Publicado em: Living Marxism: International Council Correspondence Vol. V (1940-1941), no. 3 (Winter 1941)
In Germany, shortly before fascism came to power, a group of reactionary writers began to attack the capitalistic system of production and its social organizations even more vehemently than had previously been done by the exponents of the radical labor movement. An outstanding contributor to this group was Ferdinand Fried, whose book The End of Capitalism, published in 1931, announced the close of the liberalistic-capitalistic epoch and the ascendency of state capitalism, brought about by the collapse of the old world-economy and the rise of fascism and planning.
Lawrence Dennis’s new book The Dynamics of War and Revolution belongs in the same literary category. It predicts for America what Fried once declared was Germany’s inevitable fate. Neither writer, however, has much in common with the actual fascistic political movement, nor with the pseudo-fascism preceding it. Just as Fried was exiled and his book forgotten, so will Dennis and his work find little appreciation among fascists or “anti-fascists”. The reason for this may be found in the illusions of these writers, who actually believe that the present fascistic movement has the character of a genuine revolution able to transform the world basically enough to guarantee further progressive development. Though they are right in predicting the success of fascism over burgeois democracy, they are wrong in assuming that fascism can, even temporarily, break that economic stagnation which is at the bottom of all social upheavals of the present epoch.
Because Dennis, Fried, etc., expect much more from fascism than it is able to deliver, their theories do not fit very well into the vague ideological structure of fascism; nor do these theories suit the changing requirements of the victorious fascist class. Not what they are considered dangerous; rather fascism is not “dangerous” enought to find those theories usable for any length of time. As a matter of fact, fascism is not at all in need of new social theories. What it wants are political and economic methods to secure its rule over existing society. “If one makes dogmas out of methods”, Hitler once said, “he takes away from human effort and intelligence those elastic attitudes which make it possible to operate with different means at different situations in order to master them”.
The ideia of “social development as a permanent revolution” – the motif in Dennis’s writings – can by itself suit fascism only in its struggle for power. In a modified form, it may even serve as a part of the war ideology justifying imperialistic aspirations. But fascism wants to rule for “a thousand years”. It comes with the intention of staying and all talk of a “Second Revolution”, let alone a permanent one, is answered with exile and murder. Even if Dennis is far from “defending all revolutions and everything done in each of them”, he still holds revolutions to be inevitable and thinks “that any revolution that is big enought will end stagnation”. But it is the self-appointed job of fascism to prevent a revolution that is big enough to end stagnation. It is fascism’s attempt to reform not to revolutionize, the capitalistic system of production and distribution which excludes adherence to any social theory that sees all development in terms of revolution.
Dennis challenges not only the “defenders” of bourgeois democracy but also the Marxists. “As the world swaps revolutions and imperialism”, he writes, “it is time for Americans to take new bearings. For doing this they will find little guidance in Herbert Spencer or Karl Marx… The latter-day liberals hoped to stabilize the dynamism of the industrial revolution and the frontier which are now over. The Marxists caught the equally chimerical vision of a classless society of workers from which the state would have withered away, leaving the ideas of laissez-faire to flourish in the garden of liberty completely rid of the noxious weeds of private capitalism”. In the present revolution, however, the old capitalist merchant-class elite is pushed aside by a new non-commercial elite, to whom Dennis’s book is addressed. This new elite is bent on realizing socialism. And for Dennis “Russia and Germany are examples setting the present standarts of socialism”.
Dennis justifies presenting Russia and Germany as socialistic societies with the argument that “if most of the one hundred and eighty million Russians or eighty million Germans call what they have socialism, this fact is more important for purposes of definition than the opinion of a handful of American or British idealists who are politically insignificant, but who believe theirs to be the only genuine variety of socialism”. In other words, Dennis accepts the name the “Germans” and “Russians” have given their societies. We, however, regard these nations as having state-capitalistic systems, which contain larger or smaller “private-capitalist sectors”. We prefer to call these systems state-capitalistic because we can conceive of a still different economic and social form from those existing in Russia and Germany. Dennis, not interested in things to come, willingly accepts as socialism that which calls itself such. We will then not argue about definitions, but accept as “socialism” what at other times we describe as fascism and state capitalism. In short, if Russia and Germany are “socialistic”, our opposition to those countries may then be seen by Dennis as opposition to “socialism”.
There is one more question of definition to be settled before we can proceed. Dennis states that “The only consistent feature of the capitalist revolution of the past hundred and fifty years has been continuous change, which is the only law of any and every revolution”. For him “the nature of change does not matter”. His permanent revolution first meant continuous change of capitalism; it now means continuous change of “socialism”. “The deviations of German socialism from Mein Kampf or of Russian Socialism from Das Kapital“, the writes, “are as natural as the deviations of modern capitalism from the theory of Adam Smith’s Wealth of Nations“. Aside from the fact that neither of the theories he mentions really formed the basis of social developments ascribed thereto, and that consequently these developments could not “deviate” from a basis they did not have, we do not think it particularly fruitful to assume that “the nature of change does not matter”.
We are used to making distinctions between “essential” and “non-essential” social changes. To express the difference we speak of evolutionary and revolutionary phases of social development. Though evolution is part of revolution and the latter part of the first, still not to distinguish between them means not to understand social development. To us changes in capitalism which do not disturb the specific capitalistic production-relations (wage-labor exploitation and the divorce of the workers from the means of production) are something other than the revolutionary overthrow of those production relations.
When Dennis speaks of the capitalist revolution, he means not only that revolutionary change from feudalism to capitalism, but the whole of capitalist development up to the present. He means the growth of capital, which changed a lot of things, but not that fundamental social relationship which consists of exploiting capitalists and exploited workers. When we then accept Dennis’s term “capitalist revolution”, we understand the accumulation process of capital and its social results. We fail to see, however, how on the basis of his concept of revolution, Dennis can speark, when dealing with the changes from private to collective exploitative methods in Russia and Germany, of a new social revolution. For us capitalism has not been overthrown so long as the basic capital-labor relations remain intact. While the latter exist, all other changes, however important, still indicate no more than the further evolution, or as Dennis would say, “revolution” of capitalism.
If we, however, speak of fascistic or state-capitalistic “revolutions”, we mean thereby that the further evolution of capitalism had to be brought about by new political and direct means, which appear “revolutionary” in comparison with the traditional indirect economic and political methods which accompanied previous capitalistic development.
Moreover, if we speark of fascism and state capitalism as varieties of capitalism, we do not mean to say that these new variations represent progress. Change does not necessarily imply progress. (Progress is here defined as increased exploitation, the growth of capital, and the territorial expansion of the capitalist mode of production). Progress as such is furthermore, as Dennis also points out, not important to capitalism. Only accelerated progress may solve its problems. The rate of capital accumulation, not a mere increase in profits, is here the determining factor. A relative stagnation of capital might be sufficient to produce crisis conditions.
In addition, the fact that capitalism is a world-wide system of production and distribution allows for changes in the creation and distribution of profits which are important, but which do not alter anything of significance in the conditions of capitalism as a whole. These later conditions are decisive, however, for the trends of capitalistic development. Mere shifts of economic activity from one place to another, changes in the distribution of world-created profits, may change nothing in an existing downward trend because of capitalism’s inability to expand as a whole. Less unemployment in Russia and Germany, for instance, may mean more unemployment in other countries. More surplus labor and profits in America may mean less of both in Europe.
The general crisis of capitalism, for example, has now forced the capitalistically weaker nations, in order to safeguard their very existence, to other than traditional methods of combatting depressions. This, in turn, has forced the stronger nations in defense of their profits to react in a way that, though assuring an increased economic activity all over world, will obviously lead to a still further decrease of capitalism’s profitability. Surpluses, instead of being capitalized, are now destroyed to an extend that the “new dynamism” thus created cannot indicate the coming of a new society, but only the more rapid destruction of the present one.
The End of the Capitalist Revolution
It will first be necessary to investigate Dennis’s statement, on which he bases his claim that “socialism” is inevitable, that capitalism is declining. In his opinion, “capitalism by itself” was never dynamic. Its “expansion in geometrical progression and its development of monopolies in the course of the industrial evolution” he finds explicable only through the profits obtained from non-capitalistic territories (the British empire and the American frontier), which provided opportunities, incentives, and escapes for individuals. Capitalistic, or private enterprise, Dennis point out, has always needed subsidies – something for nothing, like free lands and a perpetual landboom – to stimulate it to a necessary amount of activity. Capitalism was able to develop because of cheap labor, because of a series of easy wars of conquest and exploitation, and through rapid population growth, which also expanded the markets. Only under such conditions were private enterprise, democracy, and liberal freedom possible. However, the end of the frontier, of imperialism of the English brand, of rapid population growth and easy wars indicate the end of democracy as well as the end of capitalism itself.
