On the Formation of Marxism: Karl Kautsky's Theory of Capitalism, the Marxism of the Second International and Karl Marx's Critique of Political Economy

Gronow, Jukka Book — Published Version On the Formation of Marxism: Karl Kautsky's Theory of Capitalism, the Marxism of the Second International and Karl Marx's Critique of Political Economy Historical Materialism Book Series, No. 113 Provided in Cooperation with: Brill, Leiden Suggested Citation: Gronow, Jukka (2016) : On the Formation of Marxism: Karl Kautsky's Theory of Capitalism, the Marxism of the Second International and Karl Marx's Critique of Political Economy, Historical Materialism Book Series, No. 113, ISBN 978-90-04-30665-3, Brill, Leiden, https://doi.org/10.26530/OAPEN_613393 This Version is available at: https://hdl.handle.net/10419/181390 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/3.0/ On the Formation of Marxism Historical Materialism Book Series Editorial Board Sebastien Budgen (Paris) Steve Edwards (London) Juan Grigera (London) Marcel van der Linden (Amsterdam) Peter Thomas (London) volume 113 The titles published in this series are listed at brill.com/hm On the Formation of Marxism Karl Kautsky’s Theory of Capitalism, the Marxism of the Second International and Karl Marx’s Critique of Political Economy By Jukka Gronow leiden | boston Library of Congress Cataloging-in-Publication Data Gronow, Jukka, author. On the formation of Marxism : Karl Kautsky's theory of capitalism, the Marxism of the Second International and Karl Marx's Critique of political economy / by Jukka Gronow. pages cm. – (Historical materialism book series, ISSN 1570-1522 ; volume 113) Originally published as the author's doctoral thesis, Department of Sociology, University of Helsinki in 1986. Includes bibliographical references and index. ISBN 978-90-04-30664-6 (hardback : alk. paper) – ISBN 978-90-04-30665-3 (e-book) 1. Marx, Karl, 1818-1883. 2. Kautsky, Karl, 1854-1938. 3. Capitalism. 4. Communism–History. I. Title. HX39.5.G72 2015 335.4–dc23 2015032313 This publication has been typeset in the multilingual “Brill” typeface. With over 5,100 characters covering Latin, ipa, Greek, and Cyrillic, this typeface is especially suitable for use in the humanities. For more information, please see www.brill.com/brill-typeface. issn 1570-1522 isbn 978-90-04-30664-6 (hardback) isbn 978-90-04-30665-3 (e-book) Copyright 2016 by Koninklijke Brill nv, Leiden, The Netherlands. Koninklijke Brill nv incorporates the imprints Brill, Brill Hes & De Graaf, Brill Nijhoff, Brill Rodopi and Hotei Publishing. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill nv provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, ma 01923, usa. Fees are subject to change. This book is printed on acid-free paper. Contents Preface and Acknowledgements vii Introduction 1 part 1 Kautsky’s Marxism 1 Organised Capitalism, the General Cartel and the Proletariat 29 2 The Dispute over Revisionism 35 3 The Theory of Immiseration, Socialist Consciousness and the Intellectuals 57 4 Socialism as Science 72 5 The Capitalist Law of Appropriation: Kautsky’s Interpretation of Karl Marx’s Economic Thought 78 6 The Centralisation of Capital and Monopoly Formation 94 7 Imperialism and the Relation between Industrial and Agrarian Countries 99 8 Imperialism and Its Alternatives 107 9 Imperialism as the Last Stage of Capitalism 126 10 Theoretical Sources of Kautsky’s and Lenin’s Studies on Imperialism 134 11 Imperialism as the Truth about Capitalism 151 12 Parliamentary Democracy and Revolutionary Tactics 157 vi contents 13 The Question of Democracy and Dictatorship: Lenin’s Critique of Kautsky the Renegade 192 part 2 Marx’s Marxism 14 The Immanent Critique and the Natural Rights Theory 211 15 John Locke, Adam Smith and Karl Marx’s Critique of Private Property 225 16 The Principle of Labour 252 17 The Theory of Increasing Misery and the Critique of Capitalism 276 Conclusion 288 Bibliography 311 Index of Names 325 Index of Subjects 327 Preface and Acknowledgements This study was written originally as my doctor’s thesis at the Department of Sociology, University of Helsinki. In 1979–83 it was supported by the Academy of Finland, to which I wish to express my gratitude. A short visit to the International Institute of Social History in Amsterdam in 1983 made it possible for me to become acquainted with the Karl Kautsky archive preserved at the Institute. I would like to express my special gratitude to the following people, who commented on the original manuscript of my dissertation at different stages: Erik Allardt, Pauli Kettunen, Pekka Kosonen, Arto Noro and Matti Viikari. Erik Allardt and Matti Viikari also acted as the official examiners of my thesis. Johannes Berger was the official opponent nominated by the Faculty of Social Science at the University of Helsinki. None of them, naturally, bears any responsibility for the ideas represented in the final monograph. I am grateful to Susan Sinisalo for correcting the English of my thesis originally published in 1986 in the series Commentationes Scientiarum Socialum (nr.33) of the Societas Scientiarum Fennica. I’m grateful to the editor of the Historical Materialism series at Brill Publishersforofferingmethepossibilityofrepublishingit.Aftermuchconsideration,I have decided to publish the work in its original form, with only minor changes, mostly omissions of unnecessary repetitions and excessive quotes. Instead of makinganyextensivechangesin the maintext of thebook, Ihavepartlyrewritten its introduction in order to take into account and relate my arguments, whenever necessary, to the scientific accomplishments in the study of Kautsky and Second International Marxism which have taken place during the almost thirtyyearsthathaveelapsedsincetheoriginalpublicationofmythesisin1986, none of which, in my opinion, seriously challenge the main line of interpretation of my book. Intheoriginalversion,mostofthequotationswereintheiroriginalGerman. This new version uses either original English translations or specific translations from German to English. Since the old translations are often of a rather poor quality, even they have had to be modified at times. Whenever this is the case,I haveadded thefollowingnotetothe reference:‘translationmodified BL’. Benjamin Lewis has helped me locate the old translations, as well as translated with great skill all those texts which only existed in their original German. His role was by no means restricted to translating. He has also used his vast knowledge and extensive reading in guiding me through the most important recent contributions in the field, as well as commented expertly on my interpretation viii preface and acknowledgements of them. Without his valuable help, the whole project of republishing my study would not have been possible at all. The kone foundation has supported the project of the republication of this book for which I would like to express my special gratitude. Helsinki, August 2013 introduction 7 theRussianproletariatintheexpectationofthecomingrevolution.Thesecond recent discussion has, at least to some extent, broadened the view we have of Kautsky’s own revolutionary strategy and tactics. Kautsky was a revolutionary socialist.In his mind, therewereneveranydoubts aboutthe inevitability ofthe coming socialist revolution in Russia and the whole world. However, Kautsky was firmly convinced that under the conditions which prevailed in Germany at the turn of the century, the revolution could in practice be non-violent or almost peaceful. Thus it differed radically both from the Great French Revolution and from the European revolutionary uprisings of the nineteenth century. The Social Democratic Party could now freely organise the working class and propagate openly its revolutionary message to the workers using the freedom of press and assembly. The best proof of the success of this strategy was the fact that the German Social Democratic Party was a mass party with millions of members with a firm and, as it seemed, steadily growing representation in the German Parliament. Kautsky has therefore often been claimed as – and at times accused of – representing a revolutionary wait-and-see strategy [Attentism]ortiring-outstrategy[Ermattungsstrategie]:alltheworkingclasshadtodo was to wait until its organisations had grown in size and power, which would inevitably lead, sooner or later, to an absolute majority in the parliament. The Social Democratic Party could then simply declare that the time was ripe for social upheaval and accomplish its great historical mission by voting in parliamentfortheintroductionofsocialism(‘aballotboxrevolution’).Whatitshould avoid by all means was to make any risky moves that would endangerits organisation by any premature or untimely political adventures. Kautsky raised his warning finger in his polemics with Rosa Luxemburg, Anton Pannekoek and other left-wing revolutionary radicals who actualised the question of the use of a general strike as a political weapon. As the more recent studies have shown, Kautsky’s position was, in fact, more nuanced than is often presumed. In some of his lesser known works, like in his historyoftheFrenchRepublicaswellashisJanuary1919GuidelinesforaSocialist Action Programme,32 Kautsky formulated more detailed accounts of what was expected from the working class and its political organisations once they had taken state power into their hands, which proved that Kautsky was well aware that other radical measures were needed in addition to the parliamentary politics. For instance, he demanded the re-organisation of the army and 32 Kautsky 2011a and 1919c. Ben Lewis argues that, when comparing Kautsky’s republican writings from 1905 and 1917, there is a demonstrable watering down of Kautsky’s democratic-republican proposals for dealing with the capitalist state form (Lewis 2011). 