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ORTHODOX SOCIALISM



A CRITICISM



BY
JAMES EDWAKD LE BOSSIGNOL, PH.D.

PROFESSOR OF ECONOMICS IN THE UNIVERSITY OF

DENVER, AUTHOR OF "MONOPOLIES PAST

AND PRESENT"



( UNIVERSITY )



NEW YORK

THOMAS Y. CKOWELL & CO.
PUBLISHERS






COPYRIGHT, 1907,
THOMAS Y. CEOWELL & CO.

PUBLISHED, MAEOH, 1907.



TO

MY FATHER AND FRIEND
JAMES HENDERSON



164110



PREFACE

THE following pages contain a brief exposition
and criticism of the essential points of Marxian
Socialism, also called Scientific Socialism. That
the fundamental theories of Socialism are by no
means scientific has often been shown, yet many
intelligent people are not aware of the fact. For
this reason I have endeavored to present a critical
examination of socialistic theory in a form not
objectionable to the professional economist and
yet intelligible to such of the laity as are inter-
ested in social problems, and entitled to form
opinions of their own with regard to all important
public questions.

It has frequently been said that the socialist
movement represents a protest against the in-
equality of economic conditions rather than a
conviction of the truth of socialistic theory.
While there is some reason for a statement like
this, it cannot be doubted that error can lead
astray, and that a widespread knowledge of truth
is necessary to guide the discontent and indigna-
tion of mankind in the direction of reasonable and
practicable social betterment. The theories of



VI PREFACE

Socialism, if they are to do this, are sadly in need
of radical revision. As they stand now, Socialism
is more Utopian than scientific, and calculated to
divert society from its efforts to secure a gradual
improvement of present conditions to the danger-
ous pursuit of an intangible and impracticable
ideal.

I wish to thank my friends, Chancellor H. A.
Buchtel of Denver and D. J. L. Day of Mon-
treal, for their kind criticism and their help in
preparing the manuscript for the press.

J. E. LE ROSSIGNOL.
UNIVERSITY PARK, COLORADO.



CONTENTS

OHAPTEE PAGK

I. THE CREED OF SOCIALISM .... 1

II. THE LABOR-COST THEORY OF VALUE . . 13

III. THE IRON LAW OF WAGES .... 24

IV. SURPLUS VALUE 32

V. MACHINERY 45

VI. INDUSTRIAL CRISES 61

VII. THE ECONOMIC INTERPRETATION OF HISTORY 80

VIII. THE CLASS STRUGGLE 95

IX. THE SOCIAL REVOLUTION .... 119

SELECTED LIST OF BOOKS IN ENGLISH . . . 141

INDEX ... 145



vii



UNIVERSITY

CALJFW



CHAPTER I

THE CREED OF SOCIALISM

LIKE every manifestation of human life and char-
acter, Socialism is new in form, but old in spirit.
Envy and pity are as old as happiness and misery,
and out of such a soil in every age has sprung a
vigorous growth of reform and revolution. The
inequality of man is the most striking fact in human
history. Always have there been strong and weak,
master and servant, rich and poor, according to
the law of the eternal struggle :

" That they should take who have the power,
And they should keep who can."

Opposed to the fact of inequality and aristocracy
is the idea of equality and brotherhood, largely
derived from Christianity. Creatures of one God,
children of a common ancestor, similar hi form and
feature, intellect and appetite, why should not the
sons of men live together as members of a single,
harmonious family ? Why should the good things
of life belong to a few, and the miseries of existence
to all the rest ?

" When Adam delved and Eve span,
Who was then a gentleman ? "
1



2 ORTHODOX SOCIALISM

Out of a strong desire for better things has come
the belief that better things are possible. Man is
hopelessly optimistic. What he wants he thinks
he can get. The poor of this world, always rich
in faith, have conceived the thought of a perfect
distribution of wealth, and the desire of their heart
they believe they will one day attain. This desire
and this faith is the spirit of Socialism.

There are at least three kinds of socialists : the
naive, the Utopian, and the scientific. The naive
socialist, not knowing that he is a socialist, under-
estimating the strength of the propertied classes,
appeals to the crude and primitive arbitrage of
force, puts his confidence in bullets, bayonets,
and barricades; and in him is fulfilled the signifi-
cant prophecy, "They that take the sword shall
perish with the sword." The 'narrow-minded,
short-sighted rebel dies before his time, while his
misguided followers, heartsick with hope deferred,
cry out hi bitterness of soul, "0 Lord, how long?"

The Utopian socialist, with his little book, his
Plato, More, or Bellamy, comes to comfort the dis-
tressed with a glowing picture of a golden age,
a heaven on earth, a New Jerusalem of peace and
prosperity, where the hungry shall eat, the thirsty
shall drink, and all tears shall be wiped away.
How alluring this scheme of perfect harmony,
how just the method of distribution, how attrac-
tive to the imagination, how comforting to the soul,



THE CREED OF SOCIALISM 3

and yet how visionary, intangible, impossible, a
city of dreams, a mirage of the desert !

The scientific socialist is the only socialist worthy
of the name. The dialectics of Hegel, the economics
of Ricardo, and the biology of Darwin combine in
him to produce a theory of Socialism the most
remarkable that the world has seen.

Heinrich Karl Marx (1818-1883), by birth a
Jew, is the Moses of Socialism, its leader, lawgiver,
and prophet. His great book, "Capital," is often
called "the Bible of the working-class." In it
are expounded the economic principles of scien-
tific Socialism, which are thought to give a clear
insight into the industrial system of the present
time, and a knowledge of the tendencies of social
life and growth sufficient to justify the assertion
that the social revolution is at hand, and the eco-
nomic "millennium" about to be ushered in.

The scientific socialist of the orthodox type is
very sure of his ground. The present has no
mysteries for him ; the future is like an open book.
To him all the world is divided into three classes:
knaves, fools, and socialists. If you do not know
Marx, you are a fool. If you know, and do not be-
lieve, you are a knave, or, at best, a parasite. If
you know and believe, you are a socialist, one of
the elect. Yet nobody should be offended when
such epithets are used in the course of a scientific
discussion, for it is quite legitimate to call men



4 ORTHODOX SOCIALISM

parasites, exploiters, robbers, and the like, so long
as it is done in a scientific spirit, which, as Marx
puts it, " deals with individuals only in so far as
they are personifications of economic categories,
embodiments of particular class interests and class
relations."

But of late years a sort of " higher criticism "
has launched its attacks upon the strongholds of
orthodox Socialism. Because of recent economic
investigation, doubt has arisen concerning Marxian
doctrines formerly considered fundamental. For
such opinions some have been cast out of the
synagogue, while others, incurring suspicion of
heresy, have lost influence with their more ortho-
dox comrades, who demand rigid adherence to es-
sential principles. " Better a declared enemy,"
they say, "than a half-hearted friend." "Die
Ganzen fiirchten wir nicht, sondern die Halben."

The enlightened socialist, unable to deny the
validity of the newer criticism, is careful to distin-
guish between the essentials and the non-essentials
of Marxian doctrine. If Marx be shown to have
made a mistake, he will say that the point is not
essential, and will establish himself upon the foun-
dation-stones of the Marxian system, which, he
thinks, can never be overthrown. But if it were
proved beyond a doubt that the whole teaching of
Marx is fallacious, both in premises and conclu-
sion, the confirmed socialist would, if necessary,



THE CREED OF SOCIALISM 5

abandon his great teacher, saying, in effect, " Let
Socialism be true and every man a liar." And if
it could by any possibility be shown that Socialism,
as a system of thought, is utterly untenable, the
true socialist would retreat to his last stronghold,
and say that Socialism, in the last analysis, is not
a system of thought, but a process of social evolu-
tion, a law of the industrial world irresistibly mov-
ing on toward its final destiny.

To say this is to substitute assertion for proof,
feeling for reason, faith for knowledge, Utopian
conjecture for scientific demonstration. It may
be that feeling lies deeper than reason, that faith
is more reliable than science, that we should be-
lieve in order that we may know, but the Marxian
socialist does not consciously entertain such views
as these, and will not uphold them except as a
last resort. If Socialism is a science, how is it that
socialists display so little of that openness of mind,
that love for truth, that indifference to contradic-
tion, that sublime patience so characteristic of the
true scientific spirit?

In fact, Socialismjs not a science at all, but a
faith^jTeligion. Science for the socialist is a mere
tool, a means to an end, to be discarded when it
has served its purpose. For him science is once
more reduced to the degrading post of handmaid
to religion. In these days, when we have a psychol-
ogy without a soul, let it not be thought strange



6 ORTHODOX SOCIALISM

that we have a religion without a god. Like most
religions, Socialism has its prophet and its book.
The prophet is Karl Marx; the book is "Capital."
Like all religions it has its creed, which the ortho-
dox hold with the utmost dogmatism and intol-
erance. The twin passions of love and hate supply
the motive power, and a firm conviction that the
social revolution is at hand is a source of great
enthusiasm in the propaganda for the conversion
of the world.

Socialists are optimistic to the last degree. Un-
bounded is their faith in man ; brilliant the destiny
they predict for him. The socialist is essentially
a prophet. Believing himself able to read the signs
of the times, he does not fear to say that he can
with certainty foresee in outline, at least, the
changes that will take place in time to come.
His prophecy, as he says, is not Utopian, like that
of Plato, More, Owen, and Saint-Simon, who were
not able to give a reason for the hopes they enter-
tained; but scientific, like the clear forecasts of
the weather bureau or the logical demonstrations
of Marx, Engels, Lassalle, Bebel, Liebknecht,
Kautsky, and the rest, who are able to prove all
things, even those that lie in the dim vistas of the
future. Scientific prophecy, that is Socialism.

The International Socialist Congress, which met
in Amsterdam in August, 1904, adopted the fol-
lowing resolution: "The Congress declares that



THE CREED OF SOCIALISM 1

in order that the working-class may develop its
full strength in the struggle against capitalism,
it is necessary that there should be but one social-
ist party in each country as against the parties of
the capitalists, just as there is but one proletariat
in each country. For these reasons it is the im-
perative duty of all comrades and all socialist
organizations to strive to the utmost of their power
to bring about this unity of the party, on the prin-
ciples established by the international congresses,
that unity which is necessary in the interests of
the proletariat to which they are responsible for
the disastrous consequences of divisions in their
ranks."

In these days of independent thought it is com-
mon to speak slightingly of creeds, but when men
unite for religious, moral, political, or economic
ends, they find that success cannot be attained
without a certain degree of union in thought and
feeling. In the words of the prophet, "Can two
walk together except they be agreed?"

In early times, when philosophers like Plato,
More, and Campanella saw visions of ideal Utopias,
but never strove to realize their dreams, the question
of uniformity in belief was of no consequence to
themselves nor to the world at large. When more
practical socialists, like Owen, Saint-Simon, and
Fourier, began to establish their experimental
communities "duodecimo editions of the New



8 ORTHODOX SOCIALISM

Jerusalem," as Marx called them unity in faith
was seen to be a matter of vital importance. As-
sociations of philosophers, like the Brook Farm
Community, speedily failed, while communities
of simple-minded believers, like the Shakers,
continued to exist until the present day.

But when, in the revolutionary agitation of
1848, socialists of all countries and every sect began
to be conscious of a common purpose, the time was
ripe for the formulation of a creed that should unite
the revolutionary forces throughout the world.
The hour was come, and the man. The man was
Karl Marx, who, with his friend, Frederick Engels,
drew up in London, in January, 1848, the "Mani-
festo of the Communist Party/' the first formal
utterance of the creed and program of scientific
Socialism.

For some years thereafter the international
faith was but slowly propagated ; but after the pub-
lication, in 1867, of the first volume of "Capital,"
and in consequence of the political and economic
development of Germany after the war of 1870,
the views of Marx spread with great rapidity.
At the present time there are over 3,000,000 so-
cialist voters in Germany, and more than 6,000,000
in the world, of whom by far the greater part are
enrolled under the banner of Marxian Socialism.

Orthodox socialists throughout the world, with
all the variations in belief due to nationality, local



THE CREED OF SOCIALISM 9

environment, temperament, or other causes, hold
more or less strongly to the following doctrines,
which may be briefly expressed in a series of propo- \
sitions : \

1. The exchange value of commodities depends
upon the amount of socially necessary labor-time
required to produce them. This is the Marxian
theory of value.

2. Although the working people, the prole-
tariat, produce everything, their wages tend to
equal the bare cost of living. This is the iron
law of wages.

3. The capitalists, the bourgeoisie, take the
greater part of the values created by the prole-
tariat in the form of rent, interest, and profits.
This is surplus value, obtained by exploitation or
robbery.

4. The introduction of labor-saving machinery
and improved methods of production creates a
vast army of the unemployed and impoverishes
the whole working-class, while the capitalists
acquire a mass of commodities which they can
neither use nor consume. The result is chronic
over-production and under-consumption, and pe-
riodical crises, which threaten the very existence
of the capitalistic system.

5. The desire for the necessaries and luxuries
of life has generally been the controlling motive
in the history of individuals and of society. Under



10 ORTHODOX SOCIALISM

the influence of economic motives, and by the
incessant struggle of opposing classes for the good
things of life, society has evolved through the
successive stages of slavery, feudalism, and capital-
ism. This is the economic interpretation of his-
tory and the doctrine of the class struggle.

6. Capital is being concentrated into the hands
of a few magnates, and the middle class is being
rapidly eliminated. Soon there will be only two
classes left: capitalists and laborers, bourgeoisie
and proletariat, the robbers and the robbed.
But the proletariat will be the more numerous
class, as they are now; therefore, becoming con-
scious of their strength, they will seize the political
power and inaugurate the social revolution.

7. When the proletariat have taken the political
power, they will gradually or speedily abolish
capitalism by organizing industry on the basis
of a common ownership and management of the
means of production, with an equitable distribu-
tion of the product, so as to abolish poverty and
all the other evils of capitalism.

8. After the establishment of Socialism, human
character will adapt itself to the ideal environ-
ment; all men, or nearly all, will be industrious
and virtuous, and an era of peace, prosperity, and
happiness will prevail until the end of time.

9. The social revolution is coming and nothing
can prevent it.



THE CREED OF SOCIALISM 11

The " higher critics" of Socialism, among whom
are Bernstein of Germany and Jaurds of France,
by no means accept the orthodox creed in its
entirety, but reject certain doctrines and mollify
others, until there is little difference between them
and the unbelieving reformer or the unconverted
professor of political economy.

For example, these enlightened socialists are
well aware that the labor-cost theory of value is
utterly untenable. /They know that the condition
of the working people in all capitalistic countries
is steadily, though slowly, improving. They
recognize the fact that some, at least, of the bour-
geoisie perform services to society, and thus earn
their daily bread, if not all the luxuries which they
enjoy. They are disposed to admit that men and
women are at times actuated by other than eco-
nomic motives. They suspect the accuracy of
the orthodox theory of industrial crises, and con-
cede the possibility that their frequency may be
diminished, and their worst effects prevented,
by a better organization of the capitalistic system.
They are inclined to think that socialists might
safely cooperate with unconverted reformers for
the sake of securing the half-loaf of partial im-
provement in economic conditions. They some-
times admit that the social revolution may not
come as a sudden cataclysm, but by a gradual
and almost imperceptible process of industrial



12 ORTHODOX SOCIALISM

evolution. Finally, they are disposed to appeal to
the altruistic and idealistic side of human nature,
and not altogether to the cold decisions of pure
reason and the inexorable logic of scientific
demonstration.

But these advanced socialists, heretical as they
are, still claim to belong to the true fold, still hold
to what they consider to be the essentials of Social-
ism, and, with possibly a little mental reserva-
tion, could honestly repeat a formula such as this :
"I believe in economic evolution and the class
struggle. I recognize exploitation as the essen-
tial evil of capitalism. I believe in the proletariat.
I look for the social revolution, the regeneration
of man, and the peace and prosperity of demo-
cratic collectivism."



CHAPTER II

THE LABOR-COST THEORY OF VALUE

KARL MARX was a man of original genius, who,
one would think, might have worked out a theory
of value of his own. That he did not do so is no
evidence of sloth, for he was a most industrious
worker. Nor can it be thought to indicate re-
spect for the bourgeois economists, whom he
despised. It must, therefore, be due to the fact
that no man, however great, can rise far above
the environment and atmosphere hi which he lives.
The intellectual environment of Marx was domi-
nated by the English classical economists, of whom
Ricardo was chief, and it was from Ricardo that
he derived the labor-cost theory of value. Ricardo
says, " Commodities exchange in the ratio of
their respective costs in terms of labor;" and
Marx expresses the same idea in slightly different
words, when he says, "Commodities in which
equal quantities of labor are embodied, or which
can be produced in the same tune, have the same
value."

The problem is, to explain why commodities
exchange, as they do, in certain ratios; why two

yards of cotton exchange for two bushels of wheat,

13



14 ORTHODOX SOCIALISM

one hat for one ounce of silver. Exchange value
is ratio in exchange, which is a mathematical ratio,
a quantitative relation, and any correct theory
of value must explain the cause and measure of
such ratios in exchange.

It is clear, says Marx, that the cause of value
must be some property or quality which all com-
modities have in common. They all have size,
weight, color, and other physical properties, but
these have no direct relation to value in exchange.
They all have utility, but utility cannot be the
cause of value, for "100 worth of lead is of as
great value as 100 worth of silver or gold . ' ' There-
fore, there is only one other property which all
commodities have in common : the fact that they
are all produced by human labor.

Labor, then, must be the cause and measure
of value. But the measure of labor is its duration.
Therefore the exchange values of commodities
are determined by the amount of labor-time
incorporated or materialized in them. But labor
may be misdirected. Therefore the labor which
creates value must be " socially necessary," or
properly applied to the creation of utilities. Marx
thus arrives at the conclusion that "value is de-
termined by the socially necessary labor-time that
is required to produce an article under the normal-
conditions of production and with the average
degree of skill and intensity prevalent at the time."



THE LABOR-COST THEORY OF VALUE 15

Value, then, is determined by cost of production
as measured in labor- time.

Such, in brief, is the celebrated labor-cost theory
of value, one of the foundation stones of the Marx-
ian system. Orthodox socialists are deeply con-
cerned to prove it true, for if it can be shown that
all values are created by labor alone, it must surely
follow that all should belong to the hand and
brain that created them.

At first glance the labor-cost theory has the
appearance of a self-evident proposition; but the
more one considers it, the more unsatisfactory
and one-sided it seems to be. However sufficient
it may be to explain the value of factory products,
it certainly does not account for the value of land,
particularly of unimproved city lots. Such land
can be exchanged for cotton, wheat, hats, silver,
or gold, and must therefore have some property
in common with them all, which is the cause and
measure of its value. But it cannot be labor-cost,
for land is a product of nature. True, land would
have no value if people did not live in the neigh-
borhood and apply labor to other pieces of land ;
but, in so far as the particular land in question is
concerned, no labor-time has been applied to it,
and society, which gives it a value, stands to it in
the relation of consumer rather than that of pro-
ducer. Marx himself is conscious of difficulties
such as these, and tries to evade them by saying



16 ORTHODOX SOCIALISM

that land is not a commodity, and by the still
more absurd statement that "an object may have
a price without having value; for instance, the
price of uncultivated land, which is without value


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