The economics of socialism

Preface

There seem to be many students of political economy who do not devote either the time or the attention which are required for the complete mastery of Marx's great works. They are, consequently, almost as inaccessible to the majority of English readers to-day as they were in the original German. The subject is hard. Marx's style and method of exposition are by no means easy, and, if I am to judge by the ridiculous misrepresentations of his theories which still pass current at our ancient seats of learning, his thoughts themselves are difficult of comprehension.

Karl Marx has now been dead nearly forty years. It is safe to say that never has his influence been greater than it is now. Nothing, indeed, is more remarkable than the hopeless failure of his critics to substitute any scientific, or even reasonable, explanation of the capitalist system of production for the masterly analysis contained in his "Capital."

We are continually told, it is true, that "Marx is out of date"; that "his whole system is a muddle of contradictions"; that "if he were living to-day he would have to go to school again in political economy," and so forth and so on. Strange to say, however, whenever these contemptuous sciolists are brought to the test, and they are called upon to maintain their position, even anonymously, they at once take refuge in discreet silence. In the same way, Messrs. Marshall, Foxwell, Sidney Webb, Wicksteed,

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Bernard Shaw and the whole bourgeois school of Jevonians and Fabians, who claimed and claim to solve all problems of political economy on the theory of final utility, when my paper on "The Final Futility of Final Utility-," reprinted as Chapter XI, was sent round to them as a challenge, declined to discuss Marx's theories at all, even in a Political Economy Club! This though two or three of them had declared beforehand that Marx and his presumptuous expositor would both be crushed with ease.

It has been the same ever since, with all sorts and conditions of English academic " Professors." And endowed Schools of Political Economy, teachers and students alike, are to-day equally disinclined to debate publicly, in the press or on the platform, the soundness or rottenness of Marx's theories; though they continue their campaign of detraction whenever they can safely do so — unopposed.

Marx, in short, still holds the field. Nearly all the original work of historic economy done during the past fifty years has been based upon his analysis and generalisations; while the course of economic and social events has, in the main, followed the lines of his forecasts.

But Marx, like other great thinkers, has suffered not only from ignorant and prejudiced attacks, but from the tendency of some of his bigoted worshippers to erect him into a sort of infallible Socialist Pope, and universal arbiter of economic and social destiny. Forgetting, what he himself never forgot, that, of necessity, he built upon the work of others, who had preceded him, and here and there had anticipated him — as John Bellers in the antagonism between money and commodities; Robert Owen as to the indispensable necessity of waste under the capital-

PREFACE ix

ist system; Fourier (1825) as to industrial monopoly being in the long run under capitalism the logical and inevitable outcome of industrial competition ; and the Chartists as to wage-slavery being only chattel-slavery in disguise. Forgetting all this, certain fanatics, far more Marxist than Marx ever was, have claimed for him the position at one period claimed for, and accorded to, Aristotle. They have also carried their fetish- worship from the domain of thought into that of wholly uncritical propaganda, and have cited "texts" from Marx's earlier writings and pamphlets and letters, as Christians quote authoritatively from the Gospels and the Epistles of St. Paul, about the practical affairs of every-day political and social life.

Now it is safe to say that, on matters of this kind, as he showed even in respect to what was advisable in his own country, Marx was not a good judge when he was living. Nothing, therefore, could possibly be more foolish than to cite his opinions as decisive on such questions when thirty-eight years of rapid and critical development have passed away since his death. It is surely enough that he has given us, at the expense of a life-time of research and exposition, the key whereby we may solve many of the economic and social problems of the past, may comprehend the economic and social antagonisms of the present, and may go forward, consciously and capably, to the harmonisation of the great material difficulties and class struggles which confront us to-day.

It is Marx's explanation of Mehrwerth, or Surplus Value, as the basis of modern competitive production for profit, followed by his able and illuminating differentiation of the categories of capital, and the source of the x PREFACE

average rate of profit, which have developed political economy from an art into a science. His Theory of Historic Determinism, or the Material Basis of History, has been pushed very much farther, to the exclusion of all other considerations, than, certainly, would have been approved by Marx himself. But, taken with such modifications as he would probably have accepted, the theory throws much light upon the growth of human society in some of its aspects; although Lewis Morgan's plan of stripping off each successive layer of inventions and discoveries, through the long ages of human development, and examining the social forms beneath, lends itself less to general misapprehension.