8introduction the state bureaucracy, and emphasised the need for new forms of working class self-organisation to control the production and distribution of goods. (In fact, his suggestion in the 1919 guidelines comes closer to corporatismthan workers’ soviets). That said, one cannot completely deny that in many of his influential and well-known writings on this question, Kautsky’s views are rather vague and abstract. More often than not, he does not go into any details at all, and instead is satisfied in stating or repeating his principal position according to which the coming socialist take-over, at least in Germany and Western Europe, willtakeplacebyrespectingthe rulesofparliamentarydemocracy.Hisconceptionofbourgeoisdemocracywas,asLeninwouldputit,formal.InLenin’smind, Kautsky did not pay enough attention to the real economic and social position of the social classes in capitalism and the huge differences in the distribution of the political resources following from it. One also gets the impression as if everything will be quite simple and straightforward after the declaration of a peaceful Socialist transformation, which Kautsky insisted on calling a revolution. Kautsky does not, for instance, reflect upon the fact that the reactionary political forces and the previous ruling classes would most likely not be willing, voluntarily and without any serious resistance, to give up their political power and go along with the new social order. As we know, this was something self-evident to Lenin and the Russian revolutionaries. In theirminds, the Social Democrats should be fully prepared to meet this resistance and defend their achievements even with force against any attempts at restoring the old society. Despite the more nuanced picture based on these new findings, the standard interpretation of Kautsky’s thinking preserves a kernel of truth. As Bonner formulated it, admittedly a bit too pointedly, Kautsky ‘proved unable to visualize socialism in terms of a transition that would build the self-administrative powers of the working class to rule society. Socialism was equated with the organization and its success, while the notion of revolutionary administration andself-administrationwerethrownoverboardbya party thatwaseliminating in practice the theory that justified it in Kautsky’s eyes’.33 Finally, recent analyses of Kautsky’s writings on imperialism have raised some interesting new questions about his original contribution to the Marxist thinking of colonialism and imperialism. One of the problems in this respect has been that Kautsky wrote several treatises on imperialism before and duringthe FirstWorld Warand histheoreticalposition changed from time totime. As pointed out by Matsuoka34, Kautsky adhered alternatively to two different 33 Bonner 1980, pp. 597–8. 34 Matsuoka 1992. introduction 9 theoretical schemes in explaining the emergence of colonial policy and imperialismin capitalism. Thefirst wasbased on thetheoremofthe principaldisproportion in the rates of growth of the industrial and agrarian sectors of the capitalist economy. The second was based on the theory of the over-accumulation of capital and the consequent under-consumption: because the demand for their goods was lagging behind, the capitalists constantly needed new markets to realise their almost chronic overproduction. But Kautsky is probably best known for his conception of ultra-imperialism, which he first coined after the outbreak of World War i, borrowing from Hilferding’s Finance-Capital the thesis of the logical development of capitalism towards a single general cartel which, in Hilferding’s version, will rule over the whole national economy. Kautsky extrapolated this idea to the international economy in making the hypothetical claim of a kind of worldwide organised capitalism as the logical end-product of capitalist accumulation. The idea of ultra-imperialism is probably best known to many because Lenin ridiculed the idea in his Imperialism: TheHighestStageofCapitalismof1917.35WhatcausedLenin’sangerwasthefact that Kautsky did not acknowledge the inevitability of the aggressiveness and ultimate violence of imperialism, neither did he understand that there could not possibly be any alternatives to it. Instead he was a proponent of a peaceful coalition of democratic nation states as an antidote to imperialist politics. Lenin wasconvinced that theonly alternative towar and imperialism alike was the socialist revolution. At first glance, Lenin’s critique looks somewhat exaggerated and misplaced. Did not Kautsky also admit that ultra-imperialism was notarealisticalternative at all, but just ahypotheticalthoughtconstruction?In his opinion, political tensions would interfere with the process long before the final stage of ultra-imperialism could be reached. Lenin added to this that such a development would be impossible to imagine not only because of the inescapable political tensions between the states but also, and more importantly, because imperialism could never outgrow its inherent economic contradictions and eliminate the competition between big monopolies. On the contrary, they could only be expected to grow in strength. Neither Kautsky nor Lenin was a highly original thinker on the question of imperialism. True to his role as the main party ideologist, Kautsky’s numerous writings are often attempts to clarify the position of the party in the face of changing, actual challenges posed by international politics. To Lenin, the question of imperialism first became actual during and in the aftermath of the great imperialist world war facing the prospect of peace. He relied heavily on the 35 Lenin 1967d. 10 introduction works of Hilferding and Hobson – and more indirectly, Luxemburg – in constructing his own version that best suited his own political aspirations and convictions.MikeMacnair36 has arguedthatin one importantrespect,Kautsky laidthefoundationsforthelaterMarxisttheoryofimperialisminaseriesofarticles published as early as 1898. In these articles, Kautsky developed a historical scheme about the different stages of the development of capitalist internationalrelationsbeginningwithfeudalexploitativecoloniesandfollowedbythe ‘work colonies’ (like North America and South Africa) which, as he claimed, enriched both Britain and the new colonies. This is followed by the policy of ‘free trade’ (Manchesterism) after the Industrial Revolution in Britain, which wasfollowedinitsturnbyan exploitativestageofcolonialismwhicharisesfirst out of the new policy of protectionism adopted in Continental Europe during the very last decades of the nineteenth century as an antidote to British world domination. Kautsky’s characterisation of these stages is mainly based on the typeofprinciplesthatgovernedinternationaltradepolicy.Thisisespeciallythe case as far as the last two stages are concerned. Other theorists among Second International Marxists emphasised more the economic nature of imperialism and saw the inevitably increasing economic contradictions of capitalism as its major cause. According to Macnair, they learned from Kautsky one important lesson. This was the doctrine of the historical stages of capitalist development and the idea of (modern) imperialism as the last or latest stage of capitalism. DespiteKautsky’sgreatimpactonhisfellowMarxists,itisdifficulttoprove that they in fact learnt or adopted this idea from him. It would be safer to simply argue that Kautsky was one of the first, or perhaps even the first, to propose the thesis, and despite all the other theoretical and political disagreements concerning imperialism and capitalism in general, all the Marxists of the Second International shared this (rather abstract) idea of imperialism as a new stage of capitalism, radically differing – in one way or another – from the postulated ‘old’ or ‘classical’ capitalism of free competition and free trade. Consequently, the understanding of this new stage also demanded new theoretical tools of analysis, the development of which the Marxists took as a serious challenge. The groundbreaking studies of Moira Donalds37 and Lars T. Lih38 have convincingly shown that Karl Kautsky was the main mediator and mentor of Marx’s and Engels’s revolutionary thinking among the Russian Social Democrats before the First World War. He enjoyed undisputed authority as the main 36 Macnair2013. Day and Gaido (2011) presentthe developmentof Marxist discussions about imperialism up to the First World War. 37 Donalds 1993. 