Movements of Thought in the Nineteenth Century
Chapter 11 The Social Renaissance --
Karl Marx and Socialism
THERE was another reaction to the Industrial Revolution besides that of the reform measures that grew out of the group of utilitarians. They carried through a series of reform measures which made English industry very different from what it had been in the earlier period. The other important social movement is that which was represented at that time, and still is, by the name of Karl Marx, namely, socialism.
His doctrine is a fusion of the political economy of the orthodox Manchester school - the three leading exponents of which are Adam Smith, Ricardo, and Malthus - with the dialectic of the Hegelian philosophy-a strange marriage of minds. England especially, in the feverish industrialism of this period, and Germany, at least as represented by the romanticists, seemed about as far removed from each other as any two types of human experience could be. You remember that romanticism represented, in a certain sense, Europe's seeking for the recovery of an old world, a return to the past from the standpoint of a defeated self that gave itself up to subtle speculation, satisfied itself for its defeat by taking the whole universe into itself, by identifying reality with the ego, with the self. On the other hand, in the industrialism of England, in the sudden expansion, the development of wealth, with the enormous increase in numbers in the community itself, you have the introduction of entirely new interests which expressed themselves in the importance that came to England. With this came changes of a fundamental type in the whole community, that swept over the country like an external affair, like a force, a conquering move-
(216) -ment that caught people unaware. To bring together the economic philosophy that lies behind this movement and the philosophy that lies behind the Romantic school is what did take place in the theory of Karl Marx. Of course, he was a refugee in London because its liberalism, of which he had little theoretical appreciation, gave him refuge from the government at home. He and Lassalle are the first great figures in the espousal of the socialistic doctrine in Prussia, and he was driven out.
Perhaps the first thing we ought to realize in trying to understand socialism is something that I have referred to already, and that is the larger society which this statement of political economy brings with it. Not only all those who want to trade, merely economic men, all standing for the time being upon the same level , but the industries themselves, lost that national character which belongs to them in the theory of the mercantilist and the physiocrat. The point of view of these political economists, you remember, was that the real interest in the process lies in the money, the wealth, which could be secured, largely by governments for their own purpose, and in the uses to which the governments were going to put the money. But that presumed an industry which did not have inelastic boundaries, one which had to be conducted from the point of view of world-markets. It was a theory of industry built up on the doctrine that, by the very nature of the process, every bargain had to be a good bargain. The markets were places where the surpluses of one community could be exchanged with the surpluses of other communities. Now, there is another side to this internationalism which this doctrine carried with it, but which it neither stressed nor clearly anticipated; that was the International, the internationalism of labor.
The conditions under which people worked in factories were not national conditions. The conditions under which the English tenant, the peasant, had woven cloth in the sixteenth century and in the seventeenth century were conditions that were peculiarly English. They could not be put against conditions
(217) that were found in other countries. They were determined by conditions there. But the factory is largely international in its character. We discover that, of course, in the development of America. We brought in people from everywhere, under a free immigration law, and successfully took them into the factory, and set them at work even before they could speak English. There are no national boundaries in the factory. And it was the factory that was the center of the economic doctrine of Adam Smith. Laborers everywhere had the same essential conditions. Prices might differ; but from the point of view of the price of labor, as presented in the theory of Adam Smith, those differences inevitably disappeared. The price for labor, as for anything else, is got by haggling in the market. The price of labor is determined by supply and demand, as is tile price of everything else; and, if there is a greater demand elsewhere, the population flows there and the price of labor comes down. That was part of the doctrine. So you see that labor-the man, just as an economic unit-was much the same wherever you found it. The laborer was the same everywhere.
Here we have something of the situation to which I have just referred in discussing the utilitarian doctrine. If this theory is allowed to work without interference, the labor situation would very soon become a wretched one. And misery is the same the world over. If you take the privileged classes that secured the votes in England, that is, the capitalist classes which could buy their way into great landholdings and into peerages, you get a different expenditure of money in one class than in another. But if you come down to conditions under which people are working under supervision, you find in one country or another that that sort of industry levels things down tremendously. The international character of the factory is what we must have in mind to understand socialism.
We have to recognize these conditions in order to see the stimulus out of which the doctrine of Karl Marx and Lassalle arose. John Stuart Mill wrote a political thesis which brought the doctrines of the orthodox school up to date in his own time.
(218) The text is a logical presentation of the doctrine; but it had a whole series of footnotes, and very many of these are what would be called "socialistic literature." That is, John Stuart Mill recognized the inevitable effects of this process to which I have referred, and particularly recognized that there has to be a control over distribution and wealth in some fashion if society is to be kept from the conclusion toward which it seemed to be moving, that is, a conclusion in which the price of the market of the article, and the cost of production, could be brought just as close together as possible, with the greater masses of people living at a starvation wage as laborers, while, on the other hand, all the capital would tend to drift into the hands of those who could most effectively utilize it for production. John Stuart Mill felt that there had to be some sort of control over the distribution of wealth if this result was not to be reached. It is the logical result of the theory itself.
