# The Theoretical System of Karl Marx/Chapter 8

With the discussion, in the last chapter, of the tendencies of capitalistic development, we have entered upon the proper domain of Revisionism. While it is true that the Revisionists revise to a greater or less extent the accepted Marxian philosophico-historic and economic theories, this is done only as an incidental to their criticism of the Marxian conclusions as to the historic course and ultimate fate of capitalism. Moreover, wherever Revisionists attempt to criticize the fundamentals of the Marxian system, they do so usually only in so far as it is necessary in order to attack that superstructure of conclusions with reference to the capitalistic system which Marx erected on those fundamentals. This is to be seen not only from the nature of the criticism itself which the Revisionists pass on the Marxian theory, but also from the history of Revisionism. Revisionism, which was at one time, before it assumed its present proportions, known as Bernsteinianism, after Eduard Bernstein, its foremost representative, began in a very modest and unassuming way by questioning the accuracy of some of the conclusions to which Marx arrived as to the course and tempo of capitalist development. And it was only after it appeared in the course of the discussion that these conclusions were intimately related to the whole structure of the Marxian theoretical system that the fundamentals of his system were first called into question by Revisionists. But even then the true Revisionists did not at​tempt to pass independent criticism on the philosophico-historic or economic theories of Marx, but merely borrowed this criticism from older and more outspoken opponents of Marxism. The work of Revisionism proper still remained the criticism of what may be conveniently, though rather inaccurately, called the sociological theories of Marxism, that is, the theories as to the probable future development of our social system, which we have attempted to set forth in the last chapter. It is, therefore, not to be wondered at that Franz Oppenheimer puts at the head of his book on Marxism the thesis that "the foundation pillar of Karl Marx's social theory, the most important premise for all its important conclusions, is 'the law of capitalistic ac-cumulation.'" The center of gravity of Bernstein's book "Die Voraussetzungen des Sozialismus," the chief pronunciamiento of Revisionism, is what Bernstein has to say on the tendencies of the development of modern capitalism, although he criticizes both the philosophic and economic theories of Marx. The discussion of those tendencies forms the bulk of Revisionist literature. And in the forefront of this discussion is the question: Does capital concentrate and the middle-class disappear, and as rapidly, as Marx predicted?
In his now famous book Bernstein attempted to prove: 1st, that capital does not concentrate in the manner, and certainly not with the rapidity, that Marx predicted; and 2nd, that the middle-class does not disappear. To substantiate his assertions he cites some statistics to show that while there certainly is a tendency towards concentration, and even rapid concentration, in some industries, this tendency is not universal, and moreover, in the very industries in which this tendency does exist it is in a measure neutralized by the birth of new enterprises in the place and instead of those which disappear owing to the process of concentration. The conclusion to which he arrives, therefore, ​is that, while concentration of capital undoubtedly takes place, it does not take place in all the capitalist industries, and is, on the whole, extremely slow. He also cites another series of statistical data apparently showing that the tendency in the distribution of incomes in modern society is not, as is supposed to be assumed by Marxists, towards a wiping out of moderate incomes, leaving only a small minority with large revenues and the bulk of society with only workingmen's wages, but, on the contrary, the tendency is towards an increase of the number of persons whose income is derived from the possession of property. From this he argues that the middle-class does not disappear, but on the contrary is growing.
The likelihood of the growth of the middle-class in numbers while capital was undergoing a steady, though slow, process of concentration, would seem of such doubtful nature as to raise a suspicion as to the character of the statistics. Bernstein saw this, and he, therefore, hastens to allay our suspicions by the following observation: The corporation—says he—tends to neutralize to a large extent the tendency towards centralization of wealth through the concentration of undertakings. The corporation permits of a widespread splitting up of already concentrated capital, and makes superfluous the acquisition of capitals by individual magnates for the purposes of the concentration of industrial undertakings. Wherefore, he opines, the opinion, "prevailing among socialists," that the centralization of wealth runs parallel to the concentration of industrial undertakings is erroneous.
In the book which Kautsky has written in reply to Bernstein, "Bernstein and the Social Democratic Program," he shows that Bernstein's statistics are unreliable and incomplete, and that the conclusions he draws from them are unjustified. We shall not enter here upon a detailed discussion of these statistics, as this would be beyond the ​scope of the present work. Besides, we fully agree with one Marx-critic, Oppenheimer, who, evidently disgusted with the poor showing Bernstein made with his statistics, declares that those who attempt to refute Marx by statistics are on the wrong track. For, says he, you can only beat Marx by his own method, and the Marxian method is not at all statistical. Marx never relies on statistics to prove his assertions. He uses statistics only for the purposes of illustration. His proofs he gets from well-known facts which may be recorded in the statistical tomes but do not need any statistics to establish them. We will say here only this: Since the disastrous attempt of Bernstein to use statistics against the Marxian position, this weapon has been almost entirely discarded by Revisionists. On the other hand it must be admitted that Marxists also resort to statistics now with less confidence than formerly. It seems that since the publication of their books in which the same statistics are used by Bernstein on the one hand and Kautsky on the other and such different conclusions arrived at by each, people have become distrustful of statistics. Oppenheimer voices this general distrust when he says: "Statistics are an extremely pliable mass, as the literary controversy between Bernstein and Kautsky has shown. With a little dialectical dexterity you can prove almost anything statistically."
We disagree with the learned Marx-critic that you can prove anything and everything by statistics. But we do believe that you can prove nothing by statistics unless you handle them intelligently. Of themselves statistics do not prove anything. No more than facts of themselves prove anything. If it were so there could hardly be two opinions on most points which have been in controversy ever since scientific research began. It requires intellect to read the facts. It requires intelligence to read statistics. Furthermore, it requires great intelligence to gather statistics, and in this respect statistics, which are mere records of facts, are a poorer basis for scientific generalizations than facts of ​observation. Unfortunately our statistics are not gathered by the people who are to use them, and as they are necessarily not full and complete, they must be used with great care and discrimination. Of course wrong or unintelligent handling of statistics will not make them "prove" anything that they really do not prove, as Oppenheimer seems to think, but it will render them worthless.
Kautsky has proven that Bernstein's statistics do not prove his assertions. The reason for it is that Bernstein handles his statistics unintelligently. But even Kautsky's intelligent handling could not make them yield any great results because of the incompleteness of our statistics and of the lack of intelligence in their gathering. Hence the general dissatisfaction on both sides with statistics. We will, therefore, follow here the Marxian method of making only such facts the basis of our argument as require no statistical tables to prove them, but merely to illustrate them.
Before proceeding, however, to discuss these facts we want to call attention to some significant circumstances in connection with the Revisionist movement and its literature. First in point of time and importance is the tone of early Revisionist Marx-criticism. We have already called attention to the nihilistic character of this literature. Now we desire to add that this nihilism was a gradual growth and was forced on the revisionists by their own inability to solve the problems which confronted them. At its inception Revisionism was merely doubtful. Doubt is the leit-motif of Bernstein's first literary attempts at revision. In the second place is to be considered the inability of the old school Marxists to stem the flood of Revisionism, notwithstanding their great efforts. While the flood of Revisionism is now at a standstill, if not subsiding, this is not due to the efforts of the Marxian leaders on the theoretical field, but to its own practical barrenness. And yet, there was enough in what was written by Marxists to show the utter untenableness of the revisionists' position. Kautsky's book was a crushing blow to Bernstein's attempts at the​orizing. Yet it passed almost without any appreciable results: the question of Revisionism was not settled, although it should have been if it were a question of soundness of argument. Thirdly, we must notice the fact which we have already mentioned as the reason for the failure of the Revisionist movement: the fact that notwithstanding its great literary influence the Revisionist movement was absolutely barren of practical results as far as the socialist movement was concerned.
All of these facts and circumstances is proof positive that there must have been something in the development of modern economic life which caused the appearance of the revisionist movement as an intellectual endeavor to take cognizance of and explain this development. It is also clear that this development, whatever it may be, was not, or at least not fully, reflected in our statistics, which accounts for the fact that neither side could prove its case conclusively by the aid of statistics, and the consequent distrust of all statistics. What was that something in the development of modern economic life, and how does it affect the Marxian theory?