38 Lih 2008 and 2011. introduction 11 Marxist theoretician among the Russian revolutionaries. Lenin in particular applied Kautsky’s teachings in order to mobilise the working class, preparing for the revolution under the prevailing conditions in the Russian autocracy. Even after his quite abrupt and final split with Kautsky – when the latter sided with the majority of German Social Democrats in voting for war credits at the outbreakofthe First WorldWar – Lenin continuedtoreferwith greatrespectto Kautsky’s works written ‘when he was still a Marxist’. The pre-war Kautsky had not therefore lost his actuality, and his writings compiled before his ‘betrayal’ deserved respect. Lenin’s strong reaction and attempt to distance himself from Kautsky can best be explained by the great disappointment caused by his old teacher’s ‘betrayal’. It was Kautsky and not Lenin who had, by changing his position, deserved to be called a renegade. According to Donald’s39 close reading of Lenin’s programmatic statements and writings, his attitude to Kautsky underwent a dramaticchange first in 1914. This was partly due to Lenin’s annoyance at Kautsky’s interference in Russian intra-party financial affairs, but the final break came with the outbreak of the war. Before that time, Lenin had been, for almost twenty years, a most loyal adherent to Kautsky’s ‘orthodox’ Marxism. Even after the final split, Lenin criticisedKautskyalmostexclusivelyforhis position on thewarand not his pre-war writings.40In hisfamoustreatise ImperialismastheHighestStageofCapitalism, Lenin quite vigorously attacked Kautsky’s ‘heretic’ conception of colonialism and imperialism, but his critique was directed only to Kautsky’s recent article in which he had coined the concept of ultra-imperialism. As Donald claimed, it is impossible to know what Lenin in fact thought about Kautsky’s previous writings on imperialism since he never commented on or made any references to them.41 We can deduce with good grounds that either he agreed with them ordidnotthinkthattheirpossibleshortcomingswereof anydecisiverelevance to the central strategic questions of Social Democracy. As Donald summarised her contention, ‘far from rejecting the model of German Social Democracy at this time, Lenin remained a faithful discipline of the spd, searching constantly for parallels between the history of the party and his own, holding German Social Democracy as an example to the Russian movement, and continuing to holditsleadersand theoreticiansingreatrespect’.42 ItisevenlikelythatLenin’s almost unparalleled admiration of Kautsky prevented him as well as other Russian socialists from seeing the factual spread of revisionist tendencies within 39 Donald 1993, p. 187. 40 Donald 1993, p. 201. 41 Donald 1993, pp. 203–4. 42 Donald 1993, p. 27. 12 introduction the Party, and the German trade unions in particular, before the war. Kautsky gave the impression that revisionism had not left any permanent traces in the party. In his mind, the best proof of this was that the programme of the Party was the same old revolutionary one. In other words, revisionism had been only a short interregnum in the party history. One can therefore agree with Donald’s conclusion that ‘[i]f anything, Lenin had too rosy a view of spd’.43 The novelty in Lenin’s thinking was that since the Russian liberal bourgeoisie was weak and not capable of fulfilling its historical task of committing a bourgeois revolution by overthrowing the Tsarist autocratic regime, it now remained the task of the working class with its class ally, small peasants and agrarian workers to establish a democratic constitution in Russia. Since the Russian bourgeoisie and liberal political forces were weak and mostly sided with the landed aristocracy and the officer corps of the Tsarist army, they could not be trusted to fulfil the progressive historical mission given to them in the Marxist historical scenario. Since this task fell now on the shoulders of the proletariat, the coming Russian revolution would not be bourgeois in the traditional sense but a democratic one instead.44 This democratic transformation would then eventually be followed by a socialist one. Furthermore, a democratic constitution with its freedom of press and assembly, both of which were absent in Tsarist Russia, would create ideal conditions for the agitation of socialismandpropagationofMarxismamongtheRussianworkers,soonmobilising the whole working class into a revolutionary party of Social Democrats. Therefore it was of utmost importance that the Social Democrats would drive the democratic revolution to the end to achieve a maximal democratic transformation of the society. Lenin’s and Kautsky’s views concerning the perspectives of the Russian Revolution were closest during the First Russian Revolution in 1904–5 when Kautsky shared Lenin’s optimism that the Russian proletariat organised by the revolutionary Social Democratic Party would act as the driving force of the Russian Revolution, radically transforming the society and ending the authoritarian, imperial rule. Kautsky and Lenin were also optimistic about the wider perspectives of the Russian Social Democracy in the revolutionary process. As Bertel Nygaard argued, Kautsky believed that ‘the Russian revolution will hardly result in a “normal” bourgeois-democratic regime … It will be a “permanent revolution” leading to a swift maturation of the Russian proletariat whose revolutionary actions could trigger corresponding movements in West43 Ibid. 44 Donald 1993, p. 82. introduction 13 ern Europe’.45 However, by 1916–17, such ‘radical overtures had disappeared’. Now Kautsky was firmly convinced that ‘because of the low level of development of the country and the working class the immediate task must be to build a democratic regime within the boundaries of the capitalist mode of production, not to let the workers conquer economic or social power’.46 It can, however, be questioned whether Lenin’s divergence from Kautsky’s positions was more one of degree than of principal. Even the agenda of 1905 presumed that the Russian revolution would be ‘only’ a bourgeois-democratic one and thesocialist transformationofthe societywouldhavetowaituntilthe ripening of both the objective social conditions and the maturing of the Russian working class. The period between these two upheavals did not necessarily have to be very long. It all depended on the political developments in Germany and the rest of Western Europe. As we know, Lenin placed great hopes in the prospect that a Russian revolution would ignite revolutionary uprisings in other, more developed countries in Europe. The eventual establishment of socialism in Germany would greatly speed up the socialist transformation also in backward Russia, which could, with the help of international socialism, ‘skip over’ the otherwise long, conflict-ridden capitalist stage of development. The Bolsheviks did not expect the period between the two revolutions to be stableor long lasting.47Atthe sametime, the SocialDemocraticParty hadtobe prepared to abdicate from power if its radical reforms did not receive enough support from the masses. The fate of the revolution depended wholly on the concrete social and political conditions. Since the other political forces could not be relied on to support the democratic reforms until the end under the conditions of a steadily strengthening revolutionary workers’ party, it fell on the working class to defend the achievements of the democratic rule, like the principles of parliamentarism and majority rule. Somehow the fight for and defenceofthedemocraticrightsoftheworkersandpeoplewouldbeconducted in parallel with taking steps along the path to socialism. In other words, it was essential for the success of this strategy that reforms favourable to socialism were introduced. The interests of the toiling masses could be united with the struggle for democracy.48 This position undoubtedly comes close to the idea of apermanentrevolutionassociatedwiththenameofLeonTrotsky.AsLarsT.Lih has shown, Trotsky’s idea of a permanent revolution differed quite radically from the one shared by other Marxists (Lenin, Kautsky, Luxemburg, Ryazanov, 45 Nygaard 2009, p. 462. 46 Ibid. 47 Lih 2012. 48 Ibid. 14 introduction Parvus and Mehring among them). If they used the term at all, it referred not to a transition from a democratic to a socialist rule, as it did in Trotsky’s case, but rather to a way of conducting a democratic revolution: ‘To Trotsky, and only Trotsky, the scenario also included the following proposition: A provisional government dominated by the proletariat will inevitably strive to bring about a socialisttransformationofRussiansocietyevenwithoutwaitingforaEuropean revolution – and any other course of action would discredit the whole idea of a proletarian government’.49 The real reason for the disagreement between Trotsky on the one side, and Lenin and others on the other, lies in their different evaluations of the role of peasants in the future revolution, as well as in their relation to a socialist, collective mode of agrarian production. Again, Kautsky, Lenin and Social Democrats in general were on the same side. They thought that peasant attitudes made a truly socialist government in Russia impossible and inadmissible in the near future, since they would not voluntarily agree on giving up their newly achieved private landed property. ‘Trotsky also thought that the peasants would be hostile to socialist transformation. But he rejected the idea that this hostility need be a barrier to a proletarian government’s program of socialist transformation, including the countryside. This contrast is in the heart of the matter’.50 Accordig to Lih, Trotsky’s inability to negotiate the axiom of class ally was the main reason why his scenario found so few supporters among the Russian social democrats.51 Unlike Trotsky, Lenin had, early on in his career as a revolutionary thinker, paid special attention to the peasant question in Russia. As early as 1899, he had published an extensive and systematic study of the development of capitalism in Russia, which understandably paid special attention to the analysis of the development – and underdevelopment – of capitalism in the Russian countryside.52 The book came out in the same year as Kautsky’s The Agrarian Question, which Lenin greatly admired. Lenin had a tendency in thisworktooverestimatethe degree towhich capitalist relationsofproduction had in fact penetrated the Russian countryside, thus exaggerating the proletarianisation of the peasants, which made them a natural class ally – a kind of pseudo-proletariat – of the numerically much smaller army of industrial wage workers. For Lih, this revolutionary optimism explains why the year 1919 was a real turning point in Lenin’s outlook when an unexpected and previously 49 Lih 2012, pp. 438–9. 