William J. Blake: An American Looks at Karl Marx

34
Revisionism

In 1899 socialists were shocked by a cleverly written study of one of the most honored socialist thinkers. That economist was Eduard Bernstein, historian, editor, theoretician of Marxism, and that book¹ has become the Bible of Revisionists, that is, those socialists who hold that large sections of Marx’s thinking are limited, or superseded, or made obsolete by the facts.

Practically all non-Marxist socialism, which formerly was Utopian, now adopted substantially the reasoning method and statistical interpretations of Bernstein. In England and the United States, where Marxian theory has been less important than on the Continent, the defection of Bernstein was hailed by reformist socialists as a confirmation of their “absence of theory” in the formulation of socialist demands.

Apart from the skepticism expressed as to the philosophy of Marx and Engels, which does not here concern us, they questioned the law of accumulation, of concentration and of centralization of capital, together with its concomitant, the decline of the small capitalist. Under E. David, another German socialist, a really anti-Marxian campaign was carried out against the Marxian theory that agriculture too, though more slowly than industry, must reveal a tendency to mechanization, to higher capital investment, to a reduction of the independent farmers and peasants, and to more wage labor and the comparatively greater proportion of production accruing to rich farmers.

It was declared formally that agriculture must forever remain an exception to concentration tendencies.

But above all it was Marx’s theories of the increasing misery of the workers and the increasing gravity of crises that were denied absolutely. Thus socialism was based really on democratic and humane principles, on idealism, in short, instead of on the negative analysis of the prevailing system of Marx.

The wheel had turned full circle. After the proud announcement of Engels that socialism had passed from Utopia to Science, that it took count only of reality and nursed no poetic illusions, Bernstein denied the science and reinstalled democratic aspirations and eclectic strivings after betterment.

At once the orthodox Marxists opened their batteries, headed by Kautsky and the brilliant young expositor Lenin. The revisionist cause was sustained principally by non-socialists, a striking example being V. G. Simkhovich, in his Marxism versus Socialism.

Implications of Capitalist Concentration Denied

Bernstein denied that capital concentrated in the economic manner predicted by Marx, although the fact of concentration itself was irrefutable. But the tempo of concentration is slow, and it is not valid for all industries. The middle class may be retreating but it is still vital enough to found enough new businesses to compensate the tendency to concentration, in some measure.

As to classes considered from the viewpoint of revenue itself, the middle class is holding its own, or nearly so, and the workers are doing somewhat better. The professional and “service” classes have increased, giving the middle class another compensation for its losses elsewhere.

If there are fewer independent businesses relatively, this too is compensated by the ability to buy shares in the large companies. The lesser power does not much affect income. So that people who have a stake in maintaining the present system are, perhaps, more numerous than before.

Bernstein has an ingenious theory of concentration as being reduced by centralization. In the old days when a rich man took over his neighbor, or forced him to the wall, he enlarged his plant. But now a new trust is formed; it acquires smaller companies but leaves their plants intact. That does not affect the organic composition of capital as before.

Bernstein fattened his book with elaborate statistical tables, but most of these are not now maintained even by his followers. We shall cite only such statistics, in the theoretical debate, as are practically uncontested, except where both sides use this weapon to close hostilities. Most of the questions require no such ponderous sets of proofs either way.

Now it is clear that for such capitalists as enter a merger or a trust, the funeral of some of them, by way of competition, has been postponed.

If ten capitalists have factories worth a million dollars each, and all of these would be crushed ultimately by a fifty-million-dollar competitor, and three of them sell out to the trust, then only seven will be made poor men. The three who sold out will not be economic powers but they will be rich.

The only way in which the crowd that bought them out can make them poor is by financial roguery, and economic science is not concerned with crime.

No one disputes the reduced area of competition by reason of the trusts, but it is asserted that this diminution of competition changes the mechanism by which the capitalist system will be weakened. In certain industries, where a monopoly is effected, capitalism cannot be ended by the suicidal competition of various capitalists.

Marxist Theory of Concentration Refuted by its Fulfillment

There are many motives that lead to the formation of trusts. But all of them converge on the reduction of competition. According to the revisionists (and they have had a host of disciples to this day) the Marxist analysis of the manner in which capitalism will end is itself at an end. The trusts require a new theory for their understanding despite the fulfillment of the prophecy of concentration which was so justly made by Marx.

Marxist Analysis of Surplus-Value Superfluous

Bernstein also rejects theory as such. What does it matter, he asks (as did J. Ramsay MacDonald), what manner there is of extracting surplus-value from the working class, so long as we know it is extracted? By surplus-value, here he means exactly what businessmen mean by profits, and Bernstein, unlike Marx, views it as an appropriation, a plunder.

But this takes out the historical element completely, for there have been rich and poor for millenia and Bernstein throws no more light on this than the honest and impassioned sermons against the pride of the rich that have been cried from a million pulpits for a thousand years, Such a method would make the poet Shelley as good a guide to capitalism as Marx. It is the character of profits as they are realized that determines the economic laws of consumption and accumulation, etc. On this point Böhm-Bawerk and Marx would be at one.

The Marxians point out that Bernstein assimilated only one phase of concentration. True, some capitalists are absorbed. But the enormous increase in capital of these trusts makes it impossible for anyone to compete with these aggregated capitals. Hence new enterprises are reduced in number and the difficulties of the remaining competitors, outside the centralized corporation, are aggravated.

Since the tendential fall in the rate of profit rules for both, the cumulative effect on the smaller undertakings is increased. Nor does Bernstein notice that there is an immense difference in the position of a class when it invests with another and when it controls its own capital. Everyone knows that in a panic the class that invests is injured whereas the number of those that control is diminished and relatively strengthened. If the investor class were as numerous as the old businessmen, it would still be true that the physical concentration of wealth and the corporate centralization of ownership and management would demonstrate the Marxian thesis, “One capitalist kills many.”

Division of Surplus-Value Is Crucial

But there is a more fundamental difference than control itself. That is in the division of surplus-value. A capitalist on his own extracts surplus-value and then obtains a price of production that must yield him the average rate of profit. But as an investor in bonds or banks he receives merely interest, a section of surplus-value and a rather meager section. As a shareholder his return is theoretically somewhat higher (though whether it is so in practice has been a matter of statistical sound and fury), but it is still a mere appropriation out of surplus-value, increased, diminished, or withheld at the grace of the controlling group. The compensation for risk that shareholders are thought to get, exists but is really very small.

Now that is not the way in which money is made. Money, despite all the clever calculations of how soon a 4 per cent investment will eat up all the money in the world, is made by multiplication, not addition. The rate of 4 per cent per annum on Mr. Rockefeller’s original investment of some $3,000 in 1859, even if he ate only Uneeda Biscuits and lived in a wigwam, would now show about $50,000 at this writing, compounded at ordinary interest.

The billion dollars he made was not interest but profits and the rate of profits of a really good business makes the rate of interest look like a tip which, in effect, it is: powerful men tipping weak investors.