The trouble with Bernstein and the rest of the Revisionist writers is that they do not go below the surface of things, and therefore do not know what "struck them," to use an inelegant but adequate colloquialism. Bernstein talks of the "new middle-class," the "wide distribution of incomes," the large number of stockholders in the big corporations or "trusts," and the influence of corporations on the centralization of wealth, but nowhere does he examine these things systematically or in any way analyze them so as to see their real significance in modern economic life, or even their exact meaning. Nowhere does their connection with the theoretical system which he criticizes appear. That is why his book makes the impression of the rambling talk of a man who does not know his own mind. The truth of the matter is he did not know his own problem. He had a vague feeling that there was a problem demanding ​solution, but he did not understand what it was. Hence his doubting tone, the lack of a clear and definite purpose, or even the statement of a clearly defined problem for the solution of others. Hence the overlooking of the problem by those who took up the fight against him. Hence, lastly, the endless discussion to no purpose. Yet there was a definite problem, and had Bernstein understood it sufficiently to enable him to state it clearly it would have found an answer long ago.
At about the time Bernstein was writing his famous book, the present writer stated the essential point of this problem (which is in our opinion, together with the inability to appreciate the scope of modern imperialism, at the bottom of the whole Revisionist movement), in one sentence in the course of an unassuming magazine article. A good many have laid claim to the honor of being the original Revisionist. It is not the intention of the present writer to enter the lists as a contestant for this honor. This incident is mentioned here only for the purpose of showing that the air was then pregnant with certain questions which required answering. The present writer specifically renounces all claims to that high honor of being the Original Revisionist, for as a matter of fact he never was a Revisionist. It is of the essence of Revisionism to see or feel the problem and not to see its solution. The article referred to, however, not only stated the essential point of the problem, but also indicated its solution.
The problem is to harmonize the Marxian teaching with the development of corporate methods of doing business. We have already seen how Bernstein attempted to explain the discrepancy between the statistics as to the concentration of industrial undertakings on the one hand and as to the accumulation of wealth on the other, by a reference to the corporate methods of doing business. We shall see later that Bernstein has mistaken the influence of the development of corporations in that particular respect, and in general it may be said that Bernstein's weakness con​sists in his failure to appreciate and develop the strong point of his argument—the development of corporations. The fact, however, that Bernstein and the rest of the Revisionists failed to present it properly makes the phenomenon none the less real.
The Marxian analysis of the capitalist system and his deductions as to the laws of its development proceed upon the assumption of the absolute reign of the principle of competition. It was on the basis of that assumption that he declared that during the progress of capitalist development "one capitalist kills off ten," thereby centralizing all wealth in the hands of a steadily diminishing number of persons, eliminating the middle classes and leaving society divided into two classes only: capitalists and workingmen. But what if competition should be abolished or checked? What if the capitalists, large and small, should decide not to compete any more with each other, or to restrict the area and intensity of such competition, and divide profits amicably instead of fighting with each other over their division, so as to avoid the necessity of killing each other off? Evidently the result would be the arrest of the processes described by Marx in the event of the entire abolition of competition, and a retarding of those processes in the event of its mere checking. This is just what must happen owing to the development of corporations. The supplanting of individual enterprise by that of corporate is merely an attempt to avoid the results of competition, if not altogether abolish it. The effectual abolition of competition by the so-called Trusts, which are merely the logical result of the ordinary corporation-enterprise, is notorious and, practically, undisputed. But it is not only the Trust that interferes with competition. The primary, nay, the only purpose of a legitimate corporation is to blunt the edge of competition. It is designed either to nullify or suspend the baneful effects of past competition, or to prevent or diminish its ravages in the future. There can be only two legitimate reasons for organizing corporations. Either to ​enable those whose capital is insufficient to keep abreast of the latest requirements of production to remain in the field from which they are individually forced out by the march of events, by combining their several insufficient individual capitals into one sufficient to meet the new requirements; or, to enable those whose capital is sufficient to undertake independently to split up their large capitals into many small ones, each to invest in many undertakings and each undertaking to consist of many investments, instead of each taking up one of the undertakings on his own hook. In the first case it is an effort to beat fate by those vanquished in competition. It is an effort by those whom competition has forced out of the economic arena to stay in, by representation at least. In the second case it is an effort to limit the effects of competition in the future by dividing up and limiting its risks and liabilities (it should be remembered that the essence of a corporation is limited liability), and by providing a sort of mutual insurance between capitalists and capitals.
Here, therefore, is a check to the development of the capitalist system as outlined by Marx. A check which is destined to arrest or at least retard that development. The formula of centralization of wealth and of the disappearance of the middle-class evidently needs revision.
The question of the disappearance or the non-disappearance of the middle-class was complicated also by another and minor phenomenon which apparently swells the numbers of the middle-class and particularly influences the distribution of incomes. We refer to the so-called "new" or non-productive middle-class. This phenomenon is very interesting in another aspect of modern capitalism, the aspect of waste and its uses in the capitalistic system. But of that aspect of this phenomenon we shall treat later at some length. Here we are interested only in the mere fact of its existence. And we shall, therefore, merely say here that the existence of this "new" middle-class, particularly while its origin and character remained unexplained and ​undifferentiated from the ordinary middle-class, considerably complicated the, in themselves, not very easy tasks of determining the influence of the corporation on the destinies of capitalism and the effect of this new departure in capitalism on the Marxian theoretical system.
Of course it can easily be seen that these matters do not in any way affect Marx's analysis of the working of capitalism and the laws governing that system while it lasts. As we have seen before, competition is of the essence of that system. This is recognized by the friends as well as the foes of that system. It has been embodied in its written as well as in its unwritten laws. "Restraint of trade," which is the legal term for restricting or abolishing competition, was illegal and punishable by the common law of England, that classic land of capitalism. All our anti-trust laws are based on the assumption that competition—which is "the life of trade"—is the basis of capitalism, and, therefore, one of the inalienable property-rights of every man living in a capitalistic society. They are nothing more than a statutory enactment of the common law of capitalism that to interfere with competition is to interfere with the life-blood of capitalism, and therefore mortal sin in the eyes of capitalistic law. It is, therefore, not a refutation of the Marxian analysis of the capitalist system to show that tendencies in the development of that system which Marx said would continue to exist as long as capitalism lived, disappeared in whole or in part when the basic principle of that system was abolished or modified. Naturally enough, the tendencies of capitalism cannot manifest themselves in a society where there is no capitalism, nor can they fully develop under limited capitalism if such a thing be possible.
What may be affected by the phenomenon which we discussed above is not Marx's analysis of capitalism, nor even his prediction that capitalism as it existed is going to destruction,—but his prediction that on the ruins of the capitalist system will be reared the edifice of a socialist so​ciety. As we have seen, Marx's socialism is based entirely on his conclusions as to the future development of certain tendencies of capitalism. If those tendencies are abolished, even though with the basic principle of capitalism itself, or modified along with that principle, what warrant have we to say that socialism is inevitable? It is upon those tendencies that we are dependent for the conditions which are a prerequisite to socialism, according to Marx, and with the abolition of those tendencies the conditions which will bring socialism may never arise. The questions to be answered, therefore, are: Is capitalism going to be supplanted by some other system, or is it merely going to be limited or modified? And if it is to be supplanted what will take its place? After Capitalism, what?
In what relation does the existence or non-existence of a middle class stand to the possibility or inevitability of Socialism? It is generally assumed that, according to Marx, all the middle class must disappear and society become divided into a handful of capitalistic millionaires on the one hand and poor workingmen on the other before a socialist form of society can supplant our present capitalist system. There is, however, no warrant for such an assumption. Marx nowhere says so expressly. Nor is there anything in Marx's historico-philosophical views, that is, in his Materialistic Conception of History, from which such a conclusion could rightfully be drawn. All that that theory implies is that the evolution of society depends entirely on the development of its economic forces. And in those passages of his great work where Marx speaks of the evolution of society from Capitalism to Socialism, it is only the social forces of production and distribution that claim his attention. But Marx is no fatalist. He does not believe that society develops automatically without the aid of the human beings who compose it, or of the social classes ​into which it is divided. He takes into consideration the human beings with which these social forces work. This is, in fact, the essence of his theory of the class-struggle. In this respect the different social classes have, according to his theory, their bearings on the evolution of society.
