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was at any time in the past."

The middle classes have likewise refused to make
good the Marxian prediction. Between 1851 and 1891
England's population increased but 30 per cent, while
the number of her families in receipt of from 150 to
1000 annual income was enlarged by 233 per cent.
According to Mr. Chiozza Money, the number of persons
receiving from 180 to 700 per annum in 1904 was more
than twice as large as the number of families getting
from 150 to 1000 in 1891. The population of Prussia
doubled between 1854 and 1894, but the number of per-
sons obtaining above 150 annually was multiplied
seven times. Eduard Bernstein, the Revisionist Social-
ist from whose "Evolutionary Socialism" 5 most of these

1 "Capital," I, 406, 407 ; Humboldt Edition.

2 "The Communist Manifesto," p. 26; Kerr's Edition.
"The "Communist Manifesto" appeared in 1848.

4 Professor Bowley in the Economic Journal, viii, 488.
B Pp. 46, sq.



THE PHILOSOPHY OF SOCIALISM 113

figures are taken, declares that the other countries of
Europe "show no materially different picture," and that
the members of the possessing classes are increasing both
absolutely and relatively.

In the United States we have unfortunately no definite
statistics regarding the numbers of persons in receipt
of any particular range of incomes, or in possession of
particular amounts of property. For our present pur-
pose the most significant available figures are the follow-
ing: Between 1875 and 1911 the number of savings-banks
depositors quadrupled, while the population merely
doubled; from 1880 to 1905 the wealth of the country
increased two and one-half times, but the amount of
savings-banks deposits three and three-quarters times;
the average size of farms fell from 206 acres in 1850 to
138 acres in 1910; and between 1900 and 1910 the pro-
portion of our agricultural land in farms of more than
1000 acres decreased more than six and one-half per cent. 1

Although the wage-earners have shown no tendency
toward progressive deterioration, nor the middle classes
toward progressive disappearance, has not the concen-
tration phase of the Marxian prediction been justified ?
"The large capitals beat the smaller," said Marx. Is
the bulk of the world's wealth and capital becoming
concentrated in the hands of fewer and fewer great cap-
italists and combinations ?

Since the middle classes, the owners of medium
amounts of productive property, are continuously in-
creasing, it would seem that the question just asked
ought to be forthwith answered in the negative. And
this answer would be correct on the whole; however,

1 See Bulletins of the Census of 1910.
I



114 SOCIALISM: PROMISE OR MENACE

it needs considerable qualification, owing to the different
conditions and tendencies in different parts of the in-
dustrial field.

In agriculture, as we saw above, the tendency is away
from instead of toward concentration. The large
American farms are breaking up, and the smaller farms
are rapidly increasing. The same movement is going
on in Europe. From a brief but comprehensive cita-
tion of statistics Bernstein concludes that "in the whole
of Western Europe . . . the small and medium agri-
cultural holding is increasing everywhere, and the large
and very large holding is decreasing." l

In the field of distribution the department store and
the mammoth wholesale concern have in some places
gained on the smaller establishments; yet the small
retailer is everywhere increasing faster than the popula-
tion.

In manufactures, the concentration prediction has to
some extent been verified. The proportion of the total
product turned out by very large manufacturing estab-
lishments, and by combinations of many establishments
under a single management, has increased in practically
all progressive countries. In the United States this pro-
cess has moved faster and farther than elsewhere, espe-
cially during the last fifteen years. Every decennial
year since 1840, except two, has shown a considerably
greater increase in the amount of capital than in the
number of establishments. Between 1904 and 1909
the proportion of the total output coming from establish-
ments having a product of one million dollars' worth or
over increased nearly six per cent, while the proportion
1 Op. cit., p. 71.



THE PHILOSOPHY OF SOCIALISM 115

turned out by all the smaller establishments suffered
a decrease.