50 Lih 2012, pp. 451–2. 51 Lih 2012, p. 459. 52 Lenin 1963–74a. introduction 15 unknown element of uncertainty entered into his pronouncements. This had to do with the realisation that the international or German revolution, which was supposed to rescue the Russian Revolution, did not come or did not succeed.But it wasat least as muchtodowith therealisationthat the autonomous peasants were not willing to voluntarily follow the Bolsheviks’ call to join the collectivefarms.They preferredtostick totheirnewlywonstatusofsmall-scale landowner,aneconomicpositionthat,accordingtotheMarxisthistoricalscenario, was definitely doomed to fail. Being opposed on principle to using force against peasants, there was not much else for the Bolsheviks to do other than gradually educate the huge backward population in the Russian countryside – a task that would at best take a generation or two, even if followed by an effective programme of urbanisation and industrialisation of the country. One could claim, with the hindsight of history, that it was in fact Stalin’s five year plans with their programmes of forced collectivisation and industrialisation which ultimately solved the peasant problem or ‘agrarian question’ in Russia – not paying any attention to the huge human sufferings it caused. John H. Kautsky has most emphatically argued that Kautsky’s and Lenin’s Marxisms were, despite similar revolutionary vocabularies, in fact totally opposite ideologies. He has claimed that to Kautsky, contrary to Lenin, socialism and labour movement could never be opposed to each other. He based his claim on Lenin’s famous statement in What Is To Be Done?53 Lih’s conclusion from a close reading of the work is opposite to John H. Kautsky’s. The importance of What Is To Be Done? has been exaggerated. If Lenin’s numerous other programmaticwritings fromthis period aretakenintoaccount, one cannotbut come to the conclusion that Lenin was a real Kautskyan after all. In the citation which is crucial to John H. Kautsky, Lenin argued that the working class, if left without the guidance of the Social Democratic Party, could in fact turn against Social Democracy and end up under the wing of the bourgeois political forces: thespontaneous workingclassmovementistrade-unionism …andtradeunionism means the ideological enslavement of the workers by the bourgeoisie. Hence our task, the task of Social-Democracy, is to combat spontaneity, to divert the working class movement from this spontaneous trade-unionist striving to come under the wing of the bourgeoisie, and to bring it under the wing of revolutionary Social-Democracy.54 53 Lenin 1967a. 54 Lenin 1967a, pp. 384–5. 16 introduction John H. Kautsky combines Lenin’s fear of working class spontaneity with his idea of Russian Social Democratic Party as a revolutionary ‘party of a new type’ which, as he claims, involved a ‘change of the ideology from a laborite ideology to one of intellectuals. The Party is, and “we” are, in Lenin’s mind clearly distinct from the working class and must lead that class where it would otherwise not go. In short, it is the intellectuals, not workers, who give direction and lead the revolutionary movement’.55 This makes it also understandable why peasantsandnot workerswerethemainally of theBolsheviks.Theintellectualscan appeal to all kinds of people who, if only they follow the party, will be accepted as class allies of the (in the Russian case, largely nonexistent industrial) proletariat. Lenin’s Marxism was an ideology of intellectuals, and not a socialist ideology at all, who then promoted the delayed modernisation of a developing country, which as such could be copied by other radical intellectuals in the liberation movements of the third world. According to John H. Kautsky, they all constitute a modernising movement that is, however, not equal to a genuinely socialist movement. John H. Kautsky shares the opinion of Lenin’s many other critics who have claimedthatRussianBolshevism,organisedas aconspirationalparty ofrevolutionary intellectuals, was a Jacobin deviation from orthodox Western Marxism – in this case represented by Karl Kautsky’s idea of a democratic mass party. Lars T. Lih denies all accusations of Lenin’s Jacobinism most emphatically and stresses that even in this respect he was a true follower of Kautsky’s teachings. In Lih’s opinion, Lenin followed in all respects Kautsky’s ‘merger formula’, according to which socialism was the result of the merger of scientific socialism with the working class: Thus scientific socialism tells the proletariat a story of itself: its past (‘historical condition’), its present (‘oppressed’) and its future (world-freeing deed). Since the story will inspire the proletariat to carry out the great deed, talking the story is a precondition for freeing the world.56 It is true that originally Marxism was the invention of two bourgeois intellectuals, Karl Marx and Friedrich Engels, and had to be brought to the working class from without. However, once discovered, the working class would be ready to adopt its basic principles and willing to accomplish its great historical mis55 J.H. Kautsky 2002, p. 43. 56 Lih 2008, p. 49. introduction 23 to ‘expropriate the expropriators’ (or the capitalist class) and to organise the appropriation of these products as collectively as they were in fact produced. Engels and Kautsky were thus describing capitalism from the future perspective of socialism. This interpretation, understandable as it is, would have been quiteharmlessandacceptableasasimplifiedformulausefulforpropagandistic purposes were it not connected to Kautsky’s first short cut, the understanding of Capital as a presentation of the historical development of capitalism from simple commodity production. One of the main theses of the present study is that as a result of these postulates, Kautsky’s critique of capitalism came close to a radical version of natural rights theory; in Kautsky’s opinion, capitalism was violating the original right of the producer to the product of his own labour. The real nature of commodity production came into appearance in simple commodity production realising the principle of equal exchange, whereas in capitalism, the products of alienated labour are appropriated by property owners. In imperialism, cartels and finance capital are exploiting both producers and consumers, in a direct way violatingthe ruleof equal exchange.Duetothe developmentof capitalisminto imperialism, the exploitative nature of capitalism becomes more evident and accentuated. It can be claimed that Kautsky’s understanding of the social relations of capitalism had important consequences for his conception of the socialist revolution, the development of socialist consciousness, and the role of democracy and dictatorship in the strategy of the working-class movement. Furthermore, it can be claimed that despite the wide spectrum of their political positions, Kautsky’s interpretation of Marx’s theory of capitalism was shared by theoreticians of the Second International, from Bernstein to Lenin. It was not the validity of the interpretation of Capital that was questioned by the critics of Marxism, but rather the empirical validity of Marx’s predictions. By contrasting Kautsky’s theory of capitalism with Marx’s critique of politicaleconomy,itispossibletogainabetterunderstanding of some basic ideasin Kautsky’s thinking – and in traditional Marxism in general. Such a comparison can also be justified by the fact that Kautsky always understood it as his task to popularise, explicate and develop the scientific socialism developed by Marx and Engels. The purpose of the following discussion is not, however, merely to explicate and critically evaluate Kautsky’s theory of capitalism in the light of Marx’s Capital and its preworks. The task of reconstructing the theoretical conceptions in Kautsky’s thinking is demanding as such, but there is a question of even greater interest connected with it, vis-à-vis a problematisation of Kautsky’s central ideas that can be used to re-evaluate and reinterpret Marx’s thinking too. 24 introduction It is quite obviously true that Kautsky misunderstood and misinterpreted many of Marx’s central ideas, but the fault was not Kautsky’s alone. To Marx, the general law of capital accumulation was not an empirical generalisation explaining the development of capitalism. Neither was Marx’s conception of immiseration as straightforward as Kautsky’s. Marx never formulated the basic contradiction of capitalism in terms similar to Engels and Kautsky. Kautsky’s main mistake was that he totally ignored the fact that Marx’s theory stands in a very specific and important relation to classical political economy, and can only be understood and justified as an explicit critique of the theoretical presuppositions inherent in this tradition of thinking. A main outcome of this neglect is that there is a fundamental difference between Marx’s and Kautsky’s respective critiques of capitalism. To put it briefly, according to Kautsky, capitalism had to be condemned and was to give way to socialism because in capitalism the products of the working class are exploited by a diminishing number of capital owners violating the right of the worker to the products of her or his own