SOCIALISM.

Evening Star, Issue 8364, 15 November 1890, Page 4 (Supplement)

SOCIALISM.

[Bt Professor Flint, D.D., LL.D., in ‘Good Words' for September.]

V,—ITS TEACHING AS TO CAPITAL.

The teaching of Socialism aa to labor having been considered, wo must now turn our attention to its doctrine concerning capital. There is no portion of its teaching to which Socialists themselves attach greater importance. They trace to false the functions and rights ot capital the chief evils which prevail in modern society. They rest all their hopes of a just social organisation in the future on the belief that they can dispel these false views and substitute for them others which are true. Socialists aim at freeing labor from what they regard as the tyranny of capital, and in order to attain their end they strive _ to expose and destroy tho conceptions of capital which are at present dominant. This they consider, indeed, to be their most obvious and most urgent duty. What is capital ? It is a kind of wealth •—wealth which is distinguished from other wealth by the application made of it; wealth which, instead of being devoted to enjoyment, or the satisfaction of immediate wants and desires, is employed in maintaining labor, and in providing it with materials and instruments for the production of additional wealth. It is, in fact, just that portion or kind of wealth which, from its very nature, cannot but co-operate with labor. There is much wealth spent in such a way that the laboring poor may well be excused if they feel aggrieved when they see how it is expended. There are many wealthy persons among ns whom Socialists are as fully entitled to censure as the Hebrew prophets were to denounce the “ wicked rich, ’among their contemporaries. By all means let us condemn the “ wicked rich ;” but let us be sure that it is tho “ wicked rich,” and only tho “ wicked rich,” that we condemn. Now, a capitalist may bowicked, but he is not wicked simply as a capitalist. Viewed merely in tho capacity of ft capitalist, he is a man who employs his wealth in a way ad vantageous to labor ; who distributes the wealth which ho uses aa capital among those who labor. Aa a consumer of wealth the rich man may easily be an enemy of labor, but as a capitalist he must bo its friend ; and this whether ho wish to bo so or not. For capital attains its end only through co operation with labor. Separated from labor it is help leas and useless. Hence, however selfish a man may bo in character and intention, he cinnot employ his wealth as capital without using it to sustain labor, to provide it with materials, to put instruments into its hands, and to secure for it fresh fields of enterprise, new markets, new acquisitions. It seems manifestly to follow that those who seek tho good of labor should desire the increase of capital. It appears indubitable that if the wealthy could be persuaded to use more of their wealth as capital, and to spend less of it in the gratification of their appetites and vanities ; and if the poor could be induced to form capital as far aa their circumstances and means allow, so as to be able to supplement and aid their labor in some measure with capital, the condition of the laboring classes would be improved ; and, on the other hand, that to represent capital as the enemy of labor and the cause of poverty, and to discourage and impede its formation, can only tend to their injury, lint obvious and certain as this consequence looks. Socialists refuse to acknowledge it. ‘They labor to discredit capital, deny or depreciate its benefits, and urge the adoption of measures which would suppress the motives or remove the means essential to its preservation, and increase. There are Socialists who charge capital with doing nothing for production ; who represent it as idle, inefficacious, sterile. They say labor does everything and capital nothing; and that, consequently, labor deserves to receive everything and capital «s not entitled to receive anything. Assuredly they are utterly mistaken. Manifestly the assistance given by capital to production is immense. Without its aid the most fertile soil, the moat genial climate, the most energetic labor, all combined, will produce but little. By means of the capital which the people of Britain have invested in machinery ihey can do more work and produce more wealth than all the inhabitants of tho earth could do through the mere exertion of their unaided muscles. Surely that portion of capital is not less efficacious than the muscular exertion required to impel and direct it. Deprived of the capital which is spent aa wages, the most skilled workmen, however numerous and however familiar with machinery, are helpless. Exactly to estimate the efficacy of capital, as distinct from that of tho other agents of production, is indeed impossible, and for the very sufficient reason that it never is distinct from them, or they independent of it. Nature itself, when no capital is spent upon it, soon becomes incapable of supplying the wants of men—at least if they increase in number and rise above a merely animal stage of existence. The more labor advances in power and skill, the more industrial processes become complex and refined, tho more dependent do labor and capital grow on the aid of each other. If the influence of capital then be, as must bo admitted, incapable of exact measurement, that is only because it is so vast, so varied in the forms it assumes, so comprehensive and pervasive. It operates not as a separate and distinct factor of production, but in and through all tho instruments and agencies of industry, supplying materials, making possible invention and tho use of its results, securing extensive and prolonged co-operation, facilitating exchange by providing means of communication often of an exceedingly costly kind, and, in a word, assisting labor in every act and process by which Nature is subdued and adapted to the service of humanity. With every desire to deny or depreciate the influence of capital in production. Socialists have naturally found it very difficult to find reasons for their prejudices against it. Of late, however, some attempts have been made to render plausible the notion that capital is, if not altogether inefficient as a factor in production, at least much less efficient than is ordinarily supposed. All these attempts necessarily take the form of arguments designed to show that the various elements of the cost of production are paid not out of capital accumulated by past saving, but out of the produce which labor itself creates. The conclusion sought to bo proved carries absurdity so plainly on the face of it that there is no wonder that most of these attempts have dropped almost instantaneously into oblivion. The only one, indeed, which has succeeded in attracting general attention is that of Mr Henry •George. He, of course, has too much ability and good sense to agree with those fanatical Socialists who are hostile to capital itself, or who venture to maintain that it does nothing for labor while labor does everything for it. He does not even apply to capital in tho form of machinery, for example, the same reasoning which he does to capital in the form of wages. He does not maintain either that machinery is useless in production, or that the wealth ; spent in producing it woo wealth which the machinery itself had to generate. But the wealth spent in wages he tries to prove to have been produced by the very labor for which it is paid. Each laborer, he holds, makes the fund from which his wages are drawn, and makes it not only without deducting anything from his employer’s capital, but even while increasing it.