Nevertheless, we must note two mitigating circum-
stances. First, the number of the smaller establishments
and the amount of business done by them continue to
grow absolutely, thus showing that the absorption of
them by the great industries is still in the distant future.
In the year 1909 56 per cent of the manufactured prod-
ucts of the United States were turned out by concerns
having an annual output of less than a million dollars'
worth. Second, concentration of industry is not the
same as concentration of capital ownership. The joint-
stock company has made possible a great diffusion of
property titles in industrial concerns. As a consequence,
the number of shareholders in our railways and manu-
facturing concerns is increasing faster than the concen-
tration of capital, and faster than the size of the business
establishment. 1

Like most other intelligent Socialists of to-day, my
opponent recognizes the exaggerations of the theory
of concentration as formulated by Karl Marx. Hence
he says nothing about the impoverishment of the work-
ing-classes or the disappearance of the middle classes.
Nevertheless, he believes that the concentration process
moves steadily forward by the inexorable laws of capi-
talist evolution. "Every day capital and economic
power concentrate in the hands of an ever narrowing
circle of industrial and financial interest groups. In
the United States we can already point out a small num-
ber of combines and individuals who together control
the main sources and products of the national wealth."

1 Cf. Streightoff, op. cit., pp. 35, sq.



Il6 SOCIALISM: PROMISE OR MENACE

Apparently my opponent has in mind not merely the
combination of many corporations into a few great trusts,
but the substantial control of a large part of the entire
industrial field by a small number of financial concerns,
through such devices as interlocking directorates and
the monopoly of credit accommodations. The magni-
tude assumed by these phenomena during the last quar-
ter of a century suggests to him the conclusion that a
great industrial and financial oligarchy will in the near
future either dominate completely the lives of the people,
or be overthrown by Socialism.

And yet there is a third alternative. The great indus-
trial trusts have all been organized within the last fifteen
years, practically without interference or regulation by
the government. As I observed in my last paper,
it is by no means certain that these combinations are
really efficient and economical. Professor Meade and
Mr. Brandeis think that, as compared with concerns of
moderate size, they are inefficient and wasteful. In
the opinion of Professor Taussig, "it seems certain that
in the ordinary manufacturing industries, even in those
where large-scale operations prevail, nothing but a pre-
carious and limited monopoly can result. " 1 All our
available experience tends to show that the maximum of
efficiency, whether in a single establishment or in a com-
bination of establishments, is reached long before the
concern becomes a monopoly. Our great trusts have
not been produced merely by superior efficiency. They
have been built, at least in part, upon many forms of
special privilege, and upon predatory methods of com-
petition.

J " Principles of Economics," ii, 432.



THE PHILOSOPHY OF SOCIALISM 117

To assume that the government is powerless to check
and destroy these abnormal combinations and monopolies
through the abolition of special privilege and the restora-
tion of fair methods of competition, is hasty and unwar-
ranted. The thing has never been seriously or intelli-
gently attempted. Unless all present signs fail, the right
kind of effort will be made under the administration of
President Wilson. If it should prove futile and wasteful,
the State will have to recognize and encourage these
combinations. It will have to regulate them, even to
the fixing of maximum prices. If this method should in
turn fail, the State can itself become a competitor in
that part of the industrial field occupied by the trusts.

Not until all these devices have been thoroughly tried
and found wanting will there be sufficient reason for as-
serting that economic development leads inevitably
to the control of industry by a few great combinations,
and thence to Socialism.

That indirect form of centralization which consists
not in complete ownership, but in interlocking directo-
rates and a monopoly of credit, and which seems to en-
able a few powerful groups of men virtually to dominate
a large part of the economic life of America, is even more
recent than the development of the trusts. The as-
sumption that it cannot be prevented or adequately
controlled by action of government is even less war-
ranted than in the case of the latter. Here, again, I
would advise my opponent to "wait and see."

The second factor upon which Mr. Hillquit relies to
bring about the Socialist reorganization of industrial
and political society is the rapidly increasing power of the
working-class. "The process of capitalist concentration



Il8 SOCIALISM: PROMISE OR MENACE

results among other things in the elimination of the in-
dependent small producers and traders, who are forced
in ever increasing numbers into the state of dependent
'salaried' employees, and the cohorts of industrial wage-
earners are further augmented by accretions from the
farming population, whose life becomes more and more
precarious."

