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successful in cooperative societies of distribution than in
those of production does not meet the point. It only
proves that the latter require more capital than the
former. But distributive cooperatives depend on man-
agement, skill, and industry as much as any other busi-
ness enterprises, and their success goes to show that these



THE SOCIALIST INDUSTRIAL STATE 83

factors may develop in a very large degree without the
alleged stimulus of capitalist competition.

And there is no lack of efficient and brilliant leadership
in these enterprises, nor is there such lack of leadership
even in present government work.

The most notable feat accomplished in modern times
is, beyond any doubt, the construction of the Panama
Canal. The United States government took hold of a
strip of land barren of life and civilization, of unendur-
able climate and pestilential atmosphere. Within a few
years the country was transformed as if by the touch of
the miracle-producing wand of the magician. The dread
epidemic of yellow fever was effectively checked ; large,
shady, and comfortable dwellings were erected ; railroads,
telegraph and telephone lines were constructed; and a
powerful working force of all grades of skill and ability
was assembled.

The workers in the Canal Zone received better wages
and better treatment than their fellow-workers in the
States ; they were provided with free furnished quarters ;
they received free medical treatment ; all articles of food
and clothing were sold to them at cost ; and they were
provided with club-houses, libraries, and other means of
diversion.

The efficiency of the management and of the working
force in the Canal Zone was probably never excelled,
and as a result the most stupendous engineering feat of
ages was accomplished within an incredibly short time.

This task was accomplished by the government of the
United States operating through a Canal Commission,
and the practical work was in charge of a government
employee Colonel George Goethals. A capitalist syn-



84 SOCIALISM: PROMISE OR MENACE

dicate had attempted the task and abandoned it as
hopeless; a capitalist contractor had undertaken to
supply the requisite labour to the American government
and failed; a capitalist concern had contracted to pro-
vide the Canal workers with food, and had likewise failed.
And still our social philosophers prate about the "un-
progressiveness " and "inefficiency " of collective or gov-
ernment work, and the impossibility of securing adequate
industrial leadership without extortionate money com-
pensation. Colonel Goethals's salary is less than that
of many a successful commercial drummer, and the
efficient managers of the most stupendous cooperative
enterprises as a rule content themselves with salaries
ranging from twenty to forty dollars per week.

"But," says Dr. Ryan, in reply to this point, "the
construction of the Panama Canal is an exceptional case
and Colonel Goethals is an exceptional person. He is
an officer of the army, and the traditions and training
of the army have for centuries impressed upon its mem-
bers strong conceptions of public service, honour, and pro-
fessional duty and responsibility."

Quite so. Only this alleged objection to Socialism
seems to me rather to be one of the strongest arguments
in its favour. Take the army as seen by Dr. Ryan. It
is made up of average human beings, influenced by hu-
man motives and subject to all the laws of the familiar
bugaboo of "human nature." Still the army is not
dominated by motives of material gain. Through years
of training it has developed the higher stimuli of honour
and public responsibility.

Is Dr. Ryan quite sure that our captains of industry,
our inventive, directive, and executive geniuses are hope-



THE SOCIALIST INDUSTRIAL STATE 85

lessly impervious to these nobler motives of action ? Is
it not possible that they are to-day sordid and selfish
only because "their tradition and training have for cen-
turies impressed upon them strong conceptions" of the
all-importance of the dollar and of indifference to public
duties and responsibilities ?

The Socialists believe that the business of sustaining
life is a social function at least equal in importance to
that of destroying life; and they are convinced that a
sane and just economic regime will develop in the indus-
trial army conceptions of duty and honour superior to
those prevailing in the military army.

And finally Dr. Ryan expresses the fear that a Socialist
regime would curtail the individual liberty of the citizen.
He assures us that under Socialism the buying and sell-
ing prices of all commodities, as well as the scale of all
wages, would be determined by a "few men" or by "one
or at most two employing authorities," and that there
would thus be "no place for bargaining"; that the
majority would exercise undue powers over the minority,
and that the liberty of the press would be destroyed,
since no individual would be permitted to own and pub-
lish a newspaper.

