Like all other differences of opinion which divide Marxists into groups, the quarrel [over how to combine socialism and democracy under the banner of “social democracy” in a way that does not suffer from fatal contradictions] arose from the dualism which cuts right through that bundle of dogmas called the Marxist system. In Marxism there are always two ways at least of looking at anything and everything, and the reconciliation of these views is attained only by dialectic artificialities. The commonest device is to use, according to the needs of the moment, a word to which more than one meaning may be attached. With these words, which at the same time serve as political slogans to hypnotize the mass psyche, a cult suggestive of fetishism is carried on. The Marxist dialectic is essentially word-fetishism. Every article of the faith is embodied in a word fetish whose double or even multiple meaning makes it possible to unite incompatible ideas and demands. The interpretation of these words, as intentionally ambiguous as the words of the Delphic Pythia, eventually brings the different parties to blows, and everyone quotes in his favour passages from the writings of Marx and Engels to which authoritative importance is attached.
‘Revolution’ is one of these words. By ‘industrial revolution’ Marxism means the gradual transformation of the pre-capitalist way of production into the capitalist. ‘Revolution’ here means the same thing as ‘development’, and the contrast between the terms ‘evolution’ and ‘revolution’ is almost extinguished. Thus the Marxist is able, when it pleases him, to speak of the revolutionary spirit as contemptible ‘putschism’. The revisionists were quite right when they called many passages in Marx and Engels to their support. But when Marx calls the workers’ movement a revolutionary movement and says that the working class is the only true revolutionary class, he is using the term in the sense that suggests barricades and street fights. Thus syndicalism is also right when it appeals to Marx…. (p. 81)
Modern socialists, especially those of the Marxian persuasion, lay great emphasis on designating the socialist community as Society, and therefore on describing the transfer of the means of production to the control of the community as the ‘Socialization of the means of production’. In itself the expression is unobjectionable but in the connection in which it is used it is particularly designed to obscure one of the most important problems of Socialism.
The word ‘society’, with its corresponding adjective ‘social’, has three separate meanings. It implies, first, the abstract idea of social interrelationships, and secondly, the concrete conception of a union of the individuals themselves. Between these two sharply different meanings, a third has been interposed in ordinary speech: the abstract society is conceived as personified in such expressions as ‘human society’, ‘civil society’.
Now Marx uses the term with all these meanings. This would not matter as long as he made the distinction quite clear. But he does just the opposite. He interchanges them with a conjurer’s skill whenever it appears to suit him. When he talks of the social character of capitalistic production he is using social in its abstract sense. When he speaks of the society which suffers during crises he means the personified society of mankind. But when he speaks of the society which is to expropriate the expropriators and socialize the means of production he means an actual social union. And all the meanings are interchanged in the links of his argument whenever he has to prove the unprovable. The reason for all this is in order to avoid using the term State or its equivalent, since this word has an unpleasant sound to all those lovers of freedom and democracy, whose support the Marxian does not wish to alienate at the outset. A programme which would give the State the general responsibility and direction of all production has no prospect of acceptance in these circles. It follows that the Marxist must continually find a phraseology which disguises the essence of the programme, which succeeds in concealing the unbridgeable abyss dividing democracy and Socialism. It does not say much for the perception of men who lived in the decades immediately preceding the World War that they did not see through this sophistry.
The modern doctrine of the state understands by the word ‘State’ an authoritative unit, an apparatus of compulsion characterized not by its aim but by its form. But Marxism has arbitrarily limited the meaning of the word State, so that it does not include the Socialistic State. Only those states and forms of state organization are called the State which arouse the dislike of the socialist writers. For the future organization to which they aspire the term is rejected indignantly as dishonourable and degrading. It is called ‘Society’. In this way the Marxian social democracy could at one and the same time contemplate the destruction of the existing State machine, fiercely combat all anarchistic movements, and pursue a policy which led directly to an all powerful state….