The Middle Class Becomes More Dependent on Wages

In view of the timidity which is natural to investors in view of their historic experiences in finance, their tendency is to restrict themselves to the best secured bonds of the finest companies or guaranteed preferred stocks, etc., thus further reducing their income.

That means that they must do something else to make up the differences, and usually they become salaried employees in a genteel occupation, that is, they approximate proletarians, men whose living is basically derived from selling their labor-power and subject to the needs of another man for their services. With each shake-out and bankruptcy of large corporations (the very biggest have gone the way of all flesh—Insull, Krueger, New Haven Railroad, etc.) there are still more of the formerly independent capitalists to swell the ranks of salaried gentility.

Thus the middle class, as a class, is passing away and is being replaced by a white-collar class, whose salaries in some cities is not as high as that of the skilled workers, though their social opinion of themselves (based on the psychic assumption that culture and refinement are in inverse proportion to physical labor) is out of line with their present economic position. This, say the Marxians, is the altered semi-proletarian that Bernstein and the revisionists call the survival of the middle class.

High Salaries Are Really a Reduction of Class Income

This process is disguised by the corporation itself. Requiring an immense number of accountants, correspondents, economists, managers, salesmen, and executives, it replenishes these ranks from the class that once would have made profits. Historically they are compensated much less than they would have been, but factually they are compensated much more than workers.

It is this upper stratum of the middle class that dots a thousand suburbs with Tudor and Colonial homes. But while it is physically better off than the workers, its precarious position was made vivid in the last crisis. It has no capital that makes money, it has savings, not for profit but for mere survival. It is outside capitalism and of its control of the process of production, the ultimate source of all surplus-value.

It too is threatened, the Marxians point out. Its knowledge is being put into textbooks, manuals, rotes. Its experience is being tabulated and copied. It has fewer secrets, less individual dexterity.²

In depressions millionaires are quick to see that the executive with his name on a brass plate really would not be missed. The employers then lose the psychology of feudal lords, and when times are bad count their wealth not by the number and dignity of their retainers but by their small payroll. The universities turn out annually shoals of successors to the high-grade man. The wisdom of yesterday is the commonplace of today.

Character of Business Survivals Is More Important than Numbers

Bernstein and his group count the numbers of enterprises that survive. But they forget the character of their survival. Statistics tell us everything except where the shoe pinches.

In England practically every “public-house” is “tied” to some brewer and they are squeezed out of business the moment they stock another beer. The breweries are among the most concentrated forms of capital in the country.

Hundreds of independent manufacturers of auto parts live by grace of the three large companies. These small capitalists are permitted to survive merely because an intelligent and brutal calculation shows that, strive as they may, in bad times they must go under or get weaker and it is cheaper to have them supply the larger corporation until they drop into its lap for nothing, than either to buy them out or invest in the same line. They live, then, merely as options on disaster.

On a less acute basis, hundreds of thousands of small enterprises are permitted to survive because they no longer make the average rate of profit but have sunk to a point where the remuneration is not much above the actual labor of the enterpriser. Statistics are of no use in asking how many capitalists survive merely by counting the number of those that hang up a shingle.

Thus, irrespective of whether a rentier or salaried middle class is becoming more or less numerous, the process of production is becoming increasingly concentrated and centralized, as is also financial control.

NOTES: Apart from economics, the psychology of men becomes more socialistic as the large corporations grow. Where millions of men toil in offices and workshops socially, the old idea of the businessman gives way to the idea of advancement within a bureaucracy; that is, the ways of thinking of men working for large banks, etc., become like those working for the government. They think in ranks, salary advances, grading, pensions. They think of investing rather than of going into business for themselves. They seek security rather than danger. The highest good is to “keep a good job,” not to “make big money.” That is proletarianization.

It is seen much more in England than in the United States. There all social philosophy turns about income—how to raise it or redistribute it, etc. The idea of income would have met with a horse-laugh from a pioneer American farmer or aggressive inventor and industrialist of the 1870’s.

These people in England, like the workers, want a job, security, and stable purchasing power, only they prefer it in five rooms to three. This is a middle class but not the middle class with which Marx was dealing.

By a middle class he meant men who hoped to make money out of running industry and trade for themselves and in a good-sized way.

The new middle class wants state socialism, or it thinks it can obtain the advantages of “national-socialism.” But it does not dread state interference as the average businessman does. In this it is like the plutocracy who also favor state control of industry, but for themselves.

This reversal of the ideas of the middle class, with its changed function, would be cited by Engels as an instance of historical materialism. The middle class ferments a vague social unrest, without a fixed purpose or understanding. That is why it meets with the justified logical contempt of powerful, intelligent capitalists. But they miss its social meaning.

The corporate form, by reducing the number of people who owns a business and substituting for it immaterial receipts like shares, bonds, etc., has changed the nexus of private property. The less men are related to their own machines, shops, etc., the more social the concept of property becomes, the less personal.

This weakening of the passion for actual property in favor of pure money or income is a psychological weakening of the basis of power, and greatly reduces the number of those who feel they are charged with destiny. It is by the numbers of such a class that a society lives, grows, and is healthy. The whole English gentry felt themselves bound to govern the State, lead army and navy, and die in battle if need be. They beat the world and won the British Empire. Their French opponents, more gracious and intelligent in a spiritual sense, looked for income and safety and lost the battle of the eighteenth century. A genius like Dupleix in India was not understood at Versailles: a Clive, of far smaller talents, was backed to the full by an avid company and class.

Bernstein Centers on Money Wages

The question of wages and exploitation is considered by Bernstein and his group to turn about money wages. They are not so naïve as not to relate this money wage to a real wage, that is, to purchasing power. But the question for them is arithmetical. So many wages per annum, correlated with so much weighted index of the cost of living (including rent), is the criterion of worker prosperity, either plus or minus deciding.

The revisionist regards unemployment or short-time as relevant only to the method of addition. If 40 weeks’ work produced $1,000, then it is better, if anything, than 50 weeks’ work producing $1,050. The wear and tear on the laborer would not be compensated by the mere 5 per cent difference. But there is a qualitative aspect of spaced employment and frequent employment that makes even the money wages under regular and irregular employment have differing significances.

But the more the spacing and the more the unemployment the weaker the bargaining power of labor. Continuous employment means that the employer needs his men steadily so as to insure good profit. But irregular employment means that the employer is free to dispense with labor. Present wages are thus rendered uncertain, and what is more, the fear of unemployment enables the capitalist to “sweat” the worker more. This is apart from the human power which the threat of dismissal gives him.

NOTE: Boudin makes the point that there is an amelioration of the lot of the worker, but that this amelioration was produced by labor unionism in the course of long struggle; that is, the tendency to the accumulation of capital is inherent in the capitalist system, but is only achieved in the form modified by the struggle of organized labor against it. This checks the accumulation tendency but only because of the resistance of labor. Thus the exploitation is diminished and the capacity for resisting it increased.