The familiar notion that not socialism, but only capitalism, throught its private property form and the market mechanism, allows for political democracy, re-appears here by Dennis in a somewhat modified form. To him the disappearance of democracy is also the end of capitalism, and vice versa. Though it is true that capitalism seemed to flourish best under conditions of democracy, it also existed under other circumstances, as for instance in Russia and Japan before the ascendency of bolshevism and fascism. There is no reason why capitalism should not be able to continue to exist under any form of government. The fact that its growth in a number of countries coincided with the rise of democracy does not prove that this is the only manner in which it can develop and exist.
That there is a direct connection between laissez-faire economy and bourgeois democracy is not to be doubted; but then there never was a pure laissez-faire economy during capitalism’s development. The term laissez-faire economy is used to emphasize only one of the many characteristics of capitalistic expansion. “Democracy”, too, existed only when it did not interfere with the needs of the various capitalistic groups which ruled in their own exclusive interests over the whole of society. “Laissez-faire” contained in itself and led to monopoly; the growth of capital transformed monopoly into monopolistic laissez-faire. Democracy, once the dictatorship of capitalists, became the dictatorship of monopolists.
This process of concentration and centralization of economic and political power was at the same time the expansion of capital in size and extension. As capitalists came and went, governments were installed and dissolved, institutions were developed and discarded, monopolies were formed and broken up. But during this whole process no end of capitalism could be discerned because of the disappearance of the frontier, of easy wars and rapid population growth. It seems to us that capitalism loses it dynamic long before the barriers enumerated by Dennis are really reached.
Population and Profits
How is it possible, for instance, in a world that produced 25 millions of unemployed in the 1929 depression, to say that capitalism declines because the population decreases? The decline of capitalism cannot be explained by that of population; the latter has to be explained by the former. There is no absolute law of population; each society has a law peculiar to itself. It cannot be denied that the development of capitalism was accompanied by an enormous population increase. If capitalism can both increase and crease population, the neither tendency can explain anything essential as regards the possibilities of limitations of capitalism. Furthermore, a population increase, brought about either by greater birth rates or by immigration, does not necessarily mean greater economic activity; nor must an opposite trend lead to contraction in production. Economic activity in capitalism depends on investments. If not enought are forthcoming, population tends to decline. For Dennis, however, result is cause. And though it is true that, once captialism has started to decline, result becomes cause and cause result, nevertheless the question of primacy must be raised if one wants to inquire into the reasons for capitalism’s decay.
On the basis of his wrong assumption that population trends determine capital expansion, Dennis then says specifically that “During the days of heavy immigration, rapid population growth and a scarcity of food and shelter, labor could not have enforced its present real wage demands, which, to the extent that they must be met at the expense of profits, are deterrents to new investment and enterprise”. Aside from the fact that no serious economist any longer holds the position that the pressure upon wages, because of the larger supply of labor, could increase the rate of profits to such and extent that entrepreneurial initiative for new investments of any significance would be forthcoming, it should be quite difficult to maintain this assertion in the face of the existing large-scale unemployment, which, in Dennis’s own words, is “capitalism’s only enduring creation since the war”. Besides, the wages Dennis refers to are the privilege of only a relatively small body of workers brought about by capitalistic trade-union policies at the expense of the large majority of the laboring population, which is hardly capable of re-producing its labor power, some workers even living on the verge of actual starvation not only in the world at large but in America as well. Aside from all this, it is still more difficult to see the point of Dennis’s assertion in view of the fact that he himself has so greatly emphasized the importance of the frontier. If the latter gave many opportunities to capitalism, it also provieded the workers with the chance to refuse low wages and go westward.
It seems to us rather that the social and economic position of the workers in relation to that of capital has not been improved, and that, from this point of view, it should be far easier now than before to force the will of capital upon the workers and to make them sacrifice in favor of new investments. Not a shortage of labor and an “abundance of food and shelter” stands in the way of further capital expansion, but capitalism’s inability to use the existing surplus of labor and to employ the prevailing wide-spread misery for its own purposes. The increases in real wages, Dennis may be able to point out, were not due to a population decline, but to the greater productivity of labor, necessitating the betterment of living conditions. That this was been bought about by way of struggle, in which a real or produced temporary labor shortage served the workers, does not alter the fact that a higher productivity demands a better standard of living. However, as wage statistics will show, there was never in history a situation where the workers could enforce wages that hampered capital expansion. If such a chance ever existed, it has certainly been missed.
It is true that the individual capitalists, and now even the collective-state enterprises, see in the cutting of wages their next necessary step whenever profits become to small, or when larger profits are needed at once. Nevertheless, capitalism has never solved its real problems by the simple method of lowering wages. Wage reduction at one time are compensated for by wage increases at another. In the long run, and for capitalism as a whole, expansion of capital is not determined by high or low real wages.
At no time during capitalism’s history have wages been decisively determined by the number of workers asking for one job, that is, by rapid population growth. With regard to the commodity labor power, the law of supply and demand does not work so well as it seems to “work” for other commodities. Dennis himself knows that generally in production “Producer demand, not consumer demand is sovereign”, which means that the law of supply and demand can explain nothing essential, but is itself in need of explanation. Not the increase or decrease in the number of workers, but the fact that labor must sell its labor power in order to live, and sell it to capitalists who, in order to be able to buy it, must buy it at a price which gives them sufficient profits to exist and expand, explains the existence of certain wages. The workers may be able to bring the whole capitalist society to and end. But, regardless of the labor supply, they will never be able to raise their wages high enough to hinder on their part further capital formation. However great the unemployed army, capitalism cannot reduce wages below re-production costs for a considerable lenght of time without reducing its own profits. Despite wage struggles of all sorts, the decision as to what kind of wages will prevail is made neither by the capitalists nor by the workers, but only through them, by the needs of the economic system to which both adhere.
The increase in real wages of which Dennis speaks was, furthermore, only made possible by and was only brought about through a much faster increase of exploitation. The part of the social product falling to the workers decreased continuously with the growth of capital. This is a tautology, because the latter implies the first; it is one and the same process. Lower real wages meant lower profits, higher real wages higher profits, but labor was less exploited by lower real wages than it was by higher ones. It was less exploited during the frontier period, during rapid population increase, during the period of easy wars, and during the era of expanding markets than it is today. Capitalism’s problem consists not, as Dennis sees it, in its inability to raise sufficient profits for further development because of real wages hindering this process – wages to be explained by a relative lack of population growth. The question rather is, why, despite an exploitative greater than ever in captialism’s history, despite large-scale unemployment, serving now as before as an additional element to suppress wages, is it still not possible for capitalism to expand further? In short, why was it possible for capitalism to expand under less favorable conditions, and why can it not expand under the best possible conditions?
In his arguments Dennis included another familiar statement, namely, that capitalism “cannot raise living standards without reducing profits and the incentives to new investment and enterprise, (and) at the same time cannot maintain the necessary market for full production and employment without raising living standards or real wages at the expense of profits”. This “dilemma” which, in Dennis’s opinion, “capitalism never faced before”, and did not need to face “as long as it had a frontier, rapid growth, migration and a flourishing industrial revolution”, is not a new “dilemma”, but no dilemma at all. When raising living standards capitalism never reduced but increased profits, frontier or no frontier. As long as it increased profits sufficiently it had a market for full production, for capitalism is its own best customer. The trouble now is that, regardless of frontiers and living standards, there are not enought profits, because the question is not one of how to realize surplus value in the face of lacking markets, but how to produce sufficient surplus value (profits) to create new capitalist markets.