There is nothing in the Socialist programme to warrant
the assertion that prices and wages would be fixed by an
independent or autocratic authority. It is more con-
sonant with the general Socialist plan of industrial
organization and management to assume that whatever
prices and wages will be fixed, will be fixed through
legislative enactment by authorized representatives of the
people and with due regard to the interests of the con-



86 SOCIALISM: PROMISE OR MENACE

sumer and worker, somewhat after the manner in which
the charges and rates of certain public-service corpora-
tions are now determined by law. Is not that preferable
to having prices fixed arbitrarily and secretly by trusts
and monopolies ?

"Under the present system," Dr. Ryan observes, "a
man can get anything he has the money to pay for."
With equal truth he might have stated the negative of
the proposition : "Under the present system men can get
nothing unless they have the money to pay for it." And
mighty few persons have it.

I am also not very much alarmed over the prospect of
the majority dominating the minority. It is indispen-
sable for the stability of a social organization that a part
of the people defer occasionally to the opinions or wishes
of their fellow-citizens. Under Socialism the minority
will submit to the majority in matters of common con-
cern, but there will be no fixed majorities and minorities
in all matters, since there will be no fixed economic
classes with opposing interests. Under the present
regime the capitalist minority dominates the non-
capitalist majority in all matters at all times. Which is
to be preferred?

Nor are Dr. Ryan's fears of a Socialist "Monopoly of
Education" well grounded. A Socialist State would, of
course, make ample provisions for the education of chil-
dren, but there is no reason why it should not allow the
widest latitude to parents in the selection of studies and
instructors. The Socialist demand for compulsory at-
tendance at public schools relates to the present state,
and is made for the purpose of securing a minimum of
education to all children.



THE SOCIALIST INDUSTRIAL STATE 87

And finally, as to the imperilled liberty of the press.
It is probably true that under Socialism no individual
could own a newspaper. Nor could he own a church or
university. But it must be remembered that even under
Capitalism there are those of us who must forego the
convenience of owning a daily newspaper, and that under
Socialism there will be no reason why any organization
or school of art, science, politics, or religion could not
publish a periodical for the advancement of their views.

On the whole, it seems to me that the "tyranny" of
Socialism cannot but afford a very substantial relief
from the "individual liberty" of Capitalism.



CHAPTER IV

THE PHILOSOPHY OF SOCIALISM
I. THE FUNDAMENTALS OF MARXISM

BY MORRIS HILLQUIT

THE Socialist movement is supported by a set of social
and economic doctrines which, taken together, constitute
its "theory" or "philosophy."

The theory occupies a large place in modern Socialism.
It lends scientific sanction to the movement, formulates
its aims, and aids in the shaping of its methods. But
with all that, its importance is not paramount. Social-
ism is not identified with its theoretical doctrines in the
same sense as a school of abstract philosophy or science.
The Socialist movement did not spring from a philosophi-
cal doctrine, and its fate does not depend entirely upon
the correctness or incorrectness of any of its social
theories. Socialism is a movement of living human
beings. It is directed toward definite economic and
political ends, and was engendered by concrete social
conditions rooted in modern society. The Socialist
philosophy takes the movement as it finds it. It an-
alyzes its causes, defines its goal, and maps out its
course. But it does not create it any more than as-
tronomy creates the planetary system.

Following the course of the practical movement, from
its first faltering steps in the beginning of the last cen-

88



THE PHILOSOPHY OF SOCIALISM 89

tury to its present state of vigorous maturity, the So-
cialist philosophy has passed through many phases of
development until it has reached its modern definite
aspect. As in all other lines of thought, the evolution
was accomplished by a host of students and thinkers,
each contributing his mite to the general store of knowl-
edge and thus accumulating the material from which a
great synthetic mind could erect the solid structure of a
scientific system.