This is an answer to the clever dilemma proposed by Goldscheid³ that the economic process of capitalism (accumulation and concentration) develops a resistance in the workers so great that, so to speak, the tendency carries with it its own checks, and therefore these tendencies will never reach the limit proposed by Marx and hence that capitalism, by its very contradictions, inoculates itself against socialism.

Boudin’s rejoinder is that the system does not inoculate itself; the forces that stop its development are the forces that weaken its survival possibilities, for it cannot go ahead except by gaining accumulation, and not only is its course turned back, but the class that has done it is ready to succeed it.⁴

Are Crises Ameliorating?

The long debate on the question of crises with the revisionists got down to their argument (formulated by Tugan-Baranowski in his History of Commercial Crises in England) that crises instead of being catastrophic were now ameliorating or, rather, stagnating. Since 1914 this is no longer argued, although variants of it persisted to 1929.

The argument on Imperialism, as saving the capitalist system by the extension of new markets, has led to the examination of the period of time in which the new markets were involved in the contradictions of the home market and the advantage annulled.

The whole discussion has moved to a higher level since the vigorous booklet of Lenin on Imperialism (1916) changed the focus.

What survives of the debate is the celebrated theory of Tugan-Baranowski that overproduction is not a necessity of capitalism. According to this theory if the means of production are produced in a given ratio to consumption goods and a market found, all is well. If this theory is true, then Marx’s mechanisms of crises were only temporary motions of capitalism. For the increase to excess of constant capital was his leitmotif.

Expanding Capitalism Ends the Marxist Contradiction

Tugan-Baranowski holds that with colonial development the area of capitalism expands. Even in the last fifty years (1860-1910, say), Europe and the eastern United States, centers of capitalism, have taken over the world. Countries such as Japan, closed to all, are opened. Mines are worked in the Congo jungle. Rubber is extracted in the lands of the dread head-hunters of the Brazil wilderness. The world is the market.

The principal goods produced by capitalism are no longer means of consumption but means of production.

What then becomes of Marx’s crisis-theory which assumes that it is the inability to move consumption goods that puts the end to a cycle of prosperity? The means of production are exported for the development of production elsewhere. The development of new lands requires it. Hence Imperialism results in a lesser importance to consumption goods as the term of capitalist production. If the new markets continue to absorb more production goods, and thus a disproportion of production goods to consumption goods is avoided, no crisis can break out. Production can keep on increasing, sell its principal products (which are means of production) abroad and thus, although exploiting labor, not have to face the limits set to its development by the failure of the home consumer’s demand! Thus exploitation and assured prosperity can go on for long periods and there is no present necessity why they should ever terminate.

Marxians Maintain Expanding Capitalism Increases Contradictions

Boudin counters by saying: True, the proportion of production goods is increasing as a part of production. True, it is the export market that takes up the higher proportion of production goods. But the significance of this export movement is the opposite assigned to it by Tugan-Baranowski. So long as capitalist countries exported consumption goods that was what took the edge off the limits of the consumption goods market at home and staved off a crisis. But with the means of production exported to them, the newer countries are equipped to produce their own consumption goods. Then they will need less of the means of production (though slowly), exported from the older countries. They cease to relieve capitalism in the older countries of their consumption goods and they are only a shortlived export themselves. Since 1906, experience has confirmed Boudin rather than Tugan-Baranowski.

Waste Is Not a Tragedy for Capitalism

But Boudin formulates another, and to him more philosophical, reply. That is that waste is not a tragedy for the capitalist system, as so many American liberals especially seem to think, but that it is on waste that the capitalist system thrives.

According to Tugan-Baranowski’s remarkable history of crises, all crises are brought into being by the overproduction of those means of production which take the longest to get into play, such as railroads, canals, dams, etc. Capital is driven to develop these immense and long-breathed undertakings in undeveloped territory since it knows there is a limit to the sale of consumption goods at home. The longer this development abroad can be kept going the better the industrial picture.

But the railroads serve no adequate market, the canals no remunerative tonnage. The breakdown spreads to the means of production. Their producers dismiss workers, the consumable goods market goes fast, and then the other means of consumption and production slacken down and the panic is on. The panics of 1873 and 1893 certainly began in this way, and in 1929 the nonremunerative quality of the fifteen billions America had hysterically invested abroad, from German stadia to Peruvian public works, must have hastened the breakdown. The production goods were produced out of proportion to consumer’s goods but that did not stop the panic. Marx was right and Tugan-Baranowski wrong.

For means of production are nothing more nor less than means to produce consumers’ goods, that is, the means of subsistence of labor. This test limits all means of production manufacture. When the means of production in newer countries fail to produce a response in consumers’ goods that would keep them going and accumulating, then the situation is over. Capitalism has thriven on waste but must face a crisis. That, too, is not a calamity for many sections of the system.

The same is true of a war. A war may destroy immense amounts of goods, and many men. But when there has been a surplus production of means of production, and there is a barrier in the limit of consumers’ goods, due to the relation of exploitation, then the war at once acts like a panic or crisis.

The superfluous men become soldiers, or work in munitions factories; the destruction of the means of production is rapid, the proportion to consumers’ goods is once more in order, and when peace is restored the need for reconstruction makes it possible to keep on making more production goods for quite a while. The destructiveness of wars is related to the question only of the ascending or descending position of a capitalism when a war takes place. The twenty-three years from 1792 to 1815 left Europe far richer because capitalism was advancing production and population faster than war could use them. The war of 1914 produced the effects of a crisis but the shrinkage of maneuver possibilities in the world market made it fundamentally destructive of the system, although while it rolled on profiteering was perfect, unemployment was abolished, and for a decade afterward American loans for reconstruction made for a whilom prosperity that seemed eternal.

Ethical questions are not treated here, only economic ones. It follows, then, that wars function, while they and the reconstruction last, as a market for means of production. As war has been endemic since 1911, this is an important feature of capitalist economy.

This answers the calculations, say the Marxians, of liberals who point out that on a bookkeeping basis colonies do not pay. It is the specific function of that market in the manufacture of means of production that gives it a motor importance not measured by figures.

Marx’s Agricultural Theories Assailed

The principal opponent of Marx’s agricultural theories is the revisionist Eduard David.⁵ He held (and his modern followers who have improved his case): (1) That work by machinery can never be as important in agriculture as in industry, because of the inability to group labor, distribute, divide tasks, organize co-operation, etc., to the same extent as in industry; (2) that steam power and other forms of mechanical force and traction cannot be utilized to the same extent on the farm as in a factory, for in a factory machinery is fixed, and belting is on the move, whereas in farming the machine itself must be isolated and on the move; and (3) that wherever machinery has been adapted for movement on the farm its unit must perforce be far less than that of the giant fixed mechanisms of industry, and so machinery is more available relatively to small capitals in agriculture, and can be utilized even on small plots.