In his analysis of the evolutionary tendencies of the capitalist system Marx notes and accentuates the presence of a tendency to eliminate the small bourgeois or middle-class which he believes to be rapidly disappearing. He lays great stress on this point, and evidently believes it to be a movement of very great importance in the evolution of capitalism towards socialism. A careful reading of Marx, however, will not fail to disclose the fact that Marx did not consider the complete disappearance of that class all-essential, and that it was only the disappearance of that particular middle-class of which he treated that he considered of any importance at all. In other words, it was not the entire absence of any middle-class or social stratum between the big capitalists and the workingmen, that he considered of importance for the realization of his socialist ideals, but it is the presence of a certain particular class, possessing certain particular characteristics (or at least its presence in any such great numbers as would lend it social strength) that he considered obnoxious to the movement of society toward socialism. In order to understand thoroughly the Marxian position on this question we must consider his general estimate of the different classes or strata of society as factors in the evolution of society from capitalism to socialism. And that, again, we can only understand if we consider them in the light of the Materialistic Conception of History. This we shall now proceed to do.
Our readers are already familiar with the Marxian philosophy of history from the discussion in the early chapters of this work. We have there shown the absurdity of the claim that Marx and his followers denied the influence of ideas on the course of history. Here we want to go a step ​further and say that, in a sense, Marx was one of the most idealistic of philosophers. And the sense in which we mean this is in relation to this very question of the influence of ideas. Marx believed in the reality of ideas, both as to origin and influence. There were philosophers who, like Hegel, did not believe in the reality of our material world. They believed that the only real world was the world of ideas, and that the material world was only a manifestation of the development of the absolute idea which developed according to laws of development contained within itself. To such philosophers there could, of course, be no question of the influence of ideas on the course of history. To them there was nothing real in the whole course of history except this development of the idea. These philosophers are, of course, the real idealists (and, incidentally, more deterministic than Marx). But of those philosophers who believe in the materiality of the material world, Marx is easily foremost in the reality which he ascribes to ideas. According to Marx, ideas are firmly rooted in reality and are therefore of abiding influence while they last, and not easily susceptible of change. In this he radically differs from whose to whom ideas have a mere aërial existence, coming from the land of nowhere, without any particular reason in our historic existence and, therefore, vanishing without regard to our social environment, its needs or tribulations. This Marxian esteem of ideas must always be borne in mind when discussing the influence of the human being as a factor in the making of his own history. Let us, therefore, keep it in mind in the following discussion.
What are the characteristics of the socialist system of society in which it differs chiefly from our present capitalist system? First, the social ownership of the means of production—the absence of private property in them. Secondly, the carrying on of all industry on a co-operative basis—the absence of industrial individual enterprise. Thirdly, the management of all industrial enterprise democratically—all "captains" of industry and all other industrial dig​nitaries to be elective instead of appointed by divine prerogative, and to hold office by the consent and during the pleasure of the governed.
Now let us see what classes of our present society are suited to bring about such changes, and which are not. The bearer of the socialist revolution is the modern Proletariat. It is the class of the proletarians that has the historic mission of tearing down the capitalist system of society. Remember well: not the poor man, nor the workingman, but the proletarian, is going to do this work. There were poor men before, so were there workingmen. But they were not proletarians. So may there be poor now, and even poor workingmen, who are not proletarians. The modern proletarian is not merely a poor man, nor is he necessarily a poor man in the ordinary sense of the word. Nor is he merely a workingman, although he necessarily is one. He is a workingman—usually poor at that—under peculiar historic conditions. Those conditions are that he is not possessed of any property, that is, the only property that counts socially,—means of production. By reason of this condition he is placed in certain social relations, both as to his own kind and as to his social betters, as well as to the social machinery. Through this he acquires certain characteristics of mind and body, a certain mentality and psychology which make him peculiarly fitted for his historic mission.
We will not attempt to give here an exhaustive description of his mental and psychological nature. We will only denote his character by a contrast: he is in every way just the reverse of the peasant. He had to be that, according to Marx, in order to be a fitting instrument for the carrying out of his historical mission. Marx's attitude towards the peasant is most characteristic. The peasant was a positive abhorrence to him, and he eliminated him from his promised land. This had the peculiar consequence that in countries where the peasantry is now undergoing the process of "capitalization," as in Russia, for instance, the Marx​ists have been accused by the peasant-loving utopians of all sorts of horrible designs against the poor peasants. Of course, Marx and the Marxists have nothing but compassion for the poor peasant. But, besides seeing clearly the hopelessness of their case, they recognize the fact that the peasant, were he to exist, would be the greatest obstacle in the way of socialism. First let us note his ideas as to property. By reason of his occupation and the environment in which he and his forefathers have lived for ages, he has contracted such a love for his land, his house, his cattle, and everything else which he calls his own, that he will find it more difficult to separate from them than a millionaire from his millions. Their worthlessness has nothing to do with the case: their value can hardly be measured in money. This colors all his ideas about property. He and his forefathers before him have lived on this particular spot of land, and all his family history is connected with it. Here are buried the labors and sufferings of generations. All his own woes, and his pleasant memories (if he has any) are intimately associated with this patch of ground. Here he was born and here he hopes to die. Every tree, every building, is the result of his own and his family's great cares and labors. Every animal is his friend and companion in toil and misery. Most of them have been reared by him, even as were his own children. He will not enter the promised land if he has to give up his ruined, worthless, tax-eaten property for it. The "sacredness" of property rights to the peasant, the tenacity with which he holds on to it, is well recognized by those who have studied his character. This "idea" of his as to private property, in view of his stolidity and immobility, due to the immobility of his surroundings and the sameness of the methods and nature of his work, would make him an inveterate enemy of socialism and a stout upholder of capitalism. But, aside from this, he is unfitted for a socialist society, and particularly unfitted to make a fight for it, because of his inability to co-operate with others. A ​peasant is the greatest individualist imaginable, at least as far as boorishness, suspicion, opinionatedness, and the other "individualist" virtues are concerned. For centuries he has led an isolated and self-sufficient existence. He lived by his own toil without the help of others. He never came into contact with others except to be robbed and oppressed and occasionally to be cheated. No wonder he is such an individualist. Nor has he been fitted by the countless generations of oppression which he has undergone, or by the work to which he is accustomed, to the arduous and complicated duties of a self-governed industrial community. All this would make the old-fashioned peasant an inveterate enemy of socialism, notwithstanding his great poverty and ruined existence, if he were to survive. But he is not to survive. We cannot enter here upon a discussion of the so-called agrarian problem. One thing may be stated, however, without any fear of contradiction: the old peasant, as Marx knew him, and the old economic surroundings and social environment which produced him, are no more, except in very backward countries, and there they are disappearing before the onward march of capitalism. With the old-fashioned peasant passes away the mainstay of private property and the bulwark of reaction. There is no other social class that could quite fill his place in this respect.
The bourgeois has few of the characteristics of the peasant. He is quick and always on the qui vive. His love and attachment for property are not as pronounced as those of the peasant. He has not the kind of property which becomes individualized and may be personified. He has himself produced none of it. He cannot form any lasting friendship with his stock of goods or the machines used in his manufactory. They are liable to constant change and can be easily supplanted by others of their kind. In most cases it is in their quick disposal that his chief advantage lies, and he parts from them without regret. As a matter of fact he never cared about them: it is their money value ​or equivalent that is dear to him. In other words, it is not the property itself that he values or cares for, but the advantage derived from its possession; although in some cases, particularly where business is done in the old-fashioned way, and life is arranged correspondingly, there may be some love of property as such with reference to some kinds of property: usually the place of business or abode and its furnishings and belongings.
With these characteristics the bourgeois is ill-adapted to take the place of the peasant as a defender of property and of reaction. Yet, Marx considers his disappearance of considerable importance for the inauguration of the socialist state. Why?
To the vulgar materialists who insist on calling themselves Marxists this question presents no difficulty. They reduce the Materialist Conception of History to the simple formula: "everybody for his own pocket." And as the pockets of the bourgeoisie are presumably going to be injured by the transformation from capitalism to socialism, that class must necessarily be against the change, and therefore it must be removed in some way in order to pave the way for socialism. This perversion of the Materialistic Conception of History is, unfortunately, very widespread, and for good reason: It is a reproduction of the practice and theory of capitalism. Of the "common" practice, of course, but also of the very highest theory of which capitalism is capable. It is, in effect, a mere paraphrase of the "intelligent egoism"—the greatest height to which the capitalist intellect could rise. The fact that this theory can easily be proven to be logically absurd and historically false will not diminish its vogue as long as the condition to which it owes its origin remains unchanged. Only gradually, following in the wake of the economic changes, and at a distance at that, will a truer understanding force its way.