In the case of Socialism such a master builder appeared
in due course of time in the person of Karl Marx, a
German scholar of unusual attainments, whose prin-
cipal activity extended from the forties to the eighties
of the last century. To Karl Marx, his associates and
disciples, belongs the credit of having stripped theo-
retical Socialism of its original fantastic and visionary
garb, and having built up a system of Socialist philosophy
on solid and realistic foundations. This system, popu-
larly known as Marxism, is the accepted philosophy of
modern international Socialism, and I shall now attempt
to sketch its main outlines.

The corner stone of the modern Socialist philosophy
is its theory of social evolution. The conception of
social development as a process of gradual and logical
growth is comparatively new to human thought. Until
about the eighteenth century history was generally re-
garded as a succession of accidental events, mostly
brought about by the arbitrary will or whim of the high
and mighty of the world the kings, warriors, and
priests. But the end of the eighteenth century and the
beginning of the nineteenth brought a radical change in



90 SOCIALISM: PROMISE OR MENACE

all domains of human thought and knowledge. Aprioris-
tic theories were discarded; speculation gave way to
research, and the sequence of cause and effect was sought
in all natural phenomena.

Ultimately this scientific method was transferred from
the natural sciences to the field of social research, and
by the middle of the last century the new " social science "
was fairly established. It was generally accepted that
human society is subject to certain laws of growth and
development, and that all social institutions are fashioned
by definite causes operating within society.

But what are the factors determining the course of
social development and the elements fashioning the social
and political structure of society ? These were the main
questions which agitated the minds of the adepts of the
new science. Karl Marx was the first to offer a definite
and rational solution of the momentous question.

"The form, contents and changes of every social
order," declared the founder of the modern Socialist
philosophy, "are determined by the economic basis upon
which such society is built." Let us examine this theory
more closely.

Frederick Engels, the friend and collaborator of Karl
Marx, formulates it in the following concise language :

"The production of the means of sustenance of human
life and the exchange of the things so produced form the
basis of all social structures. In every society known to
history the manner in which wealth is distributed and the
people divided into classes depends upon what is pro-
duced, how it is produced and how the products are ex-
changed. From this point of view the final causes of all
social changes and political revolutions are to be sought,



THE PHILOSOPHY OF SOCIALISM 91

not in men's brains, not in men's better insight into
eternal truth and justice, but in the changes occurring
in the modes of production and exchange. They are
to be sought, not in the philosophy, but in the economics.
of each epoch." 1

In the literature of continental Europe this theory is
known as the Materialistic Conception of History; in
English it is designated by preference by the apter phrase,
Economic Interpretation of History.

The somewhat fragmentary formulation of the doctrine
by Engels and its still terser statement by Marx have
subsequently been amplified by both, and further de-
veloped by their disciples. As the theory is understood
and interpreted to-day, it is exceedingly simple and may
be illustrated by a familiar example.

Under normal circumstances the first care of the in-
dividual human being is to assure his material existence
to gain a livelihood. The manner in which he makes
his living (his trade, calling, or economic state) deter-
mines to a large extent his income, habits, associations,
and notions his station in life, mode of life, and view
of life. A similar rule holds good for aggregations of
human beings organized in societies. The first instinc-
tive or conscious endeavour of every nation is to provide
the means of its material sustenance to produce
wealth; and the manner in which it produces its sus-
tenance ultimately determines its form of organization,
division of work or functions, and its notions of right
and wrong its politics, social classes, and ethics. The
government, social relations, and morals of a nomadic
tribe will naturally differ from those of an agricultural
1 " Socialism, Utopian and Scientific."



92 SOCIALISM: PROMISE OR MENACE

people, a slave-owning community, a feudal society, or
a manufacturing and mercantile order, and in each case
they will adopt the forms best suited to the preserva-
tion and advancement of the prevailing economic in-
terests.

