Marxism versus socialism

Contents

CHAPTER PAGE

Introduction . . . v

I. Popular Misunderstandings About the R6le of

Introduction

The reader who is interested in the spread and development of sociaHsm here and abroad has undoubtedly noticed that the great growth of socialism in recent years has been accompanied by considerable changes in policy and doctrine. In the main, present-day political socialism is more or less Marxian, but the word socialist may mean anything. The American socialist, for example, will tell you that Marxism cind socialism are synonymous, but what he will advocate is but partial state capitalism, or state ownership of the trusts. The German revisionist and the French reformist claim to be the spiritual heirs of Marx, and yet they have no illusions about the social revolution and the inevitable sudden collapse of the capitalist mode of production. Some revisionists, in fact, have grave doubts even as to the desirability of the expropriation by the state of all means of production. The syndicalists, on the other hand, who claim to be the only ones that act in accordance with Marx's class-struggle doctrine economically interpreted, have repudiated the political struggle. The rank and file of the American and German socialist parties claim to be Marxists, but even they are far less orthodox than they claim to be. They have toned down vi INTRODUCTION

their Marxian doctrine as they have hberalized their poHcies. They have refrained from sacrilegiously revising Marx as a whole, but they have piously reinterpreted parts of his teaching — all with much loyalty to the memory of Marx, but with little respect for the intellectual consistency of the doctrine.

This situation is more than interesting, it is important. What is the cause of these changes? Why is it that so many of the socialist thinkers are so arduously revising and reinterpreting their traditional doctrine, while others are grasping for a new one ? This book, I believe, answers the question. The Marxian doctrine, which helped the development of socialism throughout the world as no other doctrine ever did, has turned into a fetter, a trap, a pitfall from which there seems to be no escape. In the same compelling manner in which Marxism once assured its followers of the inevitability of the cataclysm and social revolution, precisely so does it indicate to-day their impossibility.

Marxian socialism, or " scientific " socialism, as Marx called it, differed fundamentally from the various types of socialism that preceded it. Marx ridiculed the invention of an ideal social organization, a perfect state. The fundamental proposition upon which Marx's socialism rested was his economic interpretation of history. This conception implied that the political and legal organization of society is absolutely dependent upon its economic structure, that our future

INTRODUCTION vii

depends entirely upon existing economic tendencies, that no social revolution could socialize scattered and decentralized industry, nor could legions of small property-owners be expropriated. On the other hand,X^ no power on earth could prevent socialism, i.e., the \ expropriation of the means of production by society as a whole, i^'the economic tendencies were what Marx thought them to be when he was working out his doctrine.

Certain economic tendencies were, according to Marx, inherent in capitalism. These tendencies could but lead to the destruction of capitalism. They were : rapid concentration of production in industry and agriculture and the disappearance of small industrial and commercial undertakings; concentration of wealth in the hands of an ever diminishing group of magnates of capital, accompanied by the complete disappearance of the middle class and general proletarization of the masses; increasing misery of the proletariat accompanied by an ever increasing class struggle; commercial crises of ever increasing magnitude, due 'to" overproduction. Such were the tendencies that were to lead to the complete collapse of capitalism, to the social revolution and the dictatorship of the proletariat. Under that dictatorship the means of production were to be expropriated and the socialist commonwealth inaugurated.

Before our law and our industry had more or less adjusted themselves to the introduction of machinery, viii INTRODUCTION

all these tendencies actually existed. But when Marx formulated his doctrine, he failed to allow for counter tendencies, for society's ability to adjust itself to the Hew' situation without a revolution.

It must be borne in mind that Marx did not advocate socialism because he believed the socialist state to be good. Socialism, in his opinion, was simply inevitable because of the economic tendencies inherent in capitalism. Were not such tendencies at work, socialism would have been an empty Utopian dream, utterly lacking an economic basis and hence impossible of realization.

This is the keynote of Marxian socialism. Si non, non, is Marx's own proposition. Our contention is that nearly all the tendencies upon which Marx counted have failed him, and, consequently, that from the point of view of Marx's own economic interpretation of history the social revolution is but a revolutionary Utopia.