Now, this "elimination" of the small manufacturer
and dealer is a very slow and relative process. While
the large concerns are encroaching upon the territory of
the smaller, the latter are increasing absolutely. In
the field of merchandising the small dealers are probably
growing quite as fast as the urban population. More-
over, the displaced small independents become receivers
of salaries rather than wages, and consequently more
closely affiliated with the capitalist class than with the
proletariat.

As to "accretions from the farming population," we
find that between 1900 and 1910 the number of farms in
the United States increased at the same rate as the rural
inhabitants, while the increase in the number of farmers
who owned the land that they tilled was only 3 per cent
less than that rate. Since farming has never been so
prosperous as in recent years, the majority of those who
abandon the rural regions are not driven to do so because
life there is becoming more "precarious," but because
of the lure of the city, with its real or fancied opportu-
nities.

With regard to the magnitude and growth of the labour-
ing class in America, we have unfortunately no definite
or satisfactory statistics. While our wage-earners and
salary receivers combined undeniably constitute a ma-



THE PHILOSOPHY OF SOCIALISM 119

jority of all the persons engaged in gainful occupations,
they are not a very large majority. In all probability
they do not aggregate more than seven-tenths. Were
all the voters among them to unite at the ballot-box,
they could undoubtedly introduce, for the moment at
least, a regime of Socialism.

But there is no likelihood that they would all thus
unite. A considerable section of them can never be con-
vinced that Socialism is feasible ; another large section
will continue to oppose the project on religious and moral
grounds ; a third numerous group hope to become inde-
pendent business men under the present system ; while
a fourth section, including the majority of those who re-
ceive salaries rather than wages, will never believe that
Socialism, even if practicable, would be economically
and otherwise better for them than the conditions and ad-
vantages that they enjoy under the present regime.

Although it is probably true that the labouring class in
the wide sense here denned is increasing faster than the
independent farming and business classes, this increase
will probably be more than neutralized by the improve-
ments in their condition that are certain to come through
social legislation, and through participation in the own-
ership of productive property.

Even in the more moderate statement of my opponent,
therefore, the reasons for an irresistible "trend toward
Socialism" are neither clear nor convincing.

It was the opinion of Engels that the two main doc-
trines of the Marxian social philosophy, economic deter-
minism and surplus value, had converted Socialism from
a Utopia into a science. The average Socialist never



120 SOCIALISM: PROMISE OR MENACE

wearies of assuring us that his beloved system is founded
upon the inexorable conclusions of science, not upon mere
Utopian aspirations.

In truth, this so-called scientific basis, this philosophy
that we have been examining, is not scientific at all. It
is for the most part an a priori concoction ; for it is the
product of a misuse of the deductive method, an a priori
theory of reality, and a partial analysis of experience.
It represents an ingenious but unsuccessful attempt to
force the facts of economic and social life into the Pro-
crustean bed of theory. We must remember that its
elaborator, Marx, was a student of philosophy, a disciple
of Hegel, before he became a Socialist. His method al-
ways remained that of the metaphysician rather than the
scientist. Professor Simkhovitch calls him a "nineteenth-
century materialist in the garb of a thirteenth-century
schoolman." If he had said a "fifteenth-century school-
man, " he would have been more accurate and suggestive ;
for the subtleties in which Marx so often indulges call to
mind scholasticism in its decadence.

Marx's bad use of the deductive method is well illus-
trated in his discussion of value and surplus value. By
arbitrarily eliminating the factors of utility and scarcity,
he rigorously concludes that the one element common to
all commodities in exchange is labour, and therefore that
labour is the sole determinant of value. By reasoning
logically from this false premise, he concludes that capital
contributes to the product only sufficient value to repro-
duce itself. His discussion of these subjects and of many
others gives the impression of a man dealing with a world
of abstractions, a world made to order, not the actual
world of industry that we know.



THE PHILOSOPHY OF SOCIALISM 1 21

His a priori theory of reality and his inadequate
analysis of concrete fact are evident in the theories of
economic determinism and the class struggle. A priori
he held to the Hegelian doctrine of social evolution
through the clash of contradictory elements terminating
in a final and absolute synthesis ; observation led him to
an exaggerated notion of the class struggle ; therefore,
he seems to have concluded, the final synthesis is Social-
ism, and Socialism is inevitable. A priori he believed
that all that exists is matter ; observation assured him
that the economic factor is extremely important in social
life ; therefore, he seems to have concluded, economico-
material forces ultimately and necessarily dominate
and determine all social processes, ideas, and institutions.

Because of its a priori materialism the Socialist phi-
losophy is fatalistic. As expounded by practically all its
prominent advocates, it makes the economic element the
original and decisive element in social life, and excludes
the reality of spirit. It does not attribute our economic
evils to a "faulty" arrangement of society, but to the
inexorable operation of economic forces and economic
evolution. In the mind and imagination of the thorough-
going scientific Socialist, the social evolutionary process
seems to be a huge and unrelenting mechanical movement
which cannot be checked by any mere action of human
beings. Hence he refuses to become discouraged when the
term that he sometimes sets for the arrival of Socialism
has gone by, or when his prophecies concerning the trend
of industrial forces are falsified by the logic of events.
He blithely replies that he was mistaken as to the exact
time, but that he is quite certain of the inevitable out-
come.



122 SOCIALISM: PROMISE OR MENACE

Faith, not science, is the soul of the Socialist philos-
ophy ; but it is faith suspended in the vacant air.



III. REJOINDER

BY MR. HILLQUIT

On the whole, my opponent's reply is stronger in ad-
missions than in denials. The main foundations of the
Marxian philosophy, as I have outlined it, consists of
the Economic Interpretation of History, the Class-
struggle doctrine, and the theory of Surplus Value. Let
us see how my opponent deals with these propositions.

Dr. Ryan recognizes that economic conditions "exer-
cise a large influence upon social life, ideas, institutions,
and development" ; that "almost all our political prob-
lems and activities are entirely or fundamentally eco-
nomic," and that "even ethical notions of men vary con-
siderably according to their industrial interests." He
claims, however, that the Marxian Socialist "magnifies
the r61e of the economic factor beyond all plausibility."
This criticism would be vastly more illuminating if he
would or could inform us at what point the economic
factor loses its efficacy as a propelling cause hi social
development.

It is true that he condemns the efforts of Achille Loria
and Karl Kautsky to analyze the economic factors which
in their opinion led to the origin and determined the
growth of the Christian religion as extravagant and
fantastic, and that he characterizes the alleged inclina-
tions of "so many" Socialists to reduce all vice and
crime to economic causes as crude and superficial; but



THE PHILOSOPHY OF SOCIALISM 123

these adjectives come more properly within the province
of rhetoric than the category of proof.

With similar candour Dr. Ryan admits that "class
divisions based upon divergent economic interests are an
indisputable fact." He even concedes that "there exists
'a certain sort of class struggle between a large section
of the wage-earners and a large section of the capitalists,"
and goes so far as to accept the purely Socialist view that
the average member of the legislature represents the
economic interests of the class with which he is most
closely affiliated, and to indorse the practical Socialist
conclusion that each class (consequently also the working-
class) must have "its own representatives in every legis-
lature."

What remains of his opposition to the Marxian view
of the class struggle seems to me to be based partly on
a misunderstanding of that view and partly on a faulty
estimate of the social forces at work in modern society.

Socialists do not attempt to reduce the number of
existing economic classes to two, as erroneously assumed
by Dr. Ryan. The existence of "numerous economic
interest groups between and alongside of capitalists
and wage- workers " was specifically pointed out by me
in the main paper on this subject. What the Socialists,
however, do claim, is that the two last-mentioned classes
are the most important factors in modern society, and
that the conflict between them constitutes the dominant
issue and tends to determine the ultimate alignment
of all other classes.

But Dr. Ryan assures us that the conditions of a
"genuine class struggle" would always be wanting, for
the reason that a very large portion of the wage-workers



124 SOCIALISM: PROMISE OR MENACE

"would refuse, and do refuse, to become involved."
In reply to this I take the liberty of reminding him that
the class struggle is not a polite social function. It
issues no invitations and accepts no declinations. The
"class struggle," in the Marxian interpretation of the
term, does not necessarily involve overt, conscious, or
violent conflicts it signifies an antagonism of economic
interests, created by the inexorable conditions of capital-
ist production and not by the will or disposition of in-
dividuals ; and in this, the only true sense of the term,
every wage-worker is already deeply involved in the class
struggle.

Dr. Ryan's assertion that the class divisions in the
United States "do not yield material for a class struggle
of any great importance" must be taken to mean that
the majority of the population are economically inter-
ested in upholding the present system of private Capital-
ism, and would therefore oppose the Socialist plan of
cooperative production. In support of this contention
he quotes Mr. Streightoff, who is alleged to have made
the discovery that " about twenty-four million individuals
in the United States possess some income-bearing prop-
erty other than government and corporation securities."
Mr. Streightoff himself does not make his claim quite
so strong. He says :

"There are probably nine millions of individuals re-
ceiving some returns on savings accounts, and upward
of five millions indirectly obtaining profit from partici-
pating life-insurance policies. About five million per-
sons possess agricultural land and perhaps as many more
hold residential real estate." l

1 " The Distribution of Incomes in the United States," p. 146.



THE PHILOSOPHY OF SOCIALISM 125

Mr. Streightoff's figures are somewhat misleading.
According to the census returns of 1900, 3,653,323
farmers owned all or part of their land. The estimate
of five million owners of residential real estate is quite
arbitrary. A considerable portion of farm owners prob-
ably appear again as owners of "residential" real estate,
and the possessors of the two classes of property un-
doubtedly comprise a large part of the savings-banks
depositors and policy-holders. Mr. Streightoff seems to
appreciate the inconclusiveness of his figures, and sums
up his speculations in one terse and telling sentence :
"To attempt to estimate the distribution of income
from property would be absurd."

But Dr. Ryan takes the estimates as proven truths,
adds the full figures, elevates every individual who
chances to have a dollar in a savings-bank or to carry
a small insurance policy to the rank of an owner of
"income-bearing" property, and with one bold stroke
of the pen creates twenty-four million property holders
outside of the uncounted millions who possess govern-
ment securities and securities of corporations. If our
population were so overwhelmingly capitalistic as these
figures would indicate, this country would indeed offer
little room for class struggles.

But what are the facts ?

According to the census of 1900 the total number of
persons, ten years old and over, engaged in gainful
occupations in the United States, was a little over
29,000,000.

Of the persons engaged in manufacture 5,373,108 were
classified as "wage-earners," while 708,738 were desig-
nated as proprietors and firm members. According to



126 SOCIALISM: PROMISE OR MENACE

the Report on Manufactures of 1909, 63.2 per cent of
the manufacturing establishments produced less than
$20,000 per annum, while the remaining 36.8 per cent
produced upward of $20,000. Let us classify the pro-
prietors of the former as "small producers" or "middle-
class" manufacturers and those of the latter as "large
producers" or capitalists. On this basis we obtain ap-
proximately 254,810 capitalists and 447,928 members of
the middle class in the manufacturing industries.

For the 10,472,011 persons enumerated under the two
heads of "Domestic and Personal Service" and "Trade
and Transportation" the census does not give a similar
division by classes, but the subenumerations of specific
occupations furnish a tolerably reliable guide to the
economic status of the persons engaged in them.

Thus we may consider as capitalists all persons desig-
nated as bankers and brokers, officials of banks and
companies, and wholesale merchants and dealers. To
the hybrid middle class we may relegate all small inde-
pendent business men, such as barbers ; hotel, restaurant,
boarding-house, livery-stable, and saloon keepers; re-
tail merchants, "hucksters and pedlers," and even
undertakers ; also all individuals engaged in professional
and semi-professional service, including free practitioners,
clerks, bookkeepers, foremen, commercial travellers,
agents, soldiers, policemen, and housekeepers.

The column of "wage-earners" will be made up ex-
clusively of hired manual labourers.


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