labour. Marx’s critique of capitalism is more complicated and one does not find in Capital any simplified critique based on the doctrine of natural right. According to Marx’s critical conception, the bourgeois society is a society of exploitation despite the fact that the exchange of commodities is based on equal exchange. Bourgeois society does not hold its promise of a reasonable society guaranteeing the freedom and equality of its members and the human existence and well-being of humankind. It is not the natural society postulated by classical political economy. It could be claimed, however, that even in Capital there is a tendency to positivise the critical intention of the theory and to write a historical theory of the origins and development of capitalism. It is equally true that Marx did not object to – and in fact, even contributed to72 – Engels’s formulation of the basic contradiction of capitalism in terms of the private mode of appropriation and socialisation of production. Even in Marx’s opinion, the material means and the richness of society are nothing but the hidden potentialities of labour only temporarily alienated and objectified in capitalism as the potentialities of capital. In principle, they were returnable to labour, even though not as the potentialitiesofanindividual worker, but ratherasthose of the collectiveworking class. It can be tentatively claimed that it was the concept of labour and the labour theory of value critically adopted by Marx from classical political economy, which formed the common theoretical core of both Marx’s thinking and Marxism. But even in this respect, there is a crucial shortcoming in Marxism’s 72 See the editor’s preface in Engels 1974–2004d, pp. xiii–xiv. introduction 25 understanding, namely, that Marxism almost totally neglected the analysis of the value form of a commodity and of labour power; consequently, its theoretical position can be claimed to be closer to classical political economy than to Marx’s critique of it. Thereareimportant consequencesresultingfromMarxism’s theoryof capitalism concerning the idea of the future socialist society; in Marxism, socialism came very close to what might be called organised capitalism. Even though the idea of an organised capitalism, which had already made the socialist revolution obsolete, was first developed by Hilferding in the 1920s,73 the characterisation of socialism presented by Kautsky, for example, shared many features with Hilferding’sconception of organisedcapitalism.Itwasmainlythefact that, due tothecentralisationofcapital, the anarchicnatureofcapitalist productionhad already been – at least partly – overcome, and elements of the planned regulation of production had been established, which was understood by Engels and Kautsky to form the conditions of socialism ripening within capitalism. In Kautsky’s opinion, the state was the only social institution capable of organising national production in socialism. Thus all that the socialist revolution had to accomplish was to transform the state from an organ of the power of the bourgeoisie to the organ of the working class, and put an end to the still prevailing antagonism of distribution. A socialist society was then essentially a society in which the anarchy of production and the antagonism of distribution had been replaced by state planning and regulation. Even though Kautsky referred to socialism as a society which would mark the end of the power of the products over the producers, his socialism could hardly be equated with Marx’s communism. In Marx’s communism, humans would put an end to the prehistory of humankind, to the subordination of the activity of human beings under reified social relations. His idea of a free association of the producers was reached through an implicit critique of the classical experience manifest in the philosophy of the Enlightenment and classical political economy, according to which the private acts of individuals unintentionally and unconsciously realise a hidden plan in history; human history has a reasonable goal. Only insofar as there is such a claim of reason in history does Marx’s thinking maintain its critical potency. Marx’s principle of labour included his historico-philosophical postulate, according to which human history is a result of the objectification of human labour, the productive potentialities and capacities of humanity, temporarily alienated in a bourgeois society.Thepresentstudy,then,canbereadasaproblematisationofthisthesis. 73 Hilferding 1973a. 26 introduction The following study is divided into two relatively independent but mutually related parts. In the first part, Kautsky’s Marxism is analysed; in the second part, Marx’s critique of political economy is discussed, insofar as it is relevant for an understanding of the Marxism of the Second International and for a problematisation of Marx’s Marxism. There are three major themes in the first part dealing with Kautsky’s Marxism: Kautsky’s theory of capitalism; his conceptionsaboutimperialism;andthequestionofdemocracyandrevolution. Theelements ofKautsky’stheoryofcapitalismarefirstintroducedbyanalysing his dispute with Bernstein, and his explicit interpretation of Marx’s economic theory. The questions of imperialism, democracy and revolution are especially interesting because by analysing Kautsky’s conceptions and their relation to those of other Marxists of the time, it is possible to test the fruitfulness of the thesis that Kautsky’s theory of capitalism in fact formed the common core of Marxism. Furthermore, Kautsky’s idea of scientific socialism, and the role of science and intellectualsin the labour movements, is of special importance for an understanding of the formation of Marxism. The second part begins with a discussion of Marx’s standards of critique and the character of his theory of capitalism as a critical theory. In the following chapters, Marx’s critique of the concept of labour and the relation between private property and labour in classical political economy is analysed. The discussion also includes a short excursion into John Locke’s theory of property. The critical re-evaluation of Marx’s critique of political economy thus consists mainly of the problematisation of his redefinition of the concept of labour andofthelogicofthepresentationofCapital,whichresultsinathesisaboutthe labour theory of value as the core of Marx’s Marxism. Finally, the last chapter before the conclusion presents an answer to the question of whether there is a theory of immiseration of the working class in Marx’s Capital. part 1 Kautsky’s Marxism ∵ © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_003 chapter 1 Organised Capitalism, the General Cartel and the Proletariat Hilferding’s famous treatise on modern capitalism of 1910, Das Finanzkapital,1 was the most systematic study of the historical development of capitalism of the period of the Second International. It can be claimed that, in Finance Capital, Hilferding formulated some of the main conclusions drawn from Marx’s Capital common to traditional or orthodox Marxism. In Hilferding’s understanding, the various forms of the concentration and centralisation of capital form the main feature of the development of modern capitalism. Accordingly, he understood it as his main task to analyse the new phenomena of the concentration of capital, the establishment of cartels, and to evaluate their consequences for the functioning of capitalism, the strategy of the working class and the Social Democratic Party. It was an understanding and analysis of capitalismsharedinthemainbyKautskytoo–eventhoughmanyoftheconclusions drawn from the analysis are different in Kautsky’s works and articles. Hilferding’s main idea was that there are, in principle, no limits to the centralisation of production and the formation of cartels. The establishment of one single general cartel was – in the end – the logical result of this process: If we now pose the question as to the real limits of cartelization the answer must be that there are no absolute limits. On the contrary there is a constant tendency to cartelization to be extended … The ultimate outcome of the process would be the formation of a general cartel.2 Capitalismwasdue todevelopintoa societypolarisedintotwooppositeforces: the general cartel responsible for the production and distribution of the national product on the one hand, and the working class to be mercilessly exploited by the centralised capital on the other: The whole of capitalist production would then be consciously regulated by a single body which would determine the volume of all production 1 Hilferding 1981. 2 Hilferding 1981, p. 234. 