The theory of Karl Marx was perhaps somewhat more heroic than anything suggested in the footnotes of John Stuart Mill's Political Economy. And it is logical. It portrays a process of production: the cost of production, on the one side, and the price, on the other, in a process in which these two sides of the shears are being brought closer and closer together. It is evident that it is in the method of production that the key to the situation is to be found. If you get this productive process into the hands of the community, so that it could be utilized in the interest of the community and not in the interests of those who are producing for the sake of profit, then you can avoid this inevitable result. That is, you can if you lay aside the Malthusian doctrine for the time being. If you could control your production, not with reference to the getting of profits simply, but from the point of view of the welfare of the community itself, that is, from the standpoint of the consumption of goods to the best advantage of the community, rather than for the production of wealth as such, then you could have a situation which would be relieved of the blackest side of the picture which the Manchester school presented.
In this connection we find two different suggestions: one with regard to the distribution of wealth in some fashion, and the other with regard to the production of wealth; one which might, for example, shut down the limit of the size of fortunes, take steps toward such a distribution as would be more even so far as wealth itself is concerned, and the other, which is more radical, which would undertake to determine in whose hands wealth itself, wealth used for production, that is, capital, is to lie. If you can put it into the hands of the government which simply represents the interests of the community and not the interests of any particular class, not the interests of production which seeks the lowest rate in order to pile up profit which comes back to the hands of the capitalist, but production for the sake of the community as a whole-if you can get all the capital into the hands of the community in this fashion-then you could have a possible solution of the difficulty, and that is the socialistic suggestion. Capital must be controlled by the representatives of the community, that is, by the government; it must not be owned by the individual, but by the representatives of the people as a whole. There must be no private ownership of the means of production, because production is to lie in the hands of the community itself.
In the theory of Karl Marx the world was pictured as inevitably moving toward such a solution of the economic problem. Marx presented a very logical-indeed, the only logical-solution. Conditions would continue to get worse until this scheme was set up; the poor would get poorer, and the rich, richer. The rich were a mere handful; and the poor, the great mass in the community. The clash between these must come sooner or later. Of course, the rich have all the advantages of the institutions of the community (they can maintain themselves in 5pitc of being a minority), but conflict must inevitably come in the end if the community is increasing in numbers and if the community gives a wage which is inevitably pushed by laws of economics down to a starvation level. If the community is in such a situation, the few in whose bands lie the means of production would utilize
(220) them simply for more and more production in which the cost of labor would be kept down just as much as possible in order that it might be lower than the prices in the world-market. Such a situation is one which cannot last forever in an intelligent community. It must be turned back from this process which is grinding life out of the great mass of the community, and take control over it; and if it takes control over it, a simple method will be to get hold of these means of production and see that they are not used for the sake of profits, but for the sake of consumption.
Of course, what Adam Smith recognized was that you get a production of those things that people want to consume, and you get it in the cheapest and readiest form if you allow the process to run itself. In the end this would simply ruin society. The machine was to be allowed to go by itself awhile and then could be brought, in some fashion, under the control of the community by simply having capital left in the hands of the community itself, that is, in the hands of its agent, the government.
The world, then, was moving toward such a revolution as Karl \,Iarx pointed out in his Communist Manifesto in 1847, a revolution in which the community must turn about and get control of the means of production. Marx accepted the political economy of the Manchester school. He emphasized it; indeed, he overemphasized the results to which I have referred. He assumed that what was taking place was caused by iron laws until the social intelligence of the community should come in to correct these evils. But he had back of his doctrine not simply the logical analysis of what the current political economy implied. A Hegelian dialectic lay back of it too. And the socialism of the period is, for this reason 3 called "dialectical materialism."
Of course, this procedure toward a revolution which, as I have indicated, carried with it the implication of a reorganization, at once suggests the Hegelian dialectic, the conflict of Being and Not-Being and the rising out of that of the process
(221) of Becoming. You have the inevitable conflict; then, undoubtedly, with the crash that comes will come revolution; and then another order of things will appear. Marx had his training in the Hegelian school, and he found, in this process which is going on, an instance of just this dialectic. Hegel himself had turned to society for the highest expression of the spirit-a higher expression, you remember, than that to be found in the individual. From his point of view, government was an expression of the will of the community and of an intelligence that was greater than the intelligence of the separate individuals. The government, or the state, we will say, was a higher expression of the intelligence or spirit than was the individual himself. There was a demand, then, on the part of the Hegelian dialectic science that the individual should subordinate himself to the state, for the state represented a higher range of intelligence than could be found in the individual. That which took place through the state is something that could not take place through the action of the individual in so far as he isolated himself from the state. Bring people together in society, let them operate through the state, and they produce something that is higher than that which the individuals by themselves could possibly produce. Thus the Hegelian philosophy called for the domination of the individual by the state, not by the monarch, who was, from the Hegelian standpoint, merely "the dotting of the 'i,' " an inevitable symbol in the community, but by a power that was centered in Prussia at that time in an efficient bureaucracy. Here one found that to which the individual could subject himself because of its greater degree of intelligence, its higher expression of the Absolute Spirit.