Lately, however, we have had a most extraordinary example of the danger of endeavouring to force pseudo- Marxism upon a huge aggregation of peoples by a ruthless despotism imposed from above. Bolshevism is a combination of personal ambition and fanatical materialism, applied under conditions which rendered any realisation of scientific Socialism absolutely impossible. Failure was certain. When the leaders of this futile attempt tried to anticipate the evolution of economic and social forms by generations, through a kind of Collectivist Czarism, they have been compelled to return to the much lower stage of industrialism to which Russia had attained, and to bow the knee, by capitalist concessions to foreigners and capitalist reorganisation at home, before that very capitalist system which they desired to reorganise into Socialism, before its development had fully begun.

This is precisely the irrational impatience and individual arrogance that Marx and his coadjutor Engels would have denounced now, and as a matter of fact did denounce,

PREFACE xi

as impossible and anarchical, in their own time. The scientific Marxists of Russia, headed by George Plechanoff and Paul Axelrod, foresaw and predicted what has since occurred, and all the best-accredited exponents of Marxist theories in Western Europe agreed with them. Bolshevism is, in fact, a hideous travesty of Marxism and runs directly counter to the entire teachings of scientific political economy and social evolution.

It is true that, in the last paragraphs of the Communist Manifesto, published in 1847-48, ground is given for the contention that, at that period, its authors, Marx and Engels, thought that great countries, far behind the most advanced nations in economic status, might anticipate evolution by force. But that I can affirm most positively was in direct antagonism to their opinions at a later period. Marx, in conversation with myself, stated clearly that, in his judgment, a nation could only attain to the level of economic and social development for which it had been prepared by its internal social evolution. Engels put the point still more strongly to my friend Belfort Bax. And both of them, singly and together, wrote to the same effect as they spoke. To confuse autocratic Bolshevism, therefore, with Marxism, or with its political, social and co-operative expression in Social-Democracy, is only a device of the ignorant or malignant.

It is natural, however, that political economists who uphold either the bourgeoisie or its bureaucracy, in any shape, should be as bitterly hostile to Marx, who gave a reasoned and scientific basis to economic studies, as their predecessors were to the ablest of the Chartists, who put the economic antagonism between Labour and Capital, between wage-slaves and employers, between human xii PREFACE

agents and the machinery which overmastered them, in popular form. Both pointed to Capital as the social enemy of the toilers: Marx proved why it must inevitably continue to be so. His social labour theory of value indicates for the capitalist class its absorption into the entire democratic co-operative community, as the next stage in the upward and onward progress of the race. It is not so much the social labour value theory itself, as the necessary sociological deductions from it, that rouse the animosity of the capitalist "captains of industry," their professors, and their various dependents and hangers-on.

Hence the great efforts made to show that Marx was at one and the same time a man of transcendent ability — so much cannot be denied — and a muddle-headed thinker, who actually took great pains to contradict in his third volume of the "Capital" (produced and edited by Engels after Marx's death) all his contentions in the first volume, and even to attribute to him the inconceivable fatuity of admitting that he did so. I have dealt with this curious contradictory estimate of Marx's capacity in Chapter X. It is difficult, however, to exaggerate the nonsense, soberly and seriously penned, by economists of reputed ability and standing, in order to belittle the intelligence of the author whose arguments they are wholly unable to refute! Thus, not long ago, an elaborate pamphlet, stated to be written by one of the leading English Professors of Political Economy, to which Sir Arthur Steel Maitland, M.P., contributed a Preface, was lent to me by Belfort Bax for comment. It contained the usual Final Futility contentions, in all their barrenness, and the whole thing was scarcely worth glancing at, except as a further proof of

PREFACE xiii

the longevity of error, where ignorance and prejudice seem to suit the taste of a dominant class. But one criticism was so contemptible that I reproduce its purport, in order to show the lengths to which the exquisite rancour of the professorial mind will lead a writer who, I daresay, in other matters, is quite a decent man.

This learned gentleman actually gave it as his considered opinion that, because Karl Marx was poor throughout his life, and was at times much troubled by money worries, therefore he was unable to think clearly on the subjects with which he undertook to deal. At this rate, Spinoza was a fourth-rate philosopher, William Blake a poet and artist of no account, and Cort, the originator of the hot blast, an inventor of inferior capacity. A case must indeed be in a bad way when one of its leading advocates resorts to self-degrading imputations of this sort.

The main reasons why a few of Marx's honest and unprejudiced critics have not grasped his full meaning are that they have not covered the whole area of his systematic investigation of value; that they have not followed up the distinction between constant capital and variable capital to its ultimate issue; that they have not worked out his explanation of average rate of profit, as securing the distribution among freely competing capitals of varying amounts of surplus value; that they confuse cost of production with price of production; and that they forget that, in applying abstract theories to the solution of practical problems, allowances have always to be made for friction, changing conditions, and the like.