Frontiers and Easy Wars
What did the frontier and imperialistic expansion mean in economic terms? Markets and extra-profits, Dennis answers. But, though it is true that these extra-profits and markets were of considerable importance to capitalism, they do not explain the success of capitalism but are the result of that success. Is it not a fact that trade between highly developed industrial countries, not to mention their internal economic activity, was and is about ten times as important for their welfare as is their trade with frontier territories? The great bulk of the profits is created in the highly developed nations; only a small percentage of their riches is derived from colonial exploitation. Though it is true that the appropriation of other people’s property without an adequate equivalent has been of great importance for the development of the countries initiating the capitalist expansion process, still it only accelerated a movement whose success was already guaranteed though the capitalistic form of exploitation itself. And though it is true that the actual lack of profitability in recent history has raised the interest in additional profits from abroad, regardless of their size, still present-day imperialism, as well as the whole previous territorial expansion of capital, is and was only possible because of the increase in exploitation in the original and the now-existing capitalistic nations.
Obviously Dennis has things standing on their head. For example, he explains the success of American capitalism by the fact that American farmers and speculators could buy land and cheaply and sell it dearly. With little effort and expense they could acquire vast land holdings either by governmental land grants or simply by being firstcomers. The westward movement and the increasing industrialization allowed these lucky ones to sell all or part of their land at ever-increasing prices. The continuous land boom thus created made a considerable number of people rich. But one should not only inquire about the lucky sellers. Who were the buyers who paid the prices, and where did they get the money to do so? Either this money represented the savings of European immigrants, that is, came from past labor or past exploitation of labor, or the land, if given on credit, was paid for with the labor applied to it, or with profits raised in industry. Without increasing industrialization and the capitalist increase in exploitation, this whole process would not have been possible. The American frontier was a “frontier” because of the capitalist expansion process. The statistical material available shows, for instance, that during the nineteenth century the large waves of immigration followed, not preceded, upward waves in business. The dynamic of capitalism made the frontier what it was; the frontier did not give capitalism its dynamic.
The “enrichment” by way of the perpetual land boom did not involve the creation but only the distribution of profits. The first comers merely exploited their advantage and appropriated for themselves profits created either by others or for others. In different words, during the frontier period farmers and prospectors were able to participate in the exploitation of labor. Today the picture is reversed. Now it is industry that appropriates parts of the surpluses of agricultural production for itself, either by way of better price control or throught the industrialization of agriculture. The capital concentration also affects the division of surplus value; rent and interest disappear in order to bolster industrial profits. But both situations, exploitation by land monopoly or industrial monopoly, do not enlarge the surplus value (labor) socially created. They only indicate what social group is able to sell above value, and what other group has to sell below value. Both situations change nothing of the fact that it is always labor, agricultural and industrial, that determines the amount of surplus value on hand, over the division of which the fight may then issue.
It the frontier had actually meant what Dennis thinks it meant, it should have frustrated, not fostered, capital development, because it diminished the profitability of industry and thus hampered rapid expansion. Though it is true that parts of industrial profits wandering into the pockets of the land-owners and speculators found, via the banking system, their way back into industry, yet even for those parts interest had to be paid, so that industry could only feel itself doubly “cheated”. It was capitalism’s job to do away with the frontier. Only thus could it serve its real interests.
Just the same, the frontier was a godsend for capitalism. Not because of the perpetual land boom connected therewith nor because it subsidized capitalism, but because, though it robbed capitalism of parts of the surplus value sweat out the workers, it provided the space and material needed for capitalistic expansion. Without an abundance and a variety of raw materials capitalist production is unthinkable. Capitalism presupposes the international division of labor, it is the creation of a world economy. The more the world is capitalized, the better capitalism will flourish. The more non-capitalistic exploitation is transformed into capitalistic exploitation, the more profits are at capitalism’s disposal. Only with the end of the frontier did America become the powerful country it is today. Only then it changed from a raw-material-producing and capital-importing country into a nation selling all sorts of produce and exporting capital in great quantities. Only with the disappearance of the frontier did America cease to be a mere appendix to European capital.
Only the successful transformation of non-capitalistic into capitalistic territory is of real importance to capitalism. But each nation, expanding its capital, is opposed to capital expansion elsewhere. Though “theoretically” the capitalistic world would flourish best if it were completely capitalized, in reality each capitalistic country tries at the same time to prevent the realization of this “theoretical” necessity. Though “theoretically” the end of all frontiers should be most favorable to capitalist society, in practice the diverse, historically-conditioned, and nationally-orientated vested interests preclude the removal of these frontiers. Capitalism is not doomed because it removed the frontiers too rapidly; if the argument of the frontier is used at all, one can only say that the continued existence of frontiers demonstrates the limitations of capitalism, which has to disappear because of its inability to continue to increase the productive forces of mankind.
It should beobvious that the world at large is far from being capitalized. Even though the American frontier has disappeared, why not make use of the frontiers in South America, South-East Europe, Asia, Africa, Australia? Dennis answers that the new “social revolution” which has started in Russia and Germany excludes the utilization of the remaining non-capitalistic or backward territories for private capitalistic purposes. Why was it then that long before this “new revolution” started capitalistic expansion into non-capitalistic territory had either found its end or had begun to stagnate? Why is India as backward as it is, despite England’s longe rule? And why aren’t the “400 Million Customers” in China properly exploited?
One may point to the existing imperialistic rivalries checkmating each other. But such a situation still allows both for a general rush of investments and for a general reluctance to invest because of lack of security. Behind the failure to capitalize the backward nations stands far more than the fear among capital-exporting countries of losing their investments in case of war.
It is true that in order to open the “virgin” territories to capitalistic exploitation wars, less easy than those which created the British empire, or which led to the present form of the United States, will have to be fought. But then the ability to fight has grown with the difficulties of warfare. A strong combination of capitalistic nations will still be able to defeat a weak er combination of capitalist nations and take, as its price, control over the backward countries. War is not only now, but always was, “unprofitable”. It was not fighting which brought additional profits to the ascending capitalist regime, but more and greater exploitation of labor after the fighting was over. The difficulties of war cannot explain the end of capital expansion; less so, since the end of capital expansion led to the last and to the present world war.
The Decline of Capitalism
For all the reasons so far discussed, that is, the end of the frontier, of easy wars, and of rapid population growth, Dennis thinks that “as a constructive force for private captialism, the industrial revolution is now over”. The “socialistic countries”, Russia, Germany and Japan, will continue where capitalism has left off. However, what he assumes to be reasons for the decline of capitalism are not the real reasons, and the real reasons, that is the capitalistic mode of production which stands opposed to the social needs of today, he does not even recognize. By denying capitalism’s inner dynamic he fails to understand its present decay, and thus has to limit himself to favoring the fascist “reform” of capitalism which, whatever it might change, will not change anything in the further desintegration of the capitalist production process.
What then is at the basis of the present economic and social stagnation? Throughout his book Dennis talks extensively about many forms of capitalist exploitation. He neglects, however, to investigate thoroughly that of labor by capital. Though he realizes that expansion depends on profits, and though he knows where profits come from, still he does not graps the whole significance of the relationship between profit and expansion. Much as he tries to, he does not concern himself with fundamental contradictions of capitalism, but is concerned only with question of profit distribution. Only thus can he remain in the superficial spheres of population growth, frontiers, and easy wars. All he needs is a few good arguments to say why he thinks that the state-capitalistic, or “socialistic” form of profit distribution is superior to that of private capitalism. As the German fascists, a la Fried, were opposed only to “interest slavery”, and that at a time when the end of banking capital was already at hand, so Dennis too, though more embracing, opposes no more than private profit appropriations. He also demands this at an hour when it has already become actual practice. Today even the victims begin to realize that their days are over. Though Dennis believes he is opposing capitalism, he really favors the continuation of its mode of production if it can only be modified in such manner as to be able to with-stand the possible onslaught of the dissatisfied masses. In view of rising fascism, many of his predictions as to the features of the immediate future seem to be quite realistic; however, his belief that the problems he thinks in need of solution will thereby be solved is certainly illusory.
Since for Dennis the permanent revolution, that is, social change, never consists in more than the exchange of one elite for another and a change of institutions and functions within the otherwise unchanged exploitation relations, it is understandable why he did not bother himself too much with the basic problems of capitalist society. To safeguard his position, he has to insist that capitalism must receive “something for nothing” in order to live and prosper. But the whole of capital is “something for nothing” that is, it consists of surplus labor past and present. Imperialism itself is finally reducible to the appropriation of surplus labor from other countries. The trouble then, to repeat, is not that capital geographically reaches its barriers, but that it is no longer able to increase its profitability sufficiently at home to continue capital expansion abroad. Not because it is no longer possible to get “something for nothing”, but because it is not possible to raise the exploitability of the existing number of workers to provide for the capital needed for expansion does capitalism find it difficult to get everything for nothing.