What Karl Marx puts in place of this political development, or this expression of faith in the human spirit, is an economic process. In other words, we have here the economic interpretation of history, which was the last word in the socialistic doctrine. The process which Adam Smith, Ricardo, and Malthus had presented was a process which, of course, can be followed
(222) out in history. It was not only taking place immediately about them but had been taking place in the past. It was due to the development of the times that matters went ahead as rapidly as they did throughout the whole of the Western world, and particularly in England. Production was advancing by leaps and bounds; it was going on in an intense fashion and had been going on in an intense fashion from the beginning. The schools attempted to establish the laws by which all economic processes must take place. From an economic standpoint, the world had always been subject to these same laws. Men had only relatively recently discovered them, just as men had only at the time of the Renaissance discovered the laws of physical nature. And, as men could look back to the period before the Renaissance and see how these laws had always operated, although at that time men had not known them, so they could look back from this period at the beginning of the nineteenth century and see how these economic laws had always been in operation, and one could interpret history from the standpoint of these economic processes. Now, however, they could not only look back into the past but they could look into the future, toward this greater end -- a revolution in which the community should take possession, gain control of the means of production, and thus allow the community to express itself, through the proper form of consumption. This was the picture which Marx undertook to provide.
Hegel had gone back to the history of thought and had undertaken to show what the various categories were that had arisen in human history. He started with Greek philosophy and followed his theory through to the Western world. He took the different concepts that had arisen in men's minds, extracted ideas, logical conceptions, and showed. how they represented steps in the Hegelian dialectic. He interpreted history from the point of view of the development of logic - that is, of Hegelian logic.
We have already mentioned the Hegelian development in the socialism of Karl Marx, the so-called "economic interpreta-
(223) -tion" of history. At that time I contrasted it with the Hegelian interpretation of history, using the term "logic" in the Hegelian sense. While Hegel stopped to find in the great movements of the Western world the development of the fundamental categories of thought, Marx undertook to find the development of an economic process in which revolutions succeed each other. He undertook to interpret history in terms of such economic revolutions, to interpret thus the political changes that had taken place in the world, to bring back every fundamental political change to an economic cause, and to place all in the framework of the economic theory which he had taken over from the Manchester school.
That economic theory, you remember, was one which assumed an economic process in which the individual laborer's wage, that which he got out of the process of production, was inevitably forced down to a starvation limit, while the element of profit, the difference between price and cost of production, the accumulated wealth of the community, inevitably passed into the hands of the relatively few who controlled industry. The movement of this process was toward an ultimate revolution in which the community would take control of the processes of production in the interests of the community as a whole. There was, as in the Hegelian process, a dialectic in which there was an inevitable conflict between the interests of the community and the process by means of which those interests were carried out. This led, as in the Hegelian dialectic, to a contradiction, with a synthesis upon a higher level. Finally, you remember, the Hegelian process reaches the Idee, in which the content and the process become one. So in Marx's development one reaches the theory in which the community's interest becomes identified with the economic process itself. That would be the socialistic state toward which the political program of the Socialist party worked.
Thus, we have a picture of the development of the Hegelian doctrine-partly Hegelian and partly of the orthodox economic doctrine-as this appeared in the 1850's, in its formulation by
(224) Karl Marx and the part which it played in the organization of labor in Europe. Its importance is due partly to the success with which the labor group had been definitely organized by the Manchester theory.
What Karl Marx did was to take history and interpret it from the point of view of the development of the economic rather than of the logical process. just as Hegel had centered his account of history about the various logical categories, so the Marxian historian centered it about the appearance of economic laws. He undertook to explain all that had taken place as forms of conflict, of revolutions which were expressions of the economic situation which is moving toward a final revolution in which the community should come, so to speak, to consciousness of itself as an organization which controls every means of production and thus becomes a really intelligent Community, not simply existing at the mercy of these laws, but controlling the situation through the knowledge of their operation. Of course, it is true of the laws of political economies, as it is of the laws of nature, that you can control them only by obeying them; but if you can obey them intelligently, you can control them. Well, this is a picture which Marxian socialism presented as over against the very optimistic picture which Adam Smith gave, and the very much more shaded and doubtful account that John Stuart Mill gave. It is only fair to say that the latter, an orthodox member of the Manchester school of economists, recognized, as definitely as Marx did, that there had to be some sort of control over the system as then presented. The interpretation of the latter looked toward revolution. It favored the bringing of matters to this conclusion. Let the poor get poorer and the rich richer. Let the extremes emphasize themselves in the community, and we will get nearer to revolution and so get over the situation the sooner. Things must get worse before they can get better. This was Marx's inevitable assumption.
I have pointed out that the socialist doctrine carried with it an internationalism which was implied in Adam Smith's posi-
(225) -tion, but which got a more definite statement in the doctrine of socialism. The latter stressed the condition of labor as a result of the process of production rather than the process itself. The laborer's condition as painted by Marx was one which was, of course, the same wherever economic conditions were at work. Men might differ in language and social institutions and traditions; but, just in so far as social laws were operative, men found themselves facing the same difficulties. The same conflict between price, on the one hand, and cost of production, on the other, would inevitably tend to force down the cost of production and the price of labor. These conditions must everywhere operate in the same fashion; and labor always, therefore, must be in the same condition and must have a common interest. There must be a solidarity on the part of labor just in so far as it came to consciousness of this situation.