30 chapter 1 in all branches of industry. Price determination would become a purely nominal matter, involving only the distribution of the total product between the cartel magnates on one side and all the other members of society on the other.3 The new economic order solves the problem of the organisation of production. The whole national product is consciously distributed among the cartel and the rest of the people. Money and money prices lose their function of importance, and are substituted by a planned and conscious distribution of goods. The general cartel thus overcomes the anarchic nature of production and the contradictions inherent in production. The society remains, however, antagonistic by its nature, but this antagonism is only an antagonism of distribution. The antagonism of distribution between the general cartel and the rest of the people becomes even more accentuated in a society regulated by a general cartel: The illusion of the objective value of the commodity would disappear along with the anarchy of production, and money itself would cease to exist. The cartel would distribute the product. The material elements of production would be reproduced and used in new production. A part of theoutput wouldbe distributedtotheworkingclass and the intellectuals, while the rest would be retained by the cartel to use as it saw fit. This wouldbeaconsciouslyregulatedsociety,butinanantagonisticform.This antagonism, however, would concern distribution, which itself would be consciously regulated and hence able to dispense with money. In its perfected form finance capital is thus uprooted from the soil which nourished its beginnings.4 The finance capital – a further result of concentration – ensuing from the combinationofindustrialandbankcapitalismanifestasaunifiedpowerbased on the ownership of the means of production. The specific nature of capital disappears in a society governed by finance capital. Finance capital solves the problem of organising the national economy, and at the same time the capital associations concentrate property in their hands, making the relations of property apparent and accentuated: 3 Ibid. 4 Ibid. organised capitalism, the general cartel and the proletariat 31 Thusthespecificcharacterofcapitalisobliteratedinfinancecapital.Capital now appears as a unitary power which exercises sovereign sway over the life process of society; a power which arises directly from the ownership of the means of production, of natural resources, and of the whole accumulated labour of the past, and from command over living labour as a direct consequence of property relations. At the same time property, concentrated andcentralizedinthe handsofafewgiant capitalistgroups, manifests itself in direct opposition to the mass of those who possess no capital. The problem of property relations thus attains its clearest, most unequivocal and sharpest expression at the same time as the development of finance capital itself is resolving more successfully the problem of the organization of the social economy.5 In Hilferding’s opinion, the polarisation of society into a general cartel and the propertyless masses has, as such, no economic limitations whatsoever. From the economic point of view, the development of capitalist society would inevitably lead to the formation of a general cartel. Such a development is, however, impossible to imagine when the political forces are taken into account. The general cartel would sharpen the class constrasts to such a degree – and even more importantly, it would make them visible – that the capitalist society would be changed into a socialist one – the power of the general cartel would be changed into the power of the proletariat – long before the final stage of the general cartel was fully established. The development or the tendency towards a general cartel has, however, made the task of the proletariat much easier; not only has it created a working classconscious of itshistoricalmission, butit has alsoestablished an economic order readily and easily changeable into a socialist mode of production. The tendency towards the formation of a general cartel has put an end to the anarchy of capitalist production and has thus actually solved the economic problems inherent in capitalism. The above characterisation of Hilferding’s conception of the main historical developmentof capitalism is,ina sense, theconsequential extrapolationofthe historical tendencies inherent in capitalism as understood by the majority of Marxist theoreticians during the time of the Second International. In his Finance Capital, Hilferding was both the most influential theoretician on modern capitalism and the formulator of the strategic perspective of a socialist revolution.ItischaracteristicofhispositionthataftertheFirstWorldWar,specifically 5 Hilferding 1981, p. 235. 32 chapter 1 in 1926, Hilferding could formulate a reformist version of the same theory (the concept of an ‘organised capitalism’).6 Hilferding’s later revisionism does not in any sense diminish his role as highly influential theoretician of the Second International. On the contrary, the concept of ‘organised capitalism’ as formulated in his famous speech at the Party Congress in Kiel in 19267 only supports the general conclusions of Finance Capital. The main difference between Hilferding’s theories of 1910 and 1926 is that in the later work he recognises the general cartel as the very end of capitalism in itself; the dictatorship of the proletariat has become obsolete, since the economy organised by the big cartels has made it possible to overcome not only the anarchic nature of capitalism, but also its inner antagonism. All that is necessary for the Social Democratic Party to do is take over the management of the organised economy through the state institutions.8 One could – by way of a preliminary formulation of the problem – argue that among the Second International theoreticians, the theory of capitalism was, in a fundamental sense, based on two complementary propositions. As already pointed out, Marx’s main contribution to the understanding of capitalism and the fate of the working class was understood as being the historical law of capitalist accumulation as presented at the end of the first volume of Capital. Hence, Capital was essentially read to describe the law-like historical development of capitalism. Marx was interpreted as having claimed that the accumulation of capital was not only producing an increasing amount of wage labourers – the working class – but was also leading to the concentration of capital and the establishment of big industrial enterprises and capital associations.Accordingtothesecondproposition,thiswouldalso completeachange in the laws of commodity production; the law of the appropriation based on ownership of the products of one’s own labour is reversed into its opposite. In monopolistic capitalism, the exploitative nature of capitalism becomes visible.The law of equal exchangecharacteristicof earliercommodity exchangeis violated, and capitalist private property loses its basis of legitimation. The freedom and equality of the commodity producers of so-called simple commodity production is thus violated. In monopolistic capitalism, the accumulation of capital is based on the direct exploitation of wage workers and consumers too. The accumulation and concentration of capital has led to a relation of exploitation, which no longer expresses itself in the form of reified social relations; 6 Hilferding 1973a. 7 According toGottschalch, Hilferdingused theconcept of organisedcapitalism as earlyas 1915 (Gottschalch 1962, p. 190). 8 Schimkowsky 1974a. the dispute over revisionism 39 of families who are worsted by this transaction. Their struggle for a more just distribution or for an organization which would include a more just distribution is not on that account less justifiable and necessary.10 Having discussedthedispersionandcentralisationofpropertyin society,Bernstein criticised another central supposition or doctrine of Marxist economics. According to Bernstein, the necessity of the future disappearance of small enterprises or small production units can be deduced from the doctrine of the concentrationofcapital.EventhoughBernsteinwasbynomeanstryingtodeny the tendency towards centralisation of capital as such, he vehemently denied the conclusions drawn from it. The small-scale enterprise typical of an earlier stage of capitalism is by no means dying out. Even though typical of modern capitalism, big industrial enterprises do not push small ones out of the market. There continues to be room for the small producer and there are even certain factors that are beneficial to the increase of small-scale production in general in modern society. And as in the case of the centralisation of property, the statistical evidence collected from the end of last century does not support the thesis of the ever-decreasing number of small enterprises in general.11 In industrial production, the small production units are able to preserve their position or lose it only very gradually. In agriculture, the situation is even better. The small and medium-sized enterprises grow faster than the big ones. If the collapse of capitalist society were to depend on the disappearance of the middle steps between the top and the bottom of the social pyramid, it would not be any nearer to us today than it has ever been during the earlier development of capitalism.12 In Bernstein’s opinion, it was thus not possible to generalise any tendency towardsincreasingcentralisationeitherofownershiporofproductionin capitalism. There are tendencies inherent in capitalism pointing in such a direction, but at the same time there are countertendencies in action. The total result of these tendencies can only be clarified after careful analysis of the relevant empirical data. The empirical data at Bernstein’s disposal concerning the concentration in the 1880s and 1890s did not support the thesis of any clear concentration tendencies as such. The next step in Bernstein’s critique consisted of the Marxist conception of crisis development. Consequently, he criticised various explanations of crises 10 Bernstein 1909, p. 49. 11 See Bernstein 1904, pp. 55–61; Bernstein 1909, pp. 54–60. 12 Bernstein 1909, pp. 63–4. 