Except in the case of seers like Marx. With all his dislike for the bourgeoisie Marx never believed that all bour​geois, or their intellectual and moral leaders, simply followed the dictates of their pockets, personal or otherwise, as can easily be seen from numerous passages scattered in his many writings, and particularly in the "18th of Brumaire."
What makes the bourgeois character unfit for socialist co-operation, and his ideology one of the chief mainstays of capitalism, is the independence which the possession of property gives him. While he has no particular love for his property, or, to be more exact, for the objects of his property, he values very much the independent social status which the possession of property gives him, no matter what this property consists of. As a matter of fact it is not the particular property that he is concerned about, but its social exchange-value. For the purpose of his social status it is not the actual objects of his property that count, but the social attributes and possibilities which attach to all property. That is why he stands up for the abstract principle of private property, something which the peasant is very little concerned about as long as its practical enjoyment is not interfered with. The social existence of the old-fashioned bourgeois, his everyday economic life, make him accustomed to strive for and cherish this independence founded upon the possession of property, and his ideology becomes decidedly individualistic. In his foremost intellectual representatives this crystallizes into some such system as that of Herbert Spencer, and looks upon socialism as a form of slavery. The alertness and aggressiveness of the class only accentuate the craving of each individual for absolute economic freedom, for being let alone to fight the battles of life. And the success of the class only whets its appetite for further conquests, and makes it impatient of any restraint, while its intellectual achievements give it one of the brightest weapons ever wielded by a ruling class.
A good deal has been written and said about the supposed great influence of force as a social factor, and again ​the vulgar materialists have contributed their little share to the general confusion. Of course brute force has been and will be used by all ruling classes, both in acquiring and maintaining their dominion. But brute force alone never did, and never could, sustain a ruling class for any considerable length of time. In order to see the correctness of this assertion it is sufficient to bring to mind the fact that the ruling class is always a minority, usually a small one, of the population of a country, and that, taken man for man, the members of the ruling class seldom possess more physical strength than the members of the subject class. The force of the ruling class is not natural but acquired, and is social in its character. It consists in its organization, which permits it to use part of the strength of the subject class, and sometimes the whole of it, for the subjugation of that class. Sometimes the mere fact of its own organized condition may be sufficient to hold the superior but disorganized force of the subject-class in awe and trembling. But even then it is not mere brute force, for organization itself is a moral and not a physical force. This is evidenced by our language; we speak of a physically superior force, which is incapable of properly exerting itself for lack of proper organization and discipline, as being "demoralized." This applies, however, only in exceptional cases. Usually the ruling class depends on something outside its own organization to maintain its supremacy. This something is the social organization of the whole community or nation. It is by using the power of the whole social system for its own purposes that the ruling class is able to maintain its supremacy at a time when that is clearly against the general interest or against the interest of large portions of the subject class or classes.
The basis of this social power exercised by the ruling class is usually the economic system in vogue, which makes the subject-class economically necessarily dependent upon the ruling class. But this does not always suffice. Very ​often, therefore, the ruling class depends, to some extent at least, on purely moral suasion for the continuance of its power. Religion was, therefore, from time immemorial, the handmaid of the temporal power, except where it was itself a temporal power and thus united in itself the functions of mistress and maid. With the waning of religion and the passing of its influence, science and philosophy have taken its place, and usually perform the same functions with equal alacrity and facility. That does not mean, of course, that either religion or science and philosophy were invented by the ruling classes in order to keep the subject classes in bondage. The ruling classes merely make use—sometimes proper and sometimes improper—of a means which they find at hand. The point is that usually the lower classes get their "ideas"—their religion, science, art, philosophy—from the upper classes, and these are apt to be such as express and represent—in short "idealize"—the mode of life of those classes and the principles underlying the same. This is always true when the lower class depends on the upper for its economic existence. At such times the economic virility of the ruling class expresses itself in a buoyant and aggressive ideology which seems to, and often does, express the interests and aspirations of society as a whole. But no ruling class has ever had such a great opportunity of exercising such great moral or ideal influence on its subject class as has the bourgeoisie, owing to the great and manifold development of the arts and sciences during the time it held its sway. This unprecedented wealth of ideas has had the remarkable effect, first of all, of making the bourgeoisie itself drunk with its power and almost mad in its desires and aspirations. No king has ever believed himself more God-chosen to rule than has the bourgeoisie, nor has any ruling class ever laid such pretensions to the absoluteness and immutability of the laws of its rule as does the bourgeoisie. Or, rather, we should say; as did the bourgeoisie in the heyday of its power. ​And while it was in the heyday of its power the bourgeoisie managed to permeate the working class with its ideals, habits and modes of thought, perhaps more than any ruling class ever influenced a subject class. This was due, on the one hand, to the unprecedentedly large extent to which the working class has been permitted to participate in the benefits resulting from the general spread of knowledge, and on the other hand to the peculiarly forcible way in which the economic argument is brought home to the modern workingman. Under no preceding social system have the economic woes of the ruling class been so quickly and with such dreadful effect reflected to the subject-class. We must never, therefore, forget the great importance which the influence of the bourgeois ideology has on the modern proletariat, particularly in the early stages of its development, although, as we shall see later, during and by virtue of its development it formulates an ideaology of its own.
The capitalistic "ideas" and habits of mind are inculcated into the working class by the capitalist class, intentionally and unintentionally, by and through its lower stratum, or what is usually called the "middle class." So long as there is a large and virile middle class the working class will be largely under its domination and influence, morally and æsthetically. It is with this class that the working class comes into immediate contact socially. It is on this class that the workingman fixes his hopes and aspirations for the future. It is this class that teaches him at kindergarten and at school, that preaches to him at church and in "ethical" societies, and it is this class that gathers and sifts for him the news of the world and explains it to him in his daily newspaper, and gives him his popular science, his art and his "literature."
It is because of those "ideal" characteristics of the old-fashioned bourgeoisie, the old middle-class of capitalist society, and even more so because of the "ideal" influences of that class on the working class, that Marx con​sidered its disappearance of such great importance in the movement of society towards socialism. That is, in so far as he considered such disappearance of any moment in itself, outside of its being a mere indication of the movement of the economic forces of society. For it must always be borne in mind that it is the development of the economic forces that is the real power working for socialism, and any influence which any class or group of men may have on that movement, except as an expression of such development, is merely secondary.
In the first section of this chapter we stated that the development of corporate methods of doing business brought a new factor into the development of capitalism which apparently worked at cross-purposes with those tendencies of capitalistic development which, according to Marx, were to result in the destruction of the middle classes of capitalist society. We also stated there that this presented to Marx-students the problem of harmonizing the. Marxian prognosis as to the tendencies of development of capitalism with this new factor, and that the Revisionists were not equal to the task, and therefore came to the conclusion that Marx's prognosis was wrong. We interrupted the argument in order to give in the second section a characterization of the different social classes of the capitalist society which Marx had before him, in order to understand his position with reference to them. This was necessary in order that the reader may get the full meaning of the argument that we are going to present here in an endeavor to show that the Marxian prognosis of the development of capitalism and its ultimate fate, as well as the delineation of the social system which is going to take its place, need no revision, any more than any other part of his theoretical system. We shall now, therefore, return to our revisionist friends, and particularly to their leader, Eduard Bernstein.
​The main points of Bernstein's position on this subject, as already stated, are: 1st, that as a matter of fact the concentration of capital is not as rapid as Marx or some Marxists imagined or believed. 2d, that as a matter of fact there is no centralization of capital, that wealth does not accumulate in few hands only, to the exclusion of all others, and that the middle class is, therefore, growing instead of disappearing. And 3d, that the reason for the divergence in the tendencies of the concentration of capital on the one hand, and the centralization of wealth on the other, is due to the development of the new social factor, the corporation.