In addition to the mechanical objections, it is stated that by means of marketing and credit co-operatives, as in Denmark, the farmers, who are not relatively so outdistanced by large capitals as industrialists, can easily combine and preserve their individual small enterprises, and even make them prosper.

These objections were rightly considered important enough to enlist the ablest of the Marxians on the other side. Lenin devoted more time to this aspect of economic theory and fact than to any other purely economic concept. It was natural for a Russian to understand the importance of this question more than economists in industrialized countries. For while in value the products of agricultural and pastoral pursuits are now far below that of industry (in the United States scarcely over 10 per cent, sometimes even less), that is not true of the number of persons employed. For the world, as a whole, two-thirds of mankind, at least, live by the land. Even if we take Europe, the United States, Canada, together as the industrialized lands, the persons making a living out of farming are still a majority.

The important indexes of a capitalist development would be the number of persons working for money wages in agriculture, the amount of the investment in machinery and the part machinery plays in concentrating production and ownership, in analogy to industrialism. For this purpose it is best to steer clear of some simple statistical errors in grouping.

Statistical Pitfalls in Farm Statistics

Mere size of a farm is not a decisive criterion of the progress of capital investment. For even the group like David state clearly that there is an increase in mechanization, only that they doubt if it aids a concentration of farming, as it would if used in industry. But both sides admit a considerable increase in capital investment. If that be the case then a “small farm . . . becomes transformed into a big farm . . . according to magnitude of production . . . the increasing application of machinery, etc.” (Lenin).

The size of farms, too, by combining those with wage labor and family labor, with machinery and without, etc., obscures the specific problems involved, and even distorts them. Here more than anywhere one must be wary of statistical summaries. So many pigs per farm is a useless computation since the wealth of pigs is usually in their weight and the scraggy pigs of Spain are no match for the same number of hogs in Iowa. The milk and meat yields of cattle are more important than their number. Hence mechanized farms may not be grouped merely by area or by livestock. The specific data of production and machinery and wage labor must be made known before the class groupings in agriculture can be studied intelligently.

Machinery Makes Small Farming Less Competitive

One thing is certain: all statistics converge on the increase of mechanical investments according to the size of the farm. In Germany in 1925 carefully collated figures showed that farms under twenty acres used less mechanization than farms of two hundred acres or more, to a really pathetic extent.

Apart from financial questions, certain machines require a minimum of territory to work in order to repay their installation costs. There is no question of co-operatives combining to offset this, because often these machines can be used only in a limited time.⁶ Sowing by machinery cost half as much per acre on farms with eight hundred acres as on farms with forty acres. The per acre cost of harvesting by binders increases rapidly the smaller the size of the farm. Apart from the great crops of grain and fodder, livestock weight per unit is 25 per cent more on large farms than on small and milk yields per cow about the same differential percentage.

In the “technical” crops—sugar, rubber, cocoa, etc., throughout the tropics, in fact, especially in tea and coffee—the small planter is almost extinct.

The same is true of the beef estancias of the Argentine, the sheep “selections” of Australia and New Zealand, etc. When the opponents of Marxist thought speak of farming, then, they mean the diversified household type which in number of establishments is still the most common, even among the miserable rice planters of the Orient, or the barley-raisers of India and the near East.

Apart from the increase of tenancy, of wage labor, of the gradual increase in percentage of total production of the larger farms, of the abandonment of small farms (2,000,000 of the 6,000,000 in the United States are not even subsistence farms, especially those in the highland South), the excess of population on the farm that causes a steady trickle to the towns, the question still remains open as to how much mechanization is affecting the farm structure of the capitalist world.

The Agrarian Crisis Is Endemic

The answer must lie in the continued agrarian crises. For there can be no doubt that apart from the fillip given agriculture for five years by war prices, it has been in a rather bad way for a quarter of a century and did not participate in the industrial cycles upward to any marked extent. To this day, a part of agricultural income in many countries is derived from subsidy (bounties, equalization payments, etc.).

These continued crises must operate similarly to the crises that drove people originally off the farms in the epochs preceding machine capitalism. They must serve to increase mechanized and large farms.

But there can be no question that the ratio of constant to variable capital will long lag behind industry; that the technical (not crop) saturation of agriculture will not be comparable to that of industry for a long time.

To that extent those who feel that the peculiarities of agriculture create a wholly different tempo of concentration against industry are undoubtedly right. It is this tempo rather than the tendency that is in the minds of those who would limit the Marxian analysis of farm concentration. But that tempo is gaining, and may, as most economic developments do, show a sudden leap into great mechanization and concentration during a price crisis, etc. The fact that farm products at no time have recovered their ratio to manufactured goods that prevailed before the War, if continued, must prove such a catalyst of historic development. Marxists are vindicated on continuous tendency, but not as yet on full historic accomplishment in agriculture.

Criticism of Marxian Rent Theory

Marx’s rent theory has been contested on two grounds by Bulgakov.⁷

(a) He denies that agricultural capital participates in the equalization of the rate of profit and therefore denies that rent is created by a surplus profit in excess of the average rate of profit.

If, says Bulgakov, land is a monopoly, there is no free competition, yet Marx says only by competition is the average rate of profit determined as an equalization of differing prices of production.

(b) He denies that there is an absolute rent and a differential rent. Marx is dealing with one and the same monopoly ownership of a factor in production; now one monopoly extracts a monopoly rent only.

The argument is answered by Lenin (Collected Works, Volume IV, 183-203).

(a) Bulgakov confuses the limited quantity of land with the amount of competition on it by capitalist farmers. Land may be limited for grain production at so many acres, but the number of persons competing with their crops on the market are hundreds of thousands. Capitalists will withdraw their money from farming if it yields less than the average rate of profit, even though they should obtain more surplus-value than the average. But though that difference is pocketed by the landlord (or by themselves as landlords if they own the land) they still have the free option of placing their capital elsewhere.

(b) With reference to absolute rent: differential rent is paid because of the differing yields or different locations of land. This would persist under capitalism irrespective of who owned the land; even the government would not alter that, if it were the landlord. But we know that just because land is private property the worst possible soil on which a crop can be raised will not be given away for nothing by the landlord to the capitalist because there is a possibility of making more than the average rate of profit on it. That, as we know, is because of the greater proportion of variable capital.

But the landlord, because land is limited by private property, can hold up the capitalist for the differential above the average rate of profit, although that soil has no differential rent. Thus differential rent exists irrespective of private property in land (under capitalism), whereas absolute rent would be extinguished if land were nationalized. That one rent would persist and the other be extinguished under a different property form shows they are economically different categories.

Bulgakov also objects that as differential rent is being paid for superiorities in fertility and location may not these two factors cancel each other and result in no differential rent?

Marx says the same, but more exhaustively. Marx points out that land near a market but less fertile may command the same differential rent as land more fertile but further from a market. Transport costs cancel fertility advantages. Nowadays we see location advantages diminished by transport, yet the same development is reversed by the growth of cities, thus increasing location differentials for very close farms!