It is quite true that the concentration of industry is very great, and there is little doubt in my mind that our gigantic industrial organizations will before long be effectively controlled in some way or other by governmental agencies. But even in this country, where industrial concentration has gone much further than elsewhere, it falls far short of the expectations of Marx. Constantly hearing of the mammoth combination, we quite naturally fail to notice the multitudes of petty enterprises which, humble though they may

INTRODUCTION ix

be, exist and flourish. Furthermore, Marx was quite mistaken in assuming that centralization of industry and concentration of management result in concentration of wealth, the disappearance of the middle class, and the final concentration of all capital in the hands of a very few magnates. The numbers of the rich and well-to-do have increased and are increasing by leaps and bounds. There has arisen a vast legion of stockholders who are the veritable national guard of capital. Politically they are anything but a negligible quantity. Nor have the small farmers disappeared from the face of the earth; on the contrary, wherever farming becomes intensive there is a tendency towards decentralization. A socialist state with the farmer outside it is a conception that can rest comfortably only in the head of an American socialist. In Chapter IV the reader will find that for Marx and Engels, to whom thinking was not an irrelevant foreign tradition, the disappearance of the farmer class was economically and politically a conditio sine qua non of the very possibility of a socialist commonwealth. Nor is the theory of increasing misery at all tenable. Indeed it is admitted that misery is decreasing instead of increasing. The condition of the working classes has greatly improved, — not as much, to be sure, as we should have desired, but enough to show that Marx was quite mistaken in assuming that the accumulation of misery must correspond to the accumulation of capital; that, to use Marx's own

X INTRODUCTION

words, " accumulation of wealth at one pole is therefore at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole." (See Chapter VI.)

In Chapter X of the present study the reader will discover how striking a role Marx allotted to commercial crises. They were to extend in magnitude and increase in frequency and momentum until the entire capitalist structure should crash and tumble. This cataclysm, which according to Marx is already overdue, was to result from that anarchy in production which characterizes the competitive system, which, he said, cannot produce without overproducing on an ever more gigantic scale. A dramatic and picturesque theory it was. As the revelation of a prophet it may still find believers, but as a scholarly theory it had to be abandoned even by Marx's own followers. In the third volume of Marx's Capital there is a frank admission that with the extension of the world market and quicker means of communication and transportation the tendency toward crises of overproduction has greatly diminished. Thus did the doctrine of the inevitable collapse of our capitalist system come to grief.

It is obvious to-day that the economic tendencies upon which Marx counted have played him false, and from the point of view of Marx's own economic interpretation of history the expectations and hopes of revolutionary socialism can hardly materialize. The situation has become quite evident to the clear minds

INTRODUCTION xi

within the sociaHst movement. This explains the revisionist, reformist, syndicalist and " back to Kant " socialist movements, besides many others that have recently arisen. To-day the social movement throughout the world is in one sense but a quest for a new possible meaning of the word socialism.

So-called scientific socialism is bankrupt. Socialists to-day have the alternative of becoming plain social reformers or of being out-and-out Utopians. Not so, they say; even if all the mistakes of scientific socialism are admitted, its kernel remains sound and victory is assured. Why? Because, whereas the Utopians were dreamers, Marx exposed class exploitation and taught class struggle, and under this sign a class-conscious proletariat will be victorious, and scientific socialism will win where Utopias failed. Such statements we hear very often, and all that can be said in reply is this : If the a-_ssertion of Marx^ and Engels that all history is a history of class struggles is correct, there must have been quite a bit of class-consciousness in history before Marx; and yet these class struggles Mid not lead to socialism. With regard to so-called" exploitation, our friends the socialists are making a mistake in looking down upon their unsuccessful forerunners, the Utopians. In the last chapter of Thomas More's Utopia, from the title of which, if I am not mistaken, the word Utopian has been derived, our friends will find the following observation:

" Therefore I must say, that as I hope for mercy.

xii INTRODUCTION

I can have no other notion of all the other governments that I see or know, than that they are a conspiracy of the richer sort, who, on pretense of managing the public, do only pursue their private ends, and devise all the ways and arts that they can find out; first that they may, without danger, preserve all that they have so ill acquired, and then, that they may engage the poorer sort to toil and labor for them, at as low rates as is possible, and oppress them as they please." ^

The scientific socialists have forgotten that More the Utopian made such a statement. They would hardly have forgotten if it had materially affected economic conditions. It did not. Why, then, should we expect so much from Marx's formulation of precisely the same thought? Is it not rather Utopian to expect so much in the way of fundamental changes in our social institutions from a formula, a thought, a conception, an idea ?