40 chapter 2 and a recent discussion of the causes of crises by Rosa Luxemburg in particular.13 The most important question taken up by Bernstein was, however, the effect of the various forms of centralisation on the character of crises. In his opinion, the employers’ associations or associations of capitalists, cartels, syndicates and trusts, were obviously able to regulate production. Bernstein was not, however, supporting the thesis that the cartels were able to cure all the evils of capitalism. But in any case, new associations of capital, cartels, are a product of the capitalist economy, and not only a product of political intervention into the economyviaprotectionisttariffs.Assuch,theyareameansofadaptingproduction to the market; they are an effective countertendency to overproduction. According to Bernstein, cartels are able to modify the appearance of capitalist crises in the market: To deny this is to deny the superiority of organisation over anarchic competition. But we do so if we deny on principle that cartels can work as a modifying influence on the nature and frequency of crises.14 It is, thus, impossible to prophesy more precisely the effect of cartels on the crisis phenomena. Bernstein, however, warned the workers’ organisations not toneglect theproblemof the cartels,eventhoughnothing verydefinitivecould be said about their effects. One should take them into account because they might still modify crises.15 The general line in Bernstein’s critique is not difficult to summarise. He criticised any expectations of an imminent collapse of capitalism, whether the expectations were based on the centralisation of capital, property or income, or on crisis development. On the one hand, Bernstein denied the increasing centralisation and polarisation of society, while on the other hand, the concentration of capital was, in the form of capital associations, modifying the market problems of overproduction. Collapse and general polarisation of society were not to be expected. Any strategy based on such expectations is false and doomed to failure. The chief question in the dispute between Bernstein and Kautsky was quite evidentlytheroleofcapitalconcentrationincapitalism.Theproblemwasonce more taken up by Bernstein at the end of his critique. Bernstein referred to 13 Bernstein 1909, pp. 80–9. 14 Bernstein 1909, p. 90 (translation modified BL). 15 Bernstein 1909, pp. 92–3. the dispute over revisionism 41 Kautsky’s answer to the critique presented at the Stuttgart Party Congress a few years earlier. Kautsky had made the thesis about concentration the crucial question by saying: If it is capitalists who are increasing in number, and not those without property, then we are going ever further from our goal the more that this development progresses. It is capitalism that grows stronger, not socialism.16 Bernstein’s own comment on this thesis was typical. He not only rejected the increasing polarisation, but also problematised its possible consequences: Suppose the victory of socialism depended on the constant shrinkage in the number of capitalist magnates. Social democracy, if it wanted to act logically, either would have to support the heaping up of capital in ever fewerhands,oratleast togiveno support toanythingthatwouldstopthis shrinkage. As a matter of fact it often enough does neither the one nor the other.17 In other words, while believing in the inevitable decrease of capitalists, the Social Democrats not only neglected the real historical tendencies, but also, in fact, condemned the practical political measures of their own party. The empirical falsification of the tendencies towards the concentration of capital was not actually needed either, after all, to prove Bernstein’s point. Having attempted with great effort to prove that the concentration of capital is not a permanent and unavoidable tendency in capitalism, Bernstein denied the importance of the whole problem as far as the socialist perspective was concerned: That the number of the wealthy increases and does not diminish is not an invention of bourgeois ‘harmony economists’ [bourgeois economists preaching harmony], but a fact established by the boards of assessment for taxes, often to the chagrin of those concerned, a fact which can no longer be disputed. But what is the significance of this fact as regards the victory of socialism? Why should the realisation of socialism depend on its refutation? Well, simply for this reason: because the dialectical 16 Kautsky quote in Bernstein 1909, p. 212 (translation modified BL). 17 Bernstein 1909, p. 213. 42 chapter 2 scheme seems so to prescribe it; because a post threatens to fall out of the scaffolding if one admits that the social surplus product is appropriated by an increasing instead of a decreasing number of possessors. But it is only the speculative theory that is affected by this matter; it does not at all affect the actual movement. Neither the struggle of the workers for democracy in politics nor their struggle for democracy in industry is touched by it. The prospects of this struggle do not depend on the theoryofconcentrationofcapitalinthehandsofadiminishingnumberof magnates,noronthewholedialecticalscaffoldingofwhichthisisaplank, but on the growth of social wealth and of the social productive forces, in conjunctionwithgeneralsocialprogress,and,particularly,inconjunction with the intellectual and moral.18 The above quotation clearly proves that Bernsteinwas not, after all, only trying to falsify the predictions of Marx’s Capital as interpreted by Kautsky. He was trying to prove something else, namely, the irrelevance of the whole ‘dialectical scheme’ for the socialist perspective in general. Socialism could not, under any circumstances, be the automatic consequence of the economic development of capitalism. What then is the strategy recommended by Bernstein for the social democratic movement based on his re-evaluation of the economic tendencies in modern capitalism? According to Bernstein, socialism essentially is a ‘cooperative social order’ [genossenschaftliche Gesellschaftsordnung].19 Marxists claimed that in the big capitalist enterprises, production is already organised in a socialist manner; it has become socialised. The idea of the realisation of socialism in socialist theory was based on two essential conditions: first, the high development of capitalism (the socialisation of production); and second, the exercise of political power by the worker’s party.20 Despitethefactthatthebigenterpriseshaddevelopedandoccupiedamajor position in industry, Bernstein emphasised that smaller enterprises still played an important role in production – even more so in capitalist countries other thanGermanyor Prussia.Consequently, therecould beserious doubts astothe stage of development of the socialisation of production and the realisation of a socialist economic order in this respect in the nearest future. The second problem was even greater. The exercise of the political power through the working 18 Bernstein 1909, pp. 212–13. 19 Bernstein 1904, p. 84. 20 Bernstein 1909, pp. 84–7. the dispute over revisionism 43 class was traditionally understood among Marxists in terms of the dictatorship of the proletariat.21 Bernstein was expressing rather serious doubts about the willingness of the propertyless classes to support such a socialist course. To begin with, workers are differently placed in accordance with their actual economic position and qualifications. Further, the propertyless in commerce and agriculture, for instance, are in a position that is very different from the propertyless in industry. Hence, it would be a great miscalculation to suppose that all thepropertylessarepotentialsupportersofrevolutionarysocialdemocracy.On the contrary, political development in England – where the capitalist relations emerged earlier and are more highly developed than on the Continent – seems to point towards serious problems in the socialist movement. Even though the wage workershavebeenincreasinginnumber, the socialist revolutiondoes not seem to be any nearer today than it wasat the beginning of the nineteenth century.22 As a matter of fact, Bernstein was then questioning all the central doctrines of revolutionary socialism on which the expectation of a socialist revolution hadbeenbased.Thesocialisationofproductionwasnotsufficientlydeveloped; it would thus be impossible for the state to take over the organisation of production; and last but not least, the majority of wage workers and other propertyless classes by no means automatically supported the revolutionary course presented in the programmes of Social Democracy. There were no signs of a linear increase in the support of socialist ideals despite the increase of wage labourers. In short, in Bernstein’s opinion, it was justifiable to question the conditions of socialism in modern society on which the social-democratic strategy rested. It is the important task of Social Democrats to overcome the evident discrepancy between the programme of the party and the Marxist theory on the one hand, and the actual goals and aspirations of the working class on the other. The only consequential result of this re-evaluation could be the overthrow of all doctrinaire beliefs in a revolution in an immediate future and in the establishment of the dictatorship of the proletariat. In fact, Bernstein claimed to have been performing exactly such a revision; the party programme should be changed to answer the needs and the conditions of the present situation: ‘But is social democracy to-day anything beyond a party that strives after the socialist transformation of society by the means of democratic and economic reform?’23 21 Bernstein 1909, p. 102. 22 Bernstein 1909, pp. 105–8. 23 Bernstein 1909, p. 197. 