the man 
 alone, is a modification of the Malthusian theory 
 of population and quite contrary to experience 
 and common sense. It may apply, possibly, to 
 certain restricted localities, or to certain Asiatic 
 countries, where every betterment of the laborer's 
 lot results in early marriages and rapid increase 
 of population, but it has not been true of the 
 western world in general during the past hun- 
 dred years. 
 
 Domestic and Professional Workers. Do- 
 mestic servants are relatively decreasing in 
 numbers, while their wages are rapidly increas- 
 
 i Thirteenth Census of the United States (1910), Vol IV. 
 Occupation Statistics. 
 
142 SOCIALIST ECONOMICS OF MACHINERY 
 
 ing, as every employer of that sort of labor 
 knows to his cost. From 1890 to 1910 the num- 
 ber of "servants and waiters" increased by only 
 27 per cent, while the working population in the 
 same time increased by 60 per cent. In fact, the 
 wages of domestic servants are a good index of 
 the increasing prosperity of the working class, 
 and a convincing refutation of the "law" of in- 
 creasing misery. 
 
 Clergymen, physicians, teachers, artists and 
 other persons who render professional and per- 
 sonal service are as productive as any labor- 
 ers, even though they may not directly create 
 material wealth. Also, they serve the working 
 class more and more, for the increased produc- 
 tivity of modern industry has made it possible for 
 the poorest wage-earners to have something more 
 than the bare necessaries of life. 
 
 The socialist theory that industrial crises are 
 traceable to over - production of consumable 
 goods and the decreasing purchasing power of 
 the working class has been often refuted and will 
 be considered in detail in the next chapter. 
 
 While it would be absurd to deny that there 
 are evils connected with the private ownership 
 and use of machinery, it is equally absurd to say 
 that these evils must grow worse and worse, until 
 they destroy the capitalism that engendered 
 them, and reveal a new and almost perfect social 
 
SOCIALIST ECONOMICS OF MACHINERY 143 
 
 order emerging from the outworn shell of the old. 
 Socialists, with all their historical sense, habit- 
 ually glorify the remote past and the distant 
 future, but look upon the present with an evil 
 eye. If they could see the world as it is, in the 
 right perspective and with its lights and shadows, 
 they would know that the wage-earners of to- 
 day, with all their troubles, are more prosperous, 
 more intelligent, and more independent than 
 their predecessors of any former time. 
 
 He who thinks of the future in sober reason, 
 undazzled by impracticable ideals, must see that 
 the progress of the working class is likely to be 
 made, not by following by-paths and vain lures, 
 but by keeping pretty well to the beaten track, 
 and giving due heed to the old landmarks which 
 the fathers have set. 
 
 Perhaps the path will broaden out and become 
 less arduous as time goes on, although, if all dif- 
 ficulties were to disappear, we might justly sus- 
 pect that we were going down the broad and easy 
 road that leads to destruction. In any case, it 
 is well to keep our eyes open, that we may, if 
 possible, see the direction in which we are mov- 
 ing, for, as Bishop Butler finely says: "Things 
 and actions are what they are, and the conse- 
 quences of them will be what they will be ; why, 
 then, should we desire to be deceived?" 
 
 1 Sermons at the 'Rolls. 
 
ym 
 
 THE SOCIALIST THEORY OF 
 CRISES 
 
 Socialists have little to say about the financial 
 features of crises, which loom so large at the 
 present day, but they have a clear-cut and very 
 simple theory of industrial crises, derived from 
 the predecessors of Marx: Fourier, Sismondi and 
 Rodbertus. According to this explanation, crises 
 are due to the enormous productiveness of mod- 
 ern machine industry, coupled with the increas- 
 ing misery of the working class. Rodbertus 
 says: "With increasing productiveness of the 
 labor of society, the wages of the laboring class 
 become an ever smaller portion of the national 
 product. . . . The productiveness of labor has 
 increased and continues to increase, while the 
 quantitative sum of wages has at best not in- 
 creased in like proportion, has perhaps remained 
 stationary or even fallen." * 
 
 It is a question of supply and demand, the 
 
 i K. J. Rodbertus, Overproduction and Crises, 1850. Translated 
 by Julia Franklin, 1898, pp. 71, 73. 
 
 144 
 
SOCIALIST THEORY OF CRISES 145 
 
 supply increasing with every improvement in 
 machinery and methods, the demand falling off 
 because the mass of the people cannot buy, their 
 wages being kept down to the level of bare sub- 
 sistence. Presently there is a glut or surplus 
 culminating about once in ten years in a crisis 
 or panic, followed by a period of depression, then 
 by a time of prosperity leading up to another 
 crisis more disastrous than the former, and thus 
 decade after decade capitalism suffers from 
 periodic attacks of an incurable disease. 
 
 Rodbertus held that crises could be abolished 
 by giving to the working class the full product 
 of their labor, so that consumption might keep 
 pace with production, demand with supply. He 
 said that unless society should wake up to the 
 necessity of securing this ideal distribution of 
 income, "history will indeed have to swing the 
 lash of revolution over her again." 1 
 
 Marxian View of Crises. Marxian socialists 
 think that capitalism cannot cure its own dis- 
 eases, and that crises will increase in frequency 
 and violence until the final collapse of the decay- 
 ing system in which they rage like an intermittent 
 fever. Engels says: "The mode of production 
 rises in rebellion against the form of exchange. 
 The bourgeoisie are convicted of incapacity 
 further to manage their own productive forces. 
 
 i Rodbertus, op. cit., p. 140. 
 
146 SOCIALIST THEORY OF CRISES 
 
 The proletariat seizes political power and turns 
 the means of production into state property." 1 
 
 Engels did not altogether follow the theory of 
 Rodbertus, and even attacked it, laying more 
 stress upon "anarchy of production" as the chief 
 feature of competitive capitalism. This anarchy, 
 however, results in planless, excessive produc- 
 tion, so that he comes back to overproduction and 
 underconsumption as the basic causes of indus- 
 trial crises. He says : "The enormous expansive 
 force of modern industry, compared with which 
 that of gases is mere child's play, appears to us 
 now as a necessity for expansion, both qualitative 
 and quantitative, that laughs at all resistance. 
 . . . The extension of the markets cannot keep 
 pace with extension of production, the collisions 
 become periodic" 2 
 
 The position of Marx in this regard is some- 
 what doubtful and even contradictory. In the 
 second volume of "Capital" he ridicules the 
 theory of Rodbertus thus: "It is mere tautology 
 to say that crises are due to lack of consumers 
 who are able to pay for what they want. . . . 
 Crises in each instance are engendered in times 
 in which wages, as a rule, are rising and the work- 
 ing class is actually retaining a larger share of 
 
 1 F. Engela, Socialism, Utopian and Scientific ( Sonnenschein, 
 publisher ) . 
 
 2 Ibid., p. 41. 
 
SOCIALIST THEORY OF CRISES 147 
 
 the part of the yearly products which is destined 
 for general consumption." 
 
 But in the third volume he says: "The ulti- 
 mate cause of all real crises always remains the 
 poverty and restricted consumption of the mas- 
 ses as compared with the tendency of capitalist 
 production to develop the productive forces in 
 such a way that only the absolute power of con- 
 sumption of the entire society would be their 
 limit." 2 
 
 Notwithstanding such contradictions, which 
 are as common in the works of Marx as he im- 
 agines them to be in capitalism itself, the theory 
 of Rodbertus, with minor modifications, has re- 
 mained the orthodox Marxian view until the 
 present day. Thus, L. B. Boudin, in "The 
 Theoretical System of Karl Marx" (1907) says: 
 "Anarchy in production is not the chief cause of 
 crises according to Marx. . . . This cause is 
 the inherent contradiction of the capitalist sys- 
 tem, the dual position of the laborer as a seller of 
 his labor-power and a purchaser of the products 
 of his labor-power, and the creation of a surplus 
 product flowing therefrom which must result in 
 an over-production of commodities quite apart 
 from the anarchy of production." 
 
 i Cited by Simkhovitch, Marxism versus Socialism, p. 230. 
 
 2/6irf., p. 231. 
 
 s L. B. Boudin, op. cit., p. 238. 
 
148 SOCIALIST THEORY or CRISES 
 
 Foreign Commerce. In recent years socialists 
 have called attention to foreign commerce as 
 making an outlet for the surplus products of 
 capitalistic countries. In this way, they say, the 
 downfall of capitalism will be postponed until 
 the markets of Russia, China, South America, 
 Africa, and other backward countries are as 
 fully exploited as those of western Europe and 
 the United States. 
 
 Then there will be for capitalism no more 
 worlds to conquer, no other outlet for surplus 
 products, which will quickly accumulate until 
 there shall be in every line an enormous over- 
 production, when the most fearful crisis in his- 
 tory will occur, involving the final and utter 
 collapse of capitalism. Then the proletarians 
 of the world will take control and reconstruct 
 society on the new foundation of international 
 collectivism. 
 
 Victor Berger, in his testimony before the 
 Committee on Elections of the House of Repre- 
 sentatives on July 24, 1919; made much of this 
 struggle for world markets, declaring it to be 
 the chief cause of the World War. He said: 
 "Every manufacturing country was and is in 
 the same boat as we are looking for markets 
 to sell their surplus products. Not in any coun- 
 try and under no circumstances can the pro- 
 ducers get money enough to buy back the prod- 
 
SOCIALIST THEORY OF CRISES 149 
 
 ucts of the country under the capitalist system. 
 No matter what we do we cannot get rid of all 
 our surplus production we can't sell it ; there is 
 not market enough for it in the world." 
 
 The inference is clear. Capitalism in every 
 country, trying to escape from itself, carries its 
 contradictions and conflicts to every part of 
 the world, only to find itself pursued by the evil 
 genius of the system. Sooner or later the 
 avenger will overtake it, and the old order, 
 economic and political, capitalistic and imperial- 
 istic, will go down to ruin. 
 
 In all this can be seen the strange consistency 
 and inconsistency of "scientific" socialism con- 
 sistent with itself as a great product of the im- 
 agination, but quite inconsistent with the facts 
 which it is supposed to explain. 
 
 The socialist theory of crises is in perfect 
 harmony with the rest of the Marxian system. It 
 goes back to Hegel in that it is an expression of 
 revolutionary dialectics, which finds contradic- 
 tions everywhere, especially in capitalistic so- 
 ciety. Capitalism, in this view, is torn and 
 shaken by contradictions generated by the con- 
 ditions of production and exchange. We have 
 value created by labor and surplus value seized* 
 by the capitalist, socialized production and indi- 
 vidualized distribution, few magnates and many 
 proletarians, concentration of wealth and increas- 
 
150 SOCIALIST THEORY OF CRISES 
 
 ing misery, increasing production and decreasing 
 consumption, expansion of supply and contrac- 
 tion of demand all pointing to the breakdown 
 of capitalism, the intensification of the class 
 struggle, and the speedy coming of the social 
 revolution. 
 
 Here are suggested two ways in which the end 
 of the capitalist world might come: first, by the 
 expansive and explosive power of modern in- 
 dustry; second, by the action, direct or indirect, 
 of the working class. The theory of crises, of 
 course, lays stress upon the former, but by no 
 means exclude the latter. 
 
 Socialist Theory Is False. In criticism of 
 this theory it may be said that while overproduc- 
 tion of consumption goods in many lines, though 
 not in all, invariably accompanies an industrial 
 crisis, the cause of it is not the increasing pov- 
 erty of the working class, but an accumulation of 
 mistakes in production, traceable to the limita- 
 tions of human ability and prescience contending 
 with the difficulties and complexities and inces- 
 sant changes of the business world. Marx him- 
 self admits that the condition of the working 
 class improves during the time of prosperity 
 which precedes and gives rise to the crisis, thus 
 contradicting the central point of the socialist 
 theory. 
 
 As Tugan-Baranowsky, T. E. Burton, Lang- 
 
SOCIALIST THEORY OF CRISES 151 
 
 worthy Taylor, M. T. England, Wesley Mit- 
 chell, and many other authorities on this subject 
 have often shown, the causes of the crisis are to 
 be found in the period of prosperity which leads 
 up to it, when prices, wages, and profits are all 
 rising, where there is little unemployment, active 
 demand, and no glut or surplus of consumption 
 goods. Such overproduction as there is consists 
 rather in factories, machinery, railways, ships, 
 and other capital goods, which have not yet 
 yielded satisfactory returns upon the investment 
 because they have not created as large a sup- 
 ply of goods and services as was expected, or 
 because the demand, for various reasons, lags 
 behind. 
 
 Besides, there is the financial side of every 
 crisis, and some crises are more financial than in- 
 dustrial, so that the system of credit and banking, 
 practically ignored by orthodox socialists, has 
 far more to do with crises or panics than the 
 alleged increasing misery of the working class. 
 
 Self -Contradiction. Moreover, it can easily 
 be shown that the socialist theory of crises con- 
 tradicts itself. If we assume, with Rodbertus, 
 that the product of industry increases faster than 
 the sum of wages, then one of two things must 
 happen: the goods are sold or they are not sold. 
 If they are sold, they must be sold at a price 
 which will enable the workers to buy them, in 
 
152 SOCIALIST THEORY OF CRISES 
 
 which case prices fall, and the workers, whatever 
 their money wages, enjoy an increase in real 
 wages, by virtue of the abundance of the neces- 
 saries and comforts of life. 
 
 If, on the other hand, the goods are not sold, 
 there must be perpetual over-production and a 
 continual crisis, which is a contradiction in terms. 
 Perpetual over-production is impossible and con- 
 trary to experience, so that the increasing pro- 
 ductiveness of modern industry must and does 
 cause prices to fall and real wages to rise, while 
 business men and capitalists, as the process goes 
 on, must content themselves with smaller profits 
 and lower rates of interest. 
 
 Again, if we suppose, for sake of argument, 
 that the working class, because of increasing 
 misery, cannot buy, is it not absurd to suppose 
 that business men will go on producing, year 
 after year, commodities for which there is no 
 demand? Will they not rather, in view of the 
 stationary or declining demand for the neces- 
 saries of life, the things consumed by the work- 
 ing class, produce luxuries for their own class, 
 whose purchasing power is unlimited, or limited 
 only by the ever-increasing mass of surplus 
 value? 
 
 This, as a matter of fact, is what business men 
 do. They produce for the market, in response 
 to demand, which is controlled by the people who 
 
SOCIALIST THEORY OF CRISES 153 
 
 have purchasing power. If the wealthy have it, 
 and wish to spend rather than to invest, many 
 luxuries are produced ; if the working-class have 
 it, necessaries, comforts, and some luxuries will 
 be produced for them. Indeed, as has been 
 shown in the preceding chapter, modern machine 
 methods have notably increased the quantity and 
 reduced the price of the leading staples, which 
 are chiefly consumed by the laborers and the 
 middle class. 
 
 The force of this criticism cannot be evaded by 
 saying that the exporting of surplus products to 
 foreign lands postpones the final crisis and col- 
 lapse of capitalism. The embarrassing surplus 
 of unsalable goods of which they speak does not 
 exist. The so-called surplus is created in re- 
 sponse to foreign demand. If there were no 
 foreign demand the surplus would not be creat- 
 ed, except by accident or as the result of miscal- 
 culation of the home demand. 
 
 If the United States were shut out from all 
 the markets of the world, she would lose the 
 profits of her foreign trade, do without coffee, 
 rubber, tropical fruits, and other useful com- 
 modities, and would suffer hardship for a time, 
 but chronic over-production of cotton, wheat, 
 cattle and the like would not be the permanent 
 result. Before long production would be ad- 
 justed to demand, the elimination of foreign 
 
154? SOCIALIST THEORY OF CRISES 
 
 commerce might tend to reduce the severity of 
 crises, and farmers, manufacturers, merchants 
 and laborers, deprived of the advantage pre- 
 viously enjoyed, would cut their coat according 
 to their cloth. 
 
 The United States could get along fairly well 
 without foreign commerce; but England, Bel- 
 gium and other populous manufacturing coun- 
 tries absolutely need the foodstuffs of other 
 countries to feed their people, millions of whom 
 would die if isolated from the rest of the world. 
 Therefore, capitalism is not the chief power im- 
 pelling nations to seek foreign markets, to ac- 
 quire colonies, and, at times, to make war for 
 the attainment of these ends. Manufacturers 
 and merchants are but the agents of the people 
 in carrying on these activities, although, of 
 course, they are fighting for their own hand. A 
 socialist England, under the same pressure of 
 population, might be even more militaristic and 
 navalistic than the bourgeois England of the 
 present day. Indeed, there is reason to think 
 that capitalism, with its network of international 
 connections, is more pacifistic than any socialist 
 nation would be, with its aggressive propaganda 
 for the conversion of the world. 
 
 Socialist Prophecy Groundless. As to the 
 prophecy concerning the final crisis and end of 
 the capitalist world, it may justly be said that 
 
SOCIALIST THEORY OF CRISES 155 
 
 no part of socialist doctrine is more groundless 
 than this, nor any article of their creed more 
 plainly due to what philosophers call "the will 
 to believe." 
 
 Crises, as is well known, are characteristic of 
 periods of development and progress, and not 
 of times of conservatism and attainment. While 
 the world is being exploited and developed, and 
 the nations are competing with one another for 
 the largest possible share in this growing and 
 profitable trade, periods of rapid development 
 are sure to be followed by times of crisis and de- 
 pression. But when these pioneer days come to 
 an end, international commerce will probably 
 settle down to comparatively steady and regular 
 business, without the enthusiasms, risks and 
 losses of those adventurous times. 
 
 Orthodox socialists have been expecting the 
 end of the capitalist world for a long time, and 
 every industrial and financial crisis makes them 
 think that the day of wrath is at hand. Shortly 
 after the world crisis of the early 'nineties, the 
 International Socialist Congress of 1896 passed 
 the following resolution: "The economic and 
 industrial development is going on with such 
 rapidity that a crisis may occur within a com- 
 paratively short time. The Congress, therefore, 
 impresses upon the proletariat of all countries 
 the imperative necessity of learning, as class-con- 
 
156 SOCIALIST THEORY OF CRISES 
 
 scious citizens, how to administer the business 
 of their respective countries for the common 
 good." x 
 
 But after that time there was no world crisis 
 of the first magnitude until the year 1914, when 
 the World War broke out, and even then capi- 
 talism did not collapse, but rose to the occasion 
 in a most extraordinary way, carrying the na- 
 tions along through more than four years of 
 war and three years of slow and painful re- 
 cuperation. 
 
 The Present Crisis. The crisis which is now 
 on, and which may be followed by years of de- 
 pression, was not caused by the increasing misery 
 of the working class, but was the natural result 
 of great inflation, waste, piling up of debts and 
 credits, expansion and restriction of production 
 in many lines, and general dislocation of the 
 financial and industrial system. Nor is it likely 
 to result in the breakdown of capitalism, even 
 though it may be accomplished by widespread 
 bankruptcy, serious losses to business men and 
 other property owners, and much hardship 
 among the working class. 
 
 In spite of all that, the industrial structure, 
 like a damaged ant-hill or honeycomb, will be 
 built up again, much as before, unless, indeed, 
 the workers rebel against their leaders and try 
 
 i Bernstein, Zur Geschichte u. Theorie d. Socialismus, p. 221i 
 
SOCIALIST THEORY OF CRISES 157' 
 
 to set up a totally new system of control. This 
 would not be the predicted collapse of capitalism 
 by industrial crisis, according to the formula of 
 Rodbertus, but the final outcome of the class 
 struggle, the revolt of the proletariat, upon 
 which, when all else fails, Marxian socialists 
 take their final stand. 
 
 The fact is that capitalism, like a healthy liv- 
 ing organism, has wonderful powers of adapta- 
 tion to changing environment, and of recuper- 
 ation after severe strains and deathlike wounds. 
 Even before the War, the United States was 
 protecting itself against financial troubles by 
 improving the system of credit and banking, 
 especially through the Federal Reserve Act, 
 which took effect on November 16, 1914. When 
 the war broke out the monetary stringency was 
 relieved by the issue of emergency notes under 
 the Aldrich-Vreeland Act, which tided over the 
 idanger until the Federal Reserve Board had the 
 situation well in hand. The Board may have 
 made mistakes, but it has doubtless prevented a 
 serious financial crisis on more than one occasion. 
 
 Similarly, the European countries have car- 
 ried on four years and more of war without 
 financial collapse, by means of the moratorium, 
 the closing of stock and produce exchanges, ad- 
 vances by the great central banks, the issue of 
 emergency currency, and other devices. Even 
 
158 SOCIALIST THEORY or CRISES 
 
 if great financial disaster should come, the Allied 
 nations, at least, will not consider it too great a 
 price to pay for victory and peace. 
 
 Protective Tendencies. Nor would it be 
 hard to show that capitalism is protecting itself 
 against industrial crises also, by means of better 
 methods of promotion and investment, by scien- 
 tific production, by business education, by the 
 analysis of industrial conditions which makes a 
 certain degree of prediction possible, by co-oper- 
 ation among business men, and by the concen- 
 tration of ownership and control, which, if not 
 carried too far, may stabilize and regulate the 
 industrial organization, and give it a certain im- 
 munity from the worst effects of industrial 
 crises. This tendency is recognized by some 
 socialists, notably Bernstein, who says: "With- 
 out allowing myself to prophesy concerning the 
 final outcome of syndicates and trusts, I have 
 recognized the possibility of lessened danger 
 from crises because of the adaptation of produc- 
 tion to the needs of the market." * 
 
 Thus is brought to light another contradiction 
 in the Marxian system, between the theory of 
 anarchic or planless production, resulting in 
 crises, and the theory of the concentration of 
 capital resulting in increasing exploitation and 
 the rebellion of the working class. Unable to 
 
 i Bernstein, Die Voraussetzungen d. Socialismus (1899), p. 76. 
 
SOCIALIST THEORY OF CRISES 159 
 
 hold both of these inconsistent doctrines, most 
 socialists have ceased to look for the collapse of 
 capitalism by the way of over-production, and 
 center their hopes on the concentration of capi- 
 tal, the elimination of the middle class, and the 
 peaceful or violent uprising of the proletariat. 
 In fact, the overproduction and underconsump- 
 tion theory is so illogical and unsound, that it 
 would have been repudiated long ago, but for its 
 tactical value in socialist propaganda. 
 
IX 
 
 THE MARXIAN THEORY OF THE 
 
 CONCENTRATION OF 
 
 CAPITAL 
 
 Marxian socialism is scientific in intent, if not 
 in content, because it tries to formulate the laws 
 of social evolution and professes to see the new 
 social order growing, as an embryo, within the 
 body of the old. 
 
 The concentration of capital was partly ob- 
 served by Marx, but for the most part deduced 
 from the theories of value and surplus value in 
 terms of the Hegelian logic. In fact, the theory 
 proceeds so logically, step by step, from premise 
 to conclusion, that one suspects, at the very out- 
 set, that it has but slight relation to the facts in 
 the case. Certainly, the "law" of the accumula- 
 tion and concentration of capital was not proved 
 statistically, but thought out by Marx as a 
 mathematician derives one proposition after an- 
 other from preliminary definitions, axioms and 
 postulates. 
 