No doubt it will be pointed out to us that the underlying economic conditions have changed since the days of More's Utopia. That is quite true; but to contend that further changes are to be expected because of our economic conditions is to shift the argument and return again to present-day economic tendencies, which have ceased to be encouraging from the Marxian point of view.

^ More, Utopia (Bishop Burnet's translation), London, 1684, p. 201.

INTRODUCTION xiii

Of the various doctrines of Marx, the economic interpretation of history has suffered least from the ravages of time and of criticism. It is a very important theory, and it marked a great advance in historical methodology and social philosophy. But only a layman could regard this method as a perfect instrument. Much as I admire the theory, as perhaps the most robust ever advanced, it is at the same time the crudest and most unfinished doctrine in the field of social philosophy.

For, to begin with, there is no such thing as one economic interpretation of a given historical event; many interpretations are possible. One man may look upon certain economic conditions as the cause of the event, while another will find the cause in quite different economic aspects. The past presents nearly as varied a selection and almost as complete a chaos of economic influences as does the present, and therefore, even on the basis of the strictest economic interpretation, many combinations of causation are quite possible. Again, how can we determine, quantitatively and qualitatively, the strength of these economic influences with which we are dealing? And even assuming that historical laws have the same validity as the laws of mechanics, how much, after all, can they tell us? Every hovel and every bridge and every cathedral stands because it is constructed in accordance with mechanical laws. But do mechanical laws determine the designs of these various structures? Simxiv INTRODUCTION

ilarly within the laws of economic cohesion an endless variety of historical designs and structures is possible. Furthermore, we are apt to forget that the economic interpretation of history can explain only the changes

i

Hhat occur in things, never the things themselves. It Imight explain a change in religious doctrine, for instance, but never faith itself.

And if this doctrine, as a historical method of dealing with the past, where the game is played with open cards, is beset with such difficulties, how could one seriously expect much from it where the future is concerned ? I am indebted to Professor Goodnow for an illustration of the uncertainty of our ordinary political forecasts. As we all know, the democratic development of our form of government has been attributed to the economic preeminence of the cities, the concentration of industrial population, etc.; and because of these modern economic conditions we expect still greater democratization of our governmental institutions. But it so happened that on September 12, 1900, a gale drove the waves of the Gulf over the city of Galveston. In sheer despair all traditional political theory of separation of powers, etc., was abandoned, and to meet an extraordinary situation a commission form of government was adopted by the city. This entirely unforeseen and unexpected commission form of city government has since swept the country, one city after another adopting it throughout the United States. Of course it is easy to interpret

INTRODUCTION xv

this phenomenon economically a posteriori, but no economic interpreter could ever have foreseen so curious and extraordinary a development.

Because of this uncertainty of the things of the future, the v^riter of this book studiously refrains from prophecy. There is no assertion here that socialism is impossible in the future. The book deals with the well-known doctrine that because of such and such economic conditions social revolution is inevitable. Facts and figures show us that actual conditions do not warrant any such assumption. Neither with the naked eye nor with the help of such instruments as science may lend us can the socialist state be seen on the horizon. What may happen in the distant future we do not know; it lies absolutely and entirely beyond the realm of our knowledge, in a region where faith and imagination may reign supreme.

I cannot close this introduction without expressing my deep gratitude tO' those of my friends who have helped me in my struggle with English expression. I am especially indebted to Mrs. Simkhovitch, who, I fear, has taken time from her much more important work to lend me assistance. Both the form and the substance of the chapters relating to the class struggle were revised by that realistic genius, my late friend Miss Carola Woerishoffer. My friend and colleague, Professor Munroe Smith, as editor of the Political Science Quarterly, where this book first appeared in xvi INTRODUCTION

1908-12, has taken endless trouble in making it more or less readable, — for which I am profoundly grateful to him.

Vladimir G. Simkhovitch.

Greenwich House, New York City.