Not the frontier, population growth and easy wars gave capitalism its dynamic, but the possibility of appropriating by capitalistic exploitation methods ever greater numbers of workers, necessitating, as well as making possible, territorial expansion. The increase in the laboring population was accompanied by a still more rapid increase in capital. The decline of the laboring population relative to that of capital – this fundamental capitalistic contradiction, which though not the only one is still the only one through which all other reasons for capitalism’s decline become understandable – Dennis does not even mention.
The question previously raised as to why it is that capitalism stagnates despite high exploitation contains its own answer. Because exploitation is so great that its increase through lowering living standards or through exploitation from abroad ceases to be of importante as regards capital formation, it must be increased by additional exploitation of additional workers. That means, not by any number of additional workers, but by a number great enough to produce profits sufficient for still further capital expansion. However, every additional worker necessitates and additional capital outlay. This capital outlay increases with the growth of capital. The question is then: is it possible for the existing number of workers to create sufficient surplus value to produce that capital necessary to employ profitably the needed number of additional workers? How big must this capital be, and if it is created, are there enough workers on hand to make it possible for expansion to occur?
As long as capital was relatively small and its expansive needs limited, profits were, relatively high. Profits are what is left over from production after wages, rent, interest, distribution and reproduction costs, etc., are accounted for. Capital expansion means that part of the profits, and unnused part of other incomes ready for industrial investments, are not hoarded but are used to construct additional means of production. However, the growth of capital implies the relative decline of labor ower. The wage bill becomes smaller the higher capital mounts, though the wage bill (variable capital) may also increase, and in case of accumulation, must increase in absolute terms. Profits are derived from labor. As long as the exploitation of labor can be sufficiently increased, the decline of labor relative to that of capital means nothing. The tendency of a declining rate of profit inherent in the disproportional growth between labor and capital (variable and constant capital) cannot assert itself so long as exploitation increases fast than the rate of profit declines, that is, so long as capital accumulates rapidly.
The smaller profits of smaller capital are something other than the larger profits of large capital. A capital relation where, say half of the existing capital is invested in wages, and the other half in means of production, yields less profit than a capital relation where 9/10ths consist of means of production and only 1/10th represents wage capital. But in relation to the total capital, that is, constant and variable combined, the absolute greater sum of profit has become relatively smaller, because the profit, though won only by labor, has to be measured in relation to the whole of capital investments. Furthermore, in the case of an equal relationship of the two components of capital, a greater number of workers have to re-produce the existing capital and create its additions than in the other case. A relatively slight increase in exploitation, made possible by technological development and productive re-organizations, or even by a mere increase inthe intensity of labor, or by lengthening the working day, may assure prosperity in the first case. To have prosperity in the second case means that a very small number of workers must reproduce the existing capital and create its additions. Here a greater intensity of labor may no longer mean anything, as the high productivity already reached by reason of the large capital invested in means of production may preclude sufficient increase in labor intensity. Neither would the lengthening of the working day help because, under such conditions, after a certain number of hours, the workers’ productivity declines rapidly. What would be of help here is further technological development and better organization of production. If, however, the existing, already enormous, capital is unprofitable, technological development implies a still greater capital than that in existence. That does not neccesarily mean greater enterprises, but additional enterprises, or the replacement of less with more productive enterprises. Capital must be sufficiently enlarged to restore profitability despite the furthering of the discrepancies between the two components of capital, constant and variable. If this, at any given time, is not possible, stagnation sets in and capital destruction takes the place of expansion.
What is “healthy” in capital is not its “prosperities”, but its depressions. Those people who think that depressions are bad for capitalism, and who long for the return of prosperity, are only longing for the final capitalistic collapse. All periods of prosperity have hitherto only accelerated the development of that unfortunate disproportional development between constant and variable capital, which gave capitalism a “dynamic” otherwise possessed only by people suffering under galloping tuberculosis. Able to “prosper” only by accumulation, capital has always increased its momentary profitability by making smaller the basis on which it rests. The more it actually expanded, the more it contradicted its own “interests”.
If capitalism could prosper by a development which increased the number of exploited workers simultaneously and proportionately to the growth of capital, it would find its end with the end of natural resources and available labor power. If it could prosper by a more rapid development of population than that of capital, it would end in starvation. If it has prospered by the more rapid increase of constant capital over the variable part, it now finds its end in the inability of the relatively fewer workers to maintain and increase that capital.
Assuming the relation between constant and variable capital today approximates the 10 to 1 relationship used for illustrative purposes above, and if the existing capital has to be totally reproduced within a span of 10 years, this would mean that every employed worker today must yearly create, besides the money equivalent for his and his family’s livelihood, an equal sum for capital replacements, plus the per capita distribution costs, plus taxes, plus the livelihood of the capitalists and that of the non-working population not accounted for in the previous categories, plus, finally, additional capital for expansion. If the workers are not able to create all that, capitalist society stagnates until it becomes possible to increase the productivity of the existing working population to a point where further expansion becomes possible. If capital expansion is not successful, all the items in which surplus value is divided increase, making it less and less possible to raise the capital needed for expansion. Under such conditions a forceful destruction of capital becomes necessary; that is, the ending of a relationship in production which excludes further expansion, for instance, through a change in the proportional relationship between capital and labor from 10 to 1 to, say, 8 to 1. If crisis and depression destroy capital in sufficient quantities, and thus enable a rise of profits for the enterprises capable of living through the depression, the continuation of technical advancement and the consequent increase in productivity re-establishes a level of production which allows for further accumulation.
This has been the case so far. Each previous capitalistic depression destroyed enough capital to raise the profitability of the remaining capital sufficiently to guarantee another period of “prosperity”. If one is interested in the maintenance of capitalism, one should pray for better and bigger depressions. As a matter of fact, every capitalist does so. He always means, however, that the benefits shall be visited upon his fellow-capitalists. After all, this is a Christian civilization. The present depression unfortunately finds too many non-believers in the ranks of capital; the trouble with the present depression so far is not that it is so big, but that it is not big enough. Monopolization, capital concentration, trustification, cartellization, and market controls of all sorts hinder capital destruction in necessary quantities. However, if individual capitalists and concerns have turned into heathens, not so the rest of the population which, by its own movement, brings about and enforces governmental policies which serve to an ever greater extent the destruction of capital in order to safeguard capitalist society.
The question as to whether capital will be able once more to overcome its present stagnation and decline by simultaneously destroying capital and raising profits is not an economic question. There does not exist a purely economic problem at all. However, by taking economic phenomena out of the social setting of which they are a part, it becomes possible to shed some light on the developmental tendencies of the latter. By knowing that it takes to re-establish profitability and progressive accumulation, one becomes aware of the character and intensity of the ensuing class struggles. From a “purely economic” point of view there is indeed no reason why capitalism should not be able to overcome its present difficulties. Though the workers are extremely exploited, though they may already work seven hours for capital during an eight-hour day, is there any reason why they should not work 7 3/4 hous for capital; is there any reason why the number of workers should not increase by 10 or 20 per cent, or even more? If it should prove possible to destroy sufficient capital in order to distribute the social profits into still fewer hands, and to polarize society so that it really corresponds to what Marx thought would be the result of accumulation, capital may be able to exceed what appears to us already to be its limits. It is true that there are more reasons against such a possibility than there are in its favor, but then one never really knows where the limits of human endurance are.
To prove strictly scientifically the inevitability of capitalism’s collapse will always remain a futile attempt. Not even the assembly of data needed for such and undertaking is possible. Dennis is right in not wasting his time “to prove to doubting optimists that it is impossible to restore the necessary conditions for the successful functioning of private capitalism. Those who take my view”, he says, “do not have to prove their case. They need only challenge the optimists to prove their theses by achievement”. But he not only has no reason to prove his case, he could not prove it even if he were to try. All that can be pointed out are the reasons why the growth of capital implies the growth of the contradictions inherent in its productive system. If the empirical data corresponds with this, one can, without fear of being utopian, prepare and help support a social movement that attempts to end capitalism.
That one may also, by considering the consequences of capital accumulation, justifiably say that there is an objective end to capitalism, that its final collapse is assured, changes nothing of the fact that capitalism must be abolished through human actions in order to cease. The argument about the objective end, however correct, finally amounts to no more than the recognition of the obvious, that all things and all institutions come to an end in time.