It was in Germany that this program of the Marxian socialism was first put into a political form. The Sozialdemokratische Arbeiterpartei was organized there, and gradually increased in numbers partly because of the appeal of the program itself and partly because the government undertook to suppress it. It increased to something like four million voters at one time. It was a party which was, like other parties in the Reichstag, a protest party. It did not accept the way of things. Its members stood for a situation in which the present order should give way and a new order appear with the social revolution. And, of course, this socialistic party was to be found not only in Germany but in all industrial countries. France at that time was not so industrial as at present, so the socialistic party had no such part in France then as it did in Germany and Austria. But through the organization of the labor group an international organization was made possible in Europe on the basis of development of the Marxian program. It exercised a very important influence.
It was assumed at the time that this international organization of labor was so strong that it would make war impossible, that the laborers of one country would be unwilling to pit them-
(226) -selves against the laborers of another country. That theory was dashed in 1914, however, when the socialistic party in Germany organized itself with the government and, indeed, worked out an adaptation of the governmental theory of the superiority of Germany to all other countries, made itself essentially a part of all the propaganda of the governmental dynast in Germany. The international organization was not equal to the task of dragging down the nationalistic sense in the separate communities, and the laborers found themselves in arms against each other in a war which was more destructive of life than any other war in history. And yet, since the war the re-establishment of the International has been going on. It is not, of course, what it was before the war. That is, labor's sense of solidarity is not, as yet, as strong as it was before the war. Labor is now feeling its way in the same way as other groups in the community are feeling their way without having a clear program before them.
The international organization of labor as such was one of the great-perhaps the greatest-movements that took place in Europe in the last half of the nineteenth century. There was no other great movement that swept all over Europe, taking hold of the masses of the community as this movement did, passing over national boundaries, over differences of speech, getting together the representatives of those who were economically the lowest in the social scale, but who represented the great bulk of the community, and organizing them in the interest of the program which was essentially idealistic, one in which the members did not expect to have immediate advantages for themselves. They were looking toward a revolution that was to take place in the future. Especially in the early days, it was thought that it would be about a hundred or a hundred and fifty years before this would occur, and yet people were sacrificing immediate interests in support of this program. It was a great idealistic movement which was essentially religious in its character. It is difficult to overestimate the importance of such a movement as this in bringing about, for the time being, at least, a sense of
(227) solidarity on the part of the members of the different communities of Europe, particularly in bringing to light problems which the community had to face.
That is the other side of the movement that I want to emphasize. On the one side we have this sense of solidarity among the great masses of the laboring population throughout industrial Europe; and on the other side, a definite presentation of the problem which government has had to meet. The project which a Marxian socialism set up was one which governments were quite unwilling to undertake, and one practically abandoned in socialistic communities in Europe. The project of control over industry in the interest of the community itself, the recognition that business could not be regarded simply as existing for profit, that the other functions of business-in other words, what we call "public services"-have to be recognized, and that this recognition is one which must be enforced, if not by public opinion, then by political institution, has everywhere faced stubborn resistance. Such an institution as the Interstate Commerce Commission of this country is an illustration of the response of the community to the sort of problem that has been set up by the development of industry and so emphasized by socialistic groups. They formulated a sharp outline of the problem, so that the government was forced to approach it from a point of view that it had been unwilling to take before.
The great change as to the insurance of the labor group against those conditions in which the laborer would be unable to meet the demands which society and life put upon him is bound up with the same movement. Take the condition in which the laborer is out of work, falls sick, gets beyond the period in which he is economically productive. The older community left him to himself or to charity. The system of insurance instituted in Germany recognizes that it is the task, the duty, of a community to care for those who are willing, but unable, to labor, whatever the cause of the inability. It also recognizes that the care given in the form of charity of one sort or another was not only inadequate so far as the individual was concerned
(228) but expensive so far as the community was concerned. It was far less expensive to institute such insurance as in Germany than it was to leave the laborer under those conditions in which he had found himself previously, where he was dependent on either public or private charity. That situation, of course, was recognized not only in Germany and in other countries which introduced such insurance but finally in England. The Asquith and Lloyd George governments carried through insurance policies, now represented inaccurately by critics in England as the "dole," as a means of dealing with unemployment. It was recognized, then, that the community itself must definitely face the problems that its industry places upon it, and face them not simply in the interest of labor but in the interest of a community made up of laborers as such.
That this type of problem has been forced upon the community, forced into government programs, is in no small degree due to the development of labor parties; and this was made possible by the idealism of Karl Marx and those who followed him. I call it "idealism." The philosophy, of course, is ordinarily termed "materialism." It makes the industrial process essential in the community. But the movement is fundamentally an idealistic movement, for it is one that has looked toward the reorganization of society, toward a reorganization lying in the future. Such a movement is exactly what we term "idealistic," and this movement certainly was of that sort. It is one of the outgrowths of the Hegelian movement which we ought to recognize particularly. I have run over its history up to the present time so that you can put it in its relationship to this theory.