When dealing with the concrete expression of the will of the State, the English language provides a more subtle distinction by permitting us to use the term government instead of the term state. Nothing is better designed to avoid the mysticism which in this connection has been fostered by Marxian usages to the highest degree. For the Marxists talk glibly about expressing the will of society, without giving the slightest hint how ‘society’ can proceed to will and act. Yet of course the community can only act through organs which it has created. (pp. 128-130)
To the socialist, the coming of Socialism means a transition from an irrational to a rational economy. Under Socialism, planned management of economic life takes the place of anarchy of production; society, which is conceived as the incarnation of reason, takes the place of the conflicting aims of unreasonable and self-interested individuals. A just distribution replaces an unjust distribution of goods. Want and misery vanish and there is wealth for all. A picture of paradise is unfolded before us, a paradise which – so the laws of historical evolution tell us – we, or at least our heirs, must at length inherit. For all history leads to that promised land, and all that has happened in the past has only prepared the way for our salvation.
This is how our contemporaries see Socialism, and they believe in its excellence. It is false to imagine that the socialist ideology dominates only those parties which call themselves socialist or – what is generally intended to mean the same thing – ‘social’. All present-day political parties are saturated with the leading socialistic ideas. Even the stoutest opponents of Socialism fall within its shadow. They, too, are convinced that the socialist economy is more rational than the capitalist, that it guarantees a juster distribution of income, that historical evolution is driving man inexorably in that direction. When they oppose Socialism they do so with the sense that they are defending selfish private interests and that they are combating a development which from the standpoint of public welfare is desirable and is based upon the only ethically acceptable principle. And in their hearts they are convinced that their resistance is hopeless.
Yet the socialist idea is nothing but a grandiose rationalization of petty resentments. Not one of its theories can withstand scientific criticism and all its deductions are ill-founded. Its conception of the capitalist economy has long been seen to be false; its plan of a future socialist order proves to be inwardly contradictory, and therefore impracticable. Not only would Socialism fail to make economic life more rational, it would abolish social co-operation outright. That it would be bring justice is merely an arbitrary assertion, arising, as we can show, from resentment and the false interpretation of what takes place under Capitalism. And that historical evolution leaves us no alternative but Socialism turns out to be a prophecy which differs from the chiliastic dreams of primitive Christian sectarians only in its claim to the title ‘science’.
In fact Socialism is not in the least what it pretends to be. It is not the pioneer of a better and finer world, but the spoiler of what thousands of years of civilization have created. It does not build; it destroys. For destruction is the essence of it. It produces nothing, it only consumes what the social order based on private ownership in the means of production [i.e., capitalism] has created. Since a socialist order of society cannot exist, unless it be as a fragment of Socialism within an economic order resting otherwise on private property, each step leading towards Socialism must exhaust itself in the destruction of what already exits.
Such a policy of destructionism means the consumption of capital. There are few who recognize this fact. Capital consumption can be detected statistically and can be conceived intellectually, but it is not obvious to everyone. To see the weakness of a policy which raises the consumption of the masses at the cost of existing capital wealth, and thus sacrifices the future to the present, and to recognize the nature of this policy, requires deeper insight than that vouchsafed to statesmen and politicians or to the masses who have put them into power. As long as the walls of the factory buildings stand, and the trains continue to run, it is supposed that all is well with the world. The increasing difficulties of maintaining the higher standard of living are ascribed to various causes, but never to the fact that a policy of capital consumption is being followed.
In the problem of the capital consumption of a destructionist society we find one of the key problems of the socialist economic policy. The danger of capital consumption would be particularly great in the socialist community; the demagogue would achieve success most easily by increasing consumption per head at the cost of the formation of additional capital and to the detriment of existing capital.