 The argument runs about like this: All value 
 is created by labor, which has the "peculiar" 
 
 160 
 
THEORY OF CONCENTRATION OF CAPITAL 161 
 
 power of creating more value than it receives. 
 This surplus value, stolen by the capitalists, 
 grows ever larger with every improvement in 
 machinery and methods of production, while the 
 misery of the working class increases more and 
 more. Wealth accumulates, because neither the 
 laborers nor the capitalists can consume it, and, 
 as competition grows fiercer, the big capitalists, 
 the most efficient, eat up the little ones. Thus 
 the middle class gradually disappears, and the 
 proletariat, the many, seeing great wealth in few 
 and feeble hands, take it away from them, as the 
 strong, in the struggle for existence, have always 
 done. 
 
 Marx 'Anticipated. Socialists often give 
 Marx credit for having prophesied the concen- 
 tration of capital as realized in the trusts and 
 combinations of the present day, but several 
 other writers had already done that. The bril- 
 liant French economist, Constantin Pecqueur, 
 in his "Economic Sociale" (2d ed., 1839), whose 
 work was well known to Marx, anticipated him 
 in a remarkable way, thus: "Everyone knows 
 that, in reality, in using steam to reduce the cost 
 of products and realize great advantages, it is 
 necessary to operate on a large scale, to use large 
 amounts of capital and a large number of work- 
 men ; in a word, to produce on a large, scale. . . . 
 One may readily infer that joint stock com- 
 
162 THEORY OF CONCENTRATION OF CAPITAL 
 
 panics or very rich individual capitalists and 
 manufacturers will swallow up the work of the 
 small producers, killing them off by competition 
 which is immeasurably unequal and cruelly piti- 
 less. . . . Either on the disappearance of small- 
 scale production the small producers will be 
 co-partners of the large concerns; or they will 
 degenerate into paid workmen, into a herd of 
 serfs working from day to day in factories ; into 
 proletarians, always poor, always without a fu- 
 ture; and all the large industries will be exclu- 
 sively monopolized by an industrial feudalism." l 
 The oft-quoted statement of Marx himself, 
 though strikingly eloquent, does not add much 
 to this. In "Capital" he says: "This expro- 
 priation is accomplished by the action of the 
 immanent laws of capitalistic production itself, 
 by the centralization of capital. One capitalist 
 always kills many. . . . Along with the con- 
 stantly diminishing number of the magnates of 
 capital who usurp and monopolize all advantages 
 of this process of transformation, grows the mass 
 of misery, oppression, slavery, degradation, ex- 
 ploitation; but with this too grows the revolt of 
 the working-class, a class always increasing in 
 numbers and disciplined, united, organized by 
 the very mechanism of the process of capitalist 
 
 i Cited in Simkhovitch, Marxism versus Socialism, p. 48. Cf. 
 Marx, Capital, p. 787. 
 
THEORY or CONCENTRATION OF CAPITAL 163 
 
 production itself. The monopoly of capital be- 
 comes a fetter upon the mode of production, 
 which has sprung up and flourished along with, 
 and under it. Centralization of the means of 
 production and socialization of labor at last 
 reach a point where they become incompatible 
 with their capitalist integument. This integu- 
 ment is burst asunder. The knell of capitalist 
 private capital sounds. The expropriators are 
 expropriated." 
 
 Agriculture. The concentration of capital, 
 simple as the concept may seem to be, has become 
 quite complex, including at least three more or 
 less distinct ideas: large-scale production in 
 single plants, the combination of a number of 
 plants into a trust or "combine," and the concen- 
 tration of wealth in the hands of a few magnates 
 of capital. Then, too, the degree of concentra- 
 tion varies greatly according to the nature of the 
 business, whether agriculture, mining, merchan- 
 dising, manufacture or transportation. 
 
 Marx detested peasants, as a class, regarding 
 them as the greatest obstacles in the way of 
 socialism. But, in his opinion, they were a van- 
 ishing race, destined to go down before the march 
 of capitalism. Engels expected the peasants of 
 western Europe to be ruined by Russian and 
 American competition, after which small hold- 
 
 i Capital, p. 788. 
 
164 THEORY OF CONCENTRATION OF CAPITAL 
 
 ings everywhere would be swallowed up by great 
 estates and bonanza farms. 
 
 Perhaps, if Marx and Engels had had more 
 experience of country life, they would have 
 understood the advantages of the small farm and 
 the extreme difficulty of applying capitalistic 
 methods to agriculture. At any rate, agricul- 
 tural statistics in all countries are quite at vari- 
 ance with the socialist prediction. 
 
 For example, in Germany, in the year 1882, 
 no less than 94.19 per cent of the farms were of 
 less than 20 hectares (50 acres), and 14,174,539 
 hectares out of a total of 31,868,972 hectares 
 were thus held. In the year 1895, the situation 
 was practically the same: 94.48 per cent of the 
 farms were under 20 hectares, and 45.57 per cent 
 of the total area consisted of such holdings. 1 
 
 The American farm is, of course, far larger 
 than the European, but it shows a tendency to 
 diminish in size. According to the United States 
 Census, the average size of farms in the year 
 1850 was 202.6 acres; in the year 1900 it was 
 146.2 acres; and by the year 1910 it had fallen to 
 138.1 acres. 2 
 
 True, the value of the average farm, including 
 buildings, machinery and livestock, in the year 
 1850 is given as $2,700, in 1900 it was $3,563, 
 
 Lgtatistik des Deutchen Reiches. N. F. Bd. 112, p. 11. Cf. 
 Skelton, Socialism, p. 159. 
 
 2 Thirteenth Census of the United States. Abstract. 
 
THEORY OF CONCENTRATION OF CAPITAL 165 
 
 and in 1910 it was $6,444. This, of course, in- 
 dicates the prosperity of the American farmer 
 rather than his approaching annihilation 
 
 A. M. Simons, in "The American Farmer" 
 (1903) and later writings, has tried to show that 
 the increase of tenancy and farm mortgages, to- 
 gether with the activities of banks, railway com- 
 panies, elevator, cold storage and packing com- 
 panies, and the like, have made the farmers more 
 dependent than formerly on the "big business" 
 of New York, Chicago, Minneapolis and other 
 great cities. 
 
 Apart from the fact that these various agen- 
 cies have been of immense benefit to the farmers, 
 especially in the West, this new interpretation of 
 concentration is very far-fetched and quite for- 
 eign to the thought of Marx. Certainly, this 
 great industry, the property values of which, in 
 the year 1910, were estimated at $46,000,000,000, 
 or about a fourth of the total wealth of the 
 United States, must be excluded from the "law" 
 of concentration until some time in the dim and 
 distant future. 
 
 Wholesale and Retail Trade. Then there is 
 another great field in which concentration, 
 though considerable, has fallen far short of the 
 socialist expectation, and that is wholesale and 
 retail trade. According to the United States 
 Census there were 42,326 "wholesale merchants 
 
166 THEORY OF CONCENTRATION OF CAPITAL 
 
 and dealers" in the year 1900, and no less than 
 64,166 people of this class in the year 1910. The 
 figures, of course, say nothing about the volume 
 of business done by these people. 
 
 Retail merchants have not multiplied so 
 rapidly as those calling themselves wholesalers, 
 but it is generally admitted, even by socialists, 
 that small merchants are holding their own very 
 well against the great department stores, the 
 chain stores and even the mail-order houses. The 
 number of "retail merchants and dealers" in the 
 United States increased from 790,886 in the year 
 1900 to 939,987 in 1910. 1 
 
 The Financial Power. As to railway trans- 
 portation, it is often said that about eight groups 
 of owners own and control some two-thirds of 
 the mileage of the United States, but there have 
 been few mergers in recent years, for, in most 
 cases, the expected profits of centralization have 
 not materialized. Moreover, the railways of the 
 United States after all their consolidation, do 
 not yet seem "ripe" for socialization. 
 
 In the financial field the existence of a "money 
 trust" has been often asserted and as often de- 
 nied. The report of the Pujo Committee in 
 1913 stated that 20 of the largest banks in New 
 York City held 42.97 per cent of the total re- 
 
 i Thirteenth Census of the United States (1910). Occupation 
 Statistics. 
 
THEORY OF CONCENTRATION OF CAPITAL 167 
 
 sources of the city bank and trust companies, 
 while the banking resources of the city amounted 
 to about a fifth of those of the whole country. It 
 also stated that those financial interests, through 
 interlocking directorates, had large control over 
 the policy of 112 corporations having aggregate 
 resources or capitalization of $22,245,000,000. 
 The committee, however, did not show how the 
 New York financial interests used their power. 
 They said: "Your committee has no evidence that 
 this power is being used oppressively, and no 
 means of ascertaining the facts, so long as their 
 profits are undisclosed." 1 
 
 New York City is, of course, the financial cen- 
 ter of the United States, and it is not surprising 
 to learn that twenty of its chief banks own a tenth 
 or twelfth of the banking resources of the coun- 
 try. A list of twenty great Canadian banks, 
 with all their branches, would make a far more 
 formidable showing, yet they compete very ac- 
 tively with one another. 
 
 Nor is it strange that many of the great cor- 
 porations have their head offices in New York or 
 New Jersey and that prominent financiers should 
 be members of various directorates. It is a long 
 story, with much to be said on both sides, but it is 
 safe to say that both the degree of concentration 
 
 i Report of the Committee to Investigate the Concentration of 
 Control of Money and Credit, February 28, 1913, p. 133. 
 
168 THEORY OF CONCENTRATION OF CAPITAL 
 
 and the restriction of competition in the financial 
 world are far less than is commonly supposed. 
 
 Manufacturing. But it was in manufactur- 
 ing that Marx expected concentration to have its 
 full effect, and during the past twenty years 
 socialists have pointed to the great American 
 "trusts" as a striking fulfilment of his prediction. 
 Yet even here the movement seems to slacken and 
 fall short of the mark. 
 
 In the year 1904 there were 216,180 manufac- 
 turing establishments in the United States, and 
 in the year 1914 there were 275,791 of such estab- 
 lishments. Of course, not all of them were in- 
 dependent concerns, as several "establishments" 
 might be owned by a single corporation. Cer- 
 tainly, the corporation is of growing impor- 
 tance, for in the year 1904 no less than 71.9 per 
 cent of the "value added" was produced by cor- 
 porations, and in the year 1914 the contribution 
 of corporations amounted to 81.9 per cent of 
 such value. "Value added," it may be said, in 
 passing, is the value of the product less the value 
 of the materials used. 1 
 
 Large scale production, too, is going on apace. 
 The manufacturing establishments of the largest 
 size, having a yearly product valued at $1,000,- 
 000 or more, in the year 1904 produced 29.9 per 
 cent of the value added, and in the year 1914 
 
 i Thirteenth Census of the United States (1910). Abstract. 
 
THEORY OF CONCENTRATION OF CAPITAL 169 
 
 their quota was 41.4 per cent. The figures, of 
 course, do not show whether manufacturing is 
 being "trustified" or not, nor the extent to which 
 combination is likely to prevail in the future. 
 There is reason to think, however, that the move- 
 ment is nearing its limits. Jenks and Clark, in 
 "The Trust Problem" (1917) say: "In estimat- 
 ing the extent of both the economic and social 
 effects of industrial combinations it is essential 
 to note that their activity is limited now to only a 
 part of the industrial field, not more than 25 per 
 cent, at the most, and there seems no likelihood 
 that they will in this era, if ever, cover it en- 
 tirely." 1 
 
 Even the most notorious trusts seem to have 
 trouble in dominating their respective industries. 
 In the year 1904, the Standard Oil Company 
 produced 86.5 per cent of the illuminating oil 
 refined in the United States, but since that time, 
 because of competition in California, Texas and 
 Oklahoma, the proportion of the dissolved com- 
 panies has been much reduced. During the early 
 years of the American Sugar Refining Company 
 it refined from 80 to 90 per cent of the national 
 output, but its proportion was not over 60 per 
 cent in the year 1910, and, according to the Sugar 
 Trade Journal, it was only 33.64 per cent in the 
 year 1916. 
 
 i Jeaks and Clark, op. cit., p. 212. 
 
170 THEORY OF CONCENTRATION or CAPITAL 
 
 The International Harvester Company pro- 
 duced in the year 1902 about 90 per cent of the 
 binders, 80 per cent of the mowers and 67 per 
 cent of the rakes manufactured in the United 
 States, whereas in the year 1918 the quotas were 
 reduced to 65 per cent, 60 per cent, and 58 per 
 cent, respectively. 
 
 The United States Steel Corporation, organ- 
 ized February 23, 1901, produced in that year 
 4*3.2 per cent of the pig iron, 66 per cent of the 
 steel ingots, 60.7 per cent of the steel rails and 
 50.1 per cent of finished rolled product, includ- 
 ing structural materials; but in the year 1911 the 
 Steel Corporation manufactured 45.2 per cent 
 of pig iron, 54 per cent of ingots, 57.1 per cent 
 of rails, and 45.7 per cent of the rolled product. 
 These products, of course, are the raw materials 
 for the manufacture of more highly finished 
 products, in which combination has not gone so 
 far. 1 
 
 Diffusion of Ownership. Even if all the man- 
 ufacturing industries of a given country were 
 completely trustified and monopolized, and they 
 are very far from that, they would not fulfill the 
 Marxian test of "ripeness" for socialization un- 
 less the ownership of them were also concentrated 
 in a few hands. But, on the contrary, there is a 
 strong tendency toward diffusion of ownership, 
 
 1 223 Federal Reporter 55. 
 
THEORY OF CONCENTRATION OF CAPITAL 171 
 
 as industrial corporations increase in size, by 
 which they have gained strong support in unex- 
 pected quarters. 
 
 According to the great German revisionist, 
 Eduard Bernstein, there were in England in 
 the year 1898 more than a million shareholders 
 in industrial corporations. Spargo and Arner, 
 writing in 1912, said that the shareholders in the 
 Manchester Ship Canal numbered 40,000, and 
 that "Lipton's" had 74,000 shareholders. 
 
 Similar figures could be given for all of the 
 great American industrial corporations. Swift 
 & Company stated on January 6, 1921, that 
 they had over 40,000 shareholders, of whom more 
 than 13,000 were employees. In the year 1919 
 the Pennsylvania Railroad had 117,225 share- 
 holders, and twenty of the principal railway com- 
 panies of the United States had no less than 
 525,689 shareholders. In the year 1904 these 
 railways had only 154,610 shareholders. 1 Of 
 course, many of the larger shareholders are 
 counted more than once, but there can be no 
 doubt that there are at least 500,000 individual 
 railway shareholders in the United States, and 
 one could safely guess that there are several 
 millions of separate, individual shareholders in 
 industrial, commercial and financial corpora- 
 tions, possibly 5,000,000, or more. 
 
 iSlason Thompson, Railway Statistics of the United States, 
 1919, p. 94. 
 
172 THEORY OF CONCENTRATION OF CAPITAL 
 
 Unquestionably, the ownership of industrial 
 corporations has been highly concentrated, but 
 now appear strong counter-tendencies toward 
 diffusion of ownership, by which the great cor- 
 porations may be largely democratized. In such 
 an event they will, like living organisms, change 
 with the changing conditions, and, without col- 
 lapse or revolution, socialization may be indefi- 
 nitely postponed. 
 
 As a parody of the celebrated prophecy of 
 Marx, one might say, with some degree of prob- 
 ability: "Centralization and decentralization of 
 the means of production, with diffusion of owner- 
 ship, especially among the workers, at last reach 
 a point where producers, large and small, and 
 their employees can meet on common ground. 
 The more industrious and frugal among the 
 workers, receiving both wages and profits, join 
 hands with the management, and capitalism, 
 adapting itself to the changing environment, 
 continues indefinitely." 
 
X 
 
 THE MARXIAN PROPHECY OF THE 
 
 ELIMINATION OF THE MIDDLE 
 
 CLASS 
 
 Like all Hegelians, Marx interprets human 
 life in terms of contradictions, which go by twos, 
 so he finds in every historical stage two chief 
 contending classes: master and slave, baron and 
 serf, capitalist and proletariat. Yet, he must 
 have known that at all times there have been 
 many people who did not belong to either of the 
 opposing classes, or were partly in one and partly 
 in the other. 
 
 So, while Marx sees in modern society but two 
 great rival classes, he cannot ignore the millions 
 of unclassified people working capitalists, prop- 
 erty-owning workers, traders and others who, 
 for lack of a better word, are usually known as 
 the middle class. Obviously, they act as a buffer 
 between the great capitalists and the proletari- 
 ans, and are a stumbling block in the way of 
 socialism, wheref or Marx writes of them in con- 
 temptuous terms, as though their very existence 
 were an impertinence. He is pleased to think 
 
 173 
 
174 ELIMINATION OF THE MIDDLE CLASS 
 
 of them as a decadent and vanishing group, a sort 
 of vestige, like the vermiform appendix, which 
 will be removed because it no longer contributes 
 to human well-being and progress. 
 
 The Middle Class. The middle class, in the 
 view of Marx, are the survivors of the once 
 powerful, independent, enterprising and useful 
 burghers or guildsmen of early times: master 
 craftsmen and merchants, small proprietors 
 working in their little shops side by side with 
 their journeymen and apprentices, before ma- 
 chinery and the industrial revolution came to 
 spoil the peace of these happy industrial families. 
 
 But modern equipment was expensive and 
 beyond the reach of most merchants and manu- 
 facturers, so it gave a tremendous advantage to 
 those first using it, enabling them to accumulate 
 much surplus value, to produce on a large scale, 
 to sell cheaply, and, by the power of competition, 
 to kill off their weaker rivals. Thus capital tends 
 to be concentrated in fewer and fewer hands, the 
 middle class is eliminated, and the day of revolu- 
 tion draws near. In the Communist Manifesto, 
 Marx and Engels say: "The lower strata of the 
 middle class the small tradespeople, shopkeep- 
 ers, and retired tradesmen generally, the handi- 
 craftsmen and peasants all these sink gradually 
 into the proletariat." 1 
 
 i Communist Manifesto (Kerr, publisher), p. 23. 
 
ELIMINATION OF THE MIDDLE CLASS 175 
 
 Unquestionably, the removal of the middle 
 class would greatly simplify the social problem, 
 making it easy for the proletariat to expropriate 
 the remaining capitalists, but, with strange dis- 
 regard of Hegelian dialectics, the middle class 
 obstinately refuses to disappear. 
 
 Agriculture. Certainly, the European peas- 
 ant is not being eliminated, and the small farmer 
 of the United States, notwithstanding the drift 
 toward the cities, continues to exist as the largest 
 and most powerful single class in the country. 
 In the year 1900, according to the census, there 
 were in the United States 5,674,875 "farmers, 
 planters and overseers," and in the year 1910 
 there were 5,981,522 people of that class. 
 
 True, many of them were tenant farmers, and 
 tenancy is increasing. In the year 1900, out of 
 5,737,372 farms, 35.3 per cent were occupied by 
 cash or share tenants, and in the year 1910, out 
 of 6,361,502 farms, 37 per cent were occupied 
 by tenants. Then, too, many farmers are poor, 
 many have their farms mortgaged, and many re- 
 ceive but a small "labor income" after allowing 5 
 per cent interest on the value of their farms. 
 
 But tenancy is usually a step toward owner- 
 ship; mortgages are more often a sign of pros- 
 perity than the reverse; and the statistics of 
 "labor income" are very misleading, because they 
 apply only to owners, not to tenants, and take no 
 
176 ELIMINATION OF THE MIDDLE CLASS 
 
 account of the increase in land values, which has 
 been the farm owner's chief source of income dur- 
 ing the past twenty or thirty years. Besides, 
 even poor farmers, like the peasants of Europe, 
 are seldom revolutionists, and their so-called 
 socialism is at bottom nothing more than mid- 
 dle-class radicalism. 
 
 A good illustration of that is the radical legis- 
 lation passed in New Zealand in the nineties and 
 after, by the Liberal-Labor Party of Ballance, 
 Seddon and Ward. The small farmers and the 
 agricultural laborers, desiring to break up the 
 great estates, formed an alliance with the labor 
 unions and put through a rather startling pro- 
 gram of legislation for their mutual benefit. But 
 when the small farmers got what they wanted 
 they broke away from the labor alliance and came 
 out in their true colors as faithful members of 
 the middle class because they had something to 
 lose. To the same class belongs the radicalism 
 of the Grangers, the Populists and the Progres- 
 sives, and even the farmers of the Non-Partisan 
 League who, with all their experiments in "state 
 capitalism," desire little more than to share the 
 profits of the big capitalists. 
 
 Again, there were in the year 1910 no less 
 than 6,088,414 "agricultural laborers," most of 
 whom were farmers' sons, serving their appren- 
 ticeship and expecting to become tenants or own- 
 
ELIMINATION or THE MIDDLE CLASS 177 
 
 ers as soon as possible. If to the total number 
 of "farmers, planters and overseers" we add only 
 half of the agricultural laborers, with gardeners, 
 florists, stock raisers and the like, we have, 
 roughly, more than 9,000,000 people of the farm- 
 ing class, about a fourth of all the "gainfully em- 
 ployed" in the United States. 
 
 Manufacture. A further examination of the 
 census reports shows that the old middle class of 
 small merchants and manufacturers is still very 
 numerous. From 1900 to 1910 the number of 
 merchants and dealers increased from 833,212 to 
 1,004,157, and the number of "manufacturers 
 and officials" increased from 243,009 to 565,905. 
 Closely connected with these are a number of 
 other occupations, such as restaurant keepers, 
 bankers and brokers, officials of banks and com- 
 panies, and so on, a complete enumeration of 
 whom would run the number of merchants and 
 manufacturers very near to 2,000,000. 
 
 Professions and Skilled Labor. Then there 
 is a new middle class, scarcely existing a hundred 
 years ago, but now numbered by millions. They 
 are not usually independent proprietors, like 
 farmers or small merchants, but rather people of 
 medium incomes who enjoy a comfortable living, 
 own more or less property, and are not proletari- 
 ans in any sense of the word. Such are the so- 
 called "professional" people, including actors, 
 
178 ELIMINATION OF THE MIDDLE CLASS 
 
 architects, artists, clergymen, dentists, engineers, 
 journalists, lawyers, literary and scientific per- 
 sons, musicians, government officials, teachers 
 and professors in colleges. The total number of 
 these, according to the census, is 1,825,127, of 
 whom probably a small minority are "intellectual 
 proletarians." 
 