I now wish to emphasize again, from a different aspect, the international character of the labor movement. Finance and production, especially as these were reflected in commerce, were inevitably international. But that internationalism did not lead to any sense of solidarity on the part of the financiers, on the part of those involved in the financial process. Financiers in England and those controlling capital in Germany, France, and
(229) America each retained a sense of his own national character; and, while involved in an international financial activity, each identified himself with the community to which he belonged. The labor process was one, however, in which there grew up a very considerable sense of solidarity of interests among the laborers themselves. The position, of course, of the laborer as represented both by Marxian socialism and the Manchester school was one of necessary misery; and misery, as we know, loves company. The laborer in the face of the threat of a starvation wage felt himself supported by others in the same situation in other countries. The movement toward a revolution which would change this order of things was, then, an international movement in which there was a sense of solidarity on the part of the laborers themselves. How deep or superficial this sense of solidarity was can be found at the time of the World War, but it was far deeper than any sense of identity or of solidarity of interest on the part of the financial groups as such. The financial groups in Germany and England were in very vivid competition with each other. They were seeking world-markets and seeking to oust each other in these world-markets, although they both used the machinery of international finance. The laborers as such had no sense of competition with each other. This is true in regard to Europe pretty generally.
In the tariff program of American politics, on the other hand, there was a very definite undertaking which had a considerable success in aligning the interests of the American laborer over against labor in the European countries. The higher American wage was presented as protected by tariffs, and the laborer was taught to regard himself as in a favorable position. The whole situation in America was one which did not lead to the development of socialistic consciousness on the part of the labor group. It has not done so up to the present time. In England also it developed comparatively late.
While they say that the Labor party in England at the present time has a definite socialistic program, it is one of the Fabian sort, which does not undertake to map out just what steps are
(230) to be taken in later periods. That is, it does not present revolution as something that must take place as a result of inevitable conflict. The changes can take place by gradual legislation, and the exact form of these changes its program does not attempt to work out. It may be called a socialistic program, but one which differs at least from that of the Marxian group. The difference to which I have just referred between the programs of the English Labor party and that of the Marxian group is also reflected in socialistic thought in a later period. Marx, of course, invented a definite program. This was worked out in the program of the Sozialdemokratische Arbeiterpartei in Germany, and it remained the dogma of that party for a number of years. Gradually, however, there arose an opportunistic group in the Socialistic party, a group that sought to bring about changes or an amelioration of conditions of laboring groups, an amelioration not only in the fields of industry but also in the social conditions of labor. There grew up groups of socialists very much interested in municipal organization, who sought to improve the housing conditions, the health conditions of the labor group. In order to do that, they had to ally themselves with governing groups in the community. As I stated before, the logical position of the Social-Democratic party was that of a protest party which refuses to work with the active political parties of the countries. They always registered their protest. But if they were undertaking to carry out any program, they had to work with the dominant parties. In spite of itself, as the opportunistic group grew in power, the date of the future revolution, and the form that it should take, became less and less definite in the minds of the socialists themselves. That is, to use a current phrase, there was a tendency to substitute evolution for revolution. It was assumed that a gradual process was taking place which would lead to some such result as that which Marx had had in mind, but it did not necessarily have to take place by means of a catastrophic overturning of things. Especially it became more and more difficult to state just what the future situation should be in the control of industry, a
(231) change which was mirrored in such a type of socialism as guild socialism.
There was an uneasy feeling that even a bureaucracy as efficient as that of Germany was in some way not adequate to the task of working industry, that there was something in individual initiative, in the trying-out of possible methods of improvements in trade, which led to individual profit-something that provided a motive that could not be obtained under a bureaucratic direction of industry. While the German railroad industry under its bureaucracy proved itself an efficient and sound institution, it was realized that this was a very different economic undertaking from that of the production of articles that had to find markets and had to be produced at continually reduced prices. That is, it was realized that bureaucratic methods were fixed methods, or tended to fix themselves. There was no such stimulus to scrap the old and introduce new methods for the old as was found in private industry. The bureaucrat does not like to scrap his apparatus. There was this general feeling that, when it came to the control of industry, the government as such had not as yet, at least, proved itself competent.
Interest shifted to the question of the control within different industries or groups of industries which might be exercised by labor itself, a communistic movement which regarded labor as the whole owner of industry. Could industry be brought into relationship with labor itself? Could labor actually exercise control? Would it be possible to get hold of different types of industries which answered in a certain sense to the old medieval guilds, in which there should be representation of the labor interest? You get a shift of interest, you see, from the control of tile government over industry to a more immediate and direct control by labor itself, or the possibility of it. These were changes which went on and are going on at the present time in the program of labor groups -- a change which answers to the breakdown of the old Hegelian dialectic even in the field of political economy.