It is in the nature of capitalist society that new capital is continually being formed…. The progressive formation of capital is the only way to increase the quantity of goods which society can consume annually without diminishing production in the future – the only way to increase the workers’ consumption without harm to future generations of workers. Therefore, it has been laid down by Liberalism [i.e., capitalist ideals] that progressive capital formation is the only means by which the position of the great masses can be permanently improved. Socialism and destruction seek to attain this end in a different way. They propose to use up capital so as to achieve present wealth at the expense of the future. The policy of Liberalism is the procedure of the prudent father who saves and builds for himself and his successors. The policy of destructionism is the policy of the spendthrift who dissipates his inheritance regardless of the future. (pp. 457-459)
To Marxians, Karl Marx’s supreme achievement lay in the fact that he roused the proletariat to class-consciousness. Before he wrote, socialist ideas led an academic existence in the writings of the Utopians and in the narrow circles of their disciples. By connecting these ideas with a revolutionary workers’ movement which till then had only a petty bourgeois aim, Marx created, say the Marxians, the foundations of the proletarian movement. This movement, they believe, will live until it has accomplished its historical mission, the setting up of the socialist order of society.
Marx is supposed to have discovered the dynamic laws of capitalist society and, with the aid of the theory of historical evolution, to have defined the aims of the modern social movement as inevitable consequences of that evolution. He is said to have shown that the proletariat could free itself as a class only by itself abolishing the class conflict, and so making possible a society in which ‘the free development of each individual is the condition for the free development of all’.
Ecstatic enthusiasts see in Marx one of the heroic figures of world history, and class him among the great economists and sociologists, even among the most eminent philosophers. The unbiased observer looks on Karl Marx’s work with different eyes. As an economist Marx entirely lacked originality. He was a follower of the Classical political economists, but he lacked the ability to approach essentially economic problems without a political bias. He saw everything through the spectacles of the agitator, who considers first and foremost the effect made on the popular mind. Even here he was not really original, for the English socialist defenders of the Right to the Full Produce of Labour, who with their pamphlets in the third and fourth decades of the nineteenth century prepared the way for Chartism, had already anticipated him in all essentials. Moreover, he had the misfortune to be entirely ignorant of the revolution in theoretical economics which was proceeding during the years when he worked out his system, a transformation which made itself known soon after the issue of the first volume of Das Kapital. As a result, the later volumes of Das Kapital, from the day they were published, were quite out of touch with modern science. This was a piece of bad luck which hit his infatuated followers particularly hard. From the beginning, they had to be content with barren expositions of the master’s writings. They have timidly avoided any contact with the modern theory of value. As a sociologist and historical philosopher Marx was never more than an able agitator writing for the daily needs of his party. The materialist conception of history is scientifically worthless; moreover Marx never worked it out exactly but propounded it in various incompatible forms. He is one of the many writers of his time, now mostly forgotten, who applied the dialectic method to all fields of science. Decades had to pass before people had the face to call him a philosopher and to place him side by side with the great thinkers.
As a scientific writer Marx was dry, pedantic, and heavy. The gift of expressing himself intelligibly had been denied him. In his political writings alone does he produce powerful effects, and these only by means of dazzling antitheses and of phrases which are easy to remember, sentences which by play of words hide their own vacuity. In his polemics he does not hesitate to distort what his own opponent has said. Instead of refuting he tends to abuse. Here, too, his disciples … have faithfully imitated the master’s example, reviling their opponents but never attempting to refute them by argument.
Marx’s originality and historical significance lie entirely in the field of political technique. He recognizes the immense social power that can be achieved by welding out of the great mass of workers, herded together in workshops, a political factor; and he seeks and finds the slogans to unite these masses into a coherent movement. He produces the catchword which leads people otherwise indifferent to politics to attack private property [i.e., the capitalist method of arranging property ownership]. He preaches a doctrine of salvation which rationalizes their resentment and transfigures their envy and desire for revenge into a mission ordained by world history. He inspires them with consciousness of their mission by greeting them as those who carry in themselves the future of the human race ….