It may be noted that sixty or seventy years ago when capital could freely find new farms for nothing in which to invest, the American Western farm showed no absolute rent for a long time and a small differential rent compared to Europe, and thus American crops swept its grain markets.

Diminishing Returns Analyzed

Marx’s agricultural theories, especially of rent, have been commented on adversely principally from the view of the “diminishing returns” hypothesis. This celebrated doctrine holds that each additional investment in a given area of land (after a certain amount) yields a smaller crop. The proof of this theory is in the assertion that were this not so why would cultivation be extended? A very small area would suffice for human needs if labor and capital expended on it produced the same results as previous applications. The extension of cultivation is the result of the constantly smaller yields per acre on the older cultivated area.

The Marxians do not contest this formulation, but they limit it. Assuming the same technical level, it is formally true. But, historically, given the changes in technique, it is not true. There is a diminishing return on the use of the plow until the tractor is invented. There is a diminishing return on the soil until phosphate and potash are used. There was a great diminution before the rotation of crops was known.

The soil of Normandy has yielded threefold since beets increased the crop possibilities. An extra year’s work on Utah land yielded nothing until the Widstoe dry-farming method made the rose flourish in the desert. (This is apart from the question that the law of diminishing returns has greater limits than have been assumed even on the present basis of technique.)

And it ignores social relations, practically. A change in agricultural mortgage bank and credit methods largely increased the cultivation of Danish lands, especially Danish cattle, butter, and bacon. The War gave an impetus to wheat raising that surpassed every previous limit set by experience. So both social and technical factors make the law of diminishing returns true only when stated as limited to preliminary conditions before it will begin to operate.

Marx has stated that differential rent, unlike the ideas of Ricardo, Malthus, and West, does not require the resort to inferior soils, or an ever decreasing productivity of agriculture. Marx holds that for the first form of differential rent (mere inequality of productivity of capital on different soils) it does not matter whether there is a decrease or increase of absolute fertility of any given area; the inequality, basically, is what counts.

The Revisionist Debate

The objections of Bernstein, Tugan-Baranowski, David, etc., that so impressed their age, now have a rather musty flavor. But the key questions involved: Are the poor becoming worse off (however this question is whittled away and defined); are the rich getting richer (irrespective of the analysis of the origins of their several fortunes); and the theoretical modes of studying “middle class” increase or decrease are still living, and are central to Marxian historic-economic forecast of class relations. The second section of this chapter studies the method for arriving at the truth.

The crux of the question of increasing poverty of the working class is whether they are worse off relatively to the total production of wealth and income of the capitalist class, or whether they are absolutely poorer than they were.

The categories of poverty and income, as usually employed, are not altogether definite.

How the Meliorists⁸ Put It

Those who argue that Marx was wrong are fond of citing the automobile and the radio, the cinema and steam heat, etc., the gain in education, the more bourgeois appearance of the workers as to their clothing, than their forefathers, etc. These, they argue, are not referable to strict measurement, and yet they constitute a real addition to the income of the workers.

The spread of public libraries, gymnasiums, swimming pools, and a host of other conveniences and services have lifted life from its former brutality, stolidity, unimaginativeness. The lessened drunkenness, the greater humanity shown to the weak and the helpless, to orphans and invalids, are frequently cited to show a higher cultural level. The insane are scientifically taken care of. Where children once drifted, vocational guidance tells them what to do. All these benefits are a net gain for the worker.

As to the worker’s wife, the substitution of gas and electric stoves for the old coal stove, of sanitary kitchens, of steps saved by intelligent planning, etc., help large numbers. So does the use of laundries relieve women. The tremendous fall in the birth rate, whatever its social consequence, means less work and less early aging from overwork by women. This type of argument may be termed the qualitative convenience position.

How the Marxists Put It

The Marxists put the whole question differently. Mass unemployment, war and conscription, relief instead of wages, increase of accidents, increase of inhuman speed-up, enslavement of the colonial countries by Imperialist capital, the scourge of crises, loss of savings, inflation, fear for the future, the absence of the older pioneer and independent business hopes, the millions of intellectual proletarians turned out by those very libraries, but finding no job, the late age of marriage, the very absence of children (the object of social effort), are high prices to pay for substituting the auto for the buggy, the petroleum well for the hayfield, the cinema for the living theater, the radio for family piano playing and singing.

In view of the qualitative disagreements, it is better to confine ourselves to quantitative aspects, so far as these can be ascertained.

The Qualitative Discussion Is Interminable

For after all, those that think that the King James Bible was better literature and molded a more articulate people than radio or seven-minute he-and-she stories, will never be convinced by the moderns, nor these latter by what they think are stick-in-the-muds. It is the old warfare of the people who count by how much one takes in and those who count by how much one puts out. Political economy must take a more restricted area.

Real Wages Are the Indices

The real wages indices are used by the Marxians as their first gun. In the United States, during the highest prosperity period, the index of wages in terms of the cost of living fell from 1921 to 1929 by some 4 per cent. That is, the employed worker was 4 per cent worse off at the apex of prosperity than at its beginning, and this, though socialists always maintain that these indices are “cooked” to put up a good front, especially on the question of rent and additional expense, such as books, shows, clothing, etc.

According to some other figures, from the panic of 1907 to the boom of 1916 real wages fell by 17 per cent—this without taking account of unemployment, short-time, sickness, intensity of work, accidents.

If a total payroll list were made—that is, actual payments to the whole of the working class in dollars and cents (indexes do not cover this)—and against that all the expenses of the workers measured in quantities (so much food, clothing, so much out for rent), they maintain the showing would be far worse, altogether apart from the question of productivity per man, which deals only with relative surplus-value, relative wages.

The Statistical Basis Is Dubious

The Marxians, though using such materials, have realized that they are not theoretically well founded. An ounce of cerebration is worth a ton of mere statistics. In the first place, although there is an International Labor Office at Geneva and a splendid Labor Department at Washington, there is not a single institution actually devoted to a study of the history of labor conditions. Indices, yes; totality of study, no. In order to test the Marxian hypothesis it is necessary to standardize a procedure that will meet with the approval of the non-Marxians as well. This has been attempted by the eminent German (now British) statistician, Jurgen Kuczynski.

What do wages mean? Suppose wages are higher and health conditions worse? Suppose capital pays out the same wages at home only because it exploits ten times the labor on a coolie basis abroad? None of these are easily measured and if measured, easily weighted, one against the other. Yet unless the question is to remain forever on the deductive plane (which is not at all bad, simply not complete), it is necessary to make a tentative showing.