Coming back to the Marxian development, we must conceive of it as having two roots: one the political economy, the industrial development which the Manchester school interpreted, and the other the Hegelian dialectic. The statement which it took from the Manchester school was of a process in which, through supply and demand, through the keeping-down of costs in the interest of the production of wealth, the price of labor would inevitably be brought down to a starvation wage, if, as it generally was, the Malthusian hypothesis was accepted. It was assumed that under favorable conditions there would always be a surplus of laborers, as well as a surplus of other articles essential for production, so that expansion could take place as industry demanded it. There should be the opportunity for expansion. In order that there might be this opportunity, there should be a surplus which could be taken up as the demand developed. A surplus of labor meant, of course, persons out of jobs, who were therefore on the verge of starvation. The ideal situation from the point of view of this political economy, then, was one in which there was a line of men before the factory seeking for jobs, many of whom could not obtain any. The Malthusian doctrine, of course, fitted into this economic demand. There would always be a surplus of population beyond the means of sustenance, so that there always would be those who were seeking for a wage even if it was at the starvation level.
As we have seen, this interpretation, plus that of the gradual passage of capital into the hands of those who were not successful in the use of it, led to the assumption on the part of this Marxian doctrine that the rich would continually grow richer and the poor would keep on growing poorer up to the point at which the community would cease to recognize this form of production and industry would pass over into the hands of the state. It was the demand of Marxian socialism that all capital should be owned by the community in the form of the state. All production should be directed by the state. It did not abrogate private ownership; it was only a question of what
(233) should be owned. No capital, no means of production, should be owned by the individual except his wage. That which came to him in his function as laborer should be his own, and the amount which that would be would presumably be determined by the state in its function as producer. And production, then, would take place not in the interest of laying aside more capital, not in the interest of profit as such, but definitely in the interest of the community itself.
The assumption of this doctrine is that the whole of history had been moving toward a revolution and that back of the great political movements of the past always lay an economic motive. The development which was taking place was traced by the socialists back to the gradual development of capital out of more primitive conditions, and then out of this capitalism it was assumed revolution itself would spring. There was always the contest between those who were producing and the masses of the community; and this had expressed itself in continued opposition, contradictions. And what the dialectical materialism, as it was termed, attempted to say was that this process was one in which there had been conflicts of opposites with the appearance of a synthesis in which, for the time being, these opposites were harmonized, and such that the final conflict, so to speak, from the economic standpoint would take place in a shift of emphasis in which capitalism as such would be abrogated and state control come in
One can, of course, point to the seeming failures of the Marxian state in Russia at the present time. There has been great difficulty there in keeping economic processes going. The Russians seem to have made enormous concessions to private capital in order to keep their industries going. As I stated, the Marxian doctrine, which is very definitely economic dogma pushed into the Hegelian dialectic, gradually lost its hold throughout Europe and in our two great industrial communities, Germany and England. In Germany there was the Sozialdemokratische Arbeiterpartei that was inspired by the Marxian doctrine; and under the leadership of Bebel and those
(234) who followed him it still maintained the Marxian doctrine and looked forward to revolution; it still played the part of the protest party, one that refused to accept the operation of the government under then present conditions, one that was waiting for a socialistic government. As I have already pointed out, this devotion to the Marxian dogma waned in the later history of socialism in Germany. There grew up an opportunistic movement, gathering pretty largely about the force of the socialist party, to bring about various changes, reforms in the immediate conditions. As you know, Bismarck tried to undermine socialism by introducing state insurance for those who fell sick, for those who reached the old-age limit-insurance which would protect the laborer under conditions in which he was not able to protect himself. Then, as I said, the socialistic part, especially in the municipalities, wished to bring about better conditions for labor. 'I hey could only do that, of course, in so far as they worked with other parties. This gradually became the dominant element in the socialistic party. When, after the war, the opportunity came to the Socialists, who were the majority party in the Reichstag, of carrying out a program which they had produced in the past, namely, that of bringing about revolution, they became a relatively conservative party, unwilling to put control of industry into the hands of the bureaucratic state.
In English history socialism had been of a different character. The Marxian doctrine, although formulated in England itself, never took hold of the English laborer in the early days. In fact, in one sense it has not in the present day. Labor in England never looked forward to revolution as such. In England the laborer fought for better conditions and better wages, but his weapon has been the trade-union and not a socialistic party looking toward the reconstruction of the state itself. The conditions preceding the war, and those following it, increased the representatives of the Labor party in Parliament, so that it became the second largest party. The Liberal party lost largely to the Labor party and to the Conservative
(235) party, so that the two parties that stood over against each other were the Conservative and the Labor parties. This development of the Labor party centered about a program which was worked out really by the Fabian socialists, the Webbs. Sidney and Beatrice Webb were the ones who very largely drew it up, but there were others involved in it. It was a program that looked toward the various socialistic types of industries, those in which competition is eliminated by the nature of the industry itself. A public utility is successful only in so far as it has no competitors. You cannot have several telephone systems competing with each other and still have successful operation. And the same is true, of course, of other so-called "utilities." Competition - the breath of life from the point of view of the orthodox system-has no place there. It is necessary, in the case of such social industries, that there should be public control; and it is perfectly possible to have public management in these cases. It is possible, conceivably at least, for a state to pick out a good manager. It may be a question whether it can select a successful entrepreneur, a person who can take capital and build up an industry; but it ought to be possible for an intelligent government to select a good manager, and we have various illustrations of this in government-directed business-notably the post office, and in Germany in the operation of the railroads as successfully carried on by the government. Where you eliminate competition, where the process of operation is one which has already been well standardized, there it must be possible to introduce public operation and a gradual control, through the development of the income tax, through the distribution of wealth in the community.