Independent of the question as to whether or not the present crisis of capitalism is its last crisis, it should be clear from the rough outline of our own crisis theory as given here that Dennis is still far away from a real understanding of the problems of capitalism. It is his idea that a “capital shortage” makes for capital prosperity; but exactly the opposite is true. Capital shortage excludes expansion. If expansion fails, even those insufficient capital funds earmarked for accumulation cannot profitabily be invested, and are not invested. Thus they lie idle, creating the illusion of the existence of capital surpluses. But there is a big difference between appearance and reality. How misleading it is to take the first for the latter Dennis demonstrates with numerous examples throughout his book. Even the element of truth contained in his assertion that the decline of capitalism is partly due to population decline was neither seen by him, nor would it fit, in case he had recognized it, into his exposition of capitalism’s difficulties. Just as an actual capital shortage, a shortage in regard to the needed capital expansion, appears to the superficial onlooker as a surplus of capital, so the present surplus population, compared with the expansive needs of capital, would really represent a shortage of labor, if accumulation could continued with accelerated speed.
The Industrial Revolution of “Socialism”
Although we disagree with Dennis as to the reason for capitalism’s decline, we agree that private-property capitalism’s days are numbered. As state before, however, we do not believe that Dennis’s “socailism” will be able to solve any of the problems which it inherited from private-property capitalism and which caused the decline of the latter. We have dealt with Dennis’s theory of capital, and opposed it with our own, because in our opinion it is his wrong conception of capitalism and its developmental laws which explains his failure to understand the character and the possibilities of the system he calls “socialism”.
Neither Russia nor Germany has ended the capitalist system of production. They have changed individual appropriations of the socially created surplus value into “collective” appropriation by way of the state. This involved the partial or total destruction of the old bourgeois class of private entrepreneurs and the remnants of feudalism in favor of a new rulling class – the state bureaucracy and its privileged supporters. There was also necessary a certain degree of re-organization and “planning” within given territories, which practically, however, turned out to be planning for the present war, that is, “planning” against real planning. For real planning can be done only on an international scale. Such planning Dennis holds to be impossible and unnecessary; he is satisfied with a national-socialist America defending its own interests by way of struggle against the rest of the world. The solution of the unemployed question and the continuation of the industrial revolution is all he demands, and the thinks that this would be possible within the framework of his “socialism”.
It is true that in the struggle between the “old” and the “new” capitalism the initiative and the success have so far been on the side of the “new” capitalism. Its “dynamism” is based on poverty, a fact which gave Dennis the idea that only a “capital shortage” provides capitalism with the necessary dynamism. If necessity is the mother of invention, not all inventions need mothers. That nations act because they have to does not prove that “dynamism” presupposes misery. What the fascists are now doing with old and new methods has always been done by the old capitalistic states, whether they were poor or rich. The “dynamism” of the fascist states springs not from their own peculiarities, but finds its reason in the deadly general stagnation of the capitalist world. It is still an expression of the same dynamic that was the driving force of capitalism until it reached stagnation. As did private capitalism previously, so also does Dennis’s “socialism” expand in order to prevent expansion. His new “industrial revolution”, like the old capitalist revolution, is out to prevent the industrialization of the world. It wants to stregthen itself with the weakness of other nations. This continued “industrial revolution” means no more than the destruction of some in favor of other capital; a struggle demanding additional weapons, because the destruction of capital by way of the market mechanism is no longer sufficient.
The functioning of the “automatism” of the market was based on a rapid capital accumulation. As long as the latter was possible the destruction of primitive industry involved the construction of advanced industry; the destruction of primitive agriculture, the development of modern agriculture; the end of limited and backward markets, the opening of world-trade. As long as capitalism expanded by reason of a sufficient profitability, its “anarchy”, that is, private interests opposed to social needs, was a sort of “regulator” which provided for both frictions and their elimination. Over-production in one or another field of production was punished by lower prices and profit losses, which re-established some sort of “equilibrium” between supply and demand. Extraordinary unemployment found its compensation in temporary booms and in the spreading of capitalism. Underdeveloped fields of production, yielding high profits, were soon invaded by additional capital reducing the extra-profits to “normal”. Obsolete industries became the first victims of crises and depressions when the market mechanism re-established a lost equilibrium, that is, a situation which granted capitalist society sufficient stability to feel itself secure. In short, competititon provided for a kind of trial and error method able to bring “order” into the capitalist system.
Nevertheless, from its very inception, the capitalist system was never a system of “perfect competition”. It favored from the beginning those nations and industries within nations endowed with social and natural advantages. The growth and spread of capitalism increasingly weakened and destroyed the element of control provided for in the competitive mechanism. Laissez-faire was never more than a convenient philosophy for successful capitalists or capitalistic nations. The less fortunate nations could see in it, if they could see at all, no more than a shrewd device against their own progress. But history is more than economics; if it were impossible to gain competitive strength under the “rules” of laissez-faire, other means could be and were tried. The protectionists ruled, and if their endeavors proved to be successful, they too could then become adherents of the laissez-faire ideology. The changing needs of the capitalist system and the changing policies and fortunes of the different capitalistic nations explain the different economic theories developed during capitalism’s history.
Throughout every shift in political and economic power, through peace and war, booms and depressions, capitalism advanced. The possibility of increasing exploitation and thus accumulation with accelerated speed indicated – from another point of view – insufficient capital concentration and lack of political centralization. This “weakness” gave to wars, depressions, and bankrupties the “strength” to re-establish lost “equilibriums”. In other words, “life” was still stronger than capital; the needs of the whole of society, however violated by capitalism, were not as yet totally subordinated to the specific interests of the capitalist class.
Because capitalism failed to master the world, it could declare itself master of the world. Its “success” was due to an unsearched-for strength and an unpreventable weakness. No group of capitalists nor any capitalist nation can possibly be engrossed in more than its own advancement and is thus always vitally interested in the frustration of its competitors. That the “original” capitalist nations did not succeed in keeping the rest of the world primitive is centainly not their fault. That in attempting to do so they actually advanced the capitalization of the world does not show the guidance of an “invisible hand” nor Hegel’s “cunning of reason”, but only that the real needs of the social world are always stronger than the limited interests of one or another class which finds itself in power.
It is capitalism’s dilemma never to be able to advance without simultaneously putting new obstacles in the way of further “progress”. It has “two souls in its breast”. One wants to restrict, the other to extend expansion. But though capitalistic interests are restricted, the needs of society are limitless. Because individual capitalists have to work against each other, they hamper their common conspiracy against society. For this reason capitalism’s struggle against society brings forth the quest for capitalistic “solidarity”, which must however be achieved through the elimination of capitalists and the continuous weakening of all other social classes. This concentration process is materialized in commandeering masses of constant capital, achieved by greater exploitation. The never-ending need for more exploitation finally defeats itself. The rule of capital becomes no longer compatible with the basic needs of society.
The onde-sided and therefore wrong assumption that cirses and depressions point to the limitations and end of capitalism leads to other misunder standings, namely, that fascism is already “socialism”, or that it represents a new form of capitalism with better chances of survival. For Marx, crises and depressions were “healing processes”; his theory of accumulation ends in the revolution. If anything, the success of fascism, or “socialism”, could promise only the further sharpening of the conflict between capitalistic and social needs. The present world struggle in all its various forms is only another gigantic crisis of capitalism, a new, all-embracing, terrible attempt to reach that degree of capitalistic “solidarity” now needed to control the labor of the world. That this crisis has such and out-spokenly political character is also not new; it only reflects the degree of capital concentration already reached. The struggle between fascism and democracy is in its essentials a repetition of the struggles between protectonists and free-traders in times past. Today, however, the scope of the struggle is enlarged, the intensity greater, because of the greater pressure resulting from more polarized class relations. The economic aspects of the crisis are driven into the background because of increased monopolization. The old business cycle has already been replaced by a virtually permanent stagnation. Monopolization and the stagnation connected with it can be broken only by powers stronger than capitalistic monopolies. State-captialism is such a power; it is the opposition of a more perfect to a less perfect monopolistic society.