As a master of demagogic technique Marx was a genius; this cannot be sufficiently emphasized. He found the propitious historical moment for uniting the masses into a single political movement, and was himself on the spot to lead this movement. For him all politics was only the continuation of war by other means; his political art was always political tactics. The socialist parties which trace their origin back to Marx have kept this up, as have those who have taken the marxist parties for their model. They have elaborated the technique of agitation, the cadging for votes and for souls, the stirring up of electoral excitement, the street demonstrations, and the terrorism. To learn the technique of these things requires years of hard study. At their party conferences and in their party literature, the marxians give more attention to question of organization and of tactics than to the most important basic problems of politics. In fact, if one wished to be more precise one would have to admit that nothing interests them at all except from the point of view of party tactics and that they have no interest to spare for anything else. (pp. 459-462).
The redistribution of goods with the object of restoring the equality of property and wealth is at the back of the mind of the ordinary man whenever he thinks of reforming social conditions, and it forms the basis for all popular proposals for socialization. [However, unlike the case with the dividing up of land into plots,] in industry, in mining, in communications, in trade and in banking where a physical redistribution of the means of production is quite inconceivable, we get … a desire for the division of the property rights while preserving the unity of the industry or enterprise. To divide in this simple way would be, at best, a method of abolishing for the moment the inequality in the distribution of income and poverty. But after a short time, some would have squandered their shares, and others would have enriched themselves by acquiring the shares of the less economically efficient. Consequently there would have to be constant redistributions, which would simply serve to reward frivolity and waste – in short every form of uneconomic behavior. There will be no stimulus to economy if the industrious and thrifty are constantly compelled to hand over the fruits of their industry and thrift to the lazy and extravagant….
The values of the shares falling to individual workers in a redistribution … would be very different: some would obtain more, others less, and as a result some would draw a larger income from property – unearned income – than others. Syndicalization is in no way a means of achieving equality of incomes. It abolishes the existing inequality of incomes and property and replaces it by another….
As an aim Syndicalism is so absurd, that speaking generally, it has not found any advocates who dared to write openly and clearly in its favor. Those who have dealt with it under the name of co-partnership have never thought out its problems. Syndicalism has never been anything else than the ideal of plundering hordes. (See pp. 270-75.)
It is in the nature of capitalist society that new capital is continually being formed…. The progressive formation of capital is the only way to increase the quantity of goods which society can consume annually without diminishing production in the future – the only way to increase the workers’ consumption without harm to future generations of workers. Therefore, it has been laid down by Liberalism [i.e., capitalist ideals] that progressive capital formation is the only means by which the position of the great masses can be permanently improved. Socialism and destructionism seek to attain this end in a different way. They propose to use up capital so as to achieve present wealth at the expense of the future. The policy of Liberalism is the procedure of the prudent father who saves and builds for himself and his successors. The policy of destructionism is the policy of the spendthrift who dissipates his inheritance regardless of the future. (pp. 458-459)
Professed Christians attack the materialism of Marxists, monarchists their republicanism, nationalists their internationalism; yet they themselves, each in turn, wish to be known as Christian Socialists, State Socialists, National Socialists. They assert that their particular brand of Socialism is the only true one – that which ‘shall’ come, bringing with it happiness and contentment. The Socialism of others, they say, has not the genuine class-origin of their own. At the same time they scrupulously respect Marx’s prohibition of any inquiry into the institutions of the socialist economy of the future, and try to interpret the working of the present economic system as a development leading to Socialism in accordance with the inexorable demand of the historical process. Of course, not Marxists alone, but most of those who emphatically declare themselves anti-Marxists, think entirely on Marxist lines and have adopted Marx’s arbitrary, unconfirmed and easily refutable dogmas. If and when they come into power, they govern and work entirely in the socialist spirit. (pp. 16-17.)
The basic idea of Christian Socialism that runs through all the teachings of its representatives is purely stationary in outlook. In the economic system which they have in mind there is no entrepreneur, no [economic] speculation, and no ‘inordinate’ profit. The prices and wages demanded and given are ‘just’. Everyone is satisfied with his lot because dissatisfaction would signify rebellion against divine and human laws. For those incapable of work Christian charity will provide. This ideal it is asserted was achieved in medieval times. Only unbelief could have driven mankind out of this paradise. If it is to be regained mankind must first find the way back to the Church. Enlightenment and liberal thought have created all the evil which afflicts the world to-day.
The protagonists of Christian social reform as a rule do not regard their ideal Society of Christian Socialism as in any way socialistic. But this is simply self-deception. Christian Socialism appears to be conservative because it desires to maintain the existing order of property, or more properly it appears reactionary because it wishes to restore and then maintain an order of property that prevailed in the past. It is also true that it combats with great energy the plans of socialists of other persuasions for a radical abolition of private property, and in contradistinction to them asserts that not Socialism but social reform is its aim. But Conservatism can only be achieved by Socialism. Where private property in the means of production exists not only in name but in fact, income cannot be distributed according to an historically determined or an any other way permanently established order. Where private property exists, only market prices can determine the formation of income. To the degree in which this is realized, the Christian social reformer is step by step driven to Socialism, which for him can be only State Socialism. He must see that otherwise there cannot be that complete adherence to the traditional state of affairs which his ideal demands. He sees that fixed prices and wages cannot be maintained, unless deviations from them are menaced by threats of punishment from a supreme authority. He must also realize that wages and prices cannot be arbitrarily determined according to the ideas of a world improver, because every deviation from market prices destroys the equilibrium of economic life. He must therefore progressively move from a demand for price regulation to a demand for a supreme control over production and distribution. It is the same path that practical etatism has followed. At the end in both cases, is a rigid Socialism which leaves private property only in name, and in fact transfers all control over the means of production to the State.
Only a part of the Christian socialist movement has openly subscribed to this radical programme. The others have shunned an open declaration. They have anxiously avoided drawing the logical conclusions of their premises. They give one to understand that they are combating only the excrescences and abuses of the capitalist order; they protest that they have not the slightest desire to abolish private property; and they constantly emphasize their opposition to Marxian Socialism. But they characteristically perceive that this opposition mainly consists in differences of opinion as to the way in which the best state of society can be attained. They are not revolutionary and expect everything from an increasing realization that reform is necessary. For the rest they constantly proclaim that they do not wish to attack private property. But what they would retain is only the name of private property. If the control of private property is transferred to the State the property owner is only an official, a deputy of the economic administration. (pp. 253-55.)
If the government wants to make it possible for poor parents to give more milk to their children, it must buy the milk at the market price and sell it to those poor people with a loss at a cheaper rate; the loss may be covered from the means collected by taxation. But if the government simply fixes the price of milk at a lower rate than the market, the results obtained will be contrary to the aims of the government. The marginal producers will, in order to avoid losses, go out of the business of producing and selling milk. There will be less milk available for the consumers, not more. This outcome is contrary to the government’s intentions. The government interfered because it considered milk as a vital necessity. It did not want to restrict its supply.
Now the government has to face the alternative: either to refrain from any endeavors to control prices, or to add to its first measure a second one, i.e., to fix the prices of the factors of production necessary for the production of milk. Then the same story repeats itself on a remoter plane: the government has again to fix the prices of the factors of production necessary for the production of those factors of production which are needed for the production of milk. Thus the government has to go further and further, fixing the prices of all the factors of production – both human (labor) and material – and forcing every entrepreneur and every worker to continue work at these prices and wages. No branch of production can be omitted from this all-round fixing of prices and wages and this general order to continue production. If some branches of production were left free, the result would be a shifting of capital and labour to them and a corresponding fall of the supply of the goods whose prices the government had fixed. However, it is precisely these goods which the government considers as especially important for the satisfaction of the needs of the masses.
But when this state of all-round control of business is achieved, the market economy has been replaced by a system of planned economy, by socialism. Of course, this is not the socialism of immediate state management of every plant by the government as in Russia, but the socialism of the German or Nazi pattern.
Many people were fascinated by the alleged success of German price control. They said: You have only to be as brutal and ruthless as the Nazis and you will succeed in controlling prices. What these people, eager to fight Nazism by adopting its methods, did not see was that the Nazis did not enforce price control within a market society, but that they established a full socialist system, a totalitarian commonwealth.
Price control is contrary to purpose if it is limited to some commodities only. It cannot work satisfactorily within a market economy. If the government does not draw from this failure the conclusion that it must abandon all attempts to control prices, it must go further and further until it substitutes socialist all-round planning for the market economy.
Production can either be directed by the prices fixed on the market by the buying and by the abstention from buying on the part of the public. Or it can be directed by the government’s central board of production management. There is no third solution available. There is no third social system feasible which would be neither market economy nor socialism. Government control of only a part of prices must result in a state of affairs which – without any exception – everybody considers as absurd and contrary to purpose. Its inevitable result is chaos and social unrest.
It is this that the economists have in mind in referring to economic law and asserting that interventionism is contrary to economic law. (pp. 533-34).
The attention of sociologists is often drawn to the fact that mercantile and industrial wealth, that is, wealth not invested in land and mining property, seldom maintains itself in one family for a long period. The bourgeois families rise steadily from poverty to wealth, sometimes so quickly that a man who has been in want a few years previously becomes one of the richest of his time. The history of modern fortunes is full of stories of beggar boys who have made themselves millionaires. Little is said of the decay of fortunes among the well-to-do. This does not usually take place so quickly as to strike the casual observer; closer examination, however, will reveal how unceasing the process is. Seldom does mercantile and industrial wealth maintain itself in one family for more than two or three generations, unless, by investment in land, it has ceased to be wealth of this nature [i.e., wealth which is used in the active process of capitalist production and open market competition]. It becomes property in land, no longer used in the business of active acquisition.
Fortunes invested in capital do not, as the naive economic philosophy of the common man imagines, represent eternal sources of income. That capital yields a profit, that it even maintains itself at all, is by no means a self-evident fact following a priori from the fact of its existence. The capital goods, of which capital is concretely composed, appear and disappear in production; in their place come other goods, ultimately consumption goods, out of the value of which the value of the capital mass must be reconstituted. This is possible only when the production has been successful, that is when it has produced more value than it absorbed. Not only profits of capital, but the reproduction of capital presupposes a successful process of production. The profits of capital and the maintenance of capital are always the result of successful enterprise. If this enterprise fails, the investor loses not only the yield on the capital, but his original capital fund as well…. Production must continually replenish capital. The individual capital goods which compose it have a limited life; the existence of capital is prolonged only by the manner in which the owner deliberately reinvests it in production. To own capital one must earn it afresh day by day. In the long run a capital fortune is not a source of income which can be enjoyed in idleness….
Fortunes cannot grow [of their own accord]; someone has to increase them. The capital reproduces itself, bears fruit and increases only so long as a successful and lucky investment endures. The more rapid the change in economic environment the shorter the time in which an investment is to be considered good. For the making of new investments, for reorganization of production, for innovations in technique, abilities are needed which only a few possess. If under exceptional circumstances these are inherited from generation to generation, the successors are able to maintain the wealth left by their ancestors, even perhaps to increase it, despite the fact that it may have been split up on inheritance. But if, as is generally the case, the heirs are not equal to the demands which life makes on an entrepreneur, the inherited wealth rapidly vanishes.
When rich entrepreneurs wish to perpetuate their wealth in the family they take refuge in land…. Numerous merchant families … have undergone [this] development; having become rich in trade and industry they have ceased to be merchants and entrepreneurs and have become landowners, not to increase their fortunes but to maintain them and transmit them to their children and their children’s children. The families which did otherwise soon disappeared in obscure poverty. (pp. 378-81.)