It is not contended that the economic mainspring is
the sole motive of national life and action. Idealistic
notions and intellectual or moral conceptions often ac-
quire the force of important and even guiding factors
in the progress of civilization ; but as a rule such notions
and conceptions are themselves primarily engendered by
material conditions.

The economic interpretation of history logically leads
to another important Marxian concept the doctrine of
the "class struggle."

As against the hostile forces of surrounding nature,
and sometimes also as against other nations competing
for the same bounties of nature, the economic interests
of each nation are harmonious and entire. But within
the nation itself no such general harmony of interests
exists. As soon as a society advances in its economic de-
velopment to the point of division of labour, its members
split into different groups of separate, often antagonistic,
economic interests. The contending interest-groups con-
stitute the "classes" of society, and the main division
among such classes is created by the possession or non-
possession of property. The possessors are the privileged
and ruling classes of society; the propertyless inhab-
itants constitute the inferior and dependent classes.
The members of each of such social divisions are united
in their economic interests and are antagonistic to those
of opposite economic interests.



THE PHILOSOPHY OF SOCIALISM 93

The dominant classes always strive to maintain and
fortify their economic advantages, while the dependent
classes instinctively or consciously endeavour to better
their social position by curtailing the power and privileges
of their exploiters. The Marxian Socialists contend
that the resultant conflicts between the opposing classes
in each civilization constitute the main substance of the
recorded history of the nations.

True to the method of economic interpretation, the
Marxist does not ascribe the causes of the modern social
evils to a "faulty" arrangement of society or to the
"unrighteousness" of the ruling classes or individuals,
nor does he seek to evolve a remedy from the depths of
his own wisdom. He maintains that both must be found
in the economic structure of modern society, in our
methods of producing and distributing wealth, and he
proceeds to analyze the mechanism of our industrial
system. It is significant that the chef-d'oeuvre of Karl
Marx, the "Bible" of modern Socialism, is not a specu-
lative philosophic or moral treatise, but a dispassionate,
scholarly work on political economy, entitled "Capital."

The character of modern wealth, Marx argues, differs
from that of the wealth of former ages. It is not repre-
sented by slaves or serfs, nor even principally by land
or agricultural products. Modern wealth consists mainly
of an accumulation of privately owned commodities and
of the instruments used for their production and dis-
tribution. Wealth in this form is capital and its owners
are capitalists.

The ultimate object of capital is to produce and ex-
change commodities and thus to increase its own volume
this is the substance of the industrial process. All



94 SOCIALISM: PROMISE OR MENACE

industrial wealth is created in that process and all in-
dustrial profits are derived through it. But since all
commodities exchange for their full values, no accretion
of wealth can arise from the process of exchange, and the
source of all accumulations of industrial profits and
wealth must therefore be found in the process of pro-
duction. Let us try to trace it.

Marx adopts the classical "labour theory" of value,
i.e. the theory that the value of a manufactured com-
modity is determined by the quantity of average social
labour required for its reproduction. This doctrine was
formulated by the great classical economists Ricardo
and Smith, and was generally accepted at the time when
Marx wrote his "Capital"; but in the hands of the
founder of modern Socialism it led to a new economic dis-
covery entirely unforeseen by its original promulgators.

Since the value of all manufactured commodities is
measured by the aggregate amount of labour l embodied
in them, the capitalists could make no profits and accu-
mulate no wealth if they were to pay back to the workers
in the shape of wages or salaries the full equivalent of
their aggregate labour, i.e. all manufactured wealth. It
is therefore evident that as a matter of fact the money
wages of the workers represent less than the full equiva-
lent of the products of their labour. How are wages
determined, and how are profits made ?

1 The term "labour" as employed in Marxian economics comprehends
all kinds and grades of work required in the process of producing and dis-
tributing wealth mental as well as manual, and the work of manage-
ment and direction as well as that of execution. In that sense the labour
of the active capitalist produces as much as that of a hired employee
rendering similar services, and his compensation for such labour is quite
distinct from the workless income on his capital.