Chapter I Popular Misunderstandings About The Role Of Marx's Theory Of Value

The role which socialism is playing in the modem world and the extent to which the socialistic army in all civilized countries is marching under the banner of Karl Marx give to the body of doctrines which bear his name a unique position in social science. Even if the Marxian system be regarded as a tissue of errors, the fact that millions of men accept it makes it significant. It has, however, another claim upon the attention of the economist. Had Marxism failed to win a single adherent, it would still have been necessary for every serious student of economic theory to endeavor to understand it, for it contains a challenge that can be neither ignored nor evaded.

The literature of protest against Marxism is already vast, yet, with the notable exception of such writings as those of Bohm-Bawerk, Seligman, Sombart and Stammler, who have dealt with special aspects of the system, the bulk of that literature proves conclusively to the well-informed reader that reason is but a fig-leaf for emotion. Too obvious in most instances is the critic's desire to emulate St. George and slay the dragon, even if personal modesty clothes the brave onslaught in the humble garb of scientific research.^ With these critics emotions run riot. They have in their zeal attempted the impossible: to kill the dragon without seeing him. That even St. George could not have done.^ Such criticism, carried on for two generations, has naturally established a tradition : a man of straw has been constructed for the express use of Marx's critics.

Of the current misconceptions of the Marxian system, the most fundamental and most general is the opinion that the labor-theory of value is the cornerstone of Marxian socialism. From this is derived the equally erroneous opinion that Marx's demand for social justice stands or falls with his theory of value.

^ Marx, who, as Pierre Leroux once said about him, *' had a keen understanding of the bad side of human nature," has given to the motives of his critics a somewhat unkind interpretation. " In the domain of political economy," he writes, "'' free scientific inquiry meets not only the same enemies as in all other domains; the peculiar nature of the material it deals with summons as foes into the field of battle the most violent, mean and mahgnant passions of the human breast, the Furies of private interest." Marx, Capital, fourth English edition (London, 1891), p. xix.

^ As early as 1895 Adolph Wagner pointed out that most of the critics of so-called scientific socialism had shown that they had not the least conception of what they were talking about. See Die akademische Nationalokonomie und der Socialismus (Berlin, 1895)5 RE- 22, 2a.

POPULAR MISUNDERSTANDINGS 3

Or, as a recent Marx critic, Mr. J. E. Le Rossignol, professor of economics in the University of Denver, puts it : " Orthodox socialists are deeply concerned to prove it true, for if it can be shown that all values are created by labor alone, it must surely follow that all should belong to the hand and brain that created them." ^ This ethical interpretation of the Marxian theory of value and the desire to base socialism upon this theory are characteristic of the bulk of the academic literature about Marx. Thus Professor Foxwell writes about Professor Menger : '' For him [Menger] Marx, not Ruskin, is the type of the socialist. Socialism in this sense, the only one really distinctive, has been well defined by Mr. Rae, in terms which Dr. Menger might have drafted himself : ' It is not a theory of the state's action, but a theory of the state's action founded on a theory of the laborer's right — at bottom a demand for social justice — that every man shall possess the whole produce of his labor.' " * Giving to the Marxian system this interpretation. Professor Menger was logically justified in making the courageous statement that " Marx is far inferior to Thompson, so that the work of the latter may be regarded as the foundation stone of socialism." ^ This statement is exceedingly interesting. It

' Le Rossignol, Othodox Socialism, A Criticism (New York,

* H. S. FoxWELL, Introduction to Anton Menger, Right to the Whole Produce of Labor (London, 1899), p. xvii.

° Menger, op. cit., p. 102.

proves that by making an ethical labor-theory of value the spring and center of Marxism socialism, one eo ipso wipes out the difference between the sentimental, Utopian socialism of the first half of the last century and modern so-called scientific socialism. Most of the academic writers have attributed to Marxian theory precisely this sentimental character, but without drawing the logical conclusions.

What meaning then, the economist will justly ask, has Marx's theory of value? The answer is simple. Marx's theory of value occupies in his economic system the same position that the theory of value has occupied or has tried to occupy in many other systems. The classical systems of political economy were all metaphysics of commodities, philosophies of production and circulation. In Marx's metaphysics of production the theory of value occupies the same central position as the Svihstanz-prohlem in philosophical systems. This analogy is striking even in the phraseology of Marx. Marx is a realist, even a materialist, and is consistently, passionately, and naively so; but where he is dealing with a problem the very existence of which could not be recognized by a strict and consistent realism, he has to fall back' on mediaeval scholasticism. Observe his language : '' i quarter corn = x cwt. iron. What does this equation tell us? // tells us that in two different things — in i quarter of corn and x cwt. of iron — there exists in equal quantities something common to both. The two things must therefore he

POPULAR MISUNDERSTANDINGS 5

equal to a third, which in itself is neither the one nor the other. . . . Let us now consider the residue of each of these products; it consists of the same unsubstantial reality in each, a mere congelation of homogeneous human labor, of labor-power expended without regard to the mode of its expenditure. All that these things now tell us is that human labor-power has been expended in their production, that labor is embodied in them. When looked at as crystals of this social substance, common to them all, they are Values." ^ That is written by Marx the materialist and sworn to by Engels — the same Engels who was so vastly amused by Kant's '' Ding an sich/' and who instructs us that chemistry in its recent progress has put an end to such mysterious entities.''

Whatever the faults and merits of Marx's theory of value may be, it was not intended as an ethical basis for socialism, but as a means of interpreting economic phenomena. It is quite true that his theory of value is the central theory upon which his economic analysis of the capitalistic system rests, — in short, the foundation of his economic doctrine; but this theory plays no role whatsoever in his socialistic doctrine, which purports to be nothing more than a demonstration that socialism is inevitable.

Marx's socialistic doctrine is intensely realistic. He ;

* Marx, Capital, English translation, pp. 3, 4, 5. The italics are mine.

^Engels, Socialism, Utopian and Scientific (Chicago, 1905), p. xvii.

describes the existing economic phenomena and argues that the sum of these phenomena is bound to result in the expropriation of the means of production, in socialism. In this argument he deals with the economic phenomena historically, i.e., he does not analyze them philosophically, but treats them as existing powers, and he expounds their political and social effects, which he regards as necessary and unavoidable. The key to his socialist doctrine is the economic interpretation of history with the class-struggle doctrine following in its train. Accordingly, the doctrine of modern so-called " scientific " socialism is found in all its completeness in the Communist Manifesto^ which contains no reference to any theory of value. It is, on the other hand, when Marx is at work analyzing and explaining the economic phenomena of capitalistic society that his ingenious theory of surplus value is elaborated. This theory is to him the key-word by which we are enabled to decipher and comprehend all economic phenomena. It must always be remembered that, from Marx's viewpoint, the actual economic phenomena are motive powers of society determining its future. No analysis or interpretation of these phenomena, whether it be scientific or unscientific, increases or diminishes their sovereign power. Interpretation affects them no more and no less than a volume on astronomy affects the solar system.

How then did it happen that it was the theory of surplus value that primarily drew the fire of the

POPULAR MISUNDERSTANDINGS 7

learned economists ; and why did most of them seem to think that in disproving that theory they had dehvered a mortal blow to modern socialism? First of all, perhaps, because certain socialist agitators tried to make emotional capital out of the theory of surplus value. This circumstance cannot, however, serve as an excuse for scholars who have undertaken to criticise Marxian Socialism. Even if they deemed it unnecessary to study Marx's own writings, they could have learned from many a propagandist leaflet ^ what role the theory of surplus value actually plays in the Marxian system. Secondly — and this probably furnishes in most cases the truer explanation of their misconceptions — they were not sufliciently impressed by the peculiarities of Marxian socialism to be disposed to draw a sharp line

* For instance, see Paul Fischer, Die Marx'sche Werttheorie, Berliner Arbeiterbibliothek, Serie i, Heft 9 (Verlag des Vorwdrts, 1893), pp. Z3y 34- "The bourgeois economists have declared that Marx's theory of value is the bulwark by which socialism must stand or fall. ... In almost all criticism of the fundamental principles of Marx's system the question of the correctness or incorrectness of the theory of value is reduced to the alternative of either throwing over Marx's theory of value or of throwing over society ! . . . They foist this meaning of theirs on Marx sans fagon. As they themselves imagine that a theory of value can have direct influence on the development of society, without more ado they presuppose the same idea on the "part of Marx. Taking their own general economic point of view as the measure of Marx's theory, they commit the colossal mistake of considering the theory of value not only as the prerequisite of his criticism of bourgeois economy, hut also as the foundation of his socialistic claims. They therefore entirely mistake the role which the theory of value plays." The italics are mine.

between the socialism of Marx and the sociaHsm of his predecessors. It seemed to them, probably, like making two bites of a cherry: socialism is socialism, and its variations are but differences in shade. All pre-Marxian socialism was distinctly ethical; every peroration against capitalism contained or implied an appeal for social justice. Whenever the word " exploitation " was used, they accordingly thought themselves justified in looking for the usual end of the | sermon. When Marx, in his Capital^ describes the development of the English factory system, he does not mince matters. He makes the respectable English blue-books, to use Bernard Shaw's phrase, convict capital " of wholesale spoliation, murder and compulsory prostitution; of plague, pestilence and famine; of battle, murder and sudden death." ® The citation of those deplorable facts and the energy of Marx's language struck some gentle scientific souls as an appeal for socialism. Add the circumstance that the first part of Marx's bulky volume was devoted to the elaboration of his theory of surplus value — a theory anything but complimentary to the capitalistic organization of society — and how could there be any doubt that Marx's doctrine is an ethical appeal for justice, and that the theory of value is its foundation? And if the Marxian theory of value be the foundation of a social movement that is growing so rapidly, then to

^ Fabian Essays in Socialism, edited by G. Bernard Shaw,

POPULAR MISUNDERSTANDINGS 9

destroy socialism one has only to destroy the labor-theory of value. Thus it is that we are blessed with so large a literature on the Marxian theory of value. In vain did Marx's co-worker and literary executor, Frederick Engels, protest against the putting of such an interpretation upon the theory of value. As early as 1884 Engels wrote : '' This application of the Ricardian theory, according to which the whole social product belongs to the sole producers, the workers, as their product, leads directly to communism. This theory, however, as Marx has pointed out, is from an economic point of view formally false, since it is an application of ethics to economics. According to the laws of the bourgeois economy the greater part of the product does not belong to the workers who have produced it. Now if we should say that it is unjust that this should be so, in the first place this does not concern economics. All that we can say is that this economic fact contradicts our moral sentiment. Upon this, therefore, Marx never based his communistic demands, but upon the inevitable catacylsm of the capitalistic mode of production, which is going on before our eyes." ^" Marx himself emphasizes the same thought in different ways on all sorts of occasions. For example, in his Capital he criticises, in Proudhon, precisely that ethical attitude which the critics of

*" Karl Marx, Das Elend der Philosophie, deutsche Uebersetzung, 2te Auflage (Stuttgart, 1892) ; Friedrich Engels, Vorwort, p. ix.

lo MARXISM VERSUS SOCIALISM

Marx attribute to Marx himself. " Proudhon begins by taking his ideal of justice, of * justice eternelle/ from the juridical relations that correspond to the production of commodities. . . . Then he turns around and seeks to reform the actual production of commodities, and the actual legal system corresponding thereto, in accordance with this ideal. What opinion should we have of a chemist who, instead of studying the actual laws of the molecular changes in the composition and decomposition of matter, and on that foundation solving definite problems, claimed to regulate the composition and decomposition of matter by means of the ' eternal ideas ' of ' naturalite ' and ' affinite ' ? Do we really know any more about ' usury,' when we say it contradicts ' justice eternelle/ ' equite eternelle,' ' mutualite eternelle ' and other ' verites eternelles ' than the fathers of the church did when they said it was incompatible with ^ grace eternelle,' ' foi eternelle ' and ^ la volonte eternelle de Dieu ' ? " ^1 Not only does Marx himself avoid appeal to ethical ideas, but the entire plan on which his system is constructed obliges him to take a non-ethical attitude toward economic phenomena. Does he not justify capitalism by emphasizing its absolute necessity? In the preface to his Capital he quotes with approval a Russian critic who has clearly apprehended his main idea. This critic tells us that Marx is trying to prove " both the necessity of the present order of ^' Marx, Capital, English ed. (London, 1891), vol. i, p. 56.