 Besides there are many well-paid agents, com- 
 mercial travelers, heads of departments, buyers 
 and salesmen. Again, there is an enormous 
 number of small shareholders in manufacturing, 
 mercantile and financial corporations who, as 
 industry becomes centralized, represent the de- 
 centralization and diffusion of ownership, a 
 movement scarcely begun which may go far 
 toward democratizing and popularizing "big 
 business." 
 
 Finally, we have railway engineers and con- 
 ductors, carpenters, bricklayers, plumbers, ma- 
 chinists and many other unionized workers, the 
 aristocracy of labor, whose "wages" are higher 
 than the "salaries" of many soft-handed workers, 
 and who, though wearing overalls at work, are 
 not to be distinguished from other members of 
 the middle class on Sundays and holidays. 
 
 Middle Class Dominant. How large the mid- 
 dle class, all told, actually is, it would be hard to 
 say, but a rough guess may be made on the basis 
 of the figures given by Wilford I. King. If 
 
ELIMINATION OF THE MIDDLE CLASS 179 
 
 measured by the ownership of property only, it 
 numbers about a third of the population of the 
 United States, who own about a third of the total 
 wealth. If measured by income, as it should be, 
 it includes more than half of the people, many of 
 whom have good incomes but have accumulated 
 little or no property. 
 
 Similar figures could be given for Germany, 
 France, England and other capitalistic countries, 
 to show the extraordinary persistence of the old 
 middle class and the creation of a new middle 
 class, unforeseen by Marx. In answer to all of 
 this Boudin says, supporting Oppenheimer, that 
 Marx cannot be refuted by statistics, as his 
 method is not at all statistical. This is, in effect, 
 a confession that the elimination of the middle 
 class, prophesied by Marx, has not yet come 
 about. 
 
 Boudin claims, however, that the so-called 
 "new middle class" is not a middle class at all, 
 because their income is derived chiefly from labor, 
 because they do not control such property as they 
 own, and because their thoughts and feelings 
 about property are very different from those of 
 the old-time proprietors. They do not love prop- 
 erty as such, but only income, the usufruct of an 
 undivided interest. So they have broken away 
 from the old moorings, the old ideals are lost, and 
 
180 ELIMINATION OF THE MIDDLE CLASS 
 
 they are drifting toward the proletariat, to whom 
 they belong. 
 
 Thus the argument shifts from the physical to 
 the spiritual plane, as the middle class, physically 
 still on earth, spiritually has passed away, for 
 it has lost its soul. Yet who can show just what 
 the middle class has lost or the proletariat has 
 gained? 
 
 Shrewd as this argument is, it is far from con- 
 vincing, for it is merely dispute about the use of 
 words. Also, it is a dangerous argument for 
 socialists to use, because it proves too much. If 
 there is no new middle class, then there is a new 
 proletariat, a proletariat of prosperous workers, 
 which is a contradiction in terms. Yet these 
 nameless ones are a large and growing class who, 
 having something to lose, are likely to prove as 
 great an obstacle to socialism as the peasants, 
 the small farmers, or any other members of the 
 old middle class. 
 
XI 
 
 THE MARXIAN THEORY OF THE 
 CLASS STRUGGLE 
 
 The Marxian system is, at bottom, a philoso- 
 phy of history, which is probably the reason why 
 the higher critics of socialism try to distinguish 
 between essential and non-essential doctrines. 
 Orthodox socialists say that not a single part of 
 the great structure can be taken away without 
 weakening or destroying the whole, but the here- 
 tics hold that the system is strengthened by re- 
 moving the temporary supports, which have 
 served their purpose, and allowing the edifice to 
 settle upon its main foundation. 
 
 So the revisionists give up or explain away al- 
 most all the Marxian theories, but they still be- 
 lieve and teach that the ruling classes have always 
 grossly exploited the mass of people, and that 
 those masses, after long struggle against fright- 
 ful tyranny, are now approaching the day of their 
 redemption. Whether the revisionists can throw 
 part of the faith overboard and save the rest re- 
 mains to be seen, but their candid admissions 
 serve to narrow the field of discussion and bring 
 
 181 
 
182 THEORY OF THE CLASS STRUGGLE 
 
 into bold relief their basic conception of human 
 life and history. 
 
 With a magnificent gesture Marx and Engels 
 begin the Communist Manifesto thus: "The his- 
 tory of all hitherto existing society is the history 
 of class struggles. Freeman and slave, patrician 
 and plebeian, lord and serf, guild-master and 
 journeyman, in a word, oppressor and oppressed, 
 stood in constant opposition to one another, car- 
 ried on an uninterrupted, now hidden, now open 
 fight, a fight that each time ended, either in a 
 revolutionary re-constitution of society at large, 
 or in the common ruin of the contending classes." 1 
 
 Hegel and Darwin. Although the theory of 
 the class struggle did not originate with Marx 
 and Engels, to them belongs the credit, such as 
 it is, of having taken it as the master-key of hu- 
 man history. In this they followed Hegel, who 
 viewed the universe as the gradual unfolding of 
 ideas in a series of conflicts and compromises, 
 except that, with Fechner and the other "New 
 Hegelians," they reversed the process, placing 
 the material universe first as determining alike 
 the character of man and the course of history. 
 
 This was before the time of Darwin, whose 
 "Origin of Species" appeared in 1859, since when 
 socialists have tried to reconcile the theory of the 
 class struggle with the Darwinian theories of the 
 
 L Communist Manifesto (Kerr, publisher), p. 12. 
 
THEORY OF THE CLASS STRUGGLE 183 
 
 struggle for existence and natural selection, 
 though without much success. Yet as late as 
 1888, Engels said that the theories of economic 
 determinism and the class struggle were destined 
 to do for history what Darwin's theory had done 
 for biology. Giving the entire credit to Marx 
 he said: "That proposition is ... that the 
 whole history of mankind (since the dissolution 
 of primitive tribal society, holding land in com- 
 mon ownership ) has been a history of class strug- 
 gles, contests between exploiting and exploited, 
 ruling and oppressed classes; that the history of 
 these class struggles forms a series of evolution 
 in which, nowadays, a stage has been reached 
 where the exploited and oppressed class cannot 
 attain its emancipation without, at the same time, 
 and once and for all, emancipating society at 
 large from all exploitation, oppression, class dis- 
 tinctions and class struggles." 1 
 
 Modern socialists, following Morgan and other 
 speculative anthropologists, usually think of 
 primitive society as a sort of communistic Eden, 
 in which was little or no private property, class 
 struggle or exploitation of any kind. This, how- 
 ever, like most idealizations of the past, is little 
 more than a myth. Dr. R. H. Lowie, of the 
 American Museum of Natural History says, in 
 his recent book, "Primitive Society" (1920), that 
 
 i Engels, Preface to the Communist Manifesto (1888). 
 
184 THEORY OF THE CLASS STRUGGLE 
 
 such an assumption is "demonstrably false," and 
 with respect to land he goes so far as to say: 
 "Thus the intensive study of a single, though 
 vast area, leads to an historical reconstruction 
 that directly contravenes the sociological dogma 
 of a primeval communistic tenure. This condi- 
 tion appears not as a universal, but as a highly 
 specialized case, as a late rather than an early de- 
 velopment." 1 
 
 Theory of the Origin of Classes. As a matter 
 of fact, the Marxian theory of the class struggle 
 is as imaginary as the fiction of primitive com- 
 munism. The story runs about as follows: Into 
 the communistic Eden, where there is nothing 
 worse than cannibalism and human sacrifice, 
 comes the serpent of private property, after 
 which there is slavery, exploitation, class struggle 
 and measureless agony, for thousands of years, 
 until, at the end of the Roman Empire, the an- 
 tagonisms thus aroused break up the ancient 
 tyranny, and the chaos of the Dark Ages takes 
 its place. 
 
 Then, gradually, the Feudal System arises, at 
 least in western Europe, and a new stratification 
 is formed, with barons and higher clergy on top, 
 a few burghers and free tenants in the middle, 
 and a great mass of serfs, bound to the soil, at 
 the bottom. The class struggle is resumed, until 
 
 iR. H. Lowie, Primitive Society, p. 233. 
 
THEORY OF THE CLASS STRUGGLE 185 
 
 the power of the barons is broken, the bourgeoisie 
 become strong, feudalism passes away, and the 
 era of modern commercialism, capitalism, and 
 wage slavery is ushered in. 
 
 Under capitalism the class struggle still goes 
 on, but now the proletariat, emancipated, concen- 
 trated in large cities, increasingly numerous, mis- 
 erable and class conscious, absorbs the middle 
 class and marches upon the strongholds of capi- 
 talism. There the few remaining magnates, 
 thinking to defend themselves with their tremen- 
 dous engines of production, are really digging 
 their own graves. Sooner or later the rising pro- 
 letariat will sweep them all away, and, after a 
 time of transition and reconstruction, will set up 
 the collective commonwealth, the second Eden. 
 
 Contradictory Historical Data. This is far 
 too simple for the complexity of social variation. 
 Even H. M. Hyndman, the Nestor of British 
 Socialism, in "The Evolution of Revolution" 
 (1921), does not follow the strict Marxian inter- 
 pretation. While claiming that class struggles 
 have been continuous in the evolution of western 
 society, he is unable to show that they brought 
 about the transition from slavery to feudalism, or 
 from feudalism to capitalism. 
 
 Hyndman admits that forcible expression of 
 the class struggle, such as the rebellion of Roman 
 slaves and gladiators, never accomplished any* 
 
186 THEORY OF THE CLASS STRUGGLE 
 
 thing, and that, if they had succeeded, slavery 
 and circuses would have gone on as before. Ro- 
 man slavery passed away, he says, because of the 
 scarcity of slaves, the lack of money with which 
 to buy them, the increasing cost of their keep, 
 the increasing number of free farmers, coloni and 
 laborers, the cost of transportation, and other cir- 
 cumstances which made slavery unprofitable or 
 impossible. 
 
 Similarly, the rebellion of serfs under feudal- 
 ism the Jacquerie of 1358 in France, Wat Ty- 
 ler's rebellion of 1381 in England, and the Ger- 
 man peasants' war of 1524-1525 had little to 
 do with the decay of serfdom. In fact, serfdom 
 passed over into free tenancy largely through the 
 desire of the landlords for money rents in place 
 of surly service, royal taxation for foreign wars, 
 and other causes unrelated to class struggle, al- 
 though in many cases the desire of the serf for the 
 freehold had its influence. 
 
 Stratification in All Society. History records 
 numberless and fearful conflicts, but sectional 
 rather than class struggles fill its pages. For the 
 most part it is clan again clan, city against city, 
 nation against nation. True, there has been 
 stratification in every society, with frequent con- 
 flict of interests, but internal troubles have been 
 kept down by the dire necessity of presenting a 
 united front against the external enemy. "High- 
 
THEORY OF THE CLASS STRUGGLE 187 
 
 lander shoulder to shoulder" ws not a slogan, 
 merely, but the first condition of survival among 
 the warring Scottish clans. Perhaps the class 
 struggle of the present day is a phase of pacif- 
 ism, in which modern nations indulge because 
 they fear no external enemy. 
 
 Class struggles have often played a part in 
 history, especially in recent times, although it is 
 easy to exaggerate their importance and not al- 
 ways easy to distinguish them from sectional 
 quarrels. In England, for example, the guilds- 
 men of London, York, Bristol, and other towns, 
 frequently quarreled with the barons about char- 
 ters, taxes, and other matters, but it is not clear 
 whether such disputes are to be regarded as true 
 class struggles or as conflicts arising from local 
 interests and the antagonism of town and 
 country. 
 
 Gradually, the towns grew in size, wealth and 
 power, especially in the north of England, where 
 the Industrial Revolution began, until the mer- 
 cantile and manufacturing interests overshad- 
 owed the agricultural, the landowners lost con- 
 trol, and the commons became supreme. Thus 
 was accomplished by peaceful means what it took 
 a bloody revolution to bring about in France. 
 Throughout western Europe the same or similar 
 shifting of power took place, though whether it 
 should be interpreted as a class struggle, a sec- 
 
188 THEORY OF THE CLASS STRUGGLE 
 
 tional struggle, or a combination of both, it is 
 hard to say. At any rate, there was no overturn- 
 ing of property rights, but rather a shifting of 
 power from one group of owners to another, and 
 the opening of the door by which new men en- 
 tered the previously exclusive upper class. 
 
 Modern Conditions. So it is hard to find a 
 clear-cut class struggle until the rise of the mod- 
 ern working class after the Industrial Revolu- 
 tion, which began in England and soon spread to 
 other countries. It was in England, naturally, 
 that the first great labor agitation began the 
 Chartist movement of the 'thirties and 'forties 
 which Marx and Engels thought would soon lead 
 to a social revolution. The Chartists proposed, 
 however, only political reforms, the celebrated 
 "Six Points," which they failed to obtain, al- 
 though all but one have since been granted. 
 
 Since that time, in every capitalistic country, 
 the working class has grown in numbers and 
 power, as can easily be seen in the great labor 
 union movement, the growth of socialist parties, 
 the passage of many kinds of labor legislation, 
 and the growing disposition of employers to treat 
 their employees with consideration and respect. 
 
 Marx's Prophecy Unfulfilled. For all that, 
 the modern labor movement does not seem to be 
 developing along the lines laid down by Marx. 
 In the first place, the middle class is not disap- 
 
THEORY OF THE CLASS STRUGGLE 189 
 
 pearing, but is relatively increasing, and capital- 
 ism, by the infusion of new blood from this source 
 and from the working class, is being strength- 
 ened, even as the land-owners were reinforced by 
 the bourgeoisie during the Industrial Revolution* 
 
 This process correspondingly reduces the fight- 
 ing power of the working class, for its natural 
 leaders are being constantly taken over by the 
 employers as foremen, managers and owners. 
 Besides, many young and ambitious workers, not 
 yet promoted, are not class-conscious proletarians 
 by any means, but rather attaches of the capital- 
 ist class, into which they hope to be admitted, 
 sooner or later. 
 
 Secondly, the wage-earners are not fully or- 
 ganized in any country, and many, if not most of 
 those who are, belong to the aristocracy of labor 
 and have no revolutionary ends in view. At the 
 present time there are, roughly, 6,000,000 organ- 
 ized and 20,000,000 unorganized wage-earners in 
 the United States. The American Federation 
 of Labor, with 4,509,213 members in the year 
 1920, is organized, not for revolution, but for col- 
 lective bargaining, which logically involves loyal 
 co-operation with the employers and due regard 
 for the interests of private property. 
 
 True, radical leaders like William Z. Foster, 
 wish to convert the A. F. of L. to socialism, but 
 there is no immediate prospect of the success of 
 
190 THEORY OF THE CLASS STRUGGLE 
 
 their endeavors. The labor unions of Europe are 
 far more socialistic than those of the United 
 States, as might be expected in view of the rela- 
 tive over-population of those countries and the 
 lack of opportunity for the common man. 
 
 Third, there is among organized laborers a no- 
 table lack of unity or solidarity, and much conflict 
 of interests between occupational groups. The 
 interests of coal miners, railwaymen and steel 
 workers, for example, are by no means in com- 
 plete harmony, and there are vexed questions at 
 issue between bricklayers, carpenters, plumbers, 
 and other members of the building trades. 
 
 Indeed, it often looks as though the wage-earn- 
 ers of particular industries, such as the railways, 
 had more in common with the employers than 
 with wage-earners of other groups. Also, there 
 are serious conflicts of interest between the skilled 
 and unskilled workers in every trade, as is clearly 
 seen in the disputes between the railway section- 
 men and the aristocratic engineers and con- 
 ductors. 
 
 The Triple Alliance in England. The group 
 conflicts of the working class are well illustrated 
 in Great Britain by the notorious Triple Alliance 
 of coal miners, railwaymen and transport work- 
 ers, which, at one time recently, seemed to have 
 the country by the throat, and to be holding up, 
 not the employers only, but their fellow-workers 
 
THEORY OF THE CLASS STRUGGLE 191 
 
 of all other trades. Moreover, the interests of 
 the several members of the Triple Alliance are 
 by no means identical, as high prices of coal are 
 bad for both railwaymen and transport workers, 
 as well as for factory operatives and all the rest 
 of the British workmen. 
 
 Instead of proving the solidarity of British 
 labor, the activities of this semi-revolutionary or- 
 ganization point in the opposite direction and 
 give rise to serious misgivings as to what might 
 happen after the social revolution, when the plans 
 of syndicalists and guild socialists had been put 
 into effect. 
 
 Future of the Class Struggle. Karl Marx 
 looked forward to an era of perfect peace, a mil- 
 lennium in which there would be no classes and 
 therefore no class struggle, but in this he contra- 
 dicted himself and nullified his own theory. Evi- 
 dently the theory of the class struggle proves too 
 much, for, if struggle be the first condition of 
 progress, it must go on after the social revolution, 
 in which case the social democracy will be in dan- 
 ger of disruption. But if, as Marx believed, 
 there is to be neither class nor group struggle 
 in the new social order, progress will cease in 
 the universal stagnation of an unvarying, crys- 
 tallized and stereotyped society. 
 
 The whole Marxian system, so consistent with 
 itself and so inconsistent with the facts of history, 
 
192 THEORY OF THE CLASS STRUGGLE 
 
 is an attempt to find a rational basis for the class 
 struggle and the social revolution. That basis is 
 the closely - knit series of propositions the 
 theories of value, surplus value, increasing mis- 
 ery and the rest which have so often been 
 weighed in the balance and found wanting. As 
 none of these are theoretically sound, the so-called 
 rational basis is a myth, an illusion, and if the 
 class struggle goes on to the bitter end, as it may, 
 with the Marxian conditions unfulfilled, it must 
 be because man is not primarily a rational animal. 
 
XII 
 THE SOCIAL REVOLUTION 
 
 Now comes the final act in the drama of eco- 
 nomic determinism, when the last of the antagon- 
 isms that have convulsed the world since the time 
 of primitive communism is about to cause the col- 
 lapse of capitalism and to clear the way for the 
 communism that is to be. To this all the theories 
 of Marx lead, step by step ; here all the lines of 
 argument converge. This is the day of wrath, 
 when judgment shall be pronounced and exe- 
 cuted upon capitalism and all its works. ' This is 
 the day of emancipation that is to usher in the 
 millennium of the proletariat. 
 
 Karl Marx, like John the Baptist, was a voice 
 crying in the wilderness, denouncing the wicked- 
 ness of his day, preaching repentance and proph- 
 esying deliverance. Doubtless he was a revolu- 
 tionist by temperament before he was either 
 jurist, historian or economist, and he used the 
 results of all his studies to illustrate and reinforce 
 his faith. 
 
 Like many of his contemporaries, Marx was 
 very conscious of the recent "bourgeois" revolu- 
 
 193 
 
194 THE SOCIAL REVOLUTION 
 
 tion, and felt that a revolution of the working 
 class might not be far away. The Communist 
 Manifesto (1848) was a call to arms, and it is 
 clear that the writers expected the social revolu- 
 tion to come very soon. Later in life they saw 
 their mistake. In 1895 Engels wrote: "History 
 proved that we were wrong we and those who 
 like us, in 1848, awaited the speedy success of 
 the proletariat. It became perfectly clear that 
 economic conditions all over the Continent were 
 by no means as yet sufficiently matured for su- 
 perseding the capitalist organization of produc- 
 tion." 1 
 
 Method of the Revolution. However, one 
 must not lay too much stress on all the mistakes 
 of Marx. As Boudin says, time has little to do 
 with the validity of his argument. Socialists are 
 eager souls, hoping to see the revolution with 
 their own eyes, and reluctantly admitting that, 
 in the long process of evolution, a thousand years 
 are as one day. 
 
 But what of the method of revolution and how 
 is the collapse of capitalism to come about? Will 
 there be a great industrial crisis, national or in- 
 ternational? Marx and Engels thought so, but 
 the higher critics now admit that this theory was 
 unsound, and that the breakdown of capitalism 
 
 i Engels, Einleitung zu Karl Marats Die Klassenkampfe in 
 Frankreich, 1848-1850. Cf. Simkhovitch, Marxism versus Social- 
 ism, pp. 28, 253. 
 
THE SOCIAL REVOLUTION 195 
 
 must come by the way of concentration of capital 
 and the revolt of the working class. 
 
 Will the revolt of the working class be sud- 
 den and violent, or gradual and peaceful in its 
 operation? Marx and Engels in their youthful 
 ardor favored revolution by conspiracy, after the 
 style of Babeuf and Blanqui, although it was flat 
 contradiction of economic interpretation. The 
 Communist Manifesto closes with these fiery 
 words : "The Communists disdain to conceal their 
 views and aims. They openly declare that their 
 ends can be attained only by the forcible over- 
 throw of all existing social conditions. Let the 
 ruling classes tremble at a Communist revolution. 
 The proletarians have nothing to lose but their 
 chains. They have a world to win. Working 
 men of all countries unite!" 1 
 
 Marx's Contradictions. In the Neue Rhein- 
 ische Zeitung (1849) Marx wrote wild words 
 about "revolutionary terrorism," and in the fol- 
 lowing year he wrote: "Far from stopping so- 
 called excesses, examples of popular vengeance 
 upon hated individuals and public buildings, with 
 which bitter memories are associated, one must 
 not only tolerate these examples but lead and 
 conduct them." 2 
 
 But in the preface to the "Critique of Political 
 
 1 Communist Manifesto, p. 68. 
 
 2 Cf. Simkhovitch, op. cit., p. 196. 
 
196 THE SOCIAL REVOLUTION 
 
 Economy" (1859) Marx reverts to the logical 
 position of economic determinism in the oft- 
 quoted sentence: "No social order ever disappears 
 before all the productive forces, for which there 
 is room in it, have developed ; and new and higher 
 relations of production never appear before the 
 material conditions of their existence have ma- 
 tured in the womb of the old society." * 
 
 Darwinism and Marx. Obviously, there is a 
 contradiction between the views of the earlier and 
 the later Marx, or rather, between the two sides 
 of his dual personality. This became more glar- 
 ing after the appearance, in 1859, of Darwin's 
 epoch-making book, "The Origin of Species," 
 which clearly taught that, in biological evolution, 
 at least, new forms developed by slow, continuous 
 change along diverging lines, without leaping 
 forward, backward or sideways, and without any 
 episode in their evolution that could be called a 
 revolution. 
 
 Yet Marx and most of his followers, in the un- 
 scientific spirit of the Hegelian logic, find an 
 apparent reconciliation of the contradiction in 
 the life-history of plants and animals. Gradual 
 development goes on for a while, and then, by 
 a sudden catastrophe or revolution, the seed be- 
 comes a seedling, the chrysalis a butterfly, the 
 
 iMarx, A Contribution to the Critique of Political Economy, 
 p. 12. Translated by N, I, Stone. 
 
THE SOCIAL REVOLUTION 197 
 
 egg breaks and a chick appears, the embryo ma- 
 tures and a child is born. 
 
 It should not be necessary to say that analogies 
 such as these prove nothing with regard to the 
 possibility of revolution in biological or social 
 evolution. The life history of an individual re- 
 peats the history of every other individual of the 
 same species. Metamorphosis and birth are not 
 biological revolutions, but, as Engels puts it, are 
 examples of nature moving "in the eternal one- 
 ness of a perpetually recurring circle." 
 
 This is but a single illustration of the fact that 
 "scientific" socialism gains no support by appeal- 
 ing to modern science in general and biology in 
 particular, as the method and aims of socialism 
 and science are wide apart. Veblen, himself a 
 kind of super-Marxist, rightly says: "The fact 
 that the theoretical structures of Marx collapse 
 when their elements are converted into the terms 
 of modern science should of itself be sufficient 
 proof that those structures were not built by their 
 maker out of such elements as modern science 
 habitually makes use of." 1 
 
 Biological and Social Evolution. Biology, 
 therefore, gives no support to Marxism, but pos- 
 sibly history and sociology may have something 
 better to offer. Certainly, social evolution is 
 
 iThorstein Veblen, The Place of Science in Modern Civiliza- 
 tion, p. 437. 
 
198 THE SOCIAL REVOLUTION 
 
 more rapid than biological evolution. The hu- 
 man body has scarcely changed since the time of 
 primitive man, but economic, political, religious, 
 and other social customs and institutions have 
 changed very much. Also, social movement may 
 be accelerated, as in the nineteenth century, when 
 western Europe made greater progress in ma- 
 terial civilization than during the preceding fif- 
 teen centuries. 
 
 Again, a transformation may be so complete 
 as to amount to revolution. The Protestant Ref- 
 ormation was a religious revolution. The great 
 inventions of the eighteenth and nineteenth cen- 
 turies brought about an industrial revolution. 
 The social and political power of the landed aris- 
 tocracy of Europe has been supplanted, to a 
 greater or less extent, by the power of manufac- 
 turers and merchants in France by a sudden 
 and violent upheaval, in England by the slow 
 and peaceful methods of constitutional govern- 
 ment. The American Revolution, on the other 
 hand, was no revolution at all, but a political 
 secession. 
 
 How Revolutions Have Occurred. The 
 Marxian conception of revolution is intimately 
 connected with the doctrine of economic deter- 
 minism and the class struggle. The social revolu- 
 tion, according to Marx, is the class struggle 
 raised to the highest power. It is "a more or less 
 
THE SOCIAL REVOLUTION 199 
 
 rapid transformation of the juridical and politi- 
 cal superstructure of society arising from a 
 change in its economic foundations." 
 
 H. M. Hyndman, in "The Evolution of Revo- 
 lution" (1921) gives a similar definition: "Revo- 
 lution, in its complete sense, means a thorough 
 economic, social and political change in any great 
 human community. There can be no revolution, 
 in this sense, until the economic and social condi- 
 tions are ripe for such a change." 1 
 
 Reading history with this conception in mind, 
 one finds few, if any, good examples of social 
 revolution. As Kautsky says, the disappearance 
 of slavery in Europe came about so impercepti- 
 bly that the contemporaries of the movement 
 took no notice of it. The passing of serfdom in 
 western Europe was equally gradual. In neither 
 case did the subordinate classes overthrow the 
 power of their masters, nor was there a complete 
 transformation of the social superstructure. 
 Slaves and serfs were liberated and absorbed by 
 the other classes, and the respective countries 
 continued to be governed by the land-owning 
 aristocracy. 
 
 Even the "bourgeois" revolution of the eight- 
 eenth and nineteenth centuries, except in France, 
 was not so much an overthrow of the land-own- 
 
 i H. M. Hyndman, The Evolution of Revolution, p. 12. 
 
200 THE SOCIAL REVOLUTION 
 
 ers by the bourgeoisie as a fusion of the two into 
 a larger and more powerful capitalist class. 
 
 Maroc's Prophecies Not Fulfilled. Up to the 
 present time society has obstinately refused to 
 divide itself into two great hostile camps as re- 
 quired by the theory of the class struggle. One 
 may think of people as divided into the "haves" 
 and the "have-nots," but that is not to say that 
 all the "haves" are supporters of capitalism or 
 that all the "have-nots" would like to see it de- 
 stroyed. The line-up of interests and opinions 
 in the intricate network of industrial relations is 
 by no means so simple. 
 
 In other respects, too, the conditions laid down 
 by Marx as preliminary to the final revolution 
 have not been fulfilled. In no capitalistic coun- 
 try before the war was the misery of the working 
 class increasing, either absolutely or relatively. 
 The middle class was not being eliminated, but 
 increasing in numbers, wealth and influence. 
 Concentration of capital had not proceeded ac- 
 cording to the Marxian program, and diffusion 
 of ownership seemed likely to counteract the con- 
 centration of wealth. In brief, the evolution of 
 capitalism was not going as Marx wished and 
 expected, when he wrote, in the first volume of 
 "Capital" (1867) : "Centralization of the means 
 of production and socialization of labor at last 
 reach a point where they become incompatible 
 
THE SOCIAL REVOLUTION 201 
 
 with their capitalist integument. This integu- 
 ment is burst asunder. The knell of capitalist 
 private property sounds. The expropriators are 
 expropriated." 1 
 
 Capitalism Evolutionary. Here is another 
 misleading biological analogy, involving a curious 
 misconception of the nature and functions of 
 capitalism, based, as it is, on the institution of pri- 
 vate property. Capitalism is no mere shell or 
 integument, within which certain evolutionary 
 changes go on until they are "ripe" for revolu- 
 tion. It is the industrial organization itself, the 
 vast mechanism of production, which creates all 
 goods and services, and daily feeds, clothes and 
 shelters hundreds of millions of people, with a 
 degree of comfort unknown to the working class 
 of any previous time, or, indeed, to most of the 
 aristocrats. 
 
 Structural changes take place within this or- 
 ganization, of course, because it is living, growing 
 and adapting itself to the changing conditions. 
 Indeed, it is far more elastic and adaptable 
 than any living organism, as may be seen by 
 considering the evolution of capitalism in Europe, 
 America and elsewhere during the past hundred 
 years. 
 
 In that time the population of all capitalistic 
 countries has enormously increased; standards 
 
 i Capital, p, 789, 
 
202 THE SOCIAL REVOLUTION 
 
 of living have risen; the wage-earners have be- 
 come educated, ambitious and discontented; new 
 lands have been opened up ; great industries and 
 works of engineering have been created ; govern- 
 ments have become more democratic; laws and 
 customs have changed ; business organization has 
 reached a high degree of perfection; and, finally, 
 business men themselves have become more com- 
 petent, more considerate of their employees, more 
 respectful to the public, and, in general, more 
 ready to accommodate themselves to the chang- 
 ing environment. How, then, can capitalism be 
 thought of as a rigid form, or fetter, or shell, or 
 integument that must be broken before any new 
 and better social order can take its place? 
 
 Prophecy of Final Overthrow. In view of 
 the fact that the evolution of capitalism has not 
 proceeded along Marxian lines, inasmuch as the 
 conditions preliminary to revolution have not 
 been fulfilled, the prophecy that the working 
 class will take over all the means of production 
 is nothing but a shrewd guess posing as a scien- 
 tific demonstration. With far greater probabil- 
 ity one might hazard another guess, to the effect 
 that the magnates of capitalism, reinforced by 
 the middle class and a large section of the wage- 
 earners, will be able to maintain the present in- 
 dustrial order, in all its essential features, for a 
 long time to come. 
 
THE SOCIAL REVOLUTION 203 
 
 A guess like this is strongly sustained by the 
 analogy of organic evolution, which proceeds 
 along a given line without any considerable break 
 in continuity and is physically unable to retrace 
 its steps or to leap across to a different path of 
 progress. A given organism, of course, may 
 ultimately come to a bad end, but any attempt at 
 radical alteration would result in death. 
 
 If "scientific" socialism has no real proof to 
 give, if it cannot be shown theoretically, or by 
 appeal to fact, that social revolution is pre- 
 determined by "the immanent laws of capitalist 
 production itself," then all that socialism has to 
 offer is a Utopian ideal and many promises, which 
 the working class may be unwilling to receive at 
 their face value. Possibly, before going on a 
 wild-goose chase, they may call to mind the an- 
 cient proverb: 
 
 "A bird in the hand is worth two in the bush." 
 
 Strength of Capitalism. Over against the 
 denunciations, ideals and promises of socialism, 
 with all their power for good or ill, capitalism has 
 the tremendous advantage of possessing the field 
 as a going concern which, with all its faults, has 
 done great things in the past and may do still 
 more in time to come. Moreover, it can easily be 
 shown, contrary to the views of extreme socialists, 
 like the I. W. W., that the working class and the 
 
204 THE SOCIAL REVOLUTION 
 
 employing class have something in common. 
 This is a basic principle upon which, enlarged 
 and strengthened, may be built the temple of co- 
 operative capitalism 
 
 If one may judge by what has happened in 
 many so-called revolutions, economic, political 
 and religious, the capitalist class, repenting of 
 their sins, will set their house in order and will 
 make friends of many of their former opponents. 
 They will be able to prove to the more competent, 
 at least, of the wage-earners that they have much 
 to lose and nothing to gain by a social revolution. 
 In other words, they will set in motion a counter- 
 revolution, which will postpone the threatened 
 revolution of the proletariat, or make it forever 
 impossible. 
 
 Reason or Passion? An alternative prophecy 
 like this assumes, of course, with Marx and most 
 of the revisionists, that man is a rational animal, 
 that truth is teachable, and that people, individ- 
 ually and collectively, may be wisely led. These 
 are large assumptions, which history does not al- 
 together justify. It may be that men are gov- 
 erhed chiefly by emotion and passion, that envy 
 \ and jealousy blind the eyes of reason, that in 
 their ever-expanding desires they cannot bear to 
 be thwarted, and that, in fanatical frenzy or child- 
 ish petulance, they may destroy what they can 
 never recreate. 
 
THE SOCIAL REVOLUTION 205 
 
 All this is more or less plausible, but it is not 
 according to the later and saner Marx. The 
 great anarchist Bakunin might have sanctioned 
 it, or the syndicalist Sorel, or the I. W. W. 
 leader, Bill Haywood, or the philosopher Berg- 
 son, or the psychologist Freud, or the sociologist 
 Veblen, or the revolutionists Lenin and Trotsky. 
 It agrees with revolutionary terrorism, and sa- 
 botage, and the general strike, and a strike in coal 
 mining, transportation and other basic industries, 
 and with Bolshevism and the earlier Marx, but it 
 is out of harmony with economic determinism, the 
 evolution of revolution, and all the characteristic 
 doctrines of "scientific" socialism. 
 
 "Scientific" socialism must be judged by its 
 own standards, as a rational system consisting of 
 a logical series of propositions derived from cer- 
 tain premises. If the premises be disproved, the 
 whole system falls to the ground and cannot be 
 revived by the injection of any foreign stimulant. 
 
 For this reason the revisionists, or higher critics 
 of socialism, having abandoned Marx, are not 
 very sure of anything except that there is no 
 solid ground beneath their feet. In this unstable 
 condition they cannot well remain, so they must 
 go forward or backward forward toward emo- 
 tional, unreasoning revolutionism, or backward 
 toward a qualified support of capitalism, coupled 
 
206 THE SOCIAL REVOLUTION 
 
 with a faint hope that society will be ripe for col- 
 lectivism at some future time. 
 
 In this latter position most of the revisionists 
 now stand, and there is little difference between 
 them and the ordinary progressive sociologists or 
 social reformers, who know that Rome was not 
 built in a day, but who will do all they can to 
 mold and renovate society after the pattern of 
 the ideal state. 
 
 Emotionalists. There are those, however, 
 who, conscious that Marxism is without rational 
 basis, continue on the road to revolution because 
 they feel that it satisfies their emotional and ideal- 
 istic nature, which, in the final test, they hold to 
 be the only true guide. Concentrating their at- 
 tention on the evils of capitalism, they are filled 
 with rage and would destroy it with slight com- 
 punction. Fixing their eyes on the beauties of 
 the new social order, they are lost in faith and 
 hope, and, forgetting the difficulties and dangers 
 of the way, they raise the banner of a holy war 
 a children's crusade. 
 
 It is surprising how many revolutionary lead- 
 ers are of this emotional, imaginative, idealistic, 
 impulsive type, and what a strong appeal they 
 make to the popular mind, already prepared for 
 their suggestions by poverty, sympathy, disap- 
 pointment, envy, ambition, and all the instability 
 of temperament that leads men to embrace a new 
 
THE SOCIAL REVOLUTION 207 
 
 religion as though it were a great adventure. 
 Throwing aside prudence, reason and all mis- 
 givings, they are ready to take the fateful plunge, 
 the mortal leap, though what the outcome will be 
 for them or for the world, no man knows. 
 
XIII 
 
 BOLSHEVISM OR THE DICTATOR- 
 SHIP OF THE COMMUNIST 
 PARTY 
 
 The striking phrase "dictatorship of the prole- 
 tariat" was coined by Karl Marx himself in the 
 year 1875, when in a now famous letter he wrote: 
 "Between capitalist and communist society lies 
 the period of the revolutionary transformation 
 of the one into the other. This requires a political 
 transition stage, which can be nothing less than 
 the revolutionary dictatorship of the prole- 
 tariat." x 
 
 In the Communist Manifesto the same idea 
 was expressed in other words thus : "The prole- 
 tariat will use its political supremacy to wrest, 
 by degrees, all capital from the bourgeoisie, to 
 centralize all instruments of production in the 
 hands of the state, i.e., of the proletariat organ- 
 ized as the ruling class." 2 
 
 The Communist Manifesto gives also a fore- 
 cast of the measures which the proletariat of the 
 
 1 Letter of Marx to Bracke, May 15, 1875. Cited by Lenin, 
 The State and Revolution, p. 88. Cf. Spargo, The Greatest Failure 
 in All History, p. 355. 
 
 2 Communist Manifesto (Kerr, publisher), p. 40. 
 
DlCTATOKSHIP OF COMMUNIST PARTY 209 
 
 most advanced countries will take, including 
 abolition of property in land, abolition of the 
 right of inheritance, confiscation of the property 
 of emigrants and rebels, centralization of credit 
 and transportation in the hands of the state, ex- 
 tension of state ownership of factories, equal 
 liability of all to labor, the establishment of in- 
 dustrial armies, and free education of all children 
 in public schools. 
 
 The program itself is very simple and direct, 
 and there is little dispute about it in Marxian 
 circles, but as to when and how the dictatorship 
 shall be set up, and when and how it shall be dis- 
 placed by communism pure and simple, there is 
 much difference of opinion, degenerating at times 
 into vehement debate and bitter persecution. 
 
 The "Yellows" and the "Reds" Socialists of 
 the chair, the pulpit and the parlor, wishing to 
 make the thought of revolution palatable to the 
 bourgeoisie, usually follow the later evolutionary 
 Marx in teaching that the social revolution can- 
 not come until all things are ready; and that, if 
 brought on too soon, it must perish as an un- 
 timely birth. And when, in the fulness of time, 
 the revolution gently arrives, the "immense ma- 
 jority" of the proletariat, will set up a dictator- 
 ship that will not be a dictatorship, as it will be 
 democratic in all its ways. 
 
 But the evolutionists, the parliamentarians, the 
 
210 DICTATORSHIP OF COMMUNIST PARTY 
 
 cooperators, the Fabians, the guildsmen, and the 
 rest of the "good" or "yellow" socialists, have 
 by no means accepted the whole of the Marxian 
 gospel, and the revolutionary, violent faith of 
 the "reds," which they have rejected, now holds 
 chief place in the creed of the Communist Party. 
 
 Nor is it strange that the more ardent souls 
 embrace a more militant creed, for socialism, with 
 its fierce denunciation of the present world and 
 its glowing picture of the world to come, makes 
 so strong an appeal to the primitive instincts of 
 man that the wonder is how any of its votaries 
 can await patiently the long-expected day, or 
 keep themselves, in thought and action, within 
 the bounds of reason. 
 
 The contradictions in the opinions and actions 
 of Marx himself are so glaring that it is impos- 
 sible to draw a clear line of demarcation, placing 
 all the evolutionary, parliamentary Marxists on 
 the one side, and all the revolutionary direct ac- 
 tionists on the other. Certainly, the syndicalists 
 do not wish to be excommunicated for distrusting 
 parliamentary action and favoring the general 
 strike, nor do the Bolshevists think that they 
 deny Marx when they call themselves commu- 
 nists, set themselves at the head of the proletariat, 
 and propose to march direct from Egypt to the 
 Promised Land without going through the wil- 
 derness of capitalism. However, they admit that 
 
DICTATORSHIP or COMMUNIST PARTY 211 
 
 the proletariat must pass through a lesser wilder- 
 ness or purgatory, the transitional dictatorship, 
 before they can fully enjoy the blessings of com- 
 munism. 
 
 Marx the Prophet of All Sects. Of course, 
 the syndicalists, the I. W. W., the Bolshevists, 
 the Spartacans and all the other impatient, vio- 
 lent sects, are tainted with anarchism, even as 
 the revisionists and reformists are tinged with 
 reaction, and there are few faithful Marxists of 
 the original type left. But, with all their heresies 
 and wilful ways, Karl Marx is the prophet and 
 leader of them all, his writings are their sacred 
 books, and his system is their standard authority, 
 which the various sects interpret according to 
 their light. 
 
 Some Russian socialists have inclined toward 
 violent and sudden revolution, perhaps because 
 of the retarded development of their country, 
 the repressive policy of the government and their 
 own unworldly, inexperienced idealism. Russia 
 is still mainly an agricultural country, with a 
 population of about 170,000,000 in the former 
 Empire, 85 per cent of whom were commonly 
 classed as peasants, most of whom were quite 
 illiterate and carried on agriculture in a very 
 primitive way. 
 
 The industrial proletariat, composed of fac- 
 tory and mine workers and some others, did not 
 
212 DICTATORSHIP OF COMMUNIST PARTY 
 
 exceed 5 per cent of the population, leaving an 
 upper and middle class of about 10 per cent, in- 
 cluding the land-owning aristocracy, the officials, 
 the professional people, and a considerable num- 
 ber of manufacturers and merchants. 
 
 Capitalism had begun in Russia, but it had not 
 gone far; and it is no wonder that socialists be- 
 came discouraged or impatient, as they looked 
 forward to long years of industrial evolution 
 before the middle class should rise, fulfill its his- 
 toric mission, and pass away ; before the peasants 
 should be expropriated; and the proletariat, at 
 last comprising the "immense majority" of the 
 people, should be ready for revolution. Indeed, 
 the outlook was hopeless from their point of view, 
 for, as Bernard Shaw recently said: "If social- 
 ism is to wait until farmers become class-con- 
 scious Marxists, it will wait for ever." 1 
 
 But many of the Russian socialists did not 
 want to wait, and easily persuaded themselves 
 that the revolution might be brought about by 
 the industrial workers fighting as the vanguard 
 of socialism, a sort of Gideon's Band, who would 
 be followed, as liberators, by the poorer peasants, 
 then by the middle peasants, after which there 
 would be no class able to withstand the united 
 army of the proletariat. 
 
 i Bernard Shaw, The Old Revolutionist and the New Revolu- 
 tion. "The Nation" (London), March 12, 1921, p. 704. 
 
DICTATORSHIP OF COMMUNIST PARTY 213 
 
 Writing shortly after the abortive revolution 
 of 1905, and looking forward to the next revolu- 
 tion, Leon Trotzky (Bronstein), then an inter- 
 national Menshevist, said: 
 
 "Once the proletariat becomes master of the 
 situation conditions will impel the peasants to 
 uphold the policies of a labor democracy." 1 
 
 Trotzky then freely admitted that the indus- 
 trial proletariat, however great their faith and 
 courage, could not stand alone, but must receive 
 speedy aid from the Russian peasants and from 
 a proletarian revolution in other countries, else 
 it would soon collapse. 2 
 
 Two Revolutions Expected. Russian social- 
 ists have always had two revolutions in mind: 
 a bourgeois or middle-class revolution which 
 should overthrow the power of the Czar, the aris- 
 tocracy and the bureaucracy, and a proletarian 
 revolution following sooner or later after that. 
 Naturally, they would help the middle class in 
 the first revolution, though fully intending to 
 turn against them in the second. 
 
 It was a question, however, whether the social- 
 ists should try for a proletarian revolution soon 
 after the bourgeois revolution, or wait until Rus- 
 sia, which was backward industrially, had become 
 a fully developed capitalistic country. This was 
 
 iLeon Trotsky, Our Revolution (collected, translated and ed- 
 ited by Moissaye J. Olgin), p. 100. 
 2 Ibid., p. 144. 
 
214* DICTATORSHIP OF COMMUNIST PARTY 
 
 probably back of the fateful disruption of 1903 
 in the Social Democratic Party, when the Bol- 
 shevists, under the leadership of Lenin (Ulia- 
 nov), stood for methods of conspiracy in revo- 
 lutionary tactics, and a party organization closed 
 to all but professional revolutionists; while the 
 Menshevists, including most of the "intelligent- 
 sia," favored more open political tactics and a 
 party organization admitting all sympathizers 
 with the Socialist cause. In other words, the 
 Bolshevists were the "close communionists" of 
 the social revolution. 
 
 Both Lenin and Trotzky took part in the revo- 
 lution of 1905, following the disastrous war with 
 Japan, and in the general strike of October, 
 which compelled the Czar to promise a constitu- 
 tion and to convene the first Duma. During the 
 general strike the first Council of Workmen's 
 Deputies was formed in St. Petersburg, to act 
 as the center of the revolution and to be the 
 nucleus of a revolutionary labor government. 
 Similar councils sprung up in many other in- 
 dustrial centers, but all were dispersed as soon 
 as the government began to get the upper hand. 
 
 Forecasting the course of the next revolution, 
 Trotzky said, in 1908: "The first new wave of 
 the revolution will lead to the creation of Soviets 
 all over the country. An All-Russian Soviet, 
 organized by an All-Russian Labor Congress, 
 
DICTATORSHIP OF COMMUNIST PARTY 215 
 
 will assume leadership of the local elective or- 
 ganizations of the proletariat." 
 
 The revolution of 1905 was largely a failure, 
 although the Duma was convened from time to 
 time and Russia maintained the semblance of a 
 constitutional government. Reaction followed, 
 with the usual measures of suppression, which 
 succeeded for a time, but after a few years a new 
 revolutionary movement began, which gradually 
 gained the support of all the progressive forces 
 of the country, though led, as in 1905, by the St. 
 Petersburg proletariat. In July, 1914, no less 
 than 400,000 workers of St. Petersburg went on 
 a political strike, and barricades were erected in 
 the streets. Then the great war broke out and 
 internal troubles were forgotten, for a time. 
 
 The Revolution of 1917. As the war went on, 
 the inefficiency, corruption and treason of the au- 
 tocracy brought disaster after disaster, until at 
 the end of 1916 the Russian armies were retreat- 
 ing, vast areas of Russian territory were occupied 
 by the enemy, the economic system was breaking 
 down, and the government seemed to be on the 
 point of making peace with the Central Powers. 
 The country again reached the boiling point of 
 revolution, with public demonstrations, until, on 
 March 11, 1917, the crisis came, the soldiers 
 joined the revolutionists, and the power of the 
 
 i Trotsky, op, cit., p, 160. 
 
216 DICTATORSHIP OF COMMUNIST PARTY 
 
 autocracy was gone. On March 15 the Czar 
 abdicated. 
 
 As Trotzky had predicted, informal commit- 
 tees or councils or Soviets were immediately or- 
 ganized, first among the workmen of Petrograd, 
 then among the soldiers and sailors, and presently 
 among workmen and peasants everywhere. The 
 Petrograd Council of Workers' Deputies took 
 the lead, with Tchcheidze, a Social Democrat, as 
 President, and Kerensky, then a member of the 
 Labor Party, as Vice-President. The Duma, 
 failing to preserve the monarchy, organized a 
 provisional government under Prince Lvov, and 
 began to arrange for the election of a Constituent 
 Assembly. 
 
 After that the country drifted, with a dual gov- 
 ernment, and no strong personality to take the 
 lead. The weakness of the middle class was re- 
 flected in the vacillation of the Duma, and the 
 intoxication of the masses in the disorderly 
 behavior of the Soviets. 
 
 A National Congress of Workers' and Sol- 
 diers' Deputies was called on April 16; an All- 
 Russian Congress of Peasants met in Petrograd 
 on May 17; and another All-Russian Congress 
 opened on June 22, resulting in the election of 
 the All-Russian Council of Workers', Soldiers' 
 and Peasants' Deputies, with an Executive Com- 
 
DICTATORSHIP OF COMMUNIST PARTY 217 
 
 mittee more powerful than the Provisional Gov- 
 ernment itself. 
 
 With all this there was much disorder, with 
 infinite variety of opinion and incessant debate, 
 while military discipline was relaxed, soldiers and 
 sailors deserted, workers took control of factories, 
 and peasants seized and divided many of the 
 great estates. 
 
 Bolshevists Secure Control. Meanwhile, the 
 more radical elements gained control in the 
 Duma and in the Soviets. The middle-class cabi- 
 net of Prince Lvov and Professor Miliukov was 
 replaced by that of Kerensky, whose dramatic 
 career lasted until the November revolution. The 
 Soviets passed from the control of the Social 
 Revolutionists and the Menshevists into the 
 hands of the Bolshevists, who had a more definite 
 program in mind. 
 
 Hearing that revolution was impending, the 
 exiles gathered from Siberia and from foreign 
 lands. With the connivance of Germany, wish- 
 ing to foment more trouble, Lenin and about one 
 hundred revolutionists of various factions came 
 from Switzerland in a special train. Trotzky 
 sailed from New York, was detained for a time 
 in Halifax, but, released at the request of Pro- 
 fessor Miliukov, he made his way to Petrograd 
 to play his part in the proletarian revolution. 
 
 The war went on more disastrously than ever, 
 
218 DICTATORSHIP OF COMMUNIST PARTY 
 
 until the Germans were at Riga, almost within 
 striking distance of Petrograd. The Kerensky 
 government could not handle the situation, and 
 there was fear of reaction, especially after the 
 futile revolt of General Kornilov, on September 
 9. The Preliminary Parliament, which met on 
 October 8, passed a vote of confidence in the 
 Kerensky ministry, though by a small majority. 
 Before that the Bolshevist members, numbering 
 53 out of 555 delegates, had left the Parliament, 
 protesting that it favored the bourgeoisie. 
 
 Then the Bolshevists, through the Petrograd 
 Soviet, seeing their opportunity, determined to 
 make a great stroke, by seizing the political 
 power in the name of the Russian proletariat. 
 On November 4 they organized a great demon- 
 stration in the streets of Petrograd, when the 
 people clamored for peace, for bread, for the 
 downfall of Kerensky and for "all power to the 
 Soviets." 
 
 The Coup d'etat. Then came the "coup 
 d'etat" of November 7 (October 25, old style), 
 when the Bolshevists, with the help of detach- 
 ments of soldiers and sailors, surrounded the 
 Winter Palace, arrested the provisional govern- 
 ment, and declared Kerensky, who had escaped, 
 an offender against the state. In a similar man- 
 ner they seized the political control, which they 
 have held by force until the present time. Thus 
 
DICTATORSHIP OF COMMUNIST PARTY 219 
 
 was accomplished by a few determined men what 
 has often been done by military leaders in an- 
 cient and modern times, and thus was set up the 
 so-called dictatorship of the proletariat, or rather, 
 the dictatorship of the Communist Party. 
 
 At the time of the revolution the Bolshevists 
 were a minority of Russian socialists, and were 
 denounced by the Menshevists, the Socialist Rev- 
 olutionists of the Right and the Executive Com- 
 mittee of the All-Russian Council of Peasants. 
 In the elections for the Constituent Assembly, on 
 November 25, they obtained less than one-third 
 of the votes cast. The Assembly was formally 
 opened on January 18, 1918, and when it refused 
 to obey the orders of the Bolshevists it was curtly 
 dismissed by the guards. 
 
 The Military Revolutionary Committee was 
 succeeded by the People's Commissars, composed 
 almost exclusively of members of the Communist 
 Party, with Lenin as President and Trotzky as 
 Minister of Foreign Affairs, and this arrange- 
 ment was sanctioned by the Second All-Russian 
 Congress of Soviets, in session on the day of the 
 revolution. On July 10, 1918, the Fifth Con- 
 gress of Soviets adopted the Constitution of the 
 Russian Socialist Federated Soviet Republic. 1 
 
 iFor further details see A. J. Sack, The Birth of the Russian 
 Democracy, New York, 1918; John Spargo, Bolshevism, New York, 
 1919; H. W. Laidler, Socialism in Thought and Action, New York, 
 1920, pp. 308-358. 
 
F 
 
 220 DICTATORSHIP or COMMUNIST 
 
 The Central Executive Committee. Accord- 
 ing to the Constitution, 1 the All-Russian Con- 
 gress of Soviets is the supreme power and is con- 
 voked by the Executive Committee at least twice 
 a year. This congress, numbering about 1,500 
 members, is composed of representatives of the 
 urban Soviets (one delegate for 25,000 voters), 
 and provincial congresses of Soviets (one delegate 
 for 125,000 voters). The city proletariat are 
 thus given predominant power. 
 
 The executive power is in the hands of the Ail- 
 Russian Central Executive Committee, of not 
 more than 200 members, elected by the Congress, 
 which again elects an inner circle of 17 members : 
 the Council of People's Commissars. The whole 
 organization is controlled by the Communist 
 Party, an exclusive organization of some 600,000 
 men and women, chiefly industrial workers, with 
 relatively few intellectuals: daring, devoted, 
 ruthless, fanatical conspirators, the backbone of 
 the revolution. The dictatorship, then, is in the 
 hands of a fraction of the urban proletariat, a 
 minority of a minority. Brailsford says: "With 
 the Soviets, the trade unions, the cooperatives and 
 the army under its control, the Communist Party 
 commands the whole organized life in Russia." 2 
 
 i Russian documents, etc., No. 136, March, 1919. Published by 
 the American Association for International Conciliation, New 
 York City. 
 
 2H. N. Brailsford, in The New Republic, Dec. 22, 1920. 
 
DICTATORSHIP OF COMMUNIST PARTY 221 
 
 The Peasantry. After the March revolution 
 the peasants, who already owned over 60 per 
 cent of the land, seized much of the remaining 
 land and divided it among themselves. The Pro- 
 visional Government was carefully preparing a 
 comprehensive land act, but the Bolshevists cut 
 the tangled knot by the decree of November 7, 
 1917, announcing the confiscation of all landed 
 estates, yet leaving the peasants in undisturbed 
 possession of the land they had seized. Complete 
 socialization of land was provided in later decrees. 
 After this, for a time, the peasants' Soviets were 
 recognized by the Communist government as the 
 foundation of the whole system of agricultural 
 production and as the basic units of government 
 in the rural districts. 
 
 But soon the peasants' Soviets proved far from 
 satisfactory, at least from the national point of 
 view, as they cared only for local interests and 
 held their grain at exorbitant prices. The Food 
 Commissars intervened, with the help of the poor- 
 est peasants, organized into Committees of the 
 Poor by decree of June 11, 1918, and thus re- 
 duced the power of the Soviets, especially where 
 they were controlled by the rich or the middle 
 peasants, who were hoarding grain. 
 
 Later, the Bolshevists tried to conciliate the 
 middle peasants, and even promised to let the 
 rich peasants alone, if they would refrain from 
 
222 DICTATORSHIP OF COMMUNIST PARTY 
 
 counter-revolutionary tendencies. But neither 
 promises nor threats could make the peasants 
 part with their produce at legal prices, except 
 when requisitioned by the government. Also, the 
 seizing of produce and the bad treatment of the 
 rich and middle peasants reduced the surplus, 
 decreased production, and caused food to rise to 
 famine prices. In these and other ways, the 
 peasants, as Marx had foreseen, and as Trotzky 
 had specifically prophesied, proved the greatest 
 stumbling-block in the way of communism. 
 
 The Russian peasants, in their newly won lib- 
 erty, may have been peculiarly intractable, but 
 certainly the Bolshevists, with their traditional 
 dislike of all peasants, especially the more pros- 
 perous, have sadly mismanaged the whole agra- 
 rian problem. As early as July 2, 1919, an 
 American representative reported as follows : 
 
 "The agricultural situation is desperate. All 
 farm equipment stolen from the landlords' es- 
 tates at the beginning of the revolution is now 
 spoiled and there is no one to repair it, and it 
 would not be of much use, anyway, as there are 
 no seeds, and persons possessing do not intend 
 sowing them, but try to sell them on the sly, as 
 the Bolsheviks took the last autumn crop from 
 the peasants at a low figure. Peasants just cul- 
 tivate sufficient for their own needs and a quan- 
 tity, which is allowed, is kept. Former private 
 
DICTATORSHIP OF COMMUNIST PARTY 223 
 
 estates are managed by a commission of all kinds 
 of rabble or by a soviet steward." 
 
 Writing in May, 1920, Spargo gives an 
 equally gloomy picture of rural conditions, tell- 
 ing how the peasants quarreled with one another 
 about the division of the land, how they resisted 
 the Food Commissars requisitioning food sup- 
 plies, how they hoarded grain, how production 
 fell off, how there was a scarcity of food in rural 
 districts as well as in the cities, and how the whole 
 policy and behavior of the Bolshevists further 
 brutalized the life of the peasants, deepened their 
 old distrust of government, fostered anarchy, 
 and restored the most primitive methods of liv- 
 ing and working. 2 
 
 So effective was the peasants' resistance, both 
 active and passive, that the failure of commun- 
 ism in Russia has been laid at their doors. Not 
 long ago Radek said : 
 
 "Naturally, we know quite well that we haven't 
 communism at all in Russia now. The peasant 
 has beaten us." s 
 
 The Industrial Workers. The history of the 
 industrial workers' Soviets has been very similar. 
 After the November revolution, the Bolshevists, 
 
 1 Certain Aspects of the Bolshevist Movement in Russia, p. 35. 
 American Association for International Conciliation, New York 
 City, March, 1920. 
 
 2 Spargo, The Greatest Failure in All History, pp. 90-140. 
 
 a Henry G. Alsberg, Russia : Smoked Glass vs. Rose Tint. "The 
 Nation," June 15, 1921. 
 
224? DICTATORSHIP OF COMMUNIST PARTY 
 
 instead of giving all power to the Soviets, as they 
 had promised, tried to reduce their injurious 
 activities. Lenin himself favored employment 
 of technical experts at high salaries, and even 
 advised the introduction of the Taylor system of 
 efficiency engineering. And when, in March, 
 1919, L. B. Krasin undertook the reorganization 
 of Russian industry, he insisted on restoring old 
 and tried methods of factory management, nar- 
 rowly limiting the powers of the workers' coun- 
 cils. Evidently, the soviet organization was 
 found quite unsuited to the conduct of business, 
 as Schaffle and other critics predicted many years 
 ago. 1 Pasvolsky says: 
 
 "The conflict of authority, the disproportion- 
 ate growth of the managing personnel and the 
 absence of efficiency due to lack of coordination 
 among the various parts of the system are all 
 characteristic of the whole system in its largest 
 ramifications. They are all, in the final analysis, 
 attributable, of course, to the human elements in 
 the system." 2 
 
 The trade unions, too, soon found that they 
 were under a system of compulsory, militarized 
 labor, where a strike was equivalent to mutiny 
 and treason. The ruthless punishment of the 
 Petrograd strikers of March, 1919, and the sup- 
 
 1 Schaffle, The Impossibility of Social Democracy, 1885. 
 
 2 Leo Pasvolsky, Economic Problems that Soviet Russia has Not 
 Solved. "The Annalist," March 14, 1921. 
 
DICTATORSHIP OF COMMUNIST PARTY 225 
 
 pression of many unions, clearly showed that the 
 unions were no longer fighting organizations, but 
 subordinate agencies of the central power. 
 Spargo says: "The Bolsheviki had been forced 
 to recognize the fundamental weakness. of every 
 form of syndicalism, including sovietism. They 
 had found that the Soviets were not qualified to 
 carry on industry efficiently; that narrow group 
 interests were permitted to dominate, instead of 
 the larger interests of society as a whole. The 
 same thing was true of the trade unions." 1 
 
 However, there has recently been a reaction 
 against centralization and military control, and 
 the Soviets and trade unions seem to be asserting 
 themselves once more. Both the conference of 
 trade unions in November, 1920, and the Eighth 
 All-Russian Congress of Soviets in December, 
 favored reducing the power of the People's Com- 
 missars and increasing that of the Central Exec- 
 utive Committee. These murmurings show that 
 the Russian people are restless under the dicta- 
 torship of the Communist Party, and that there 
 is a tendency toward decentralization, which may 
 lead to reaction, if not to anarchy. Commenting 
 on this situation Farbman says: "The real and 
 fundamental cleavage is between these factions 
 (including Lenin and Trotzky) and the Labor 
 Opposition, which represents the non-partisans, 
 
 i Spargo, The Greatest Failure in All History, p. 25C. 
 
226 DICTATORSHIP OF COMMUNIST PARTY 
 
 now the biggest party in Russia. The Commu- 
 nist Party remains the ruling force in the politics 
 of Russia, but within it there is working a power- 
 ful democratic section. The ferment in the Com- 
 munist Party and the awakening of the non- 
 partisan masses undoubtedly marks a crisis in the 
 progress of the Russian Re volution. " 1 
 
 Economic Breakdown. As is well known, the 
 industrial system of Russia is in a bad way. The 
 falling off in production of most raw materials 
 and manufactured goods has been enormous, so 
 that the cities, lacking food and fuel, are being 
 depopulated, and the country districts, lacking 
 clothing, shoes, salt, petrol, farm implements and 
 many other things, are reverting to primitive 
 ways of living. The railways have run down, 
 factories are short of coal and raw materials, ma- 
 chinery has become unusable, business men have 
 become common laborers, many of the technical 
 experts have disappeared, and there is a serious 
 shortage of labor, as great numbers of the indus- 
 trial workers have, regardless of severe penalties 
 for desertion, fled to the country in search of 
 food. 
 
 Then, too, the vast issues of paper money and 
 the fixing of maximum prices have greatly ag- 
 gravated the situation, causing prices to rise to 
 
 i Michael Farbman, The Ferment in the Communist Party in 
 Russia, "The New Statesman," March 5, 1921. 
 
DICTATORSHIP OF COMMUNIST PARTY 227 
 
 fabulous figures, encouraging smuggling and 
 "spekulatsia," and creating a new class of illicit 
 dealers whose profiteering is worse than anything 
 known before the war. In other respects, also, 
 notably the appalling decline of the birth-rate and 
 increase of the death-rate, 1 Russia has suffered 
 terribly since the Bolshevist revolution, although 
 her misfortunes are not attributable to that alone. 
 In a recent article, Olgin says : 
 
 "The conditions are trying, indeed. There is 
 hunger in Russia. Not hunger for bread and 
 potatoes, perhaps, but hunger for the most ordi- 
 nary necessities of life. There is no white bread 
 in the cities of Russia and very little meat or but- 
 ter or sugar or fat. Milk and eggs are being 
 given only to children, seldom to the sick. 
 Throughout my six months' sojourn in the Rus- 
 sian provinces I saw no chocolate, no oranges or 
 lemons, no coffee, no tea, no cake. No tramways 
 are running in the cities of Russia, no lamps are 
 burning in the streets outside of Moscow. In the 
 winter water pipes are bursting, canalization and 
 sewage systems collapse, misery and hideous suf- 
 ferings are inflicted on millions. There is a 
 scarcity of medicines and soap and an abundance 
 of disease. The peasants have enough to eat, yet 
 
 *In the year 1917 the Russian birth-rate was 29.5 per thousand 
 inhabitants, while the death-rate was 21.5 per thousand; in 1919 
 the birth-rate was 13 and the death-rate 75. Cited from the 
 statistics of the Commissariat of Health and Hygiene by Professor 
 S. Zagorsky, in "Le Monde Nouveau," February, 1921. 
 
228 DICTATORSHIP OF COMMUNIST PARTY 
 
 rural Russia is clamoring for salt and kerosene 
 and cotton fabrics and nails and flour and 
 scythes." 1 
 
 These and many other misfortunes are attrib- 
 utable in part to the disorganization caused by the 
 Great War and the civil wars following, in part 
 to the blockade, but chiefly to the attempt by the 
 Bolshevists to create a new system upon the ruins 
 of the old. In this connection, H. G. Alsberg 
 says: "A goodly share of the misery in Russia 
 to-day has been due to the stupid, deadening dog- 
 matism, the corruption, the frightful bureau- 
 cracy, the tyranny, the disdain, the contempt for 
 what we western 'bourgeois' would call person- 
 ality, the individual, which have been character- 
 istic of Russian Marxism as distinguished from 
 Russian human nature. Lenin again and again 
 has pointed out that the communist regime has 
 been not only stupid but almost insanely doc- 
 trinaire." 2 
 
 Individual Liberty Suppressed. Much more 
 could be said concerning the failure of commun- 
 ism in Russia, which has been recognized by most 
 of the foreign observers, notably those of socialist 
 faith or leanings. M. J. Olgin says that there is 
 no personal liberty in Russia, no political free- 
 
 1 Moissaye J. Olgin, Mechanics of Power in Russia, "The New 
 Republic," June 15, 1921. 
 
 2 Henry G. Alsberg, "Russia: Smoked Glass vs. Rose Tint, "The 
 Nation," June 15, 1921. 
 
DICTATORSHIP OF COMMUNIST PARTY 229 
 
 dom and no equality. The peasants are deprived 
 of their crops without receiving the equivalent 
 in manufactured goods ; the workingman is bound 
 to his factory or mine and cannot move without 
 a permit from the labor organization, which is 
 controlled by the state; he cannot go on strike, 
 and is compelled to participate in the activities of 
 the union. The bourgeois parties, of course, are 
 under the ban, but the Menshevists and the So- 
 cialist Revolutionists, even those of the Left 
 Wing, are prevented from issuing newspapers 
 and magazines or pamphlets and are forbidden 
 to call open meetings of their own. Moreover, 
 there is not even liberty of speech, as the people 
 are in fear of the Extraordinary Commission for 
 Combating Counter-revolution, which has prac- 
 tised all the methods of the Vehm Gericht and 
 the Spanish Inquisition. 1 
 
 Civilization in Peril. Writing from a more 
 theoretical point of view the well-known English 
 mathematician, theoretical anarchist and pro- 
 fessed guild socialist, Bertrand Russell, said, 
 after visiting Russia in May and June, 1920 : 
 
 "For my part, after weighing this theory 
 (revolutionary communism) carefully and after 
 admitting the whole of its indictment of bour- 
 geois capitalism, I find myself definitely and 
 strongly opposed to it. . . . I cannot sup- 
 
 i Olgin, in "The New Republic," June 15, 1921. 
 
230 DICTATORSHIP OF COMMUNIST PARTY 
 
 port any movement which aims at world revolu- 
 tion. The injury to civilization done by revolu- 
 tion in one country may be repaired by the 
 influence of another, in which there has been no 
 revolution; but in a universal cataclysm civiliza- 
 tion might go under for a thousand years." 
 
 Besides all this, many observers have noted the 
 cultural and moral decadence that has accom- 
 panied the decline of material civilization. Apart 
 from the damage that has been done to the 
 Church, to religious life and moral standards, 
 science and art have suffered grievously, through 
 the death, impoverishment and exile of many of 
 Russia's most distinguished men. The case of 
 the Russian scholars alone is sufficient illustration 
 of what has happened in other cultured circles. 
 Professor Rostovtsef , formerly of the University 
 of Petrograd, now of the University of Wiscon- 
 sin, writes: 
 
 "In painting the dark picture of Russia in 
 agony, emphasis is usually laid upon the physical 
 and material side of the ruin wrought by the Bol- 
 sheviki. This is fearful enough in all conscience, 
 millions of hapless victims paying the price 
 through executions, starvation, and epidemic dis- 
 eases. But more terrible and irreparable is the 
 destruction of the cultural and moral values. 
 
 iBertrand Russell, Soviet Russia 1920, "The Nation," July 31, 
 1920. 
 
DICTATORSHIP OF COMMUNIST PARTY 231 
 
 There are still millions of workers and peasants 
 to build up again the material prosperity of Rus- 
 sia out of her abundant natural resources, once 
 the dead hand of Bolshevism has been removed, 
 but the intellectual and moral field must lie fallow 
 for many years." 1 
 
 Industrial Reconstruction. Notwithstanding 
 all the ruin that has been wrought, the old indus- 
 trial system has not been entirely destroyed, and 
 it seems to be repairing and reconstructing itself, 
 much as a colony of ants or bees repair a dam- 
 aged hill or hive. The peasants have the land, 
 and nationalization exists only in name. Many 
 manufacturing industries are still nationalized, 
 but they are conducted largely by highly paid 
 experts, under the old system of factory manage- 
 ment, and appear to be drifting back toward pri- 
 vate ownership. The country districts, isolated 
 from the cities, and reverting to medievalism, 
 have developed the old "kustary" or cottage in- 
 dustries, and local trade, and with them a new- 
 old middle class of artisans. 
 
 The speculators of the towns, the numerous 
 officials, the army officers, the technicians and 
 foremen of factories, constitute a new middle 
 class that may be the backbone of Russia's 
 economic reconstruction. However, this "soviet 
 
 iM. I. Rostovtsef, The Plight of the Russian Scholars, "The 
 Weekly Review," April 20, 1921. 
 
232 DICTATORSHIP OF COMMUNIST PARTY 
 
 bourgeoisie" is menaced by the laboring class 
 which, as Dr. Paul Rohrbach says, "is over- 
 whelmingly anti-Bolshevik." Only 70,000, or 
 11 per cent, of the 604,000 members of the Com- 
 munist Party are at present employed as work- 
 men, the rest being soldiers or officials of one 
 kind or another. Dr. Rohrbach says: 
 
 "In Moscow there are hardly 100,000 workmen 
 left, but there are 230,000 Soviet officials, both 
 male and female. All attempts to eliminate ineffi- 
 ciency, sabotage, and corruption from this gigantic 
 bureaucratic apparatus are doomed to failure." x 
 
 Thus the Bolshevists, in their fatuous determi- 
 nation to carry out their theories to the logical 
 consequences, are confronted with social forces 
 and obstacles which they can neither destroy nor 
 control, and in conflict with which they are likely 
 to suffer shipwreck. Professor Zagorsky sums 
 up the situation thus: 
 
 "The Soviet authorities set as their aim the 
 immediate realization of communism in Russia, 
 but, by their policy, they succeeded only in cre- 
 ating conditions favorable to the rebirth of capi- 
 talism primitive, brutal and ruinous. Wishing 
 to abolish the division of society into classes, they 
 provoked class antagonisms such as Russia had 
 never yet seen. Trying to stifle the capitalist and 
 
 iDr. Paul Rohrbach, Germany and Eastern Europe, "The 
 Weekly Review," November 3, 1920. 
 
DlCTATOKSHIP OF COMMUNIST PAKTY 233 
 
 bourgeois classes, they created a new petty bour- 
 geoisie, equally rapacious. In endeavoring to 
 suppress private property, they merely succeeded 
 in developing, in all grades of society, property 
 instincts pushed to an unheard-of degree, and, 
 throughout the whole social economy, an unpre- 
 cedented orgy of unbridled egoism." * 
 
 Capitalism Coming Back. The soviet govern- 
 ment, evidently recognizing the drift toward 
 capitalism, and unable to handle the industrial 
 situation, has offered concessions to foreign capi- 
 talists for periods running from 20 to 80 years, 
 including a tentative concession to an American 
 syndicate for the exploitation of fish, furs, coal, 
 and petroleum in Kamchatka, a great forestry 
 concession to an English syndicate, and another 
 to German dye manufacturers. Also, the gov- 
 ernment has made overtures for trade with for- 
 eign countries, as in the recent Russo-British 
 agreement, although it has little to offer in ex- 
 change but gold, as there is practically no sur- 
 plus of wheat, flax, lumber, or other raw materi- 
 als. And as the gold is limited in quantity there 
 remains, as Krasin has said, "only the granting 
 of concessions." 2 
 
 Finally and this is another long step back to- 
 
 iS. Zagorsky, Les Aspects Soriano? de la R6publique des Soviets, 
 ''Le Monde Nouveau," Fevrier, 1921. 
 
 2 Krasin answers Wells. By Fabian Franklin, "The Weekly 
 Review," June 18, 1921. 
 
234* DlCTATOKSHIP OF COMMUNIST PARTY 
 
 ward capitalism the Tenth Congress of the 
 Communist Party, which met at Moscow in May, 
 1921, adopted a radical change of policy de- 
 signed to encourage the peasants and the small 
 capitalists. The peasants are to pay taxes in 
 kind by giving the state about one-third of the 
 crop, the remaining two-thirds to remain at the 
 disposal of the peasants for trading through the 
 re-established cooperative societies. The govern- 
 ment is to retain control of transportation and 
 the largest industries, but small and middle-sized 
 cooperatives and private industries are to be per- 
 mitted. 1 ' 2 
 
 The Third International. Strangely incon- 
 sistent with such compromises are the twenty-one 
 conditions of admission laid down by the Con- 
 gress of the Third International held in Moscow 
 in August, 1920, designed to separate the sheep 
 from the goats in all socialist circles throughout 
 the world. Socialist organizations desiring ad- 
 mission to the International Communist Party 
 
 i"The Literary Digest," June 18, 1921. 
 
 2 This decision came too late to induce the peasants to raise 
 larger crops, or, indeed, to save the usual amount of seed, so that 
 the acreage planted for the crop of 1921 was less than usual and 
 the amount of seed planted per desiatina ( 2.7 acres ) was less than 
 half of the usual amount. So, when the drought came in the 
 Volga region, there were but slight reserves on which the peasants 
 could live until another season, no adequate means of transpor- 
 tation of food from the Ukraine and other districts, and very 
 little seed to plant for the harvest of 1922. The responsibility of 
 the Soviet government for the worst results of the frightful 
 famine of 1921 cannot be evaded. (Cf. Why Russia Starves, by 
 Leo Pasvolsky, "The Weekly Review," August 6, 1921.) 
 
DICTATORSHIP OF COMMUNIST PARTY 235 
 
 must agree to have only tried communists as lead- 
 ers, to purge themselves of all small-bourgeois 
 elements, to carry on incessant propaganda 
 among industrial workers, peasants, trade unions, 
 cooperative societies and the like, to break with 
 reformism, to make war against the Amsterdam 
 International, to assist any soviet republic fight- 
 ing against counter-revolution, to adopt the name 
 "Communist Party," and to submit to the iron 
 discipline of the Communist International. In 
 reading such outrageous demands one cannot but 
 think of the old proverb : 
 
 "Whom the gods would destroy they first make mad." 
 
 Naturally, these iron - clad demands have 
 caused great searchings of heart among socialists 
 of every country, as all true communists were 
 called to come out from among their "yellow" 
 associates, and to be wholly separate and sancti- 
 fied to the great cause. 
 
 There has been, therefore, a split in the social- 
 ist parties of practically every country, the "red" 
 minority usually joining the Third International, 
 and the majority of the "yellow" variety being 
 left to the tender mercies of the bourgeoisie. In 
 the United States, for example, many of the in- 
 tellectuals and revisionists, as Spargo, Walling, 
 Ghent and Russell, had already left the Socialist 
 Party during the war, but now most of the others 
 
236 DICTATORSHIP OF COMMUNIST PARTY 
 
 of that belief, including Algernon Lee, James 
 Oneal, Meyer London, Victor Berger and Mor- 
 ris Hillquit, refusing to bow down to the Moscow 
 International, are excommunicated, and only a 
 remnant of comparatively unlearned agitators 
 are left to bear the standard. 
 
 Bolshevism Is Revolutionary Marocism. But 
 intellectuals of high standing such as these, 
 among whom are now numbered Plekhanoff and 
 Martoff of Russia, Kautsky and Bernstein of 
 Germany, and even Jean Longuet of France, 
 grandson and interpreter of Karl Marx, cannot 
 approve either the doctrines or the tactics of the 
 Russian communists, because they do not con- 
 form to the evolutionary views of the later Marx, 
 and do not rest on the will of the "immense ma- 
 jority" of the proletariat. 
 
 Doubtless the revolutionism of the Russian 
 communists is theoretically unsound and was 
 repudiated by Marx and Engels in their later 
 years. And yet these communists have a right 
 to claim both Marx and Engels as their spiritual 
 fathers, because they follow their earlier, if not 
 their later, teachings, and are moving in the di- 
 rection indicated by them, though far too fast 
 for their academic comrades. The case is well 
 stated by Vexler: 
 
 "Between Babeufs Club of Equals and 
 Lenin's Central Committee lies a world of dif- 
 
DICTATORSHIP OF COMMUNIST PARTY 237 
 
 f erence and a century of history. Yet it cannot 
 be gainsaid that an unbroken chain of revolution- 
 ary tradition links the conspiracy of 1796 with 
 the coup d'etat of 1917. From Babeuf to Blan- 
 qui, from Blanqui to Marx, from the latter to 
 Lenin, the red thread of the social revolution 
 runs unbroken through several revolutionary 
 organizations." * 
 
 Therefore the academic socialists, who for 
 more than a century have tried to arouse the pro- 
 letariat to a burning sense of their wrongs and 
 to convince them that capitalism was doomed to 
 destruction, have no reason to be surprised or 
 grieved because the enraged and unleashed pro- 
 letariat, seeing the quarry at their mercy, have 
 sprung direct at its throat. 
 
 The communists will doubtless fail in their pre- 
 mature attack, but they have at least presented 
 an object lesson of socialism in action that may 
 save the world from like experiments, though at 
 terrible cost to their own country and to them- 
 selves. And the academic socialists, whose theo- 
 retical position is no less unsound, cannot exon- 
 erate themselves by saying that they did not plan 
 or intend the event. What are plans and speci- 
 fications in time of revolution? 
 
 It might have been well for them if they had 
 pondered the wise words of that political cynic, 
 
 i Feliciu Vexler, "Columbia University Quarterly," July, 1919. 
 
238 DICTATORSHIP OF COMMUNIST PARTY 
 
 Machiavelli: "Let no man who begins an inno- 
 vation in a state expect that he can stop at his 
 pleasure or regulate it according to his inten- 
 tion." 
 
APPENDIX 
 
 THE NONPARTISAN LEAGUE 
 
 By way of indicating the historical significance of the 
 Nonpartisan League, founded by A. C. Townley in Feb- 
 ruary, 1915, it should be noted that it is not a proletarian 
 outbreak such as Marxian socialists have in mind, but an 
 expression of discontent on the part of farmers, especially 
 those of the western or poorer districts of North Dakota. 
 As such it is an agrarian movement related to the Populist 
 and Free Silver agitation of the 'nineties and the Granger 
 movement of the 'seventies. 
 
 The National Granges directed their attacks chiefly 
 against the railroads, which they desired to regulate; the 
 Populists and free-silver advocates favored inflation as a 
 means of maintaining prices and paying debts ; and in this 
 new agrarian movement the farmers, believing themselves 
 cheated by commission merchants, millers, bankers and 
 other middlemen, wish to do their own marketing by cooper- 
 ative effort, or, failing that, by means of elevators, mills, 
 banks and other agencies owned and operated by the state. 
 
 Economic conditions do not account for everything, yet 
 they may partially explain why the Nonpartisan League 
 should have originated in North Dakota rather than in 
 one of the other western states. According to the latest 
 census (1920) North Dakota has a population of 646,872, 
 of whom 67 per cent live on the farm, 19 per cent in 
 villages and small towns, and the rest in towns of 2,500 
 inhabitants or over. The commercial and industrial capital 
 of the state, therefore, is not Fargo with its 22,000 in- 
 habitants, nor Grand Forks with about 14,000, nor Bis- 
 marck, the seat of government, with barely 7,000, but 
 rather the twin cities, Minneapolis and St. Paul, the only 
 
 239 
 
240 APPENDIX 
 
 great urban center between the Great Lakes and the 
 Pacific coast. 
 
 Then, too, North Dakota is still largely a one-crop state, 
 producing chiefly small grains, of which spring wheat is 
 by far the most important. This great crop is mostly 
 financed, marketed and milled in Minneapolis, St. Paul, 
 Duluth, Milwaukee and Chicago, and it is not strange 
 that the farmers of North Dakota should regard the mer- 
 chants, manufacturers and bankers of these cities as non- 
 resident aliens. 
 
 The case against the financial interests of the great 
 cities, including New York, the mother of them all, makes 
 mention of speculation in land, discrimination in railway 
 rates, increase in mortgages, high rates of interest, growth 
 of tenancy, and other forms of real or fancied exploitation, 
 but the chief count in the indictment asserts that the 
 farmers do not receive a square deal in the marketing of 
 farm products. 
 
 As to the marketing of spring wheat, relatively little is 
 said about the automatic adjustment of prices on the 
 Chicago board of trade and similar organizations, although 
 their operations are a mystery to outsiders, who for that 
 reason suspect the insiders of manipulation, gambling and 
 other questionable practices. But it is well known, though 
 not generally admitted, that the prices paid to the farmers 
 fluctuate with those of the central markets, and that the 
 grain dealers, allowing for freight charges and all other 
 expenses, are doing business on a narrow margin. The 
 chief complaint, therefore, is that the grading done at the 
 private elevators is unfair and that competition has been 
 largely eliminated in the buying of grain by the conspiracy 
 of the dealers under the leadership of various business 
 men's associations, especially the Minneapolis Chamber of 
 Commerce. 
 
 In a recent speech, Senator E. F. Ladd, formerly presi- 
 dent of the North Dakota Agricultural College, said: 
 
APPENDIX 241 
 
 "The flagrant injustice of allowing the grades of grain 
 to be arbitrarily fixed by the buyer is best evidenced by 
 the fact that the great terminal elevators at Minneapolis 
 and Duluth habitually sold more bushels of high grade 
 grain than their records show that they had purchased 
 from the farmers. Evidently by some mysterious hocus 
 pocus grain became enhanced in value after it had left the 
 farm and gone into the hands of the grain buyers, and, of 
 course, this manipulation in grades cost the farmers of 
 North Dakota in the aggregate many millions of dollars 
 every year." 
 
 In reply to this and similar statements the monthly let- 
 ter of the National City Bank of New York for April, 
 1921, says: 
 
 "In our opinion it is incredible that the Minneapolis 
 Chamber of Commerce has countenanced unfair and ir- 
 regular methods. It is quite possible that there may have 
 been individual members of the grain exchange who would 
 not be above sharp practice, but that the exchange as a 
 body would adopt rules of practice of that kind is un- 
 believable." 
 
 The charge is based upon the practice of mixing, by 
 which a certain amount of grain of inferior grade may be 
 mixed with that of better quality, without lowering the 
 grade or injuring the milling value. Moreover, the possi- 
 bility of doing this is taken into account in fixing the price 
 of the lower grades, so that the farmer may gain in price 
 part or all of what he loses in grade. However, this ex- 
 planation does not satisfy the farmers of North Dakota. 
 
 There are three chief lines of action open to the farmers 
 of North Dakota or any other state where similar problems 
 present themselves. In the first place, they might do their 
 own marketing through cooperative associations like the 
 California Fruit Growers' Association, which have been 
 measurably successful in holding private interests in check 
 and in setting standards of fair market conditions, eveD 
 
242 APPENDIX 
 
 when they have gained little in the way of higher prices. 
 
 Secondly, they might appeal to the state to remove the 
 most glaring abuses by inspection and control of grading 
 and other conditions of marketing, thus supplementing the 
 work of the United States Bureau of Markets. Or, going 
 farther along the line of state activity, they might ask for 
 state ownership and operation of elevators, mills and other 
 agencies by which the grain growers might become in- 
 dependent of private enterprise or at least set up equitable 
 standards to which private business would conform. 
 
 In the third place, the farmers might find, after careful 
 study of marketing, that it could be most efficiently carried 
 on, as now, by private enterprise, and that the business 
 men's organizations would cooperate with them to remove 
 or minimize abuses and to secure the greatest possible 
 benefit to all concerned. 
 
 The first of these methods has been tried in North 
 Dakota, chiefly by the Equity Cooperative Exchange, 
 which has built hundreds of elevators, some of which have 
 been quite successful, especially during the time of rising 
 prices. However, the terminal elevator which the Equity 
 Exchange built in St. Paul lost in four years about $75,000, 
 and, of course, the financial interests of Minnesota were 
 blamed for this. 
 
 As is well known, farmers' cooperative associations are 
 hard to carry on, as there are too many masters, it is diffi- 
 cult to obtain competent managers, and not easy to establish 
 financial connections. Besides, the margin of profit per 
 bushel of grain handled is not so large as is commonly 
 supposed and, in general, the farmers are as yet lacking 
 in cooperative experience. 
 
 Evidently, the cooperative elevators of North Dakota 
 were not altogether satisfactory, as is shown by the clamor 
 for state owned elevators which arose as far back as the 
 year 1907. In the election of November, 1912, the people 
 ratified a constitutional amendment authorizing the state 
 
APPENDIX 243 
 
 to establish a state-owned terminal elevator, but the legis- 
 latures of 1913 and 1915 did not obey the mandate. It 
 might have been well if the farmers had been allowed to 
 go ahead with their schemes, if only that they might have 
 shown the relative inefficiency of state management and 
 have been dissuaded from trying experiments on a larger 
 and more hazardous scale. 
 
 But the movement grew by the very opposition which 
 it engendered, until in February, 1915, Mr. A. C. Townley, 
 formerly an organizer for the Socialist Party, conceived 
 the idea of creating a farmers' league which should control 
 the political situation and thus force the legislature to 
 comply with their demands. Thus was founded the Farm- 
 ers' Nonpartisan League of North Dakota, which later 
 developed into the National Nonpartisan League, and has 
 been the storm center of politics in North Dakota and 
 several other states during the past few years. 
 
 Through the efforts of Townley and his corps of organ- 
 izers, at first walking from farm to farm, later going in 
 Ford automobiles, the League spread like a prairie fire. 
 Presently it obtained control of the Republican Party, and 
 in the state election of 1916 it elected Lynn J. Frazier as 
 governor, won all the state offices except that of state 
 treasurer, elected 81 of the 113 members of the lower 
 house, 18 of the 25 members then elected to the senate, 
 and three judges of the supreme court. 
 
 The League could not do much in the way of legislation 
 during the session of 1917, because of the hold-over sen- 
 ators, but during the ensuing two years it carried on a 
 more active campaign than ever, until it had organizations 
 in 13 states, with nearly 200,000 members who had paid $16 
 apiece for their two years' dues. In the election of 1918 
 in North Dakota they obtained control of both houses, 
 sent three of their members to Congress, and passed amend- 
 ments to the constitution giving the legislature large 
 powers in the carrying on of industry and permitting 
 
244? APPENDIX 
 
 exemption of improvements and some personal property 
 from taxation. The total vote for the League in the 
 states where it was active was about 600,000. 
 
 The program of the League pointed strongly in the 
 direction of state socialism, demanding state terminal 
 elevators, warehouses, flour mills, pulp and paper mills, 
 stockyards, packing houses, cold-storage plants, state hail 
 insurance, rural credit banks. Then, too, there was an 
 additional program of labor legislation designed to capture 
 the labor vote. 
 
 During the session of 1919 the Legislative Assembly 
 of North Dakota, now completely controlled by the League, 
 passed laws for the creation of a state bank, state mills 
 and elevators, a system of state grading, a state home build- 
 ing association, state insurance, and other measures for 
 the benefit of the farmers first of all. The Assembly also 
 passed a series of labor laws, including disability com- 
 pensation, eight-hour day for women, minimum wage for 
 women, limiting the issuance of injunctions in labor dis- 
 putes, requiring the union label on state printing. For 
 the administration of the state industrial enterprises an 
 Industrial Commission was created, consisting of the 
 Governor, the Attorney-General, and the Commissioner of 
 Agriculture and Labor. 
 
 The inauguration of so considerable a program of state 
 enterprise required a considerable sum of money, so an 
 issue of bonds up to a limit of $17,000,000 was authorized 
 by the Assembly. The legality of the entire program in- 
 cluding the validity of the bonds, was soon attacked in the 
 courts, but a favorable decision was rendered by the United 
 States Supreme Court on June 1, 1920. 
 
 Toward the end of the year an issue of $6,200,000 in 
 bonds, bearing interest from 5 to 5% per cent was offered 
 for sale, but could not be floated at the time. Friends of 
 the League accuse the financial interests of conspiring to 
 discredit the bonds and of demanding that NQ?th Dakota 
 
APPENDIX 245 
 
 abandon part of its industrial program as the price of their 
 assistance. The banks, on the other hand, say that the 
 bonds are not attractive to investors, as the financial affairs 
 of North Dakota have been badly managed, and as the 
 bond market in general has been much depressed. Failing 
 to sell the bonds in the usual way, the Bank of North 
 Dakota has recently offered them to popular subscription. 
 Lacking funds from this source, and eager to begin the 
 various enterprises, the Industrial Commission took ad- 
 vantage of section 7 of the Act creating the Bank, which 
 required all state, county, townsfcip, municipality and 
 school district funds, with the funds of all penal, educa- 
 tional and industrial institutions of the state, and all other 
 public funds, to be deposited in the bank. 
 
 On the basis of these deposits the Bank made large 
 advances to the industrial enterprises. The Mill and 
 Elevator Association, organized May 29, 1919, purchased 
 a small experimental flour mill at Drake, which it operated 
 at some loss because of falling prices, which could not be 
 legally evaded by the usual "hedging." On May 5, 1920, 
 the Association began the construction of a large mill at 
 Grand Forks to cost about $2,000,000, but the work was 
 suspended later in the year for lack of funds. The Home 
 Building Association began operations in the summer of 
 1919, since when 31 homes have been completed and 27 
 are in course of construction; but this work also has been 
 suspended. 
 
 The Bank also lent nearly $3,000,000 in over 600 farm 
 loans, running for 30 years. Then, too, it deposited about 
 the same amount in some 470 local banks, some of which 
 were specially favored. The deposits in the Scandinavian 
 American Bank of Fargo, now closed, in which League 
 members are said to have been largely interested, amounted 
 to $444,127, and the deposits in other closed banks 
 amounted to about $500,000 more. In these and other 
 ways nearly $5,000,000 of the Bank's resources were, tied 
 
246 APPENDIX 
 
 up in non-liquid or "frozen" credits and were not available 
 to meet the demands of the local governing bodies and 
 other custodians of public funds. 
 
 The troubles of the Bank were not wholly due to bad 
 banking, but in part to a change in public opinion, which 
 after a time set strongly against the League. In No- 
 vember, 1916, Governor Frazier was elected by a majority 
 of 67,000; in 1918 his majority was reduced to 15,000; 
 and in 1920 it was only 4,700, although in that election 
 women were first allowed to vote. At that time, too, the 
 League lost control of the House, holding the Senate by 
 a small majority. To cap the climax, two important 
 measures were adopted by referendum vote, the one con- 
 fining the activities of the Bank to rural credits, thus 
 preventing the financing of the industrial projects, the 
 other repealing the aforementioned section 7 which required 
 the political subdivisions to deposit their funds with the 
 Bank. 
 
 Soon after this 37 out of 51 county treasurers demanded 
 their funds, and presently other custodians of public moneys, 
 followed suit, thus creating a serious run on the Bank, 
 as the deposits were large. Thereupon the Bank had to 
 call in deposits from the local banks, creating a crisis which 
 was only partially relieved by the redeposit of these funds 
 by their custodians in the same or other local banks. The 
 situation was decidedly embarrassing, especially in view 
 of the general financial stringency. Some 35 of the local 
 banks closed their doors, including the Scandinavian 
 American Bank, and the Bank of North Dakota itself 
 could not pay all its depositors. The Bank is doubtless 
 solvent enough, as it has the credit of the state back of it, 
 but it will take a long time to liquidate, and meanwhile 
 the taxpayers will have to pay. Altogether, North Dako- 
 ta's experience of state banking, coupled with state in- 
 dustrial enterprise, has not been happy. 
 
 As to the success or failure of the industrial enterprises, 
 
APPENDIX 247 
 
 nothing final can be said, as most of the projects have 
 been discontinued for lack of funds and will not be resumed 
 until the bonds are sold or the taxpayers advance the 
 money, which they will hardly do. It is said that the state 
 is unable to pay hail losses amounting to some $800,000. 
 Already taxes are more than twice what they were before 
 the war, and the prospect of increasing burdens on the 
 farmers in these hard times must be decidedly unpleasant. 
 However, Senator Ladd is very hopeful, for he says: 
 
 "The State mill (at Drake), although it has been run 
 on an experimental scale, has demonstrated that huge sav- 
 ings can be effected in the marketing, manufacture, and 
 distribution of North Dakota's wheat crop when the state 
 enters into business on a large scale. If the entire wheat 
 crop of North Dakota can be handled by the state and 
 manufactured into flour, the annual saving to the produc- 
 ers and consumers of the state would not be less than 
 $60,000,000." 
 
 Extravagant statements such as this, which abound in 
 the Nonpartisan Leader and other publications of the 
 League, read like the prospectuses of certain mining com- 
 panies, and must be largely discounted by the taxpayers 
 of North Dakota if they would not plunge into financial 
 waters beyond their depth. Up to the present time they 
 have got nothing but increasing taxes, glowing promises, 
 and some experience of the ways of government in the 
 initiation and conduct of industrial enterprises. Possibly, 
 however, they may take comfort in the thought that North 
 Dakota has been a pioneer in this line of activity and that 
 her sister states may profit by her mistakes. 
 
 The experience of North Dakota is of little value except 
 in a negative way; but that of New Zealand, continued 
 through more than 25 years, has some bearing upon the 
 problem involved. In that country in the early 'nineties, 
 the Liberal Party, consisting largely of small farmers and 
 shopkeepers, made an alliance with the labor unions for 
 
248 APPENDIX 
 
 their mutual benefit, and in the years that followed they 
 put through a double-barreled program of legislation de- 
 signed to break the power of the great landowners and 
 capitalists. 
 
 On the one hand were laws designed to break up the 
 great estates, whether by direct purchase or by special 
 taxation of large holdings and the property of absentees. 
 There were government advances to settlers, and other 
 favors to the small farmers. On the other hand, a long 
 series of labor laws were passed, including the employers' 
 liability amendment act, the industrial conciliation and 
 arbitration act, the seamen's act, acts providing for old- 
 age pensions, workers' dwellings, advances to workers and 
 the like. Also, the government, which already owned and 
 operated the railroads, acquired a few coal mines, went 
 into the fire, life and accident insurance business, and 
 carried on some other activities pointing in the direction of 
 state socialism. 
 
 The experience of New Zealand shows clearly that a 
 country may move in a given direction for a time without 
 approaching the apparent goal. Certainly, the agrarian 
 legislation of New Zealand, while ostensibly socialistic, 
 was really the very opposite of that, as it increased the 
 number of small farmers and strengthened their attach- 
 ment to the institution of private property. So also the 
 "socialistic" labor legislation, in so far as it was beneficial 
 to the laborers, tended to make them less discontented and 
 more loyal to the present social order. 
 
 However and this is an interesting phase of the class 
 struggle the "Lib-Lab Party" continued for a time, but 
 as the farmers became more prosperous and the laborers 
 demanded more and more, including further taxation of 
 land values, the alliance weakened, and finally broke up, 
 the farmers foregathering with conservatives, while the 
 more radical of the laborers drifted toward socialism. 
 
 Another interesting phase of state activity in New ea- 
 
APPENDIX 249 
 
 land is the fact that it has built up a large and influential 
 civil service or bureaucracy, which is a source of political 
 strength to the party in power, giving opportunity to 
 political leaders to build up an impregnable machine. 
 Indeed, the long life of the "Lib-Lab Party," from 1891 
 to 1912, was probably due in part to the tremendous pow- 
 er wielded by the Ministry, which made it advantageous 
 to civil servants, merchants, manufacturers, contractors, 
 banks, newspapers, counties, municipalities, and even 
 farmers, to "stand in" with the government. The fact 
 that this kind of corruption has not gone further in New 
 Zealand is a testimony to the generally high standards of 
 public morality in that country. 
 
 As to the general financial success of the industrial en- 
 terprises in New Zealand, the most that can be said is that 
 they have not ruined the country, although some of them 
 have resulted in deficits which have been made up out of 
 taxes and loans. It should be noted, too, that New Zealand 
 has done little in the way of "socialistic" legislation during 
 the past fifteen years, and that there is at present little 
 evidence to show that capitalism in that country is break- 
 ing down. 
 
 Viewing the experiments of North Dakota in the light 
 of those of New Zealand, and in their relation to "scientific" 
 socialism, it is evident that the farmers of North Dakota 
 as a class are not socialists, and that if they succeed in 
 solving the marketing problem, whether by state activity 
 or cooperative effort, or merely by regulating private en- 
 terprise, they will be better satisfied than ever with the 
 private ownership of land and other property. Moreover, 
 as everybody knows, the farmers are the bulwark of 
 capitalism, and anything that will make them prosperous 
 and happy will strengthen the foundations of the present 
 social order. 
 
 By the same token, orthodox socialists, wishing industrial 
 conditions to grow worse and worse, scoff at all such ex- 
 
250 APPENDIX 
 
 periments in "state socialism" or "state capitalism" as 
 have been tried in New Zealand and North Dakota. Some 
 of them have attacked the Nonpartisan League and are 
 glad to see it fail, because they wish to have it clearly 
 shown that social salvation can come through the prole- 
 tariat alone. But the farmers of North Dakota are not 
 proletarians and have no wish to become such; wherefor, 
 from the point of view of the evolutionary Marxists, and 
 certainly from that of the Moscow International, they are 
 but henchmen of the bourgeoisie. 
 
 For all that, there have been and are a number of social- 
 ists of various shades of red or pink among the leaders 
 of the Nonpartisan League, for soon after the movement 
 had well begun a number of carpet-bag socialists came 
 from far and near, even as the Bolshevists and others of 
 that belief gathered in Petrograd after the March Revo- 
 lution. 
 
 A. C. Townley himself was an organizer for the Social- 
 ist Party and ran for the legislature of North Dakota on 
 the Socialist ticket in November, 1914. The well-known 
 socialist author and journalist Charles Edward Russell 
 helped to launch the Nonpartisan Leader, wrote a series 
 of appreciative articles for Pearson's Magazine, also a 
 book, and was for some months a valued advisor of the 
 League. 
 
 Arthur Le Sueur, a socialist of long standing, a friend 
 and associate of Mr. Debs, and a member of the executive 
 committee of the Socialist Party, was one of the leading 
 lights of the League. Another was Walter Thomas Mills, 
 a peripatetic author and orator, once of Milwaukee, later 
 of California, still later a socialist agitator and organizer 
 in New Zealand. Still another was D. C. Coates, sometime 
 lieutenant-governor of Colorado, one of the organizers of 
 the I. W. W. in Chicago in the year 1905, la-ter a prominent 
 socialist in Spokane, Washington. Besides these were 
 minor socialist lights, such as A. E. Bowen, Joseph Gilbert, 
 
APPENDIX 251 
 
 Richard Grace, L. L. Randall, Alex Strom, O. M. Thoma- 
 son, J. Arthur Williams, F. B. Wood, Howard Wood and 
 others. 
 
 The presence of these men, of a type not indigenous in 
 North Dakota, shows that the League did not exist merely 
 for the solving of the marketing problem, but that a strong 
 group of professed socialists were directing it toward 
 ulterior ends. They were wise enough to keep in the back- 
 ground and to put mostly non-socialists into public office, 
 but what took place on the stage can be fully understood 
 only by finding out what went on behind the scenes. 
 
 In the corresponding movement in New Zealand, on the 
 contrary, few, if any, out-and-out socialists were concerned, 
 and such radical legislation as was passed was directed 
 toward immediate ends. Also, in New Zealand more care 
 was taken to put competent men in charge of the various 
 public enterprises and to keep them free from political 
 interference. 
 
 In fact, the political organization of North Dakota, as 
 of all the other states of the Union, is not well suited to 
 the carrying on of state industries, and must be consid- 
 erably changed before it can operate them with any measure 
 of success. Probably it will be necessary to have some- 
 thing like the cabinet system obtaining in the United King- 
 dom and the British dominions, or the more highly 
 organized, though less elastic bureaucracy of continental 
 Europe. To plunge blindly into a number of industrial 
 activities, as North Dakota did, without the necessary 
 changes in governmental organization, with insufficient poli- 
 tical training, with practically no business experience, and 
 with insufficient funds, was to invite disaster. 
 
 The League itself, with its highly centralized organiza- 
 tion, was for a time the real government of North Dakota, 
 a government within a government, or, rather, the power 
 behind the throne, and, as such, was open to all the ob- 
 jections commonly urged against Tammany and other 
 
252 APPENDIX 
 
 political machines. And inasmuch as a number of the most 
 prominent leaders, as socialists and adventurers, were in 
 no sense representatives of the farmers of North Dakota, 
 the dictatorship of the League was all the more objec- 
 tionable. 
 
 At the present time it looks as though the methods, if 
 not the aims, of the Nonpartisan League of North Dakota 
 were pretty well discredited, as premature efforts to solve 
 the marketing problem by state enterprise on too large a 
 scale. The revised program of the League in other states 
 appears to favor state ownership of elevators, mills, pack- 
 ing companies, and the like, "in so far as necessary to 
 restore competition and break monopoly power." 
 
 Meanwhile, there has been a revival of interest in 
 cooperative marketing, as exemplified in the work of the 
 Farmers' Educational Cooperative Union, and in the recent 
 organization of the United States Grain Growers, Inc., 
 which is to coordinate the work of many of the other 
 cooperative associations, to carry on the marketing of 
 grain and to manage other operations on a very large scale. 
 The prospectus calls it "A farmer-owned, non-stock, non- 
 profit association to handle and sell grain at cost for its 
 farmer members, designed to stabilize market prices, 
 eliminate speculation and manipulation, and furnish ade- 
 quate credit to farmers." 
 
 Clearly, the revolt of the farmers against the abuses, 
 real and imaginary, of the present marketing system is 
 not a revolutionary movement directed against the founda- 
 tions of the present social order, of which the farmers have 
 always been staunch supporters. Doubtless, the farmers 
 of North Dakota will presently get rid of the vagrant 
 socialists who have so badly muddled and discredited the 
 movement with their vague theories and their woful lack 
 of business experience. After that the movement will 
 doubtless continue in a saner and more businesslike way. 
 
SELECTED LIST OF BOOKS IN 
 ENGLISH 
 
 GENERAL AND HISTORICAL 
 
 Barker, J. Ellis. British Socialism. 1908. Scribner. 
 
 Beer, M. A History of British Socialism. 2 vols. 1919. 
 Bell (London). 
 
 Bliss, New Encyclopedia of Social Reform. 1908. Funk 
 and Wagnalls. 
 
 Cross, Ira B. Essentials of Socialism. 1912. Macmillan. 
 
 Ely, R. T. Socialism and Social Reform. 1895. Crowell. 
 
 Ensor, R. C. K. (editor). Modern Socialism. 1907. Scrib- 
 ner. 
 
 Guthrie, William B. Socialism Before the French Revolu- 
 tion. 1907. Macmillan. 
 
 Hillquit, Morris. History of Socialism in the United 
 States. 1910. Funk and Wagnalls. 
 
 Hughan, Jessie W. American Socialism of the Present 
 Day. 1911. Lane. 
 
 Kirkup, Thomas, and Pease, Edward. History of Social- 
 ism. 1914. Macmillan. 
 
 Laidler, Harry W. Socialism in Thought and Action. 
 1920. Macmillan. 
 
 Mavor, James. An Economic History of Russia. 2 vols. 
 1914. Dutton. 
 
 Menger, Anton. The Right to the Whole Produce of 
 Labor. 1899. Macmillan. 
 
 Russell, Bertrand. Proposed Roads to Freedom. 1919. 
 Holt. 
 
 Shaffle, A. The Quintessence of Socialism. 1880. Scribner. 
 
 253 
 
254* SELECTED LIST OF BOOKS IN ENGLISH 
 
 Seligman, E. R. A. The Economic Interpretation of 
 
 History. 1902. Columbia University. 
 Spargo, John, and Arner, George B. L. Elements of 
 
 Socialism. 1912. Macmillan. 
 
 Spargo, John. Socialism: a Summary. 1918. Macmillan. 
 Stoddart, J. T. The New Socialism : an Impartial Inquiry. 
 
 1909. Hodder & Stoughton (London). 
 Walling, William E. Socialism as It Is. 1912. Macmillan. 
 Walling, Stokes, Hughan and Laidler (editors). The 
 
 Socialism of Today. 1916. Holt. 
 Vandervelde, Emil. The State vs. Socialism. 1919. Kerr. 
 
 EXPOSITION OF SCIENTIFIC SOCIALISM 
 
 Boudin, Louis B. Theoretical System of Karl Marx. 
 
 1907. Kerr. 
 DeLeon, Daniel. Socialist Reconstruction of Society. 
 
 1918. N. Y. Labor News Co. 
 Engels, Frederick. Socialism, Utopian and Scientific. 
 
 1892. Kerr. 
 
 Fabian Essays. 1913. Ball Publishing Co. (Boston). 
 Fraina, Louis C. Revolutionary Socialism. 1918. Com- 
 munist Press. 
 Hillquit, Morris. Socialism in Theory and Practice. 1909. 
 
 Macmillan. 
 Hyndman, H. M. Evolution of Revolution. 1921. Boni 
 
 & Liveright. 
 
 Kautsky, Karl. The Class Struggle. 1892. Kerr. 
 Kautsky, Karl. Social Revolution. 1902. Kerr. 
 Marx, Karl. Capital. (3 vols.) vol. I, 1867; vol. II, 
 
 1885; vol. Ill, 1894. Kerr. 
 Marx, Karl, and Engels, Frederick. The Communist 
 
 Manifesto. 1848. Kerr. 
 Plekhanoff, George. Anarchism and Socialism. 1912. 
 
 Kerr. 
 
SELECTED LIST OF BOOKS IN ENGLISH 255 
 
 Rodbertus, Karl. Overproduction and Crises. 1898. 
 
 Swan Sonnenschein (London). 
 
 Simons, A. M. Class Struggle in America. 1909. Kerr. 
 Untermann, Ernest. Marxian Economics. 1911. Kerr. 
 
 CRITICISM BY REVISIONISTS AND ANTI- 
 SOCIALISTS 
 
 Bernstein, Eduard. Evolutionary Socialism. 1909. 
 Huebsch. 
 
 Bohm-Bawerk, Eugen von. Karl Marx and the Close of 
 His System. 1898. Fisher Unwin (London). 
 
 Boucke, O. F. Limits of Socialism. 1920. Macmillan. 
 
 Cathrein, Victor. Socialism: its critical basis. 1904. 
 Benziger (New York). 
 
 Croce, Benedetto. Historical Materialism. 1914. Mac- 
 millan. 
 
 Day, Henry C. Catholic Democracy. 1914. Heath, 
 Cranton & Ouseley (London). 
 
 Flint, Robert. Socialism. 1894. Ibiston (London). 
 
 Guyot, Yves. Socialistic Fallacies. 1910. Macmillan. 
 
 Hillquit, Morris, and Ryan, John A. Socialism: Promise 
 or Menace? 1914. Macmillan. 
 
 Hirsch, Max. Democracy vs. Socialism. 1901. Mac- 
 millan. 
 
 Jaures, Jean. Studies in Socialism. 1906. Putnam. 
 
 Leroy-Beaulieu, Paul. Collectivism. 1908. John Murray 
 (London). 
 
 Mallock, W. H. A Critical Examination of Socialism. 
 1912. John Murray (London). 
 
 Mallock, W. H. Social Reform. 1914. John Murray 
 (London). 
 
 Nitti, F. S. Catholic Socialism. 1895. Macmillan. 
 
 Robinson, Cyril E. New Fallacies of Midas. 1919. 
 McBride. 
 
 Shaffle, A. Impossibility of Social Democracy. 1892. 
 Scribner. 
 
256 SELECTED LIST OF BOOKS IN ENGLISH 
 
 Simkhovitch, V. G. Marxism versus Socialism. 1913. 
 Holt. 
 
 Skelton, O. D. Socialism, a Critical Analysis. 1911. 
 Houghton Mifflin. 
 
 Sombart, Werner. Socialism and the Social Movement. 
 1909. Button. 
 
 Spargo, John. Karl Marx: His Life and Work. 1910. 
 Huebsch. 
 
 Towler, W. G., and Ray, W. Socialism: Its Promise and 
 Failure. 1920. King (London). 
 
 Tugan-Baranowsky, M. Modern Socialism. 1910. Allen 
 (London). 
 
 de Tunzelmann, G. W. The Superstition Called Socialism. 
 1911. Allen (London). 
 
 Vaughan, Bernard. Socialism from the Christian Stand- 
 point. 1912. Macmillan. 
 
 Veblen, Thorstein. Place of Science in Modern Civiliza- 
 tion. 1919. Huebsch. 
 
 Withers, Hartley. The Case for Capitalism. 1920. 
 Button. 
 
 SYNBICALISM ANB THE I. W. W. 
 
 Brissenden, Paul F. The I. W. W: A Study of American 
 
 Syndicalism. 1919. Longmans. 
 Brooks, John G. American Syndicalism: The I. W. W. 
 
 1919. Macmillan. 
 Clay, Sir Arthur. Syndicalism and Labour. 1911. John 
 
 Murray ( London) . 
 Estey, J. A. Revolutionary Syndicalism. 1913. King 
 
 (London). 
 
 Levine, Louis. Syndicalism in France. 1914. Longmans. 
 Lewis, A. B. Syndicalism and the General Strike. 1912. 
 
 Unwin (London). 
 Macdonald, J. Ramsay. Syndicalism. 1912. Conctable 
 
 (London). 
 
SELECTED LIST OF BOOKS IN ENGLISH 257 
 
 Scott, J. W. Syndicalism and Philosophical Realism. 
 
 1919. Black (London). 
 Snowden, Philip. Socialism and Syndicalism. 1913. 
 
 Collins (London). 
 Spargo, John. Syndicalism, Industrial Unionism and 
 
 Socialism. 1913. Huebsch. 
 
 GUILD SOCIALISM 
 
 Cole, G. D. H. Labor in the Commonwealth. 1919. 
 
 Huebsch. 
 Cole, G. D. H. Guild Socialism Restated. 1920. Parsons. 
 
 (London). 
 
 Cole, G. D. H. Social Theory. 1920. Stokes. 
 Cole, G. D. H. Self Government in Industry. 1920. 
 
 Bell (London). 
 
 Douglas, C. H. Economic Democracy. 1920. Harcourt. 
 Hobson, S. G. National Guilds. 1919. Bell (London). 
 Hobson, S. G. National Guilds and the State. 1919. 
 
 Macmillan. 
 
 Penty, A. J. Old Worlds for New. 1917. Bell. 
 Penty, A. J. Guilds and the Social Crisis. 1919. Allen 
 
 & Unwin (London). 
 Reckitt, Maurice B., and Bechofer, C. E. The Meaning 
 
 of National Guilds. 1918. Macmillan. 
 Taylor, G. R. S. Guild State: Its Principles and Possi- 
 bilities. 1919. Macmillan. 
 Webb, Sidney and Beatrice. Constitution for the Socialist 
 
 Commonwealth of Great Britain. 1920. Longmans. 
 
 BOLSHEVISM 
 
 Aubonelli, Etienne. Bolshevik Russia. 1920. Knopf. 
 
 Brailsford, H. N. The Russian Workers' Republic. 1921. 
 Harpers. 
 
 Bullard, Arthur. The Russian Pendulum. 1919. Mac- 
 millan. 
 
258 SELECTED LIST OF BOOKS IN ENGLISH 
 
 Hillquit, Morris. From Marx to Lenin. 1921. The Han- 
 ford Press. 
 
 Kautsky, Karl. Dictatorship of the Proletariat. 1921. 
 Appeal to Reason, Girard, Kansas. 
 
 Lenin, N. Soviets at Work. 1919. Rand School. 
 
 Lenin, N. The State and Revolution. 1917. Allen & 
 Unwin (London). 
 
 Lenin, N., and Trotzky, L. Proletarian Revolution in 
 Russia. 1918. Communist Press. 
 
 Miliukov, Paul. Bolshevism: An International Danger. 
 
 1920. Scribner. 
 
 Olgin, M. J. The Soul of the Russian Revolution. 1917. 
 
 Holt. 
 Pasvolsky, Leo. The Economics of Communism. 1921. 
 
 Macmillan. 
 Paul, Eden and Cedar. Creative Revolution. 1920. 
 
 Allen & Unwin (London). 
 Ross, Edward A. The Russian Bolshevik Revolution. 
 
 1921. Century. 
 
 Russell, Bertrand. Bolshevik Theory. 1921. Harcourt. 
 Sack, A. J. Birth of the Russian Democracy. 1918. 
 
 Russian Information Bureau. 
 Spargo, John. Bolshevism. 1919. Harpers. 
 Spargo, John. The Greatest Failure in all History. 1920. 
 
 Harpers. 
 
 Trotzky, Leon. Our Revolution. 1918. Holt. 
 Trotzky, Leon. The Bolsheviki and World Peace. 1918. 
 
 Boni & Liveright. 
 
 Walling, W. E. Sovietism. 1920. Dutton. 
 Wells, H. G. Russia in the Shadows. 1921. Doran. 
 Williams, A. R. Lenin, the Man and His Work. 1919. 
 
 Scott & Seltzer. 
 Wilcox, E, H. Russia's Ruin. 1919. Scribner. 
 
SELECTED LIST or BOOKS IN ENGLISH 259 
 
 THE NONPARTISAN LEAGUE 
 
 Bruce, A. A. The Nonpartisan League. 1921. Macmillan. 
 
 Gaston, Herbert E. The Nonpartisan League. 1920. 
 Harcourt. 
 
 Langer, William. The Nonpartisan League. 1920. Man- 
 dan, N. D. Farmers' Press. 
 
 Russell, Charles E. The Story of the Nonpartisan League. 
 1920. Harpers. 
 
 BIBLIOGRAPHIES 
 
 Zimand, Savel. Modern Social Movements, Descriptive 
 Summaries and Bibliographies. 1921. 
 
 Other good bibliographies are contained in the works of 
 Skelton, Cross and Laidler. 
 
INDEX 
 
 Academic Socialists, 237 
 
 Adams and Sumner, 95 
 
 Adams, E. F., on social saving, 
 121 
 
 Agricultural statistics, Ger- 
 many and America, 164; at 
 variance with socialistic pre- 
 diction, 164, 165 
 
 Agriculture, 163; statistics of, 
 164, 175; New Zealand legis- 
 lation, 176, 247; in Russia, 
 222, 223 
 
 Alsberg, Henry G., 223, 228 
 
 American Federation of Labor, 
 189; opposed by the I. W. W., 
 39 
 
 American Socialist Parties 
 enumerated, 49, 50 
 
 American Sugar Refining Co., 
 production, 169 
 
 Anarchism described, 46 
 
 Bax, Belfort, 28 
 
 Bebel, August, 28, 98 
 
 Belloc, Hilaire, 31 
 
 Berger, Victor, foreign com- 
 merce, 148 
 
 Bernstein, Ed., 156, 158, 171 
 
 Beveridge, W. H., 137 
 
 Biological and Social Evolu- 
 tion, 197 
 
 Bolsheviki, The, 44, 225 
 
 Bolshevism, described, history, 
 41-43; Ely on, 45; the Dic- 
 tatorship of the Communist 
 Party, 208, et seq.; "Yel- 
 lows" and "Reds," 209; is 
 revolutionary Marxism, 236 
 
 Bolshevists, The, are the "close 
 communionists" of the Rus- 
 sian social revolution, 214; 
 secure control of Russian 
 Government, 217; the coup 
 d'etat, 218; a minority par- 
 ty, 219; in 1918, 219 
 
 261 
 
 Boudin, L. B., quoted, 69, 98, 
 147, 179, 194 
 
 Bowley, A. L., 93 
 
 Boycotting, defined, 34 
 
 Brailsford, H. N., 220 
 
 Brain work, a factor in labor 
 efficiency, 82 
 
 Body Economie, unhealthy con- 
 dition of, 122, 123 
 
 Burton, T. E., causes of crises, 
 150 
 
 Butler, Bishop, quoted, 143 
 
 Capitalism, evils of, 122, 123; 
 benefits of, 124, 126; recuper- 
 ative powers of, 157; protec- 
 tive tendencies of, 158 ; proph- 
 ecy of final overthrow of, 
 202; strength of, 203 
 
 Capitalism, Evolutionary, 201; 
 a mistaken idea, 201 
 
 Capitalist Class, The, 117, 119 
 
 Capitalists, two classes of, 117, 
 118 
 
 Christian Socialism, 26, 29; 
 first writer on, 27; Bebel, on, 
 28; Bax, on, 28; Hyndman, 
 on, 28; Flint, on, 29 
 
 Classes, Theory of origin of, 
 184; contradictory historical 
 data in theory, 185 
 
 Class Struggle, The, 67; Skel- 
 ton, quoted on, 67; Marxian 
 theory of, 181, et seq.; con- 
 tradictory historical data in, 
 185; in recent times, 187; 
 modern conditions in, 188; 
 Marx's prophecy unfulfilled, 
 188; future of the, 191 
 
 Cole, G. D. H., on Guild Social- 
 ism, 40 
 
 Communists, where the name is 
 applicable, 45 ; will doubtless 
 fail, in Russia, 237 
 
 Commercial Capital, 108 
 
262 
 
 INDEX 
 
 Communism, 45; first use of 
 word, 46; is extreme social- 
 ism, 46 
 
 Communist Manifesto, 1848, 14 ; 
 spirit of, 44 ; quotations from, 
 88; on the Middle Class, 174, 
 182, 183; a call to arms, 194, 
 195, 208 
 
 Communist Party, generally, 
 208, 236; creed of, 210; 
 Tenth Congress of, 234; fer- 
 ment in, 226; ruling politi- 
 cal force in Russia, 226; in- 
 dividual liberty suppressed 
 by, in Russia, 228; civiliza- 
 tion imperiled by, 229; Rus- 
 sian membership of the, 232 
 
 Complexity of Social Forces, 58 
 
 Concentration of Capital, Marx- 
 ian theory of, 160, 172; an- 
 ticipated by Pecqueur, 161; 
 Pujo Committee Report, 166 
 
 "Constant Capital," 129; con- 
 trasted by Marx with varia- 
 ble capital, 133 
 
 Contradictions of Socialists, 147 
 
 Crises, Socialist theory of, 144, 
 159; Rodbertus, on, 144; En- 
 gles, on, 145, 146; Marxian 
 view of, 145 ; Socialist theory 
 of is false, 150; self-contra- 
 diction of, 151; Socialist 
 prophecy concerning the final 
 crisis groundless, 154; de- 
 fined, 155 
 
 Crisis, The Present, 156 
 
 Cunningham, W., 91, 92 
 
 Darwinism and Marx, 196 
 David, Dr. Eduard, 98 
 Distribution of Wealth, 110; 
 
 W. I. King on, 110, 111 
 Domestic and Professional 
 
 Workers, 141, 143 
 
 Economic Interpretation of His- 
 tory, 51; the Hegelian Meth- 
 od, 52; the Marxian Theory, 
 53; Modern Examples, 57; 
 Rejected as a guide, 67 
 
 Economic prophecy, Futile, 66 
 
 Elimination of the Middle 
 Class, 173, et seq. 
 
 Ely, R. T., on Bolshevism, 45 
 
 Emotionalists, 206 ; character 
 of, 206 ; effect of appeal made 
 by, on the popular mind, 206, 
 207 
 
 England, M. T., Causes of 
 Crises, 151 
 
 Engles, Friedrich, 15, 31, 54, 
 68, 145, 146, 183, 194, 197 
 
 Enlightened Socialists, 19; for- 
 mula, 20 
 
 Evolution, Biological and So- 
 cial, 197 
 
 Fabian Socialism, 29; objects 
 of, 30 
 
 Fabian Society, The, 29; some 
 members of, 29 
 
 Factor of Scarcity, The, 76 
 
 Factor of Social Utility, The, 
 77 
 
 Farbman, Michael, 225 
 
 Farmer Labor Party, 50 
 
 Financial Power, The, 166 
 
 Fling, F. M., on prediction, 66 
 
 Flint, Robert, 29 
 
 Foreign Commerce, 148; Victor 
 Berger on, 148 
 
 Fourier, Fran?ois, 1, 14 
 
 Franklin, Fabian, 233 
 
 Friday, David, on Share of La- 
 bor, 112 
 
 Future of the Class Struggle, 
 191 
 
 General Federation of Labor, 33 
 General Strike, The, 35 
 Giddings, Prof. F. H., 6 
 Giffen, Sir Robert, 92 
 Government, Socialist idea of, 
 
 58 ; Marxian view of, narrow, 
 
 63 
 Guild Socialism, 39; argument 
 
 of, 39-41 ; Cole on, 40 
 
 Hegel and Darwin, 182 
 Hegel, G. W. F., 51; history, 
 
 according to, 52 ; dialectic of, 
 
 twisted by Marx, 53 
 
INDEX 
 
 263 
 
 Hegelian Method, The, 52 
 
 Higher Criticism, 10 
 
 Higher Critics, The, 18 
 
 Hillquit, Morris, 33 
 
 History, Economic Interpreta- 
 tion of, 50, 68; Marxian the- 
 ory of, 54; two distinct in- 
 terpretations of, 54; Modern 
 examples, 59; Marxians give 
 only partial explanation of, 
 61 ; economic interpretation 
 rejected, 67; part played in, 
 by class struggles, 187 
 
 Humanitarianism, 64 
 
 Hyndman, H. M., 28, 112, 185, 
 199 
 
 Income of the Nation, 115; dis- 
 tribution of, 115, 116 
 
 Inconsistency of Socialists, 100 
 
 Increasing Misery, Marxian law 
 of, 85, 101; Socialist inter- 
 pretation of, 87; Socialists' 
 admissions concerning, 97, 
 99; one refutation of, 142 
 
 Industrial Revolution, causes, 
 etc., 127, 198 
 
 Industrial Union, The, 36 ; place 
 of, in politics, 36; as viewed 
 by the syndicalists, 36 
 
 Industrial Workers Soviets, 
 The, 223 
 
 International Communist Par- 
 ty, membership requirements, 
 234, et seq. 
 
 International Harvester Co., 
 production, 170 
 
 International Socialist Con- 
 gress, 1896, resolution of as 
 to crises, 155 
 
 International Socialist Con- 
 gress, 1904, resolution of as 
 to party, 13 
 
 I. W. W., The, 37; some mem- 
 bers of, 38; original idea of, 
 38; Brissenden on, 38; the 
 direct actionist in, 38, 39; 
 represents American syndic- 
 alism, 50 
 
 Jenks and Clark, 169 
 
 Fantsky, Karl, 98, 199 
 
 Kerensky, Alexander, 49, 216, 
 217; downfall of, 218 
 
 Keynes, J. M., 115 
 
 King, Gregory, 92 
 
 King, W. I., findings as to pur* 
 chasing power of hourly 
 wages, 96; on distribution of 
 wealth in U. S., 110; quoted, 
 117, 118, 119, 178 
 
 Krasin, L. B., 233 
 
 Labor, Share of, in some indus- 
 tries, 111; Streightoff on, 
 111; David Friday on, 112; 
 conditions of in the United 
 Kingdom, 113 
 
 Labor and Capital, 104, 105 
 
 Labor Conditions in the United 
 States, Prof. Fite on, 95; Mc- 
 Master on, 95; Adams and 
 Sumner on, 95 
 
 Labor-cost Theory, Marxian 
 construction of, 71; impor- 
 tance of theory so construed, 
 72; fatal exceptions to this 
 construction, 73; collapse of, 
 75; Marx's admission, 79; 
 discredited, 83 
 
 Labor Power, Marx definition, 
 102; incorrectness of Marx 
 definition, 107 
 
 Laidler, H. W., quoted, 99, 219 
 note 
 
 Lasselle, Ferdinand, on law of 
 wages, 87 
 
 Lenin, Nicolai, 214, 217, 219, 
 224, 228 
 
 Levine, Louis, 36, 37 
 
 Living Conditions in Russia, 
 227 
 
 Living Costs Determine Wages, 
 86, et seq. 
 
 Lowie, R. H., 183 
 
 McMaster, J. B., life of laborer 
 
 in Revolutionary times, 95 
 Machiavelli, Nicolo, 238 
 Machinery, Socialist economics 
 of, 127, et. seq. ; Marx's views 
 on, 128; a plausible case, 131; 
 
264 
 
 INDEX 
 
 Socialist contradictions re- 
 garding, 132; may displace 
 labor, 134; operatives of, 
 135; makes for shorter days, 
 138; not a blight, 139; has in- 
 creased demand for men, 140 
 
 Mallock, W. H., percentage of 
 land rent in England and 
 Wales, 114 
 
 Malthus, Thomas R, 85; on 
 population, 86; Marx twists 
 theory of, 89 
 
 Man, Contradictory motives of, 
 59 ; non-economic instincts of, 
 60; racial characteristics of, 
 61 
 
 Manufacturing, 168; character 
 and extent of, 168, 171 
 
 Manufacturing Establishments, 
 U. S., 168 
 
 Manufactured Goods, Value of, 
 how determined, 78 
 
 Marshall, Alfred, standard of 
 living among working classes, 
 94 
 
 Marx, Karl, 2; Founder of 
 Modern Socialism, 9 ; epithets 
 of, excused, 10; on Capital- 
 ism, 22; a dual personality, 
 43; "not a Marxist," 44; a 
 disciple of Hegel, 52 ; on sur- 
 plus value, 70; his adapta- 
 tion, 71; on labor value, 74, 
 75 ; admission as to value, 79, 
 81; on law of wages, 88; 
 twists theory of Malthus, 89 ; 
 pessimism and optimism of, 
 90 ; on the ten hour law, 98 ; 
 definition of labor power, 
 102; celebrated puzzle of, 
 106 ; views on machinery, 128, 
 129 ; concentration of capital, 
 162; disappearance of social 
 order, 196; contradictions of, 
 210; the prophet of all sects, 
 211 
 
 Marxian Theory, The, 53; En- 
 gels on, 54; applications of, 
 55, 56 
 
 Marxian view of crises, 145; 
 contradiction in, 158 
 
 Marxism with Marx left out, 
 99 
 
 Marx's Celebrated Puzzle, 106, 
 107 
 
 Mehring, Franz, 99 
 
 Men, not displaced by women, 
 140; demand for, increased 
 by machinery, 140 
 
 Menshiviki, The, 42; chief er- 
 ror of, 43, 48 
 
 Menshevists, The, 214, 217, 219 
 
 Middle Class, The, Marxian 
 prophecy of the elimination 
 of, 173, 180; denned by 
 Marx, 174; in agriculture, 
 175; in manufacture, 177; in 
 professions and skilled labor, 
 177; is still dominant, 178; 
 persistence of in Europe, 179; 
 an obstacle to Socialism, 180 
 
 Migrations, Causes and incen- 
 tives of, 56, 62 
 
 Mine and Farm Costs, 77 
 
 Mitchell, Wesley, causes of cri- 
 ses, 151 
 
 Moderate Socialists in Russia, 
 43, 45 
 
 Modern Socialism, Origin of, 
 2; Founder of, 9 
 
 Modern Socialists, Ideas of, 183 
 
 More, Sir Thomas, 1 
 
 Mulhall, Michael G., 93 
 
 National Income, 115; how dis- 
 tributed, 115, 116 
 
 National Labor Party, 50 
 
 New Zealand, Industrial legis- 
 lation in, 176, 247; experi- 
 ence of, 248; the "Lib-Lab 
 Party" of, 176, 248 
 
 Nonpartisan League, The, 50, 
 239, 252; character of, 239; 
 why organized, 240; growth 
 of, 243; membership and 
 dues, 243 ; state election, 
 1916, 243; organizations in 
 13 states, 243; total vote of, 
 1918, '244; North Dakota 
 legislation, 1919, 244; the 
 State Mill (at Drake), 247; 
 some Socialist members of, 
 
INDEX 
 
 265 
 
 250; was for a time the real 
 government of North Da- 
 kota, 251; discredited at 
 present, 252; not a Socialist 
 movement, 252 
 
 North Dakota, Production in, 
 239, 240; three lines of ac- 
 tion open to farmers in, 241 ; 
 legislation, 1919, 244; bond 
 issue of 1920, 244; Mill and 
 Elevator Association, 245 ; 
 the Bank, 245; Home Build- 
 ing Association, 245; Action 
 of Bank, 246 
 
 Olgin, M. J., 228, 229 
 Overproduction, Kind of, 151 
 Optimism and Pessimism of 
 
 Socialists, 13, 87 
 Owen, Robert, 1, 14 
 Ownership, Diffusion of, 170, 
 
 172 
 
 Partial Dissenters, The, 18; 
 views of, 18, 21 
 
 Pasvolsky, Leo, 224, 234 
 
 Pecqueur, Constantin, 161 
 
 Plato, 1, 6, 25 
 
 Political Philosophers, Visions 
 of, 14 
 
 Population, Increase of, in cap- 
 italistic countries, 201 
 
 Production, Large Scale, 168, 
 170 
 
 Professions and Skilled Labor, 
 177 
 
 Proletariat in Russia, 211, 213 
 
 Prophecy, 66; is groundless, 154 
 
 Protective Tendencies, 158 
 
 Proudhon, P. J., on property, 
 121 
 
 Pujo Committee Report, 166 
 
 Reason or Passion, 204; as sole 
 
 motives of action, 204, 205 
 Rent, Interest and Profits, 120, 
 
 123 
 Revisionists, 4; defined, 10; 
 
 have abandoned Marx, 205; 
 
 and given up most of his 
 
 theories, 181 
 
 Revolutions, How, have Oc- 
 curred, 198; Hyndman on 
 evolution of, 199 
 
 Ricardo, David, Labor-cost The- 
 ory of, adapted by Marx, 70, 
 71 
 
 Rodbertus, K. J., on industrial 
 crises, 144, 145 
 
 Rohrbach, Paul, 232 
 
 Rostotsef, M. I., 231 
 
 Russell, Bertrand, 229 
 
 Russia, 212; two revolutions 
 expected, 213; Revolution of 
 1905, 215; Revolution of 
 1917, 215, 219; Bolshevists 
 secure control in government, 
 217, et seq.; the Supreme 
 Power in, at present, 220; 
 the Peasantry, 221; Commu- 
 nist Party the ruling force 
 today, 226; Economic Break- 
 down in, 226; Birth and 
 Death rates in, 227; Indi- 
 vidual Liberty suppressed in, 
 228; civilization of, in peril, 
 229 ; industrial reconstruc- 
 tion of, 231; the new middle 
 class in, 231; capitalism com- 
 ing back in, 233 
 
 Russian Central Executive 
 Committee, 220; membership, 
 power of, 220 
 
 Russian Economic System, 
 Breakdown of, 226 
 
 Russian Peasantry, conditions, 
 actions, status, etc., 221, et 
 seq.; deprived of crops, 229; 
 relieved by action of "Tenth 
 Congress," 234 
 
 Russian Revolution of 1917, 
 215, et seq. 
 
 Russian Soviets and Trade 
 Unions recovering at present, 
 225 
 
 Sabotage, 34 
 
 Sack, A. J., 219, note 
 
 St. Thomas of Aquinas, Ideas 
 
 of, 27 
 
 Saving, The effect of, 114, 121 
 Scarcity, The Factor of, 76 
 
266 
 
 INDEX 
 
 Schaffle, A. E. P., 224 
 
 "Scientific Socialism," 1, 3; 
 The center core of, 23; un- 
 scientific character of, 50; 
 how must be judged, 205 
 
 Scientific Socialists, 9, 25; in- 
 consistency of, 84 
 
 Scott, Sir Walter, on leprosy, 
 91 
 
 Sects of Socialism, The, 22, 50 
 
 Serfdom, 186; passing of, 199 
 
 Share of Labor, The, 111, 112 
 
 Shaw, Bernard, 212 
 
 Simkhovitch, V. G., 44, 68, 147, 
 162, 195 
 
 Simons, A. M., 165 
 
 Skelton, O. D., on class strug- 
 gle, 67; on one gap in the 
 Marxian theory, 107 
 
 Small property owners in U. S., 
 116 
 
 Social Democrats, 48 
 
 Socialism: a caricature, 3; 
 character of movement, 4, 5; 
 appeal of, 5; the creed of, 7, 
 21; considered, 11; not a sci- 
 ence, 12; orthodox doctrines 
 of, 16, 18; the sects of, 22, 
 50; propaganda and tactics 
 of, 24; first use of word in 
 English, 45; anarchistic ten- 
 dencies in, 47; different in 
 every country, 48; varieties 
 of, 48; source of, 64; histori- 
 cal explanation of, difficult, 
 64; as a theory of social evo- 
 lution, 22 
 
 Socialist Factions in every 
 country, 50 
 
 Socialist Party split nearly 
 everywhere, 235 
 
 Socialist Theory is false, 150 
 
 Socialists, The first, 1; types 
 of, 8; character of, 13; are 
 optimistic, 13, 87; desire of, 
 for party unity, 13; votes of, 
 in U. S., 15; stock in trade 
 of, 15; glorification of the 
 past by, 90 ; inconsistency of, 
 100; mental attitude of, 143 
 
 Social Revolution, The, 193, 
 207; method of the, 194; 
 Marx's contradictions regard- 
 ing, 195; Marx's idea of, 198; 
 Marx's prophecy not fulfilled, 
 200 
 
 Socialist Revolutionists, Rus- 
 sia, 48-49 
 
 Social Unity, The Factor of, 
 
 Soviets in Russia, 214-216, 221- 
 232 
 
 Spargo, John, 219, 223, 225 
 
 Spargo and Arner, 171 
 
 Standard Oil Company, produc- 
 tion, 169 
 
 State Capitalism, 31 
 
 State Socialism, 30; Walling 
 on, 31; Belloc on, 30; Hill- 
 quit on, 33; in New Zealand 
 and North Dakota, 250; ab- 
 horred by Syndicalists and 
 others, 47 
 
 State Socialists, ideas of, 32, 33 
 
 Stratification of All Society, 186 
 
 Streightoff, Dr. F. H., on share 
 of labor, 112 
 
 Surplus Value, Marxian theory 
 of, 102, 126; a concrete ex- 
 ample of, 103; two sides to 
 the picture, 122 
 
 Syndicalism, 33 
 
 Syndicalists, ideas of modern, 
 as to industrial unions, 36 
 
 Taylor, W. J. Langworthy, 
 causes of crises, 151 
 
 The Third International, ob- 
 jects of, 234 
 
 Thompson, Slason, 171 
 
 The Triple Alliance in England, 
 190 
 
 Towler and Ray, 28 
 
 Townley, A. C., 239, 243, 250 
 
 Trade Unions, in Russia, 224; 
 et seq. 
 
 Trade Unionists, in France, 34 
 
 Trotzky, Leon, 213, 215, 216, 
 217, 219 
 
INDEX 
 
 267 
 
 Tugan-Baranowsky, causes of 
 
 crises, 150 
 Two Sides to the Picture, 122 
 
 Unemployment, 137, 138 
 United States Census (1910), 
 
 141, 164, 165, 166, 168 
 United States Grain Growers, 
 
 Inc., objects, etc., 252 
 United States Steel Corpora- 
 tion, production, 170 
 Utility, as a factor in value, 81 
 Utopian Socialism, 23, 24, 26 
 Utopian Socialist, The, ideas of, 
 8, 9 
 
 Value, Marxian Theory of, 69, 
 109; Boudin quoted on, 69; 
 Ricardo's labor-cost theory 
 adapted, 70; Marx's adapta- 
 tion, 71; importance of the- 
 ory, 72; fatal exceptions to, 
 73; collapse of, 75; contra- 
 dictions in idea of, 149 
 
 "Value Added," defined, 168 
 
 Value of Labor Power, defined 
 by Marx, 88 
 
 Value of Manufactured Goods, 
 how determined, 78 
 
 Value of Useful Article, criti- 
 cism of Marx's definition, 80 
 
 "Variable Capital," 129; con- 
 trasted by Marx with con- 
 stant capital, 133 
 
 Veblen, Thorstein, 197 
 Vexler, Feliciu, 236 
 
 Wage Earners, Organized and 
 Unorganized in United States, 
 189 
 
 Wages, how determined by liv- 
 ing costs, 86; Lassalle's law 
 of, 87; increases in percent- 
 age of, 93; nominal and real, 
 134 
 
 Walling, W. E., 31 
 
 Wholesale and Retail Trade, 
 165 
 
 Webb, Sydney and Beatrice, on 
 condition of workers, 93, 94; 
 use of machinery, 134, 136 
 
 Wholesale and Retail Trade, 
 165 
 
 Workers, Changes in the Con- 
 dition of, 92; Giffen, Bowley 
 and Mulhall on, 93; other 
 data, 94 
 
 Workers, Domestic and Profes- 
 sional, 141, 142 
 
 Workers' International Indus- 
 trial Union, 39 
 
 Working Classes, earlier condi- 
 tions of, 91, 92; changes in 
 conditions of, 92; standard 
 of living among, 94; progress 
 among, 97 
 
 "Yellows" and "Reds," The, 209 
 Zagorsky, S., 227, 232 
 
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