Speaking of the change which took place in the socialistic doctrine and the orthodox economic conceptions, I have indicated that it was a change from a program to opportunism. The term "opportunistic" does not do entire justice to the shift in attitude. It was not simply an attitude on the part of the thinkers of various types to reach out for any chance advantage that might be gained. There was always behind it the assump-
(236) -tion that there was some sort of method or social process that could be found out, and therefore some sort of method that might be adopted so that these human institutions could be adjusted to this process; that is, that there might be laws which, if discovered, could be used to control social events. The first assumption of the economic doctrine had been that certain so-called "iron laws" of nature had been discovered which are involved in the economic process, and that the only thing one could do was to accept them and act in accordance with them; that if one undertook to contravene them he got himself into difficulties. It was like refusing to obey the law of gravitation. One must obey in order to control.
What generally came out of the struggle, however, was a gradual recognition that these laws did not have the form which an earlier economic doctrine had given to them. That doctrine led logically to the conclusions which Karl Marx drew from them. That is, if one were to accept not only the laws of supply and demand, those which control the price of things in the markets of the world, but accept also the process of competition, and the Malthusian law, the results which Marx drew from them were logical. However, out of the labor-union movement in England and in this country, out of the processes which were responsible for these movements, it was found that the price of labor could be influenced by other considerations than those of supply and demand, that it was possible to increase the price of labor above a subsistence level. What had been overlooked in the Marxian assumption was the greater productivity of labor. It had also overlooked the various social conditions that determine the fixing of the wage. Taking the laws of these first, it was found that in the struggle between the labor unions and the employers, in the discussion of the conditions under which labor operated, there could grow up a public sentiment that was effective in determining the price of labor, or at least that had an influential part in determining the price of labor. Also, it was slowly discovered that a wage which made possible mere subsistence and which kept the laborers on the verge of starva-
(237) -tion was not a wage which produced the highest results; it was not an economic wage.
The abstract doctrine we have been speaking of assumed that man was like a machine: he could be bought and then he would operate; but he could operate only on the basis of a subsistence which he obtained in exchange for his labor, and which, if inadequate, would render his performance inadequate also. There were evidences of a social sort, of a physiological sort, which entered into the determination of the wage which were not presented in the first formulation of the economic doctrine in question.
Then, too, there gradually grew up a recognition that Malthus' law itself had not the necessary operation which was supposed to belong to it. In the first place, there was evidence which was to be found in France that population could be held down, that, actually, increase did not take place in accordance with the Malthusian law; and gradually in England itself there grew up evidence that there was what has later come to be called "birth control," which determines to considerable degree the increase of population. That is, the human race does not necessarily oversupply the world as forms lower than it do. Its method for the control of population was of a different sort than that which exists in lower forms. Man himself could determine the actual increase. In other words, it was found that the socalled "iron laws" did not have uniformity which belongs to a so-called "law of nature," and men went back to the study of human conditions, to study the process of production and distribution, the economic process; and, as this investigation was undertaken, it was found that the situations were very complex.
One result of this was the discovery of something of the same assumption that belonged to the Hegelian doctrine, namely, that the state had a higher intelligence than the individual. Indeed, something of this sort was more or less implied. Why should one assume that a bureaucratic state would be more successful in the process of production than individual entrepreneurs ? One found, of course, in industry that a large number
(238) of capitalistic undertakings failed where very few succeeded. It was computed that something like ninety-odd per cent of capitalistic undertakings were not successful. It was this, of course, which led to the assumption that capital would flow into the hands of those who were successful. Why should it be assumed that the state in a bureaucratic fashion would be able to draft ability which would enable it to carry on these industries successfully? Great industries have to work on a very narrow margin if they work in accordance with economic laws, and the Marxian doctrine was orthodox in its acceptance of these laws. Something like a 5 per cent margin is what separates a great industry from success or failure. It is always, so to speak, near the edge -- always has to maintain itself by a careful consideration of its conditions and the situation within which it operates, and on the basis of which it can succeed. As I said, the assumption that the state could take over such a difficult undertaking as the management of great industries and make them successful, is an assumption that implies that the state is going to control powers and capacities which it is very difficult to secure under private management. The person who succeeds is one who is selected out by a sort of process of competition, and it is very difficult to determine from consideration of the individual whether he will succeed or not. There is something of an implication that the state as such has a higher intelligence than the individual, if we assume that this industrial state is going to be economically successful in its processes.