A List of Difficulties

To begin with, the hourly or weekly basis differs, and so do piece rates and time rates. Rates of wages and wages paid in fact are quite different. As to the tendencies of all these against each other we are much in the dark. Has overtime increased? No one knows. How do yearly wages paid out differ from weekly wage rates, or even weekly pay? Has anyone measured losses due to illness? There are all sorts of conjectured life insurance company figures, but they are far from conclusive. How about strike and lockout losses? Some brave attempts have been made to find out what workers really make during their lives, from apprentice and learner rates through full earning power, down to the last, act as night watchmen or taking out the grandchildren. But they are partial and too few in number. The measurement of taxes paid, trades-union dues, life insurance, unemployment insurance, transportation, are all rudimentary and unsatisfactory. Those who talk so glibly about a level of wages can have little idea of their assurance.

Labor Related to Same Capital for Comparison

In the first place the Marxian thesis requires that the full number of workers employed by any groups of capitalists be included. English capitalists do not read geography books and limit their investments to England. They employ cattle raisers in the Argentine, Kaffirs in the South African mines, peasants in India.

Marx speaks of the accumulation of capital at one pole leading to the accumulation of misery at the other. To discuss his equation, both poles must be studied totally. True, it is useful to study labor in England alone, but that would not tell the whole story. The same is true, though in lesser degree, of the United States. The wages paid in New England were finally undermined by those paid in North Carolina and Alabama. The labor employed by all American capital is the basis if the Marxian thesis is to be tested adequately.

It must be recalled that the constituents of indexes can change. If horse feed was important in an index of 1890 it would not be today. Nor would the expense of mustache-cups or bustles or bicycles play the part they did.

It is a fact, for example, that workers live far away from the office or factory, whereas a hundred years ago they walked to work. To compute a cost-of-living index, it is necessary to shift units as well as prices, to study qualitative changes in consumption as a guide to measuring different quantities. This is apart from price changes. To make up a moving index invites new difficulties, but a static index also is off center.

An Attempted Formula

For relative purchasing power, the difficulties are increased. Shall we measure the compensation of the worker against all goods produced, including means of production, or only against means of subsistence? If we choose the latter, then, at times when means of production are being produced in a new and high proportion, as in a boom, labor will appear to be doing relatively better than if we include this new constant capital.

If we can eliminate prices and get down to physical production we will actually be near to testing the theory of Marx. For he counts time of labor, and if we approach this analysis by approximating the mass of production, then we are coming close to determining whether his concepts have made good or not. To get as near as possible Kuczynski constructs the following formula:

The following laws of wages can be assumed when using this formula:

(1) Money wages and real wages increase during times of good business.

(2) Money wages decrease during a crisis, or bad business.

(3) Real wages, taking account of unemployment, decrease in crises

(4) Wages relative to total production increase in a crisis (though they decline absolutely).

(5) Relative wages certainly decrease in times of prosperity.

These are called rather the “habits of wages” because nearly all commentators agree that they take place, whatever may be their interpretation. They are not absolutes, they merely indicate general tendencies.

Relative wages, though, show a steady tendency to decline and deviate little from this relation. The importance of this for the theory of capitalist accumulation is very large, but not for the question of absolute impoverishment.

It is necessary to realize that statistics will never give us the answer, nor must we wait until they do. But if intelligently handled statistics point consistently one way, then the deductive work of Marx would seem more correct than ever, though the method of political economy scarcely calls for this check-up.

Intensity of Labor Factor

For Kuczynski there is no question but that the increasing intensity of work is a blow to the conditions of the workers. The only question for him is: Does the alleviation of the condition of the workers, both in times of prosperity and in the factory itself (in order to keep him as fit as possible so as to be speeded up as much as possible without a diminishing return), counterbalance the wear and tear and threat to working longevity? If they do, then what are called his conditions are not getting much worse. If they do not, real index wages can be forgotten, they are no longer important. If a workingman sells thirty years of his life to a factory for ten years’ pay, his wages were below those of a Hindu rice worker who survives fifty years, so far as he is concerned. The alleviation has to equal twenty years for him to receive the value of his labor. Otherwise high wages can become effectively the lowest ever known.

Physical Standards

Another important commentary on conditions are the physical standard of armies in European countries. For the last generation they have been marked down everywhere, and that began before the War!

In computing the effects of short-time and unemployment and labor turnover, one must add the accidents that come from workers at new jobs, due to turnover; the fact that their intensity of labor might be terrific, but not expressed in production figures because they are inexperienced, and the nervous fear of losing jobs cannot be measured either. Hence professional statisticians are not intoxicated with their art: they know its limits.

Kuczynski concludes that the British worker was exploited more and more from 1820 to 1850, that from 1850 to 1870 the world monopoly of Britain in manufactures enabled the workers to benefit, that from 1870 to 1900 their welfare was pretty stationary and since 1900 much worse.

If his figures are of value, then only two conclusions can possibly emerge and both justify Marx to the hilt: that the relative position of the British worker to the capitalist has reached the lowest point of history and his absolute condition is worse than in 1900. Never before have the rich people been better off, in possessions and relative to the workers, than today.⁹ Net real wages have declined from 100 per employed and unemployed worker in 1900 to 93 from 1924-1932 and even in the boom year 1935 it reached only 102. But on a cyclical basis, it runs as follows:

Relative wages in Great Britain are as follows in cycles:

The chronic crisis in England and the need for desperate expedients, such as devaluation, protection, etc., are easily explained by the incapacity of the workers’ purchasing power for consumption goods to match the accumulation of capital, or even to come near doing it any more. This is perfectly compatible with the immense wealth of British capitalists.

This may appear contradictory, but it is well known that for profits, capitalization, etc., the Russian capitalists were never richer than before the Revolution of 1917 showed that their system was too rent by contradictions to go on.

But it is for Germany that the situation reveals the import of a capital accumulation without reference to relative consuming capacity of the workers and where even the absolute deterioration is not slow, as in England, but ghastly. The cycles are similar to those given for England, but it must be remembered that the level of real wages was lower to begin with.

In 1913 it was estimated at only 75 per cent of the British average.

In other words, the German capitalist system has accumulated at such a rate relative to its home labor that only the conquest of half Europe would give it a proper market. Here is the Marxian thesis complete, for in Germany the tendencies of capitalism have not been eased by Imperialism as in Britain.

The German capitalists, unable to resolve this enormous contradiction, cannot continue to manufacture means of production to such an excess, for if the ratio of constant capital is nearly 5 to 2 to variable capital, and that ratio is produced and increased further, it can lead only to a situation that is revolutionary at home or requires perpetual war against neighbors.

Hence the German bankers and industrialists, made keenly aware of the dilemma, beginning in 1927 and madly after 1932, manufactured goods that are neither means of production nor means of subsistence but which are neither productive nor consumable, such as guns and other armaments.¹⁰ This means that an immense amount of raw material is wasted and that neither means of subsistence are being created nor the means of obtaining them abroad. The conclusion is obvious.