This being a purely theoretical discussion, the first point can hardly be considered. Theoretically only the tendency of the evolutionary phenomena is of any importance. What may, therefore, have been of very great importance in the discussion between Bernstein and Kautsky, which embraced other than purely theoretical matters, may be of only secondary importance here. The length of time which History will take to complete the evolutionary process outlined by Marx is no part of the Marxian theoretical system. Marx never stated it, and it could, therefore, only be surmised what his opinion on this subject was. But even if he had expressly stated it, that would not, of itself, make it part of his theoretical system. Besides, the ground is so well covered by Kautsky that one does not feel like doing less, and can hardly do more, than reproduce the Kautsky argument in full. And as considerations of space do not permit us to do that, we must refer those of our readers who may be interested in this phase of the discussion to the original.
As to whether, and how far, the second point made by Bernstein is of any importance in the discussion of the Marxian theory will be considered later. Here we will examine the phenomenon supposed to have been noted by him. We have already mentioned the fact that the only proof on which Bernstein relies to establish his second proposition are certain statistics as to incomes. But right here the fallacy ​of his statistical method becomes apparent. Aside from the fact that there is no standard by which you can measure the different grades or divisions of incomes as high, middle or low, and any such division must, therefore, necessarily be arbitrary, and aside from the fact that such standard must vary, not only from country to country, but even between places in one country and even in close proximity with each other, and (and that is of paramount importance) from time to time, there is the cardinal defect that income, as such, is no index whatever to either social or economic position. A man's income does not, necessarily, place him in any social position, and need not, necessarily, be the result of a certain economic condition, except under certain exceptional circumstances when, as Marx would put it, quantity passes into quality. The mere statement of a man's income does not, therefore, give his social position or economic condition, unless it be first proven that certain incomes can only be derived in a certain way, or from certain sources. Bernstein glides over carelessly from incomes to property, assuming that the derivation of a certain income implies the possession of a certain amount of property. But this nonchalance is due to an absolute lack of understanding of the real questions at issue. As a matter of fact, a given amount of income does not always, nor even in the majority of cases, indicate the possession of a given amount of property. A farmer, a manufacturer, a grocer, a teacher, an army officer and a mechanical engineer, may all have the same income, and yet their social position, their economic condition, and the amount of property which each possesses may be entirely and radically different. The question is, or should be, not what is a man's income, but what does he derive it from? And, under what conditions, and in what manner does he do it. And this does not mean merely that the inquiry should be directed to the amount of property he possesses, or whether he possesses any at all, but also, if he does possess property, to the question of what it consists of and how it is employed in order to yield the income. The importance ​of this last point will immediately suggest itself if the reader will recollect what we said in the second section of this chapter on the psychological and ideological effects of the different kinds of property and the different occupations. But we shall discuss this more at length further below.
As we have already stated, however, in the first section of this chapter, the real strength of Bernstein's argument does not lie in the statistical data with which he attempts to prove his alleged facts, but in the social phenomenon which he observed and which seems to counteract the evolutionary tendencies of capitalism described by Marx. The real meat of his argument lies in the third point mentioned above. The real question is: how does the modern development of that social economic factor, the substitution of corporate in the place of individual economic action on the part of the capitalists, react on the fortunes of that class. Our inquiry must not, however, be limited to the question of the division of income within that class, but also as to how, in what manner and under what circumstances, this division is being effected. We must find out not only how much each capitalist gets as his share of surplus-value created by the working class, but how his share is determined and what he must do in order to get it. Into what relations does his getting it, and the manner in which he gets it, bring him to his fellow-capitalists, the other classes of society, and society at large, that is, the social organization as a whole.
Bernstein says, in discussing the importance of the Marxian theory of value, that the fact of the creation by the working class of surplus-value, and its absorption by the capitalist class being provable empirically as a fact (to his satisfaction, of course) it makes no difference by what economic laws it is brought about. This may be good enough reasoning when one starts out from so-called "ethical" premises, but is absolutely inadequate from the scientific historico-economic point of view. We have already sufficiently pointed out the great importance of the difference which does exist, in its purely economic bearings, and now we wish to ​insist on it because of what might be termed its social or ideological importance. For it is not the mere fact of the creation by one class of surplus-value or a surplus-product and its absorption by another class, but the way in which it is done that gives its character, including its ideology, to society as a whole and to each and every class and subdivision of a class therein. In examining, therefore, the influence of the development of the corporation on the fortunes of the capitalist class, it is not only the effect upon its numbers, but also and mainly the effect upon its character that is to be considered, for on the latter may depend the character of the whole social system. Upon the latter may also depend the durability of the social system and its speedy transformation into another. We shall, therefore, examine the question from both aspects.
And first as to numbers. Does the substitution of corporate for individual effort arrest the shrinkage of the numbers of the capitalist class or develop a tendency to its expansion, as Bernstein asserts? Decidedly not. And even Bernstein's empirical-statistical method, poor as it is, shows this. Bernstein does not deny the absolute and relative growth of the working class. And as the working class and capitalist class can only grow, aside from their proportional growth with the growth of population, at the expense of each other, they evidently cannot both grow at the same time. But this is just what is evidently happening if Bernstein is to be believed. Both the capitalist class and the working class are simultaneously growing at the expense of each other! Only the uncritical handling of mere figures could betray him into such an absurdity. A careful examination, on the other hand, of the actual phenomena under consideration would have shown him that while the corporation may arrest the rapidity of progress in the shrinking process of the capitalistic ranks, it cannot do away with the process itself. The capitalist class must shrink!
In this connection we must, in the first place, consider the fact, already noted by Marx, that the corporation itself ​is a means towards the concentration of capital, with all that it implies. By combining the smaller capitals of the individual capitalists, and more particularly by turning over to the big capitalists the small capitals of the middle class and upper strata of the working class, either directly or indirectly, by means of banking and saving's institutions, such tremendous concentrations of capital and industrial undertakings are made possible which otherwise could not, or could only with great difficulty, take place. This places the whole industrial system on a higher plane of capitalization, and must necessarily force out a lot of small capitalists by making their capital inadequate for the undertakings in which they are engaged, and the return on their capital, owing to the increased falling of the rate of profits, insufficient to sustain them. Thus, while on the one hand this form permits these small people, or some of them, to combine their capitals and thereby gain a new lease of life, long or short as the case may be, it on the other hand gives additional impetus to the very forcing out process which makes their individual independent position untenable. While in one way it retards the shrinking process it, in another way, accelerates it.
Another point to be considered in this connection is the fact that the corporation is the chosen and well-adapted means of all forms of dishonest and speculative undertakings, by means of which the unscrupulous rich manage to relieve the confiding, because helpless, poorer strata of the capitalist class of whatever individual competition has left to them. In times of "prosperity" all sorts of industrial and commercial undertakings are organized which no one would dream of organizing if he had to do it with his own capital. But as the corporation form permits the "promotion" of these schemes at the expense of the public, there will always be found enough "promoters" who are willing to "take a chance" with and at the money of the "general public," which is composed of the lower strata of capitalism. This "public" not being in a position economically to com​pete with the magnates of capital, are willing to nibble at their schemes in the hope of finding some profitable employment for the remnants of their former fortunes or their savings.
Then comes the panic or the "contraction" and all the bubbles burst, leaving the field strewn with the corpses of the small fry, the would-be-capitalists despite the fact that their means were insufficient to give them standing as capitalists individually. Another and very important aspect of this phenomenon will be considered later in another connection. Here we simply want to point out the fact that the corporation is not merely a means of permitting the small capitalists to participate in the economic undertakings which they could not tackle on their own account, but also of relieving them of their small capitals, and either wasting them or transferring them to the large capitalists, directly or indirectly. This was pointed out at the beginning of the discussion by Kautsky, and since then we have had abundant proof of the great possibilities of this relieving process. The exposures of Thomas W. Lawson have shown that the very loftiest pillars of capitaldom engage in this relieving process, not merely as an incident to the natural "expansion" and "contraction" of the commercial world, but deliberately, with malice aforethought, manufacturing to order "expansion" and "contraction" in order to accelerate the relieving process. These exposures have also shown that where the small fry do not nibble themselves in propria persona, their bankers, savings banks and other depositaries do it for them, as if they were vying with each other. to prove the correctness of the Marxian prognosis.