THE PHILOSOPHY OF SOCIALISM 95

"Labour," answers Marx, "in the present system is a
commodity, and is purchased by the manufacturing
capitalist in the open market, in the same way as raw
material or machinery on the basis of its market
value." The market value of labour is established sub-
stantially in the same manner as that of any other com-
modity by the cost of its production. In the case of
labour this formula means the equivalent of such quantity
of food, clothing, and other necessaries of life as will
enable the worker to rear offspring, to maintain his
health, and restore his working power from day to day
according to the established standard of living.

Thus if the necessaries of the working man's life per
day can be produced in six hours of average social labour
time, his average wages will represent the portion of his
labour equivalent to six hours, and if he works ten hours,
the product of the remaining four hours will go to his
employer. The portion of the labour product which the
capitalist thus retains for himself Marx styles "surplus
value."

The "surplus value" of the employing capitalist is by
no means his clear profit. From it he usually pays rent
to the owner of his factory site or interest to the banker
who advances his operating capital, or both. Thus all
forms of capitalist revenue, rent, interest, and profits,
depend ultimately on the production of "surplus value,"
while the workers depend for their living on wages.
Since wages and "surplus value" are derived from the
same source labour employed in the production of
wealth it is evident that the portion of the one is
relatively smaller as that of the other is larger.

Hence arises a constant conflict of interest between



96 SOCIALISM: PROMISE OR MENACE

the capitalist class and the working-class over their re-
spective shares of the product, and that conflict under-
lies all class struggles in modern society. In normal
times it smoulders under the surface, and expresses itself
in the instinctive efforts of the worker to save and con-
serve his sole valuable possession his labour power, to
"loaf on his job," as Dr. Ryan expresses it, and, on the
other hand, in the endeavour of the employers to secure
the maximum labour from his "hands" for a given wage
to "speed up." It is also at the bottom of the end-
less bickerings over wage scales and working hours, of
the predilection of the manufacturing capitalist for the
labour of women and children and of the workers' oppo-
sition to these forms of cheap labour.

The more acute stages of the ever present conflict of
interest between employer and worker find expression in
the "labour disputes" which have become inseparable
from our industrial order, the frequent and extensive
strikes, boycotts, lockouts, and blacklists.

Nor is the modern class struggle entirely confined to
the economic life of the nations. It always influences
and often determines their politics as well. The re-
spective attitudes of the contending political parties
toward capital and labour are among the most vital issues
in all modern political platforms, and the practical hand-
ling of the problems arising from the conflict of the two
economic categories often constitutes the main feature
of administrative policies and politics.

The struggles between capital and labour are not
based on lack of mutual understanding or on personal
hostility between the capitalists and the workers. The
private relations between an employer and his employees



THE PHILOSOPHY OF SOCIALISM 97

may be very cordial, and both sides may even be uncon-
scious of the conflict of their interests ; but that conflict
is nevertheless firmly and fatally imbedded in their
economic relations, and no amount of personal good feel-
ing or harmony can remove it so long as the capitalist
system of production prevails.

The economic antagonism between capitalists and
wage-workers is not limited to their immediate every-
day concerns : it extends to their ultimate and more vital
social interests.

The capitalist owes his ability to extract "surplus
value" from the worker and thus to amass profits and
wealth to the fact that he owns the tools without which
no wealth can be produced. The worker is forced to
surrender a substantial portion of the fruits of his toil
to the capitalist because he possesses nothing but his
labour power, and that possession is worthless without the
modern tool. The private capitalist ownership of the
tools or instruments of production is thus at once the
source of the capitalists' strength and of the workers'
weakness ; and while it is in the interest of the former to
maintain the system, the salvation of the latter lies in its
abolition.

Socialism, which advocates the abrogation of private
ownership in the instruments of production, is thus the
logical philosophy and social goal of the working-classes.

This deduction from the analysis of the existing eco-
nomic system is one of the most important practical
results of the Marxian philosophy. It served to trans-


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