Mr George brings forward, in proof of hie hypothesis, a number of instances, which are ingeniously and interestingly presented, but which supply no real evidence. He starts with the assumption of a naked man thrown on an uninhabited island, and supporting himself by gathering birds’ eggs, or picking berries. The eggs or berries which this man obtains are, he says, “bis wages,'’ and are not drawn from capital, for “ there in no capital in the case.” Bat manifestly these eggs or berries are not wages. There can be no wages where there is only one man, where there is no quid pro quo between one person and another, where there is neither employer nor employed. Mr George proceeds to imagine a man hiring another to gather eggs or berries for him, the payment being a, portion of the eggs or berries gathered. In this case, too, he says, there are wages, and they are drawn from the produce of labor—not at all from capital. But was there svsr such a case ? Would any sane person who was not in some way dependent on another take only a portion of the eggs or berries he colleetod when he might have, and ought to havo, t bff whole ? When a

m»n who collects eggs or berries engages to take only a portion of them for his trouble and to give up the remainder to another man, it mnst be because he recognises that that man is entitled to have a share in the eggs or berries in virtue of some right of property in them, or because he has done him some service which makes him his debtor, or has already given him wages in some other form than eggs or berries, but for which eggs or berries will be accepted as an equivalent. Mr George’s hypothesis finds, then, no support or exemplification even on the simplest and most primitive applications of labor. It fails far more, of course, to apply to ordinary agricultural and manufacturing industry, when labor has to be expended weeks, months, or even years perhaps, in advance, requires to bo provided not merely with a basket but with costly instruments and materials, and is seldom occupied with what can be eaten almost or altogether raw. The ingenuity which would persuade us that the wages of the workmen who built the Pyramids, or tunnelled St. Gothard, or cut the Suez Canal, or cast the cannons of Herr Krupp, were paid out of the pyramids, the tnnnel, the canal, and the cannons must be wasted. It must bo added that if the wages of labor were no deduction from capital, while labor only generated and increased capital, it becomes most mysterious that capitalists should ever losetheir capital. Yet it is a fact of daily occurrence. And if any man inclined to approve of Mr George’s hypothesis will only attempt to act on it, he will soon find out to his cost how easily the fact may occur, and how incorrect the hypothesis is. Whoever tries to establish and carry on business without capital for the payment of wages, will speedily discover that he has made a serious mistake. The hypothesis that such capital is unnecessary will cot stand the test of practice. Capital is charged with a worse fault than indolence. It is denounced ns not only a sluggard but a thief. It is said to be born in theft and kept alive only by incessant theft ; to be nil stolen from labor, and to grow only by constantly stealing from it. This is the thesis on the proof of which Karl Marx concentrated his energies in his treatise on “ Capital.” By the acceptance of some unguarded statements of Adam Smith, by misconceptions of Ricardo’s meaning, by sophisms borrowed from the copious store of Proudhon, by erroneous definitions of value and price, by excluding utility from or including it in his estimate of value just us it suited his purpose, by unwarranted assumptions regarding the functions of labor, and by numerous verbal and logical juggleries, ho elaborated a pretended demonstration, To expound it in detail would take an article to itself, and a general refutation of it would require at least another, but to indicate its essential features and fundamental defects need not detain us long, and may suffice for ovr present purpose. So far as lam aware it has imposed upon no one who knew sufficiently the elementary truths of economic science. The greater number of those who have accepted its conclusion have, owing to their ignorance of economics, necessarily received it merely or chietly on authority. Marx regards capital not as a natural and universal factor of production, but as a temporary fact, or what he calls an historical category, which has had an historical and even late origin. The origin was, according to his view, violence and fraud, or in a single word, spoliation. The mass of capital at present in existence he traces back to conquest, tho expropriation of the feudal peasantry from the soil, the suppression of the monastries, the confiscation of church lands, enclosures, legislation unfavorable to the working classes and other like causes. In this part of Marx’s doctrine there is nothing original or specially important. That wealth has been obtained by the illegitimate means he describes is indubitable. That it was created by them is very doubtful. It must have existed before it could be stolen ; mere theft is not creative either of wealth or capital. The great mass of extant capital has not been inherited from so remote a past as the close of the feudal system and the Reformation, but is of very recent origin. The great majority of contemporary capitalists are not the descendants of feudal lords or of the appropriates of the wealth of the Roman Catholic Church, but are the sons, grandsons, or great-grandsons of poor men. Probably a larger proportion of tho wealth of Britain than that of any other country may be traced to the sources described by Marx, but even it must bo only a small proportion. Tho bulk of British wealth has had its source within the capitalist system itself, and is not directly at least inherited plunder. Still more, of course, does this hold good of American and Australian wealth.

But here Marx meets us with the cardinal article of his economic creed—the continuous capitalistic appropriation of surplus value. The profits of capital are represented by him as of their very nature robbery. They are onlv obtained by the abstraction of what is due'to labor. The capitalist and the laborer make a bargain, the latter consenting to accept as wages, instead of the full value of what ho produces, only, perhaps, a half or a third, or a quarter of it, and, in fact, only the equivalent of what will keep him and his family alive, while the former pockets the remainder, lives in luxury, and continuously accumulates capital, “ Capital, therefore, is not only,” as Adam Smith says, “ the command over labor. It is essentially the command over unpaid labor. All surplus value, what ever particular form (profit, interest, or rent), it may subsequently crystallise into, is in substance the materialisation of unpaid labor. The secret of the self-expansion of capital resolves itself into having the disposal of a definite quantity of other people’s unpaid labor.” If this doctrine be correct all capitalists are thieves ; and Marx often energetically denounces them as such. In one of the prefaces to his chief work, however, he has tempered his reproaches by the statement that as he considers economic evolution to be simply “a process of natural history,” ho does not hold capitalists to be individually responsible, but merely regards them_ as “ the personification of economic categories, the embodiments of class interests and class relations,” This only amounts to saying that although capitalists do live by theft, we must in condemning them remember that they are not moral agents. Schiifiie attempts to improve on it by arguing that although the capitalist must be objectively a thief, he may be subjectively a most respectable man ; and that although he lives by stealing, ho is not even to bo expected to cease from stealing to the utmost of his power, because “ if he did not abstract as much as possible from the earnings of his workmen, and increase his own wealth indefinitely, he would fall out of the running.” It is a pity that after so remarkable an application of the terms “objective” and “subjective,” Herr SchafHe should not have succeeded in reaching a more plausible conclusion than that capitalists are to be excused for stealing because they could not otherwise get the plunder. Might not all the thieves in prison be declared mihjeetively honest on the same ground ? If the doctrine of Marx as to capital be correct, if the profit of capital be entirely the result of the exploitation of labor, if capitalism be a system of robbery, there is no need of any apology for calling capitalists fhieves, and no possible justification of any man jvho knows what capital is living on its gains. All who live on profits, rent, or interest, are thieves if Marx’u doctrine be true ; and they are consciously thieves if they believe it to be true. It is to he hoped that most of them can plead that they do not believe it to be true. For that opinion there ore ciany strong reasons. As I indicated in the previous paper, the notion that all value is derived from labor is erroneous. But on this error Marx s whole hypothesis of surplus value and of the iniquity oJ the accumulation of capital rests. Another support of his hypothesis is the notion that the true of value is to be found in normal labor time. But this is a gross absurdity, justified by no {acts, and defended only by sophisms, A third conception essential to the hypothesis is that profit arises only from the part of capital expended In the payment of wages. It requires us to believe that It \n of no consequence to the capitalist what he requires to pay for raw materials, buildings, and machinery, os he ean neither gain or lose on these things, but only on what he spends in wages. But surely a man who believes that must have much more regard for his own fancies than for the actual experience of other men. , . Again, Marx’s doctrine of the production of relative surplus-value necessarily implies that as capital jpows strong labor grows

weak ; that aa the wealth of the capitalist accumulates the poverty of the laborer increases, Almost all modern socialists have come to the same conclusion. Marx believes himself to have demonstrated it. The direct aim of his entire criticism of capital and especially of that analysis of the formation of surplus value which is what is most distinctive and famous in his treatise, is to establish the result which he himself states in the following vigorous terms: —“ Within the capitalist system all methods for raising the social productiveness of labor are brought about at the cost of the individual laborer ; all means for the development of production transform themselves into means ot domination over, and exploitation of, the producers ; they mutilate the laborer into fragments of a man, degrade him to the level of an appendage of a machine, destroy every remnant of charm in his work, and turn it into a hated toil; they estrange from him the intellectual potentialities of the labor process in the same proportion as science is incorporated in it aa an independent power ; they distort the conditions under which ho works, subject him during the labor process to a despotism the more hateful for its meanness ; they transform his lifetime into working time, and drag his wife and child beneath the wheels of tho Juggernaut of capital. . . . . The law, finally, that always equilibrates tho relative surplus population, or industrial reserve army, to the extent and energy of accumulation ; this law rivets the laborer to capital more firmly than the wedges of Vulcan did Prometheus to the rock. It establishes an accumulation _ of misery corresponding with an accumulation of capital. Accumulation of wealth at one pole is, therefore, at the same time accumulative of misery, agony of toil, slavery, ignorance, brutality, mental degradation, ot the opposite pole.” The theory which necessitates such a conclusion must bo false, for the conclusion itself is certainly false. The evils, indeed, incidental to, and inherent in, the existing economic condition of society must bo admitted to be numerous and serious. There is no sufficient warrant for any optimistic view either of the present or of the future of industry. But such sheer pessimism os that of Marx is thoroughly baseless and irrational. It insists that within the capitalist system, and in the measure that the wealth of capitalists increases, the laboring classes must become continually poorer, more dependent, more ignorant, more degraded in intellect and character. Yet within this very system, and while wealth has been accumulating with extraordinary rapidity, the working classes have obtained the political rights formerly denied to them, democracy has proved irresistible, knowledge and the desire for knowledge have penetrated to the lowest strata of society, crime relatively to population has decreased, wages have remarkably risen, commodities have generally fallen in price, and material comfort has become much more common. Statistical investigations leave it, perhaps, undecided whether during the last half-century wages have increased relatively to the gains of capital ; but they make it certain that they have increased absolutely, and that the r;se of real wages has been even greater than that of nominal wages. They show that there has been a remarkable levelling up of wages ; and even that the wages of tho more poorly paid occupations have increased proportionately much more than those of the better paid. The doctrine of Marx, generally accepted by Socialists, that tho increase of production and the accumulation of capital necessarily tend to the disadvantage, slavery, and misery of the operative classes, is thus clearly inconsistent with history, and decisively contradicted by science truly so called. ( To he concentred. J