Frequently, also, there is a determinate inclination to regard the question of the apportionment of gross and net profit, due to the unpaid labour of the wage-earners xiv PREFACE

at large, among all the various capitals engaged in social production and distribution of commodities, from the point of view of the individual capitalist and the personal (or company) appropriation of the surplus value, or gross profit, produced by such unpaid labour of his own wage-earners. Consequently, these writers fail to comprehend how it comes about that capitals with greater amounts of constant value in their composition obtain for their commodities when produced and realised, in money or its equivalent, prices higher than their value, and capitals with less constant capital in their composition obtain for their commodities under the same conditions prices lower than their value.

But, after all, the best evidence that Marx was not both a genius and a noodle lies in the indisputable fact that his theories have lived down the criticism of bourgeois economists. When a Professor of Political Economy of the highest reputation, Prof. A. A. Issaieff of the University of St. Petersburg, gave up his Chair rather than go on teaching what was antagonistic to Marx's theories; when, practically, the whole International Socialist Party accepts his views and acts upon his economic principles; when we bear in mind that all this recognition is due to no sentimental attraction, still less to any sort of religious enthusiasm, but is wholly and solely dependent upon the force of pure reason — I think nothing more need be said as to Marx's influence being a living power in world-wide sociology.

In the present volume I make a further endeavour to simplify, for ordinary readers, the main points of Marx's teaching, which I have been propagating myself, in Great Britain, for the past forty years. My personal acquain-

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tance with Marx — broken off by some amusing if virulent attacks upon me, by himself and Engels, in the well-known "Letters to Sorge," and then happily renewed — enabled me to have the advantage of direct explanation by him of some of the more difficult passages in the "Capital." Few are now living who enjoyed a similar privilege.

The book is founded upon a series of Lectures, delivered so long ago as 1894, to the members and friends of the Social-Democratic Federation, and afterwards printed and circulated. They have long been out of print. The whole has now been carefully revised, largely rewritten and considerably expanded.

Throughout I have not confined myself to a bold exposition of Marx's views. Wherever it has seemed to me desirable, for the better understanding of the subject, I have made use of quotations and elucidations from other writers upon political economy. I have, also, shown how the great war has hastened forward powerful combinations of the capitalists, on the one side, and of the wage-earners, on the other, with a rapidity not expected in Marx's day. The class struggle has thus been intensified throughout the world, in the political as well as in the industrial field. Direct action, in the shape of mass strikes and general strikes, has been vigorously advocated and adopted in more than one country; while in Italy seizure of large works by the wage-earners was, though unsuccessful, clear evidence of revolt against the entire wage system and production for profit. In order to meet this growing unrest, peacefully and politically, a thorough comprehension of the general economic and social development is indispensable.

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Some repetitions of the basic truths of the sociallabour theory of value, as well as of the important categories of capital, as defined by Marx, will be found in the following pages. I have considered this advisable, regard being had to the strange misapprehensions which are current as to the real purport of Marx's contentions and their bearing upon the economic and social problems of our day.

I hope, therefore, in the critical period, social and political, upon which we have obviously entered, the volume will be of service to students of political economy and especially to members of the working-class. The resumption of the name and the continuance of the work of the old Social-Democratic Federation, by many active members of that pioneer organisation of Socialist propaganda in Great Britain, remind me of the enthusiasm with which we all worked for the cause from 188Q- 81 onwards, and I think I can discern signs that similar activity and self-sacrificing vigour will be displayed in the future as in the past.

H. M. H.

13 Well Walk, Hampstead.

Chapter I Methods Of Production"

Thanks to the work which has already been done, nobody now talks as if our present methods of producing wealth had been permanent ever since private property broke up the old communal forms. I remember when the majority even of educated people spoke as if the system of production under which we are now living — that is, production for profit and exchange — had lasted through all the centuries, and they went back to the history of Greece and Eome, of Carthage and of Egypt, and endeavoured to prove that there were prevailing in those ancient empires the very same forms and ideas which we have in London and in England at the beginning of the Twentieth Century. This fallacious method, I am glad to say, is now quite exploded. The historical school has so completely swept away the old empirical teaching that nowadays it is no longer necessary to insist upon the truth that economic conditions have changed so greatly as to render it impossible to apply the ideas and expressions of one period of production to those of another.

When once we recognise that such phrases as "History invariably repeats itself," " What has been always will be/' " It is contrary to human nature," " Nobody would work unless he saw some profit in it " are the commonplaces of the ignorant, a closer investigation inevitably follows.

Nothing is more difficult than to read oneself fully into a past system of society and to understand its industrial

l and social relations. It is hard enough to comprehend societies in different stages of development which still exist in our own day. But when we try to transport ourselves in imagination into the minds of men of an entirely different race at distant periods, such comprehension becomes doubly hard. Happily, many of these social and industrial forms can still be seen around us, though, in most cases, their higher developments have faded. It is true, in a wide sense, that we can trace the industrial and social history of man on our planet from the aborigines of Australia, the bushmen of South Africa, the natives of Patagonia, and the hillmen of India, up to the highest development of capitalist civilization in Great Britain or the United States of America. All these forms of society can be surveyed at the present time, and have been described by men who have devoted themselves to their investigation. If, therefore, we wish to understand a little as to what men were and how they lived in past ages, we can see something like them in these various communities, whose social development is so much behind our own.

It is now a commonplace of our knowledge that mankind, in the earlier stages of its existence, lived under communism. All writers of any note on the early history of man are agreed upon this. Such men as Sir John Lubbock, Mr. Taylor, Mr. Herbert Spencer, Lewis H. Morgan, Yon Maurer, Bachofen and others express no doubt whatever that the earliest form of society was a rude communism. Being now at the point when, after the successive periods of development under private property, we are on the eve of a great transformation back to our starting-place on an almost infinitely higher plane, this early communism has a special interest for us. If we look through the development of nature we shall find that

METHODS OF PKODUCTION 3

the same law apparently governs all organic and inorganic growths. In the case of an ear of corn, for instance. There is the seed which you sow : this is split up or differentiated in the earth, and then it reappears in the ear again, but on a higher plane.

In the celestial sphere we can trace the operation of the same law from the nebulae to the various galaxies back to their point of origin again. In the organic world and animal life we detect a similar process going on. These and similar illustrations seem to show that the same law pervades all nature. It is a reasonable hypothesis, which is now being verified under our eyes, that this law likewise applies to the development of man in society. If this is so, then the last development of human society will be nearer in form to its original starting-point than to any of the intermediate stages. As we began in the early history of our race with narrow, tribal communism, provided with and based upon small means of production; so we are now proceeding to world-wide communism on an immensely higher plane; in accordance with the greater powers over nature which we possess, as the result of greater knowledge and closer intercommunication.

Manifestly, we are not now at the beginning, or even at the middle, of the capitalist period of production. All the signs which betoken the close of a cycle may be detected at the present time. Admitting this, then the long process of splitting up from the earlier communism is at an end, and the recombination in the shape of the higher and final communism is at hand. Those who try to draw a distinction between evolution and revolution, or speak of evolutionary and revolutionary Socialism and Socialists, misunderstand the entire theory of sociological development, as formulated by the whole scientific Socialist school.

Revolution simply means that the evolution of society has reached the point where a complete transformation, both external and internal, has become inevitable.

No man and no body of men can make such a revolution before the time is ripe for it; though, as men become conscious, instead of unconscious, agents in the development of the society in which they live and of which they form a part, that they may themselves help to bring about this revolution peaceably instead of by violence. A successful revolution, whether effected in the one way or the other, merely gives legal expression and sanction to the new forms which, for the most part, unobserved or disregarded, have developed in the womb of the old society. Force may be used at the end of the period as during the incubation and full % growth. It is true, as Marx said, that " force is the midwife of progress delivering the old society pregnant with the new " ; but, on the other hand, force is also the abortionist of reaction, doing its utmost to strangle the new society in the womb of the old. Force itself, on either side, is merely a detail in that inevitable growth, which none can very rapidly advance, or very seriously hinder.

If, then, we have at last arrived at the end of the long series of centuries in which private property has been the dominating factor in economics and society, the early communal forms have, I repeat, a special interest for us. Not that we shall return to those precise social conditions, or that our descendants will necessarily resemble the men and women who lived under them; but because that form of society is, in its essentials, nearer to the one to which we are approaching than any of the societies based upon private property could possibly be. Men have lived under communism, as nomads, as savages, as village tribes, as

METHODS OP PRODUCTION 5

advanced barbarians, vastly longer than they have lived under all the forms of private property taken together. The history of man on this planet has been in the main the history of communism. Moreover, mankind progressed from the lowest form of savagery up to the very frontiers of civilisation under this social arrangement; in which the ownership of the means of making wealth was in the hands of the gens or the tribe, and the distribution was in accordance with the needs of the various members of the community. Though each of these social units was, in the earlier stages, at war with every other similar unit harmony reigned within the little body itself. Kinship, not property or locality, was the bond of connection.