The “new dynamism” displayed by the fascist powers is then only a new version of the old crisis dynamism. Both have the same cause and can lead only to essentially identical results, unless other factors, such as a revolution ending all capitalistic relations and problems, intervene. If the crisis should fail in its political aspects – that is, as war and “revolution” – as it has failed since 1914 in its economic aspects, to re-establish a socio-economic relationship which guarantees the further accumulation of capital, the crisis itself will become the basis of the new social strugglers and must be ended in a non-capitalistic manner. But if this crisis should have sufficient force to re-establish a profitable capital accumulation on a world-wide scale, it would demonstrate only that the old capitalistic dynamism is still at work. The crisis would not have “solved” any of the capitalistic problems; it would once more have postpond the downfall of capital. As the problems of society would remain the same, so also would the task of the workers be unaltered.
However, we are still in the midst of the crisis and there is nothing visible which could suggest its early end and a new prosperity. In one sense the present crisis is only the deepening of the capitalistic depression which came into being long before the first world war. With the beginning of the twentieth century, industry and agriculture began their relative stagnation, surplus populations arose in village and city, a lack of capital for expansion was felt everywhere. Life went on just the same. People travel other roads if the traditional ones become impassible. The necessary reorientation may be a slow and painful process, but history proves that it has never failed. If capital is lacking to safeguard and expand vested interests, whether private or national – interests for whose defense some sort of social stability is needed – production will be maintained with less regard for those vested interests or with none at all. If production is carried on via the market mechanism, where money must yield more money before economic activity is possible, and if this mechanism begins to fail, production must be carried on without consideration for private profit needs. Production must then be ordered, partially or totally. The ordering implies economic authority and hence control over all phases of social life. The question as to who is going to do the ordering is settled by political struggles involving shifts in class positions.
That political group which secures for itself the control over the means of production, coercion, and integration will do the ordering. In what manner this control is reached, whether by legal or “revolutionary” means, depends on historically-conditioned, specific circumstances, which vary for different coutrnies and different times. To order or “plan” what previously had not been “planned” because it was thought that the “automatism” of the capitalist market would take care of it, that is, continuing and regulating production on the basis of labor exploitation in the interest of a ruling class, is then celebrated as a new social advance.
Whatever ordering or “planning” is done in Dennis’s “socialism”, for instance, is done in order to reach the same results – that is, more surplus labor and profits – which private property capitalism achieved without that much bother. As always before, so also in Dennis’s “socialism” property and control go together. The ruling classes in Germany and Russia have control over both the means of production and the means of destruction. For labor there remains the necessity of selling its labor power in order to live, and selling it at a price that satisfies the needs and desires of the ruling class. The power of this ruling class is now strengthened by more direct methods of coercion which are supposed to compensate for the loss of the automatic control measures that operate under private property conditions. At a “higher” stage of “socialism” artificial market control may be re-introduced for the convenience of the “planners”. The various theories of “market socialism” now in vogue are supposed to supplement and make easier organized exploitation in state capitalism.
The Russian collectivization, that is, the realization of the old capitalistic dream to abolish once and for all the tributes paid landowners, and the transformation of the agricultural population into wage workers was carried out by the bolsheviks. However, this was possible only through the simultaneous destruction of the whole of the old ruling classes. Yet nothing has changed in the essential social arrangements, though in industry and agriculture private enterprise and incentive for private investments have been ended. Private incentives are only detoured; they are now directed toward political and social positions which determine the degree to which one may participate in the enjoyment of surplus value. It is true that there are no capitalists in Russia, but there are rich and poor, exploited and exploiters, rulers and ruled. Private enrichment is now based on the possession of jobs. The social struggle for positions in “socialism” was already foreshadowed in the increasing discrepancies between ownership and management and in the growth of trade unions in old-style capitalism. There are now as many varieties of rich people in Dennis’s “socialism” as there are wage scales for workers, or degrees of impoverishment.
In order to escape exploitation in “socialism” one must become and exploiter. All aspirants for exploitative positions and those in the lower ranks of the exploiting group must continuously strive to better their positions. To escape the lowest class one must have his eyes on the highest. Those who occupy the best positions must defend them against the rest of society beneath them. In order to rule they must also, like all other rulers, divide. Their own needs and security enforce the establishment, re-creation, or maintenance of class relations. Increased social productivity on the basis of class relations increases all the frictions in all layers and between all layers of society. To weaken those who are seemingly powerless in order to secure the rule of the “strong”, the weak must be kept impoverished. If they are continually impoverished, they are not only weak but also dangerous. To cope with this danger the forces of coercion must be strengthened and kept intact. They have to be maintained with the profits sweat out of the workers. Newly arising social groups have to be “bribed” to remain loyal. To get the profits needed for the security of this hierarchical arrangement on the basis of an expanding economy, exploitation must be increased. To make this possible, capital must be accumulated. If the expansion process starts on such a basis, accumulation in the interest of the ruling class becomes of necessity accumulation for the sake of accumulation.
Responsible for this fatal trend are the continued class relations on the basis of a developing social division of labor. The necessity for each group to secure its own restricted interests atomizes the whole of society and fosters the struggle of all against all. Social solidarity is here excluded. Such a situation does not allow for the elimination of those blind forces which operated through the market mechanism throughout capitalistic development. For it was not the market but the class relations behind that market which were responsible for the unseen forces back of the capitalist accumulation process. The end of market relations does not indicate the beginning of a consciously regulated social production and distribution so long as the class relations which were behind the market relations continue to determine social production and distribution. All planning turns out to be planning in the interest of a class and can only deepen the contradiction between special and social interests which is at the bottom of all present-day troubles. As long as there are buyers and sellers of labow power, all the planning of the buyers is planning against the sellers. The enlarged reproduction process under such conditions deepens the reproduced class frictions and leaves unsatisfied the objective need for real social planning. Such a system cannot exceed the social accomplishments of private property capitalism, but if it secures further expansion, can only increase the prevailing chaos because it adds another irritating element – this very same planning – to the already thousandfold-disturbed economy. Just as the growth of monopolies increased the capitalistic disorder with the increase of production, state-capitalistic “planning” is making more chaotic what seems already to be completely crazy. It is an illusion to conclude from the fact that state capitalistic planning has been able to expand production at a time when the rest of the world was unable to overcome its stagnation that this kind of “planning” can solve the social problems of today. It can expand production, yes, but at the price which had to be paid for all unplanned capitalistic expansion: greater chaos. Furthermore, as there is no longer a “national economy”, the element of planning – in each nation only further disturbing the economic and social relationships – helps to create a greater chaos in the world economy. The ascendency of “planning” occurred simultaneously with the increased difficulties of world-capitalism. The further disruption of the old world economy brought about by national planning in turn reacts quite unfavorably upon the different nationally planned economies. Planning meets counter-planning, finally war. This whole contradictory trend is no more than a further expression of the still declining capitalistic system.
The accelerated atomization of society comes to light also in feverish attempts to overcome its objective destructive element by strengthening its subjetice control element. Attempts are now made to create the perfectly controllable human being, because social and economic conditions which would allow for both social order and class rule cannot be established. The “old” capitalism has been able to do both foster its specific interest, a fact expressed in the growth of monopolies, and without much effort to guarantee some sort of regulation securing social stability and allowing, as a by-product, illusions of democracy and libery. Dennis’s “socialism’, however, functions exclusively and most directly in the interest of the ruling class. That it cannot help leaving parts of the social product to the workers, this regrettable necessity it shares with all other ruling classes of all other societies. But where the “old” capitalism, because of the absence of “planning”, because of market fluctuations, crisis conditions, and other uncontrollable phenomena often could not prevent the rise of situations which granted the workers moments of respite, this kind of unearned “social justice” has now been planned away in “socialism”.
Within certain limits workers have been able to take advantage of capitalistic anarchy – for instance, during depressions, when prices fell faster than wages, or during strikes, which gave them an otherwise unobtainable leisure period. And though these “lucky breaks” for some of the workers could not influence the course of capitalist development or the general situation of the workers, nevertheless they represented openings in the otherwise watertight capitalistic exploitation system. This kind of “waste” is now eliminated in the “socialist” planning system. The more wasteful the exploitation system becomes by reasons of its unreconcilable enmity to the social needs of the world, the more it tries to restrict that “waste” which, though in a very paradoxical manner, somehow favors the workers. “Socialism” is thus the replacement of a less perfect by a more perfect exploitative mechanism.