This type of program was, as I have suggested, socialistic in character, but evolutionary rather than revolutionary. It was the sort of program which the Labor party put up. It became socialistic in the sense that it looked to the state to take over production, but has never been socialistic in the sense of making socialism a religion. The Marxian doctrine was essentially a religion, had been in Germany and elsewhere in Europe, as it is at present among the communists in Russia. That is, it was conceived of essentially as an expression of the intelligence of the community. What this socialistic doctrine has
(239) implied is that the economic process is the dominant process of the community, and that this dominant process of the community is controlled by the intelligence of the community, that if this process is developed to the proper level the community will naturally take control over it. The religious life is essentially a life of the individual in that of the whole group to which he belongs, that is, in which the individual is subordinated to the group, in which the individual realizes himself in the life of the community. The socialist doctrine, then, was in this sense a religious doctrine. It conceived of the life of the community as essentially an economic process. The individual was realized in this great social process through the Industrial Revolution. The control of the process was to pass into the hands of the community, in which the individual was the essential part. That is, the individual through the part which he played in the various labor organizations, industrial organizations, was the fundamental element in the state. And the individual, realizing himself in the life of the community, had definitely a religious attitude toward the process itself. In other words, you can find a parallelism between the statement of religion and the Hegelian state, the state being nearer to God than the individual in the community, the individual subordinating himself to the state as a higher expression of spirit. This attitude, being of a religious character, was, on the socialist side, expressed as an economic process which is the essential life of the community, and it is in so far as the individual, in his relationship to this economic organization, subordinates himself to its highest expression in the state that he gets a realization of himself in the group to which he belongs. That is, he gets essentially a religious attitude.
Now this attitude is one which you do not find in the English Labor party, socialistic as it has in some sense become. Fabian socialism is not a religious movement. It is one which looks toward the meeting of all sorts of evils found in the industrial communities by governmental action of different sorts. It feels free to use the government in industrial situations as much as
(240) it is used in political situations, and in policing situations that arise. The government can be utilized by the community to meet economic conditions and to better these conditions. But it does not assume that the economic process is the process in which the intelligence of the community as such expressed itself necessarily. The development of socialism in England is, in a certain sense, parallel with the development which took place in Germany in the passage of dogmatic socialism into opportunistic socialism-one willing and desirous of utilizing the powers of the state to bring about better conditions for labor without endeavoring to state just what the organization of society was going to be. The earlier socialists proceeded as if they had had a vision on the Mount which showed them what the order of society should be. They felt they could work out deductively what the order should be. It was that which they held before themselves, waiting to bring about this great change which, when the evolution of conditions had reached the proper point, could be carried through. In place of this we have in England a type of socialism which felt itself free to utilize the state in a fashion it assumed to be legitimate.
The old doctrine called off the hand of the state from industry. Adam Smith called for the abandonment of monopolies which the state had allowed to grow up, the giving-way of tariff, the opening of doors, the taking-off of political control of industry, allowing industry to proceed with its own laws. That is still the doctrine in the orthodox school. As over against this you have the sort of development which has been taking place not only in industrial Europe but also in America. Our Interstate Commerce Commission, for example, as I have already mentioned in passing, is an expression of government in which the control of industrial conditions, specifically the determination of rates, of the conditions under which transportation is to take place, is in the hands of the state. We have established other bureaus along the same lines, although they have not developed to the same extent or had the importance which the Interstate Commerce Commission has. We have been behind
(241) England in the development of governmental control over public utilities. We proceed very slowly in this country as compared with England and Germany, the reason presumably being found in the fact that our local governments are more corrupt than local governments in England have been, so that the community has been wary of introducing an opportunity for the government control of great public utilities. For example, in Chicago there was a time during which public sentiment in the community as a whole was, by and large, for public ownership of the transit system. At the present time sentiment is active on quite the other side. The lack of confidence in our municipal institutions as they are organized and conducted by our present politicians is such as to make the community hesitate to turn over operations of great public utilities to them, and so this type of development of public control has advanced very much more slowly in this country that it has in Europe.
The movement, however, is one whose general lines I have sketched. We have at this time the somewhat sensational undertaking in Russia to actually carry out the Marxian program, the setting-up of a Marxian system as final, or an attempt to carry it through in its detail, with, of course, as I have said, very unsatisfactory results from the industrial standpoint, at least up to the present time. Of course, there is a certain absurdity in undertaking to carry out Marx's doctrine in Russia. Such a doctrine gathers about the proletariat composed mainly of factory laborers. Socialism has never been able to get hold of agricultural labor, and go per cent of the laborers in Russia are peasants, those living upon the soil. The Communist-Socialist government has had to give way before the peasantry and turn over control of the soil to the person who is, to all intents and purposes, the owner of the soil which he cultivates. The place in which to undertake an experiment such as is being carried out in Russia would be in Germany or in England, great industrial communities in which you have a large and relatively highly intelligent proletariat in a socialistic sense, men who have had training of a political sort such as the socialists have had in the
(241) Social-Democratic party in Germany, and such as the English laborers are getting. But what was clearly evident after the war, when socialism had things in its own hands in Germany, was an entire unwillingness to undertake any such experiment; and, of course, the same thing is true in England. Laborers as such were quite unwilling to undertake any revolutionary process, any turning-over of the industry of the community to control by the state, with the consequence that there has been a serious slowing-up, if not actual discounting, of the effectiveness of such a program.