Marxian Prophecy Complete in Germany¹¹

The Marxians maintain that in Germany completed accumulation at one end has produced misery at the other. Either they must allow the workers’ revolution and replace their state with a noncapitalist organization of industry, or they themselves must transcend the capitalist structure in some respects, that is, accumulation for a profit, to try and obtain that profit by conquest abroad.

That is, they are still in the grip of capitalist accumulation; their capitalists still have to make money, however defined, but the Marxian tendency having actually been attained at home, they seek to make their money abroad by conquest. In the conquered territories they can begin the historic carrousel once more of production of means of production to create means of consumption and thus make money.

This picture, although suspected to be true as to fact for Germany, is contested vigorously by the non-Marxists. Germany was not a product of a Marxian law, she was defeated in war. Politics rather than economic theory can explain her miseries.

But, unfortunately, her accumulation rate before the War, relative to labor, was already the highest in the world. She would soon have come to the present rate in peacetime. The non-Marxists who grant this point, however, make some very sharp and pertinent criticisms of its validity for proving the Marxian case.

Where, they ask, is the impoverishment of which Marx speaks? True, he does not say poverty will increase, but misery and degradation will, and that is much the same thing. When Marx wrote Capital and made his dire prophecies, the real wages of labor were about 74. Now, in the last cycle, they were 93, and may even be higher today (in the present English boom).

England was the country Marx picked out to study; stick to it. The working class is not only better off in real wages from 74 to 93 (and could socialism do much better in that time?), but this has coincided with a fall in relative wages from 111 to 78!

The wealthy have accumulated at a rate far greater than the poor have earned wages, but it has not led to an increase of misery but to an increase in welfare. Take any figures you wish, that the worker is speeded up, that the physique of the nation is declining, that the fear of unemployment is increasing. Do these balance the gain from 74 to 93? If not, Marxism is false in this particular. For, after all, the classic lands of machinery are the United States and Great Britain. Unlike Germany, they came into the capitalist arena while there still was time to move. Here you see the capitalist system not cribbed and confined, as in Germany, but with a full play. And its results are beneficial.

The Challenge of Increasing Misery

The Marxians are limited in their reply to this. For they cannot say no, take Europe as a whole, Italy, Poland, Austria; take 80 per cent of the population of Europe today and who can doubt but that it has lost ground in the period of high capitalism? The system must be described as an entirety.

The reply of the non-Marxists is, these countries are in the brutal, larval stage of early capitalism, or were. They reproduce the horrors of the English and French factory systems before 1850. This brutality is a symptom of the early development of capitalism. But Marx’s entire theory turns not on the early but the ultimate evolution of capitalism.

Now the more highly evolved countries like England, Holland, Scandinavia, the United States, are the real test of the theory. Is the condition of the worker getting worse in countries with scope for markets and investments and with a highly developed, old, integrated capitalism?

We see that in England the terrors predicted by Marx have not come to pass. There is an immense amount of misery there, but then there always was.

Where is the dynamics of a labor movement that can permit capital to expand its horse-power immensely, accumulate riches, employ 50 per cent more people than when Marx wrote, and still the conditions of the workers are, at the very best, 20 per cent better than when he wrote, and at the very worst not much worse?

If you say, trades unions have brought this about, capitalism is not seen with its tendencies fully realized but only as modified by labor resistance—then it is clear that within the capitalist system trades unionism can annul or at least blunt the famed law of accumulation of Marx.

The knell of the capitalist system has been turned into a peal of wedding bells. Capital and labor are uneasily married for their good.

Since Marx himself points out that the value of labor-power is determined by historic and moral causes, to a large extent, and that the area of bargaining as to the value of labor-power is very wide and depends on strikes and negotiations, it follows that the ability of labor to make terms within the system is sufficient to end the law of increasing misery. One or the other must explain the evolution of British labor conditions. (This is a more up-to-date version of the Goldscheid theory.)

Marxian Analysis of Total Exploitation

The Marxians reply as follows: It is not a question of the unit but of capitalist society as a whole, on which basis we are willing to discuss the matter. But we do not identify English capitalism with the kingdom called England. Let us compare from what labor British capital actually made its profits when Marx wrote, and from what labor it makes its profits today.

Otherwise we are not speaking of the same thing. If English capital employs 50 per cent of its labor outside England and uses labor at home for more skilled work—that is, it now uses England merely as a department, where once she was a country—then you are saying, in effect, that the wages of more skilled workers should be compared to the wages of all workers fifty years ago.

Actually what has happened is the same as has happened in the northern United States and in France, two countries that have imported their common wage labor from Poland, Italy, the Negro South, or Algeria. In these areas where immigrants or Negroes do the hard work, the older stock of Frenchmen and Americans do more genteel, skilled, highly paid work.

Still no one would say let us compare the wages of native-born white American workers of Anglo-Saxon stock in 1938 steel mills with those in 1860 and see how they are earning wages. For there are no such workers in the steel mills, or if there are they are inconsequential. The Polish and Slovak immigrants outnumber them ten to one.

The British unit must be treated in the same Marxian manner, the same capital against the labor it employs in the process of production, and out of which it makes its money.

Lancashire versus India

Now in the textile industries of Lancashire, in old England, real wages per fully employed worker, not counting unemployed and short-timers, have risen from 103 at the outset of the century to 109. Over a half-century, since Marx wrote, wages have increased nearly 13 per cent. They are still dreadfully low but they have gone ahead. If we count unemployment and short-time this gain may be more than canceled, but at any rate there has been no serious tendency to an increasing misery.

The textile industry in India has been established by British capital on a big scale in India since Marx wrote. If we combine these wages with those in the mother country, we find that in fifty years, fully employed labor is getting 10 per cent less in real wages. But in the last decade this current has been reversed. But if unemployment is taken into consideration this gain in the last decade has been much more than canceled.

If we take unemployment for the whole area controlled by British capital we can say that, leaving out speed-up, the condition of labor has deteriorated by more than 20 per cent. The less skilled workers in India suffered more than the more skilled ones in Lancashire.

In the United States the figures of Paul H. Douglas in his statistical study Real Wages in the United States, 1890-1926, have been used by the Marxians to sustain their argument that even in the United States (apart from the question of relative wages) there has been an absolute decline in workers’ conditions, despite the added amenities of life for large sections of the workers, such as automobiles, radio sets, etc.¹² This computation is complicated by the social fact that whatever may be the absolute conditions of a Polish steel worker compared to those in his home country, his position as a member of the American working class as compared to the capital that employs him, is not affected by his marked improvement in condition by reason of having emigrated.

Theory Is Still the Deciding Weapon

But the question of increasing misery, or the closely allied question of the rich getting richer, or the real fate of the middle class, will not be settled, fundamentally, except by a study of the categories as given in Marx’s Capital (Volume I).

If it is a necessity of capital to accumulate and centralize, then the tendency for the rich to get richer, relatively to their workers and absolutely with the increase of production, is given in the conclusions of the economic analysis, and it would be a good technique for statisticians to suspect their arrangements of figures, if they do not conform. If the Marxist scheme of reproduction is not true, then figures of centralization might nevertheless still be correct, but for other reasons. Theory is the decisive factor.