A greater need for profits is expressed in this kind of “planning”. To achieve it, the changes from private property economy to Dennis’s “socialism” are necessary. But nothing of importance in regard to social needs has here occurred. The need for ever greater profits is capitalism’s permanent need. Heretofore it has always been satisfied by more intensive exploitation and by the exploitation of additional laborers. Capital grew with the growth of productivity, its concentration progressed, and thus society became polarized into two essential classes. “Socialism” changed nothing in this respect. With additional political means it only accelerated what very same process. The greater need for surplus value – and there is a greater need in capital – poor countries such as Japan, Russia, Italy and Germany – forced those nations to go farther with capital concentration than richer nations had to do, because of their so-called more “organic” development. It became necessary for capital-poor nations to approach the extreme in concentration and centralization because of world-wide depression and general capital stagnation.
It is a knows fact that in Germany longe before the first world war cartellization in industry and state interference in economic life were much more advanced than in other countries. It is known that Russia was characterized not only by its backward agriculture but also by the existence of large industrial trusts, partly under governmental control. A similar situation existed in Japan. These nations had to do in advance what became with the “richer” nations only the result of a long development. Politics had to play a greater part in the poorer countries that tried to industrialize themselves. “Planning” had to compensate for economic disadvantages. In the case of Russia a whole state-capitalistic revolution was necessary to break an economic stagnation which was slowly strangling the country. That the “stronger” nations now have to follow suit indicates only that their strength is also warning. The general dearth of capital also forces the richer nations to reorganize their exploitative mechanism.
No new industrial revolution or continuation of the old through “socialism” is here involved as Dennis wants to believe, but, to repeat, only another forceful attempt by present-day capitalism to fight its way out of world-wide depression. Those nations most pressed by the crisis fight the hardest. Whatever Dennis may read out of the books of the apologists for Russian and German “socialism” he cannot prove that “socialistic” countries have carried on the industrial revolution where “old” capitalism left off. The single continuous strip-mill for steel production in Germany, for instance, was imported form the United States. Manchukuo was opened by England and Japan on a fifty-fifty basis. German rationalization was made possible my American loans. Machinery imported from capitalistic nations made possible Russian expansion of industrial production. The tempo of Russian development is no greater than that of other capitalistic countries that profited from the experiences of older capitalistic nations, sometimes under even less favorable conditions – for instance, Japan. What distinguishes these countries from the so-called democratic nations is not their furthering of the industrial revolution, but their early direction of production toward a way economy designated to reach by warfare and political pressure what they could not reach by any other means. This kind of “socialistic” advancement of the industrial revolution can also be achieved by the democratic nations, as they are at present trying to prove.
To support his view of the matter Dennis points out that, in contrast to the “democratic” nations, there is no unemployment in Russia and Germany. However, in the first place, socialism would not be socialism if it could not increase unemployment, that is, reduce working hours and give people a chance to enjoy life. Socialists may oppose the insane distribution of the social labor in capitalism which forces some workers to work until their tongues hang out of their mouths and others to dream about the great privilege of being exploited. But socialism cannot oppose unemployment. In one sense, socialism is finally nothing else but the triumph of unemployment. Secondly, it is not true that Germany and Russia have solved the unemployment question.
Capitalistic unemployment means suffering. Workers will demand jobs in order to better their conditions. Full employment appears to be a real service to the workers. But even this paradoxical solution, able to satisfy an immediate demand on the part of the workers, has not been fulfilled in “socialism”. Unemployment may exist even where it is no long recorded. The English and rather pro-Russian economist Colin Clark, only recently pointed out in this book “A Critique of Russian Statistics” that the Russian countryside is very much overpopulated. He showed, for instance, that the 1928 output of Russian agriculture could have been handled by 40 or 50 million workers, but that 74 million were thus occupied at that date. He puts the surplus population of the Russian country-side at 40 to 50 millions, workers and dependents together, and calls it “disguised unemployment on a gigantic scale” which overshadows the whole economic life of Russia. As regards the industrial revolution in Russia, he shows that there was virtual stagnation in the years from 1928 to 1934, accompanied by a decline in agricultural production. The greater influence exerted upon the whole economy by the increased armaments since that time and the repercussions of the world-wide economic depression upon Russian economy have not improved the situation. No, Russia has not as yet demonstrated that its societal form is a better medium for the industrial revolution than private property capitalism.
Neither can Germany’s war economy be given as a proof of her success in doing away with the problem of unemployment. In economic terms German war socialism implies the opposite – it proves an increase in unemployment. Beyond a certain number of jobless, that which is called “normal”, needed to fill the fluctuating demands of capitalistic production and to serve as an additional weapon to keep wages down and workers in their place, unemployment fills the hearts of capitalists with deep sorrow; the loss of exploitable labor power demonstrates to them lost opportunities to get rich. The war economy, however, employs all hands. It raises an enormous amount of surplus labor, but fails to transform that labor into profits able to be capitalized. What should be profits leading to industrial expansion and still more profits is only another form of waste. There is no difference if profits are not produced at all, or if their basis, surplus labor, after it has taken the form of “use values”, disappears as costs of war. The destruction of the potential capital here involved and the deterioration of the capital on hand are only the accelerated form of capital destruction experienced in former crises. The unemployed soldiers are merely the uniformed version of the unemployed armies of former depressions. Their feeding and fattening before the slaughter is only another variation of relief in addition to all the others enforced in previous crises. This, too, is a disguised form of unemployment and demonstrates “socialism’s” inability to solve that problem which was one important reason for the change from capitalism to “socialism”.
The Blessings of Fascism
Though it would be quite difficult for Dennis to prove that the industrial revolution would actually continue under fascistic auspices, it must be granted that there is far more activity and noise in fascism than in yesterday’s democracy. To justify the fascist transformation of capitalist society, celebrated as the return of “dynamism”, Dennis rightly asks: “Why should a political regime enjoying e monopoly of propaganda and guns take orders from men who have nothing but money?” Indeed there is no reason why they should, as “property rights derive from guns and propaganda, not guns and propaganda from property rights”. However, though it is true that guns and propaganda were and are pre-requisites to property, the fact that Dennis’s “socialism” arrived at a certain stage of capitalistic development shows, at the very least, that guns and propaganda cannot always be directly identified with the power to control complex societies.
Guns and propaganda control society when they are fused with the productive apparatus, which presupposes that the productive apparatus lends itself to such a fusion. Capitalism’s development was such that fascism – that is, the fusion of guns, propaganda and property – could only be the result of a long process of economic and political centralization. Even the fact that it became possible to shorten with political means the period of monopolistic development, as in the case of Russian state-capitalism, can be explained only through the concentration of capital previously carried through in other nations. When Lenin, for instance, pointed out that the Russian Revolution was a bourgeois revolution against the bourgeoisie, he practically said that because of the actual world situation created by previous capitalistic development there could be no Russian repetition of the process of capital development such as other countries experienced. Russia had to do rapidly what in other nations occured slowly. The Russian Revolution was furthermore a state capitalistic revolution against world capitalism, because it attempted to stop the latter’s exploitation of Russian labor. There is undoubtedly a direct connection between the present-day fusion of guns, propaganda, and property in the “socialistic” nations and the general development of world capitalism.
Capitalist society evolved out of feudalism, that is, out of a society of numerous relatively independent units of force and property. The modern nation-state created by capitalistic elements, developed a new unity of force and property operating on a larger scale. Art first, however, there arose what was apparently a separation of property, guns, and propaganda. The variety of classes and interests, fostered by the rapid extension of the division of labor, specialization in economic activity, and growth of capital production, demanded a state with limited powers. Such a state was sufficient to guarantee “order” because of the expansion of capital, by which, seemingly, all classes, and even parts of the working class, profited. The dissatisfied elements in society, even if in the majority, could not seriously challenge the prevailing optimism which could speak of the existence of “civilization” because “one could walk unarmed among his enemies”. No particular class or group needed to usurp all state power for itself nor found it possible to do. Even Napoleon did not dare to interfere, nor did he wish to interfere, with the interests of French commerce and industry. Even he had to leave intact the division of property and guns, which slowly turned the state into the direct servant of capital.
A relative “balance of power” between the various exploiting groups precluded for a long time the fusion of state and capital. But the divorce between state and property was of concern only to the exploiting classes; it never existed for the exploited. Despite all the frictions among the ruling classes with regard to the exploited part of the population their interests were identical. For themselves the ruling classes favored as the “best government, no government”. Government was thought of as no more than the instrument of class rule. But after the concentration-of-capital process had been completed, the instruments necessary for centralized control by coercion and integration of the whole of society – with a sufficient polarization in a relatively small group of actual rulers and a large majority of ruled – had been created, and after the state had already become the direct instrument of capital, it then became possible once more to fuse completely guns, propaganda and property.