It must not be assumed, however, that this relieving process is due entirely to dishonesty on the part of the big sharks of capitalism in dealing with their weaker brethren. On the contrary, the process itself is a natural one, due to the natural workings of the corporation. This process is only accelerated by the exposed "evils," by the abuses of the corporate form of doing business, for there are natural, as ​well as artificial, panics and contractions, and they all result in the transfer of the capitals of the small fry to the big sharks, or in their utter waste and destruction, as will be seen later.
Aside, however, from the "evils" and "abuses" of the corporation system, aside from the casual, although periodically recurring, waste of small capitals and their transfer to the big magnates of capital in times of panics and contractions, the usual and necessary results of the corporation system, its very uses and mode of operation are such as to make it almost nugatory as a preservative of the numbers of the capitalist class—as a means of staving off the destruction of the independent middle class.
The ordinary and usual course of corporation business is such that only a few persons, the rich who organize and control it, get most or all of the benefits derived therefrom. In order that we may clearly understand this point we must bear in mind the difference between business and loan capital. There is a difference between the return a man gets from his capital when he employs it in business himself and when he lends to another capitalist to be used in the same business. In the first contingency he gets all the profit that is made in the business, in the second only that part of the profit which is called interest. The amount of interest is not always the same proportion of the amount of profit realized, but it is always only a share and never the whole thereof. In determining the proportionate share of the owner of the capital and the undertaking capitalist, respectively, in the profits realized in the business, all other things being equal, regard is had to the risk assumed or undergone by the owner of the capital, the lowest proportion being paid as interest where the owner of the capital takes no risks whatever. This is interest proper. The balance of the profit, whatever is left after the deduction of this interest for the mere use of the capital with no risk attached, remains in the hands of the capitalist, according to capitalistic notions, for his work of supervision of the industrial ​undertaking and the risks involved in it. If a capitalist lends his money on insufficient security he gets higher interest. But this higher interest is really not pure interest; it is interest proper together with an additional premium (part of the profit in its narrower sense) paid for the risk run by the man who makes the loan.
In a corporation the work of supervising the undertaking engaged in by the concern is not done by the stockholders, but by paid officers and employes. These officers and employes are always the rich who organize and control it, and they not only eat up all that part of the profits which goes to the capitalist for his work of supervision, but usually a great deal more in the shape of high salaries and incidental expenses. This part of the profit of all of the capital interested goes to the big capitalists only, the small fry get none of it. And if by some chance a small capitalist should get this (which would only be possible in the exceptional case where all stockholders are small men) it would still remain true that only one would get it, and the remaining stockholders would not get that part of the profit which goes to every independent capitalist.
There remains, therefore, to the stockholding capitalist only the interest proper and that part of the profit which goes as compensation for risk. In this respect the stockholding capitalist is placed in the same position as the lending capitalist; the greater the risk involved in holding stock in a certain corporation the greater will be his return (if he gets any), and the smaller the risk the less his return, in the shape of dividends. But the risks which he takes here are not only the risks of the business venture, but also those of dishonest corporate management. Besides, even in the question of the profitableness of the business there is the possibility of fraud, for he is obliged to rely on the judgment of others who may be interested only in the venture to the extent of their ability to draw large salaries. The result of all this is that the prospective stockholder is desirous of investing in a safe corporation, that is to say, in cor​porations at the head of which are big capitalists who hold out some kinds of guaranty or promise as to results. But the safer the corporation the more is the investor, not only the bondholder but even the stockholder, reduced to the position of a person who lends his money to it, at least as far as the amount of profits he receives on his capital is concerned. This can be seen any day on the stock exchange. The safer the corporation the more is the dividend reduced to the level of mere interest. In speaking of dividend in this connection we mean, of course, the amount of the dividend as a percentage on the capital invested. Sometimes a very safe corporation pays very large dividends (although this is unusual), but in such an event the value of the stock will be so much above par as to bring the dividend down to the proper level. The small capitalist who desires to invest in a corporation is, therefore, between the Scylla of taking all sorts of risks which are not present in the case of the independent industrial undertaker, and the Charybdis of getting no return on his capital except interest.
But as interest is only a share of the whole profit, and usually a small one at that, it is very evident that not all, and not even most, of the capitalists who possess sufficient capital to furnish them an independent income at the prevailing rates of profit, if they could remain independent undertakers, will be able to derive such income as stockholders of a corporation. A good many of them will necessarily have to fall out at the bottom. Usually these are the people who furnish the capital for all sorts of venturesome schemes with alluring promises, which result disastrously. Being unable to maintain their position as capitalists by investing in safe corporations, they desperately risk their small capitals in these undertakings, hoping to retrieve by a stroke of luck what they lost by the force of economic evolution.
But this is not yet all. Those smaller capitalists whose capital is for the time being sufficient to maintain them as rentiers of capitalism, as investors in safe corporations, are ​by no means sure of their position. We have already shown that the rate of profit has a tendency to fall. With the falling of the rate of profit falls that portion of it which is paid as interest, directly or in the shape of dividends, to bond and stockholders of corporations. This makes a capital which is sufficient to maintain a man independently to-day insufficient for that purpose to-morrow. Thus the falling-out-at-the-bottom process increases as capitalism progresses.
Some of the causes and processes noted above are slow in their operation. But one thing is certain, they are there and working their deadly havoc in the ranks of the capitalistic cohorts constantly and surely. The tendencies of capitalistic development cannot, therefore, be mistaken. Not only can not the capitalist class, that is, its lower stratum which is commonly called the middle class, grow, but it must surely and constantly diminish.
This diminishing process in the capitalist ranks, the passing from the capitalist class into the proletariat, may, however, and, owing to certain circumstances which will be considered later, frequently does assume such forms that the whole process becomes veiled and not easily recognizable. Here again the corporation plays a part, although not a very important one. Its part here consists in furnishing some additional folds for the veil which covers this process.
Some Marx critics, and Bernstein is among them, talk as if Marx saw only one process, and that one the constant passing of former capitalists of the middle class into the ranks of the proletariat. No doubt there are some passages to be found in Marx's writings which at first blush give such impression. And as a general statement of a tendency this is true too. But that does not necessarily exclude some cross-current which may affect the original and prime tendency described by him, although it cannot completely negative it. Hence the danger of relying on single passages in Marx without careful examination as to their connection, and the immediate purposes for which they are used in the connection in which they are found. Hence, also, the ease ​with which all sorts of contradictions are found in Marx, according to his critics, as was already pointed out in another connection. It took Marx several bulky volumes to expound systematically his theoretical system, and then his work remained unfinished. He could not at each point recount all the circumstances which might affect or modify the tendencies or laws discussed, and which might be contained in other parts of his work. He assumed that the reader would remember them and read all the passages relating to the same subject together. Sometimes he purposely gave absolute form to a statement which he intended to qualify, and made certain assumptions he himself did not believe in, intending later to modify the absolute form of the statement or show the incorrectness of the assumption, in order to more clearly and systematically present his theory.
As regards the matter now under discussion there can be no doubt but that Marx did not mean to say that all those who are reduced from the ranks of capitalism by the progress of capitalism become proletarians. Some of them may, for a time at least, remain in the position of half capitalist, half proletarian, in that they may derive a part of their income from their property and part thereof from their labor. But even those who have lost all their property may still become proletarians in the antique sense only, that is, persons who possess nothing, but they may not be proletarians in the modern sense of the word, that is, laborers who are not in possession of their means of production. They may cease to be capitalists and still not become laborers; they may live by their wits instead of by their labor, or become mere sponges on their former co-classites. It is our opinion that, with the progress of capitalism, the percentage of this last mentioned class of people is growing larger among those who lose caste by reason of the elimination process of the middle class.
Hence the cry of the so-called "new middle class," raised by the Revisionists. Hence, also, the peculiar features of the statistics as to incomes. It is not because there is no ​process of Centralization of wealth accompanying the Concentration of capital, as Bernstein would have us believe, that there is apparently a wide diffusion of small incomes which are not the proceeds of wages. This phenomenon is due, first, to the fact that with the concentration of capital wage-slavery has been growing upwards, embracing constantly new occupations, such as by their character and remuneration were not properly within its domain on a lower rung of capitalistic evolution. This class has been particularly increased by the development of the corporation. And secondly, to the increase of the class of people, who, although not possessing any property, still manage to maintain themselves in real or apparent independence and without coming, formally at least, within the purview of wage-slavery.
This brings us to the question of the effect of the recent economic development on the character of the middle class. Before passing, however, to the examination of that question, we desire to note the fact that much of the talk and statistics about the supposed slowness of the process of the concentration of industrial undertakings is due to the merely apparent and formal independent existence of many undertakings and undertakers that are really mere dependent parts of a large, concentrated, industrial enterprise. And we also desire to mention here the fact that Heinrich Cunow, one of the ablest of the younger generation of socialist writers in Germany, has done splendid service in pointing this out.
But, one may ask, while it may be true that the processes which you have described show that not all the members of the present or former middle class can remain in their position of small capitalists, deriving their income from the possession of property, there still does remain this "new" middle class which is not reduced to the position of proletarians. This "new" middle class, while it possesses no property, or not sufficient property to count economically, is still a class distinct and apart from the proletariat, and if numerous enough is a force to be reckoned with. And as to ​the great numbers of this class the income statistics are certainly an indication. Those incomes which can not possibly be the result of wage-labor must be the incomes of this "new" middle class, unless they are the incomes of the property owning middle class, and the income statistics therefore certainly prove at least one thing, and that is that the "new," property-less middle-class, together with the old-propertied middle-class, certainly form at present quite a formidable class and diminish only slowly. Where is the difference, as far as the subject that interests us (the approaching transformation from capitalism to socialism), is concerned, between the old and the new middle classes? Isn't Bernstein right, after all, when he says that if the coming of socialism were dependent on the disappearance of the middle class the socialists might as well go to sleep, for the time being at least?
In answer to such questions we will say: As already pointed out, it is not part of the Marxian doctrine that all middle classes must disappear before the advent of socialism, and the fact, therefore, that there may be developing a new middle class is no warrant for the assertion that the Marxian theory needs revision. Provided, of course, that the new middle class is sufficiently different to make a difference. It was shown already that Marx's prognosis as to the centralization of wealth through the disappearance of the property-owning middle-class is correct. And this is one of the decisive moments in the evolution from capitalism to socialism. (It is not so much the merging of the persons who compose the middle class into the proletariat that is required as their severance from their property.) For the passing of our society from its capitalistic form of production to a socialistic form of production, that is, for the socialization of the means of production, the only things that are of paramount importance are, first, that these means of production should be social in their character, and the more social the better (the concentration of capital); and, second, that these means of production should lend themselves to ​social management, that is, be in the hands of as few persons as possible (the centralization of wealth). It is of comparatively little importance how the surplus-value produced by the working class, the income of the capitalist class, is distributed. The question of this distribution is of any importance only in two aspects: 1st, in so far as it reacts on the centralization of wealth by permitting greater or less numbers to maintain their position as property-owners; and, 2d, in so far as it may affect the ideology of the different classes of society.
In the first aspect, as we have already seen, the "new" middle-class is harmless. Its existence does not retard the process of the centralization of wealth, but, on the contrary, is its direct result. It is, therefore, only in the second aspect that any significance whatever could be attached to it. Let us see what it amounts to?
But before proceeding any further we must state that the possession of capital, property, being of the essence of a capitalistic class, the introduction of this so-called "new" property-less middle-class has created no end of confusion. A very great proportion of what is termed new middle class, and appears as such in the income statistics, is really a part of the regular proletariat, and the new middle class, whatever it may be, is a good deal smaller than might be supposed from the tables of incomes. This confusion is due, on the one hand, to the old and firmly-rooted prejudice, according to which Marx is supposed to ascribe value creating properties only to manual labor, and on the other to the severance of the function of superintendence from the possession of property—effected by the corporation as noted before. Owing to these circumstances large sections of the proletariat are counted as belonging to the middle class, that is, the lower strata of the capitalist class. This is the case with almost all those numerous and growing occupations in which the remuneration is termed "salary" instead of "wages." All these salaried persons, no matter what their salaries may be, who make up perhaps the bulk, ​and certainly a great portion, of the "new" middle class, are in reality just as much a part of the proletariat as the merest day-laborer. Except, of course, in those instances where, by reason of the amount of their salary, they are in a position to, and do, save and invest. In so far as such investment takes place (as in the case of those who invest the remnants of their capital while depending for their support mainly on some useful occupation) they are on the border line between capital and labor, and are akin in their position to the ruined peasants who, before abandoning their villages, attempt to remain farmers by doing "something on a side." These cases are, however, not very numerous, and their condition is merely transitory. Another exception that should be noted is of those cases where the salary is so large that it evidently exceeds the value of the labor of the recipient. It will be found, however, in such instances, that such salary is paid only to capitalists who are really in control of the corporation which pays it to them, and is part of the process by which the big capitalists relieve the small ones of part of the profits coming to them. With these negligible exceptions, salaried persons are really part of the proletariat, no matter what they themselves think about it.
It is true that by reason of their descent, associations, habits and modes of thought these persons feel a certain solidarity with the upper class rather than with the class to which they belong. But this does not change their social-economic status, and, so far as their usefulness for the work for socialism, they present a problem which is only different in degree, but not in kind, from the general problem of the organization of the working class for its emancipation from wage-slavery. In the solving of the special problem, as well as in the general, the change in the character of the middle class is of quite some importance.
And the character of the middle class has changed. Nay, the character of the whole capitalist class has changed by reason of this substitute of corporate undertakings in place ​of individual enterprise. And not only this, but the character of our whole social system is undergoing a change of quite some importance by reason thereof. And these changes have already wrought great changes in the ideology of the different classes composing our society, and are going to entirely revolutionize it. The famous phrase of a well-known English statesman, "We are all socialists now," was not as idle as some people supposed it to be. Of course the gentleman who uttered it may not himself have quite realized its full import, but the fact that he uttered it is one of the proofs of its correctness, although he may have attached to it an entirely different meaning from the one we give it. Its real meaning is this: The philosophy of individualism, the ideology of private ownership of property, and particularly of individual enterprise, is doomed; and the philosophy of collectivism, the ideology of the collective ownership of the means of production and of the social organization of human enterprise, is fast taking its place. The change is taking place not only in the realm of jurisprudence, which is the immediate expression of accomplished economic facts, but also in the remoter fields of art and philosophy. As yet there is chaos. None can mistake the "breaking up of old ideals," but only very few can see the whole meaning and import of it: that a new society, and a new ideology to correspond, are forcing their way and making rapid strides.
Spencerianism, that purest expression of capitalism, and not so very long ago the reigning philosophy, is dead and forgotten. And every new day surprises us by the official throwing overboard of some remnant of that philosophy which was still clung to the day before. Socialism is the order of the day. But not merely the "menace of socialism," which simply reflects the growth of the organization of the working class, but the recognition of collectivist principles and the expression of collectivist ideas. The session of the American Congress just closed gave remarkable evidence of that. It is not what was accomplished there, but ​what was conceded in principle that interests us here. It is not, therefore, the legislation or attempted legislation for the benefit of the working class only that must be considered, but all legislative attempts which show this change of ideology.
In this connection we desire to state that there is some basis of fact in the cry raised in some capitalist quarters that Roosevelt is more "dangerous" as a socialist than Bryan. We do not think much of the socialism of either, and believe that they are both quite "safe," but we really think that Roosevelt is not quite as "sane" from the capitalist point of view. The difference between them is that between reactionary and progressive capitalism. It is the difference between anti-trust laws and railway rate legislation. Both classes of legislation are purely capitalistic measures, designed to protect the small capitalists against the big ones. But the methods adopted are based on fundamentally different social principles. As was already mentioned in an earlier part of this chapter, the anti-trust law is a capitalistic measure pure and simple, based on the theory that the State had only police duties to perform. Railway rate regulation, on the other hand, proceeds upon the theory that social means of production are there primarily for the benefit of society as a whole, and are, therefore, subject to social control. That does not mean that railway rate regulation is of any importance in itself. Neither regulation nor even ownership of railways by the capitalistic state are of any importance. But the assumption of regulation, particularly in a purely capitalistic country like the United States, is of significance as showing the drift of ideas. It is also of significance. that attention is diverted from incomes, the Bryan mode of attacking capitalism, to the control of production, the field on which the real battles for the reorganization of the social structure will have to be fought out.
These changes in ideology have not come about because people have obtained a "better insight" into the true relation of things, but because the basis of all ideology, the eco​nomic relations within our society, have changed, are changing. The private ownership of the means of production is the basis of capitalistic society, and therefore of all capitalistic ideology. And by ownership is not meant merely the derivation of revenue, but real ownership, that is, control. A capitalistic class not owning any capital, as the so-called "new" middle class, is a contradiction in terms, an anomaly. But no less anomalous is the position of a capitalist who owns but does not control his property. That wonderful artist, Gorky, with the true insight of genius, has divined this truth and has expressed it when he made one of his characters say that the true importance of wealth is the power of control that it gives one over other people. But this power of control does not lie in the revenue which one derives from wealth, but in the control of this wealth itself, which in our society is synonymous with means of production.
The truth is that the "new" property-less middle class is not a capitalistic class. It is no middle class at all. It is true that it stands in the middle between the capitalist class and the working class, and in this sense it is more of a "middle" than the old middle class which was nothing but the lower strata of the capitalist class. But it is no class. A class is not merely an aggregation of individuals having a more or less similar income obtained in a more or less similar way. In order that any aggregation of individuals should really form a social class they must perform some social-economic function. The existence of the "new middle class" is entirely too aërial to give it position as a social class. They are either merely "hangers on" of some other class, or hang in the air entirely, where they obtain their income from "wind." This "class" has none of the characteristics and none of the ideas of the bourgeoisie which we have described. It not only has no love for property as such, because it does not possess any, but it has not even that love of economic independence and individual enterprise which is the characteristic of the true bourgeois. ​It has no veneration for property or property-rights, no love of economic independence, and consequently no constitutional abhorrence of "paternalism" or of socialism. All this "class" cares for is its income, and that is why its ideologists, the social reformers of all grades and shades, put so much stock in the question of income and always push it to the foreground. To the old bourgeois, in control of his property, it was a question of freedom and independence; he looked upon socialism as upon the coming slavery, he abhorred it for its very comforts which everybody shared alike. Not so with the new middle class. Any one of them is ready at any moment to change his windy existence for a governmental job, service of some corporation or any other occupation, provided his income will not be diminished, or even if it is diminished to a certain extent, provided it is assured to him for any length of time. For it must be remembered that this new middle class suffers just as much from insecurity of income as the working class, if not more, to which must be added insecurity of position. It is very natural that a "class" so all up in the air should not form any firmly rooted ideology of its own, that it should be drifting all the time, and should, therefore, be almost worthless as a social force either for or against the introduction of a new order. But, on the other hand, it is, because of the very nature of its social existence, extremely restless, ever ready to change, and ever longing for a change which would finally do away, or at least alleviate, its unsettledness, give it a rest. "Governmental interference" has no terrors for it. It feels the need of a stronger hand than that of the individual in arranging the field of battle for the struggle for existence. If such a makeshift may be dignified into an ideology, its ideology is State Socialism.
But it is not only the property-less, only-in-name, middle class that has lost its old bourgeois ideology. The remnants of the old middle class, the stockholding small capitalists, have lost their ideology with the control of their property. For it was that control, the individual enterprise, ​that was at the basis of it. Furthermore, with this class as with the "new" middle class, it has become merely a question of income. For property without control is again a contradiction in terms. These people really have no property, although they and others think they do. What they have is a right to a certain income. They are nothing but rentiers, annuitants, either of public or private corporations. They are ready at any time to, and do, exchange their supposed property for more formal annuities and other rentés.
Robbed of its economic independence, deprived of the control of its property and of the opportunity of individual enterprise, it has no other aspirations except to preserve its comforts, its incomes. If it has any ideals at all, its ideals may be said to be just the reverse of the old bourgeois middle class. By the very nature of its way of managing its affairs the propriety, effectiveness, and, above all, the necessity of socialization, is brought home to it. Furthermore, being minority stockholders, the members of this class naturally look upon the general government, the social organization as a whole, as the protector of its rights against the unscrupulous methods and the rapaciousness of the big capitalistic sharks. It is true their ideas in this respect are not those of the revolutionary proletariat, it is not the social organization of work that they dream of, but the social organization of the distribution of gain. By a curious mental process they fill the old forms of their ideology, according to which the State was merely a policeman, with an entirely new substance by extending the police powers to fields which would have horrified their fathers had they lived to see the thing. The ideology of this class, like that of the new middle class, is a curious mixture of old and new ideas, but one thing is clear in the midst of all this confusion, that its antagonism to socialism is not a matter of principle but of convenience.
Hence the "breaking up of ideals," the great changes in the ideology of capitalistic society which we have already noted. Hence, also, the so many different forms of "social​ism" with which we are blessed. Hence, lastly, the "social unrest" in capitalistic quarters.
For it is a mistake to think that the "social unrest" comes wholly, or even mostly, from below. Of course there are moments of unrest in the working-class. But it will be found, upon close examination, that a good deal of it is merely the reflection of the unrest of the higher layers of society. Furthermore, it will be found that the more the working-class emancipates itself from the mental and moral tutelage of the upper class, the more it develops an ideology of its own, as we shall see in the next chapter, and the less the "unrest" in its midst: the more steady its thoughts and actions become. Before the working-class ideology is full-grown, however, and while it is yet under the tutelage of the middle classes, the changes in the ideology of those classes which we have described are of great importance, and even the very restlessness of that ideology and psychology is of importance. For it first creates restlessness below, thus calling out nervous activity, and when that nervous activity has resulted in a firm and clear ideology it cannot offer any effective resistance.
Whatever, therefore, has been saved of the middle class by the corporation with regard to numbers, has been destroyed, and very largely by this very agency, as to character. What was saved from the fire has been destroyed by water. The result is the same: the middle class, that middle class which Marx had in view, the middle class which was a factor obstructing the way towards socialism, is doomed.
This is not all, however. The corporation has not merely failed to save the middle class. It is performing a positive and great service in the work of transformation of our society from capitalism to socialism. That work is nothing less than the abolition of private property and the substitution of collective property in the means of production; the demolition of the basis of capitalism and the rearing of the ground work of a socialist system of society. It is hard to think of our capitalists as doing this work, but that is ​what they are doing nevertheless. In their frantic efforts to save themselves, the capitalist class is doing nothing less than undermining its very existence, cutting out the ground from under its own feet, abolishing, not only the basis of capitalism, but the basis of all class-society—private property. This fact has not been noticed hitherto and given the attention which it deserves, because, again, of the question of income which has obstructed our vision. Because our big capitalists get the benefits, the income, of our corporations, it has not been noticed that they don't own the property from which these incomes and' benefits are derived. In looking with rapturous gaze or hateful abhorrence at the enormous fortunes of our kings, barons, and lesser gentry, the startling fact has been lost sight of that these fortunes are mere titles to revenue and not to property. The law recognizes this fact clearly. The great John D. Rockefeller, ruler of the great Standard Oil and all its domain, has no more title to any part of the property of the great corporation of which he is the master than the poorest elevator boy employed in one of its buildings, and should he attempt to appropriate a dollar's worth of it by using it for himself, the law will treat it as a case of conversion, or larceny, of somebody else's property.
And let no one say that this is mere legal formality. Legal forms always express economic realities. Sometimes they survive their substance and become mere empty forms. In such cases they are records of past economic realities. When they are not records of the past they always express present reality. In this case the form is full of substance. It not only expresses a present reality, but, as it happens, presages the future. As yet the collective form substituted by the capitalists is crude and undeveloped as to form, and the collective bodies are still "private," that is, the benefits derived therefrom are enjoyed by private individuals. The proper distribution of the benefits, that distribution which is suited to the new form of ownership, which in itself is only an expression of the new form of production, will follow as ​surely as harvest follows the planting of the seed. This work of readjustment of the mode of distribution to the new mode of production and ownership, and the full development of all the three processes to the limit of their capacities for the benefit of all members of society, will remain for the fully developed, organized and educated working class. But in the preparatory work of transition, particularly in the ruthless destruction of all the elements of the old social system, our friends the enemy have rendered, and are rendering, signal service. In their mad effort to escape their fate the capitalists are only cheating the gallows by committing suicide.
* ↑ Eduard Bernstein, Die Voraussetzungen des Sozialismus und die Aufgaben der Sozialdemokratie. Stuttgart, 1899.
* ↑ Karl Kautsky, Bernstein und das Sozialdemokratische Programm. Eine Antikritik. Stuttgart, 1899.