NOTE: It does not follow that workers in Europe or the older parts of the United States are better off, just because of increased exploitation of labor in the newer countries. In England for about thirty years or so the capitalists, on an astoundingly rising trade, did share some of their profits with the workers, but with which workers? Only the upper, skilled group; the lower groups remained in an appalling degradation. The revelations of Booth in Life and Labor shocked the complacent England of the eighties, and the Salvation Army movement headed by another Booth to save “Darkest England,” and the wonderful eloquence of Arnold Toynbee (founder of “settlement work”), were required to demonstrate that in the only period in history when the workers obtained a slight share in an industrial monopoly, the differentiation within labor was made more acute, thus tempering the revolutionary edge of the labor movement.

Thus no total figures can have much meaning. Nor can figures of real wages, for national differences. The League of Nations figures show real wages in 1925 at 100 in London and 59 in Paris. To anyone who traveled regularly and worked in both capitals, this mode of computation was simply ludicrous, no matter how “scientific” its foundations. Marx’s total theory of the economic significance of the term “means of subsistence” is profound, and enables us to escape these misleading calculations.

Marx says plainly that be his salary higher or lower, the worker’s means of subsistence are determined by his class situation and not his class situation by the level of wages. Hence high wages, if they impede accumulation, slacken investment. Thus his class position cancels his advantage, and the wages level is determined by the fact that he must sell his labor-power, and the capitalist can decide whether to buy it or not. This is apart from the issue whether the position of the workers should be determined by what they get from the capitalists as wages or by what they give to the capitalist in the shape of expenditure of energy compared to means of subsistence. Hence when Marx speaks of increasing misery, whatever the temporary movements of wages, he means that the working class, in its class relation, is steadily worsening its position with respect to the sale of labor-power (as shown by chronic mass unemployment) and this is the decisive question.

Naturally this increasing misery proceeds in a most unequal fashion. The development of capitalism being founded on irregularities and leaps in developments, the rhythms of its purchase of labor-power, both as to amount purchased and amounts paid, must vary correspondingly. But these irregularities are within a general tendency, and never depart from its laws.

The rich are getting richer?

This question, the antipodes of the poor getting poorer, is largely governed by the equations on poverty. But it has a methodological interest of its own. The question of the rich has to be dealt with either as a title to ownership, capitalized, or as revenue, so as to have a money expression.

But it is not ownership that confers wealth but a stake in the process of production, since ownership would mean merely a wasting of assets, if the goods owned were spent as revenue. Hence income figures are most significant.

But even these have defects. The institution of Swiss family foundations, of personal service holding companies, of a long series of assignment to “dummies” (with releases of these assignments signed by the “dummies”), the assignment of surpluses to all sorts of contingency funds, the development of “foundations” and endowments in which the same control is exercised, and the same ultimate right of disposition, but where the money appears to be given away (and the amount that would be paid in taxation is actually spent on education or charity); these and a thousand other dodges mean that statistics of revenue of the rich are as good as useless for our purposes.

Neither Marx nor anti-Marx stands a good statistical chance on the question of the rich getting to be richer. The evidential method pursued by Anna Rochester in Rulers of America is perhaps the best for prevailing tendencies, and the attempt of Colin Clark of Cambridge University in England to penetrate all veils and determine this personal concentration of command over labor (as against the industrial forms of centralization), make profitable reading but remain brilliant excursions, that may be true and probably are, but are not yet science. (Colin Clark, The National Income, especially in pamphlets of the Labor Research Department, Doughty Street, London.)

In theory the question, too, is related to whether the inquiry is confined to such rich people as make their money out of the reproduction of capital in the pure capitalist accumulation, or whether it comprehends rich people who have come out of noncapitalist sectors like agriculture or self-employment, by way of savings, or out of colonial profits. This last group is becoming less important, but it makes all statistics dubious as to their referent.

Gide argues that there is a greater concentration of wealth than ever before but there are also more people rich than ever before, even though their proportion of assets to that of the magnates is decreasing. If he means that population is five times what it was, he is right. But the question is one of classes.

Positive Theory of the Present Position of the “Middle Classes”

It is argued that the middle classes are today a compound of petty capitalist and proletariat. The petty capitalists are divided as individual producers and salariat, crossed by petty investments and savings and house ownership.

During the last crisis, a sixth of all businesses failed. Salaried unemployment was almost as great as workers’ unemployment. Among “intellectuals,” unemployments ran from 60 to 90 per cent.

In production (not in circulation) individual enterprisers have fallen by a fourth, their output still more.

The United States is still bourgeois compared to England though, for the middle class is a fourth of persons gainfully employed, in England a fifth. Of the gainfully employed middle classes, only a fourth were independent enterprisers (corrected figures including professionals show nearer a third).

Of shareholders, it is said that 9 per cent owned 80 per cent of all shares. Shareholders and bondholders and property and business owners together are far less important than the corresponding class was in 1870, say, when Marx wrote.

Of farmers, five-sixths earned less than $1,500 in money even in prosperity. Of shareholders some two-thirds derived $100 a year or less from investments, etc

This parade of figures, repeated to infinity, in a host of books and pamphlets, leaves us unmoved. If anyone had drawn a picture of the condition of England in 1600, the towns crowded with decayed gentry and artisans, shopkeepers ruined by monopolies and by clipping the coin, the swarms of beggars and tramps on every road, the tattered clergy, the dying farms, the continuous alarms and threats of invasion, the figures would have been glorious but their meaning, for our purposes, nil. Most people have always been wretched and the life of most small business people frightfully hard.

What Marx maintains is a thesis concerning the place of smaller capitalists in the process of total reproduction of capital, as related to a reproduction functioning autonomously, not reckoning primitive accumulation.¹³ This remarkable tendential study in economic processes is converted into a vague populism by the above citations. But we must include them, as they comprise the most significant statistics bandied about in the literature.

Footnotes

1. Evolutionary Socialism (translated by Harvey, London and New York, 1909. German original, 1899).

2. When I first entered Wall Street (1908) bond calculating was an occult art. Today high-school boys do for $15 what experts then did for $200. [Author.]

3. See Bibliography.

4. See second section of this chapter.

5. His study of agriculture (1901) was twin to Bernstein on industry.

6. As in harvesting.

7. Capitalism and Agriculture (St. Petersburg, 1900).

8. Meliorists: those who believe that anything is getting better gradually.

9. The Economist (London, 1937), reviewing Kuczynski, attempts to modify this conclusion in some part.

10. It is not commonly known that six years before Hitler a fifth of German production was in armaments. Like all “leaders” he is the epitome of continuous class needs.

11. Objectively, that is.

12. Douglas does not agree. He thinks a larger supply of capital helps workers.

13. Kuczynski, Zurück zu Marx, p. 130.

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