All the great inventions which lie at the foundation of our modern arts and mechanical appliances to-day were first used under Communism. Those who contend that inventions must fade under Socialism, and that no further progress would then be possible, overlook, or are ignorant of, the whole of the early history of mankind. If there are any inventions in the entire range of the human application of the power of nature to the purposes of the race which excel others in ingenuity, surely the wheel, the potter's wheel, and the bow and arrow deserve the first place. Yet all of these were discovered under Communism. So also were the boat, the sail, the rudder, the oar, the stencil plate, fire, weaving, rude printing, building in wood and clay, decoration, the cultivation of cereals, the taming of animals, and the smelting of metals. It is upon this foundation laid by our ancestors of long ago that the whole fabric of our modern industry is built up. But for the work done by these primitive Communists, but for the efforts of the men of genius who devoted their thought to the inventions and discoveries by which we profit, we of to-day should be living in skins and depending on fish and our fellow-man for the greater portion of our food.

" The developments of the power of human production, whether in agriculture or in manufacture, are necessarily due to a long series of circumstances failing any one of which the improvement could not have been made. The introduction in agriculture of the turnip, of the potato, of artificial grasses, of rotation of crops ; the vast improvement in the breed of domestic animals; which has enabled meat and beasts of burden to be produced of so much better quality than heretofore; the properties of manures and their right application; the preservation of fish by salting and curing, which added so enormously to our food supply, extending the cod, ling and herring fisheries to the proportions of great industries : all these inventions are due to the combined observation and steady industry not of one or two but of thousands or millions of our race, though some lucky individuals may be honoured for the last crowning bit of work. Division of labour again, whether adapted to special advantage of soil and climate in particular regions — as wool-growing in Australia, cotton-growing in Louisiana, hunting and forestry in the Tyrol, &c. — or devoted to the abridgment of toil in workshops and factories ; this, one of the most powerful engines for the domination of nature and the increase of produce, arises from the long, general, never-ceasing progress of human society, and is in nowise to be laid to the account of one or more men of individual genius.

" Precisely the same with shipping and navigation. No man knows who invented the mariner's compass, or who first hollowed out a canoe from a log. The power to observe accurately the sun, moon, and planets so as to

METHODS OF PEODUCTION 7

fix a vessel's actual position when far out of sight of land, enabling long voyages to be safely made; the marvellous improvements in shipbuilding, which shortened passages by sailing vessels and vastly reduced freights even before steam gave an independent force to the carrier — each and all were due to small advances which together contributed to the general movement of mankind.

" So with the great industrial machines simple or complicated. Who can fix upon the actual discoverers of the application of wool or flax, silk or cotton, hemp or jute, madder or indigo to human use or adornment or luxury? Their names are legion, doubtless; but all have been swept away as time has slowly swept its effacing figure over the records of the past. With machines the same is true, from the simple wheel, the pump, the forge, the stencil plate, the potter's wheel onwards to printing, steam, electricity and the great machine-making machines. Each owes all to the others. The forgotten inventors live for ever in the usefulness of the work they have done and the progress they have striven for.

"We of to-day may associate mythical or noble names with the advances we specially remember; but too often even then the real worker or discoverer, if such there were, remains unknown, and an invention beautiful but useful in one age or country can be applied only in a remote generation, or in a distant land. Mankind hangs together from generation to generation ; easy labour is but inherited skill; great discoveries and inventions are worked up to by the efforts of many myriads ere the goal is reached. Those, therefore, who hold that the individual is all, who contend that these organisers or that class have the right to take from their fellows in return for the services they themselves have rendered, do but show their ignorance of the whole unbroken history of human progress and social development/' 1

The bed-rock inventions of humanity, then, those inventions on which the whole edifice of modern capitalist industrialism is based, were made under Communism. Various forms of this primitive Communism can be studied to-day. There is, for example, the Communism of the Australian aborigines who roam without any fixed habitat, or live a precarious life in the roughest and rudest way, and yet possess a most remarkable weapon in the boomerang, and a social system as strange to us as it is effective for its immediate purpose. The Communism of these, to our ideas miserable, nomads is the lowest social life with which we are acquainted, as their knowledge of and command over nature is at the lowest point. Nevertheless, their existence is not unhappy, and white men who have lived among them testify to their enjoyment of life.