When the Marxists pointed out that the state could never be more than a class organ of capitalism (and they pointed it out at a time when governments controlled by landowners were occasionally willing to “cooperate” with the workers against capitalists, and other governments were willing to “cooperate” with capital and labor against agrarian interests), they did so because, as far as the workers were concerned, there always existed the unity of propaganda, guns, and property. What was true for the workers at any particular time during capitalism’s development became true for the whole of society with the further concentration of capital and its political consequences.
To speak of a difference between property and state was only another way of saying that the division of surplus value was still largely determined by market laws, that the monopolistic destruction of competition was only in its infancy. However, commodity production is only competitive because it is also monopolistic. Commodity production, however competitive, is always production for monopolists, that is, for profit in the interest of those who own or control the means of production. The existence of commodity labor power implies the monopolistic character of production and distribution. If a socio-economic development starts out on such a basis, and if it is not interrupted by a real social revolution which destroys the commodity character of labor power, it can end only in the completion of monopolistic rule, in state capitalism. State capitalism thus finds its cause not in the concentration process of capital, not in an organizing principle, but in the commodity character of the workers’ labor power. The concentration process is only one phase of this general development. For this reason it is inconceivable for Marxists that capitalism could be abolished except through the abolition of commodity production, wage labor, and value relations.
The new fascistic unity of gungs, propaganda, and property rests also on commodity production, on the existence of a proletariat which sells its labow power to those who have a monpoly over the means of production. This being the case, Lenin was forced to forget in post-revolutionary Russia the Marxian demand to end the wage system. He had to satisfy himself with adopting the prevailing capitalistic organizing principle which could effect, not the exploitative character of society, but only the division of surplus value. “Socialism”, he said, “is nothing but the next step forward from State Capitalistic monopoly. Socialism is nothing but State Capitalistic monopoly. It is nothing but State Capitalistic monopoly made to benefit the whole people; by this token it ceases to be capitalistic monopoly”.
The “dynamic” of “socialism” consists then of no more than the activity necessary to change the form of distribution. It leaves untouched the fundamental class relations that it takes over from the “old” capitalism, and thus excludes the change in distribution so much desired. Unhampered by a socialist past, not committed to a Marxian ideology, profiting from the experiences of the last twenty years, Dennis does not speark of a state capitalistic monopoly “made to benefit the whole people”. Where Lenin thought he could turn his state into a paternalistic institution of the finest sort, leading over to the communist society, Dennis restricts himself to the sober statement that all that can now be expected is “a new pattern of inequality, emerging from the current revolt of the have-nots and the world triumph of national socialism”. But, he continues, “for some time to come, it will correspond better than the present pattern of distribution to the actual and new force pattern, all of which amounts to saying that it will constitute social justice”. He fails, however, to offer one serious argument which could support even this kind of meager optimism with regard to the immediate future. All he is able to suggest is an elarged and somewhat unessentially modified public works program, executed by a new set of politicians. In other words, he argues in favor of what already exists. But continuing “pyramid-building” in peace and war – that is, production for the sake of production, discipline and sacrifice for the sake of discipline and sacrifice, autarchism and hemispheric reorganization to guarantee more wards and an uninterruptedly Spartan life – means only prolonging and intensifying the present-day miserable reality.
Some interesting speculation would have been possible if Dennis had entered into a discussion on the economic opportunities of state capitalism on the basis of a hypothetical unified world economy. There would even be some sense in discussing the economic and social aspects of national-socialism on the basis of its possible evolution into a perfect state-capitalist entity. But all that Dennis “forecasts” is the emergence of an American “mixed economy” where private incentive and private enterprise exist side by side with state-controlled enterprises, where the state takes over wherever private economy fails. But such proposals are only descriptions of a situation which has already arisen, and which is already delivering proof that it does not bring forth a new pattern of distribution favoring the poorer classes, but only drives the poorer classes from the relief stations to the battle field.
However, Dennis is less interested in the distributive side of his “socialism” than in the spiritual values connected thereto. In his opinion “the social prolem of the world crisis today is one of finding sufficient dynamism, not of finding enough food.” He thinks that there exists in men a real desire for war and danger, that sadistic and masochistic drives are important social forces, that people possess an innter compulsion to suffer, a need for discipline, heroism, sacrifice, and community feeling based on a sense of duty. The ideological noise accompanying the further concentration of capital in fascism appears to him as a revival song of the real human spirit on which society thrives. But all this grand phraseology, mere ideological weapons employed by the exploiting class to secure its position, has no more meaning than all those other sayings which the poor have always been forced to listen to – such saying as “Dry bread brings color to the cheeks”, “Hunger is the best cook”, that one grows best if one eats little, or even if one walks in the rain. Dennis’s other prerequisites for the recreation of a social dynamism, such as the “will to power”, the desire to rule, which makes history no more than ever-recurring struggle between the “ins” and the “outs”, the changing of the world by the changing of seats – all this, too, is old stuff, as meaningless as it is popular. The unsocial character of society, increasing insecurity, and wide-spreard misery have at all times provided more than enough of that kind of “dynamism”.
The “desire for war and danger” in capitalism is none other than the desire for peace and security. People go to war and seem to like it, just as they seem to go happily to work. But they have no choice and where there is no choice the question of desire cannot arise. Desire can determine action only in situations that offer alternatives; the “desire” to find work is not a desire but compulsion through outside forces. The “desire” to go to war results from the recognition that there is no escape. What one has to do, one “desires”, because to “desire” what has to be done anyway makes the compulsion more bearable. But this kind of “desire” has nothing to do with “human nature”. It is an “artificial desire” growing out of socially-created wide-spreard fear and loneliness. The renaissance of spiritual values attribued to war and danger indicates no more than the general growth of fear due to further social disintegration. The “accidental” character of each one’s existence, the decreasing opportunities to integrate one’s life into the social process, prepare people to accept a life of “aciddents”, especially when such an attitude is fostered and supported by the enormous propaganda apparatus at the disposal of the ruling classes interested in war – interested in war not because they are human beings, but because they have to make others fight if they are human beings, but because they have to make others fight if they want to maintain class rule and exploitation. That there is a real desire on the part of some people to see others go to war springs from the quite ordinary desire to make some money or get a job.
Dennis’s “idealistic” position with regard to the psychological motivations of men interests us least of all. It brings to light only his own perfect capitalistic mentality, which makes out of “socialism” in his mouth exactly what “democracy” is in the mouth of a capitalist. Despite all his insight into the brutal relations of contemporary society, despite the fact that his sharp eyes have spotted so many details in the ugly social panorama of today, and that his pen has put them down masterfully, still, his book is only another contribution to that bitter family feud now being waged between the supporters of state capitalism and the supporters of capitalism pure and simple. In this feud all the advantages are on the side of Dennis, not only actually, but also theoretically, as his book bear witness. A liberal democrat could not possibly oppose his arguments with any measure of success. And in fighting Dennis’s “socialism” the laugh will be on Dennis’s side, because his enemies will certainly in the process of fighting fascism have turned themselves into fascists.
The liberal democrat as well as Dennis has, however, nothing to say to nor offer the working class. According to circumstances both will have the workers’ support for some time to come, but the societal forms defended or proposed by both are and remain in opposition to the real social needs of today, and thus in opposition to the working population. Dennis is right in believing that the workers have no reason whatever to prefer democracy as they know it to the fascism of today, but they have also no reason to prefer fascism to the democracy of yesterday, as they soon will be forced to find out. To thinking workers who have escaped the capitalistic ideology of yesterday and today Dennis’s book has nothing to say that they do not already know. Those workers who find themselves opposed to capitalism, not because the latter can no longer exploit them efficiently enough, but because they do not want to be exploited at all, can learn from Dennis’s book just one thing, namely, that it is their job to start where he has left off, that what he sets as the temporary end-point of social development must be regarded as the starting point for new investigations and new actions directed against the new fascist reality.
 The Weekly Foreign Letter, 515 Madison Ave., New York, N. Y. (259 pp.; $3.00)
All transcriptions were done by Felipe Andrade. Did you find any mistakes? Suggestions? Send e-mail to: