Part 7 (1/2)
CHAPTER V
CAPITALISM AND THE LAW OF CONCENTRATION
I
Such was the mode of the development of capitalistic production in its first stage. In this stage a permanent wage-working cla.s.s was formed, new markets were developed, many of them by colonial expansion and territorial conquest, and production for sale and profit became the rule, instead of the exception as formerly when men produced primarily for use and sold only their surplus products. A new form of cla.s.s division thus arose out of this economic soil. Instead of being bound to the land as the serfs had been under feudalism, the wage-workers were bound to their tools. They were not bound to a single master, they were not branded on the cheek, but they were, nevertheless, dependent upon the industrial lords. Economic mastery gradually s.h.i.+fted from the land-owning cla.s.s to the cla.s.s of manufacturers. The political and social history of the Middle Ages is largely the record of the struggle for supremacy which was waged between these two cla.s.ses. That struggle is the central fact of the Protestant Reformation and the Cromwellian Commonwealth.
The second stage of capitalism begins with the birth of the machine age; the introduction of the great mechanical inventions of the latter half of the seventeenth century, and the resulting industrial revolution, the salient features of which we have already traced. That revolution centered in England, whose proud but, from all other points of view than the commercial, foolish boast for a full century it was to be ”the workshop of the world.” The new methods of production, and the development of trade with India, and the colonies and the United States of America, providing a vast and apparently almost unlimited market, a tremendous rivalry was created among the people of England, tauntingly, but with less originality than bitterness, designated ”a nation of shopkeepers” by Napoleon the First. Compet.i.tion flourished and commerce grew under its mighty urge. Quite naturally, therefore, compet.i.tion came to be regarded as ”the life of trade,” and the one supreme law of progress by British economists and statesmen. The economic conditions of the time fostered a st.u.r.dy individualism on the one hand, expressing itself in a policy of _laissez faire_, which, paradoxically, they as surely destroyed. The result was the paradox of a nation of theoretic individualists becoming, through its poor laws, and more especially through the vast body of industrial legislation which developed in spite of theories of _laissez faire_, a nation of practical collectivists.
The third and last stage of capitalism is characterized by new forms of industrial owners.h.i.+p, administration, and control. Concentration of industry and the elimination of compet.i.tion are the distinguis.h.i.+ng features of this stage. When, more than half a century ago, the Socialists predicted an era of industrial concentration and monopoly as the outcome of the compet.i.tive struggles of the time, their prophecies were mocked and derided. Yet, at this distance of time, it is easy to see what they were foresighted enough to envisage in the future; easy enough to see that compet.i.tion carries in its bosom the germs of its own inevitable destruction. In words which, as Professor Ely says,[94] seem to many, even non-Socialists, like a prophecy, Karl Marx argued that the business units in production would continuously increase in magnitude, until at last monopoly emerged from the compet.i.tive struggle. This monopoly becoming a shackle upon the system under which it has grown up, and thus becoming incompatible with capitalist conditions, socialization must, according to Marx, naturally and necessarily follow.[95] In this as in all the utterances of Marx upon the subject we are reminded of the distinction which must be made between Socialism as he conceived it and the Socialism of the Utopians. We never get away from the law of economic interpretation. Socialism, according to Marx, will develop out of capitalist society, and follow capitalism necessarily and inevitably.
It is not a plan to be adopted, but a stage of social development to be reached.
II
For the moment, we are not concerned with the prediction that Socialism must follow the full development of capitalism. The important point for our present study is the predicted growth of monopoly out of compet.i.tion, and the manner in which that prediction has been realized.
Concerning the manner and extent of the fulfillment of this prediction, there have been many keen controversies, both within and without the ranks of the followers of Marx. While Marx and Engels are properly regarded as the first scientific Socialists, having been the first to postulate Socialism as the outcome of evolution, and to explore the laws of that evolution, they were not wholly free from the failings of the Utopists. It would be unreasonable to expect them to be absolutely free from the spirit of their age and their a.s.sociates. There is, doubtless, something Utopian in the very mechanical conception of capitalist concentration which Marx held; the process is too simple and sweeping, the revolution too imminent. Still, by followers and critics alike, it is generally conceded that the _control_ of the means of production is being concentrated into the hands of small and ever smaller groups of capitalists. In recent years the increase in the number of industrial establishments has not kept pace with the increase in the number of workers employed, the increase of capital, or the value of the products manufactured. Not only do we find small groups of men controlling certain industries, but a selective process is clearly observable, giving to the same groups of men control of various industries otherwise utterly unrelated.
In the early stages of the movement toward concentration and trustification, it was possible to cla.s.sify the leading capitalists according to the industries with which they were identified. One set of capitalists, ”Oil Kings,” controlled the oil industry; another set, ”Steel Kings,” controlled the iron and steel industry; another set, ”Coal Barons,” controlled the coal industry, and so on throughout the industrial and commercial life of the nation. To-day all this has been changed. An examination of the ”Directory of Directors” shows that the same men control varied enterprises. The Oil King is at the same time a Steel King, a Coal Baron, a Railway Magnate, and so on. The men who comprise the Standard Oil group, for instance, are found to control hundreds of other companies. They include in the scope of their directorate, banking, insurance, milling, real estate, railroad and steams.h.i.+p lines, gas companies, sugar, coffee, cotton, and tobacco companies, and a heterogeneous host of other concerns. Not only so, but these same men are large holders of investments in all the great European countries, as well as India, Australia, Africa, Asia, and the South American countries, while foreign capitalists similarly, but to a less extent, hold large investments in American companies. Thus, the concentration of industrial control, through its finance, has become interindustrial and is rapidly becoming international. The predictions of Marx are being fulfilled, even though not in the precise manner antic.i.p.ated by him.
III
During recent years there have been many criticisms of the Marxian theory, aiming to show that this concentration has been, and is, much more apparent than real. Some of the most important of these criticisms have come from within the ranks of the Socialist movement itself, and have been widely exploited as portending the disintegration of the Socialist movement. _Inter alia_, it may be remarked here that a certain fretfulness of temper characterizes most of the critics of Socialism.
Strict adherence to the letter of Marx is p.r.o.nounced as a sign of intellectual bondage of the movement and its leaders to the ”Marxian fetish,” and, on the other hand, every recognition of the human fallibility of Marx by a Socialist thinker is hailed as a sure portent of a split in the movement. Yet the most serious criticisms of Marx have come from the ranks of his followers--perhaps only another sign of the intellectual bankruptcy of the academic opposition to Socialism.
Of course, Marx was human and fallible. If ”Capital” had never been written, there would still have been a Socialist movement, and if it could be destroyed by criticism, the Socialist movement would remain.
Socialism is the product of economic conditions, not of a theory or a book. ”Capital” is the intellectual explanation of the genesis of Socialism, and neither its cause nor an argument for it by which it must be judged. Hence the futility of such missions as that undertaken by Mr.
W. H. Mallock, for example, based upon the a.s.sumption that attacks upon the text of Marx will serve to destroy or seriously hinder the living movement. Like a prophet's rebuke to these critics, as well as to those within the ranks of the Socialist movement who would make of the words of Marx and Engels fetters to bind the movement to a dogma, come the words of Engels, published recently, letters in which he writes vigorously to his friend Sorge concerning the working-cla.s.s movement in England and America. Of his compatriots, the handful of German Socialist exiles in America, who sought to make the American workers swallow a ma.s.s of ill-digested Marxian theory, he writes, ”The Germans have never understood how to apply themselves from their theory to the lever which could set the American ma.s.ses in motion; to a great extent they do not understand the theory itself and treat it in a doctrinaire and dogmatic fas.h.i.+on.... It is a credo to them, not a guide to action.” And again, ”Our theory is not a dogma, but the exposition of a process of evolution, and that process involves several successive phases.” Of the English movement he writes, ”And here an instinctive Socialism is more and more taking possession of the ma.s.ses which, _fortunately_, is opposed to all distinct formulation according to the dogmas of one or the other so-called organizations,” and again, he condemns ”the bringing down of the Marxian theory of development to a rigid orthodoxy.”[96] The critics who hope to destroy the Socialist movement of to-day by stringing together mistaken predictions of Marx and Engels, or who think that Socialism is losing its grip because it is adjusting its expressions to the changed conditions which the progress of fifty years has brought about, utterly mistake the character of the movement. In its abandonment of the errors of Marx it is most truly Marxian--because it is expressing life instead of repeating dogma.
Doubtless Marx antic.i.p.ated a much more complete concentration of capital and industry than has yet taken place; doubtless, too, he underrated the powers of endurance of some petty industries, and saw the breakdown of capitalism in a cataclysm, whereas modern Socialists see its merging into a form of socialization. But, when all this is admitted, it cannot be fairly said that the sum of criticism has seriously affected the general Marxian theory, as apart from its particular exposition by Marx himself. So far as the criticism has touched the subject of capitalist concentration, it has been pitifully weak, and the furore it has created seems almost pathetic. The main results of this criticism may be briefly summarized as follows: First, in industry, the persistence, and, in some cases, even increase, of petty industries; second, in agriculture, the failure of large-scale farming, and the decrease of the average farm acreage; third, in retail trade, the persistence of the small stores, despite the growth in size and number of the great department stores; fourth, the fact that concentration of industry does not imply a like concentration of wealth, the number of shareholders in a great industrial combination being frequently greater than the number of owners in the units of industry prior to the combination. At first sight, and stated in this manner, it would seem as if these conclusions, if justified by the facts, involved a serious and far-reaching criticism of the Socialist theory of a universal tendency toward the concentration of industry and commerce into units of ever increasing magnitude.
But upon closer examination, these conclusions, their accuracy admitted, are seen to involve no very damaging criticism of the theory. To the superficial observer, the mere increase in the number of industrial establishments seems a much more important matter than to the careful student, who is not easily deceived by appearances. The student sees that while some petty industries undoubtedly do increase in number, the increase of large industries employing many more workers and much larger capitals is vastly greater. Furthermore, he sees what the superficial observer constantly overlooks, namely, that these petty industries are, for the most part, unstable and transient, being continually absorbed by the larger industrial combinations or crushed out of existence, as soon as they have obtained sufficient vitality and strength to make them worthy of notice, either as tributaries to be desired or potential compet.i.tors to be feared. Petty industries in a very large number of cases represent a stage in social descent, the wreckage of larger industries whose owners are economically as dependent as the ordinary wage-workers, or even poorer and more to be pitied. Where, on the contrary, it is a stage in social ascent, the petty industry is, paradoxical as the idea may appear, frequently part of the process of industrial concentration. By independent gleaning, it endeavors to find sufficient business to maintain its existence. If it fails in this, its owner falls back to the proletarian level from which, in most instances, he arose. If it succeeds only to a degree sufficient to maintain its owner at or near the average wage-earner's level of comfort, it may pa.s.s unnoticed and unmolested. If, on the other hand, it gleans sufficient business to make it desirable as a tributary, or potentially dangerous as a compet.i.tor, the petty business is pounced upon by its mightier rival and either absorbed or crushed, according to the temper or need of the latter. Critics of the Marxian theory have for the most part completely failed to recognize this significant aspect of the subject, and attached far too much importance to the continuance of petty industries.
IV
What is true of petty industry is true in even greater measure of retail trade. Nothing could well be further from the truth than the hasty generalization of some critics, that an increase in the number of retail business establishments invalidates the theory of a progressive concentration of capital. In the first place, many of these establishments have no independence whatsoever, but are merely agencies of larger enterprises. Mr. Macrosty has shown that in London the cheap restaurants are in the hands of four or five firms, and this is a branch of business which, because it calls for relatively small capital, shows in a marked manner the increase of establishments. Much the same conditions exist in connection with the trade in milk and bread.[97]
Similar conditions prevail in almost all the large cities of this country. Single companies are known to control hundreds of saloons, restaurants, cigar stores, shoe stores, bake shops, coal depots, and the like. A mult.i.tude of other businesses are subject to this rule, and it is doubtful whether, after all, there has been the real increase of individual owners.h.i.+p which Mr. Ghent concedes.[98] However that may be, it is certain that a very large number of the business establishments which figure as statistical units in the argument against the Socialist theory of the concentration of capital might very properly be regarded as so many evidences in its favor.
A very large number of small businesses, moreover, are really manipulated by speculators, and serve only as a means of divesting prudent and thrifty artisans and others of their little savings.
Whoever has lived in the poorer quarters of a great city, where small stores are most numerous, and has watched the changes constantly occurring in the stores of the neighborhood, will realize the significance of this observation. The writer has known stores on the upper East Side of New York, where for several years he resided, change hands as many as six or seven times in a single year. What happened was generally this: A workingman having been thrown out of employment, or forced to give up his work by reason of age, sickness, or accident, decided to attempt to make a living in ”business.” In a few weeks, or a few months at most, his small savings were swallowed up, and he had to leave the store, making place for the next victim. An acquaintance of the writer owns six tenement houses in different parts of New York City, the ground floors of which are occupied by small stores. These stores are rented by the month just as other portions of the buildings are, and the owner, on going over his books for a period of five years, found that the average duration of tenancy in them had been less than eight months.
During the past few years in the United States, as a result of the development of the many inventions for the production of ”moving pictures,” a new kind of cheap, popular theater has become common.
Usually the charge of admission is five cents, whence the name ”Nickelodeon”; the entertainment consists usually of a number of more or less dramatic incidents portrayed by means of the pictures, and a few songs, generally ill.u.s.trated by pictures, and sung to the accompaniment of a mechanical piano. In almost every town in the United States these cheap pictorial theaters have appeared and their number will, doubtless, considerably swell the total of business establishments. In the small towns of the State of New York, the writer made an investigation and found that there were frequently several such places in the same town; that they were practically all built by the same persons, started by them, and then leased to others. These were generally people with small savings who, in the course of a few weeks, lost all their money and retired, their places being taken by other victims of the speculators.
What seemed to the casual observer an admirable and conspicuous example of an increase in petty business, proved, upon closer study, to be a very striking example of concentration, disguised for purposes of speculation.