44 chapter 2 Kautsky took Bernstein’s critique very seriously. As already pointed out, he answered it during the same year, in 1899, by publishing his Anti-Bernstein.24 In his response, Kautsky took up all the central problems and questions posed by Bernstein in his Evolutionary Socialism. Kautsky did not practically accept any of Bernstein’s conclusions. They were all based on either serious misunderstandings or unreliable empirical data. The historical validity of the law of capital accumulation and concentration was discussed in great detail and in a systematic way in the second part of the work, ‘the programme’. According to Kautsky, Bernstein’s first mistake was that he did not seem to recognise that Marx’s theory of concentration of capital did not include any predictions or prophecies as to the exact development and stage of concentration, even less any prophecy of a collapse of capitalism. Marx had only pointed out the general direction of economic development in capitalism.25 However, Kautsky admitted that there was a real problem pointed out by Bernstein: is there a tendency towards increasing concentration active in capitalism? According to Bernstein, there is no parallel tendency towards the concentration of production and enterprises, and the concentration of property. The first tendency is – with certain reservations – a real one; the second does not necessarily take place at the same time. According to Kautsky, the statistical evidenceprovidedbyBernsteincouldnot,however,proveanythingofthekind. To begin with, Bernstein was using statistics that for the most part referred to a certain year, and thus they could not prove anything about the historical tendency of concentration. Secondly, the Social Democrats had never denied the possible future existence of small-scale enterprises alongside the big ones.26 Furthermore, there cannot be any question of a general expropriation of the small capitalists all at once.27 In Kautsky’s opinion, it cannot be denied that there is, however, a general tendency towards the capitalisation of production and the gradual disappearance of individually owned enterprises operative in capitalism. This tendency is of crucial importance from the point of view of the socialist perspective, for it is through this tendency that the proletariat comes to recognise the inevitability of overcoming private property: The abolition of petty proprietor production [Alleinbetrieb], which hitherto formed the dominant form of enterprise, creates proletarians, wage24 Kautsky 1889a; see also Kautsky 1899b and 1899c. 25 Kautsky 1899a, p. 49. 26 Kautsky 1899a, pp. 52–3. 27 Kautsky 1899a, p. 49. the dispute over revisionism 45 workers. The more that capitalist production develops on the ruins of handicraft, the less chance the wage-worker, as an isolated producer on thebasis of privateproperty, has offreeinghimselffromcapitalistexploitation and subjugation, and the greater his yearning for the abolition of private property. Thus, concurrently with the emergence of the proletariat, socialist ideas inevitably arise among the proletarians themselves, aswellasamongthosewhoplacethemselvesonthesideoftheproletariat and who wish to raise it to independence, i.e. freedom and equality.28 The concentration of capital is the crucial question because it creates both the subjective and the objective conditions of a socialist revolution: Itisthe concentrationof capitalthatcontinues toimprovethese [the preconditions of socialism]. The more it advances, the more it increases and schools the proletariat. As we have seen, however, the more it advances, the more it reduces, enfeebles and dejects the mass of those who have an interest in private property of the means of production, the self-sufficient entrepreneurs, the more it weakens their interest in maintaining this property and the more it creates the preconditions of socialist production.29 Kautsky was quite explicit in his theoretical thinking about the laws of capitalist development. The concentration of capital both sets the historical task of the proletariat and creates the means to solve it: According to the Marxist point of view, these are the elements from whichsocialism istoarise. The concentrationof capital sets the historical task: the introduction of a socialist social order. It produces the forces to accomplish this task, the proletarians, and it creates the means of doing so: social production. Yet it does not solve this task by itself, without further ado. This solution can only arise from the consciousness, the will and the struggle of the proletariat.30 The data about German occupational and industrial statistics used by Bernstein were not, however, totally irrelevant, for they could still be used to test 28 Kautsky 1899a, p. 53. 29 Ibid. 30 Kautsky 1899a, p. 54. 46 chapter 2 Marx’s prognosis about the direction of social development. Kautsky was, after all, taking Bernstein’s empirical studies, or the questions posed by them, seriously. He first took up the question of the concentration of enterprises and the development of small-scale industries or enterprises. For Kautsky, there was no doubt about centralisation in this respect. Even though the number of small enterprisesandtheirshareofthetotallabourforcewerestillquiteprominentin some industries, the general trend was obvious; their share had been diminishing during the latter part of the century. The situation was somewhat different incommerceand inthe sphere of circulation,wheresmallenterprisesstill held adominantrole.Theydidnot,however,supportthe thesis of the viability of the small-scaleenterprisein general.On the contrary,thesmallenterprisesin commerce were becoming more and more ‘proletarianised’ and dependent on the bigger enterprises.Moreover, their customers werepredominantly proletarian, which lent them a proletarian character: However, the increase in small-scale enterprises in intermediary trade and the tourist and catering industry [Gewerbe der Beherbergung und Erquickung] is not a sign of the viability of small-scale enterprise, but a product of its decomposition. In this way the small publicans and traders are becoming ever more proletarian in their feeling and thinking. If up until now the petit-bourgeois mindset was decisive for the proletariat, then the opposite is increasingly the case.31 Takenasawhole,thestatisticalmaterialsupportedtheMarxistthesisaboutthe development of concentration and centralisation in industry and the economy in general: ‘If ever a theory was glowingly confirmed in the figures provided by the German employment and industry data, then Marxist theory was’.32 In agriculture, thesituationwassomewhatdifferent,and Kautskywasforcedtoadmit that the concentration of capital was not as clear in farming as in industry. The share of small farms had been increasing in agricultural production. But even here the tendency towards the polarisation of production relations was quite clear. On the one hand, there were big farms working with wage labourers, on the other, there were small family farms providing work for members of the family for only part of the time. The small farmers were not only no longer able to make a livingfromworkon the farm, their workand means of subsistencehad become 31 Kautsky 1899a, p. 64. 32 Kautsky 1899a, p. 68. the dispute over revisionism 47 more and more dependent on industrial production and the capitalist market. It was therefore possible to speak of proletarianisation even in relation to agricultural production and the agrarian population.33 Once again, the latest development in the economy thus supported the Marxist thesis about the polarisation of society even in the agricultural sector, even though there was an important difference when compared with developments in industry. In agriculture, there were more countertendencies and, consequently,thedirectionofthedevelopmentwasnoteasytopredict.34There could not, however, be any doubts about the general direction of development in the whole capitalist production: Yet if Marx’s expectations about the concentration of land holdings have not been fulfilled, then his expectations about the whole of the modern process of capitalist production have been all the more splendidly confirmed.The‘capitalmagnates’,who‘usurpandmonopolise’alltheadvantages of the capitalist ‘revolutionary process’, have become a reality in the short space of time since Marx wrote this sentence, and are increasingly becoming a reality in the form of cartels and trusts achieving the concentration of capital.35 Having discussed the problem of the tendency towards the concentration of capital in modern society, Kautsky took up Bernstein’s second and seemingly more central argument. Bernstein did not, in fact, deny the concentration of capital or enterprises, but only the concentration of property. According to Kautsky, the greatest problem was what Bernstein meant when speaking about property owners [Besitzenden]. Marx never presented any theory about the decrease in the number of property owners. On the contrary, the number of capitalists was due to an increase at the same time as the number of wage labourers due to the accumulation of capital. Kautsky was obviously at his strongest in arguing against Bernstein about the meaning of the property owners. It is, indeed, unclear as to what Bernstein meant when speaking about property owners and their increase. More specifically, Bernstein was speaking aboutpeoplewitha‘higherincomebasedonproperty’,thatis,peoplewhohave some property income without or besides the income from their wage labour. Kautsky’sinterpretationwasthat Bernsteincould have meant one of threepos33 Kautsky 1899a, p. 73. 34 Kautsky 1899a, p. 78. 35 Kautsky 1899a, pp. 78–9. 48 chapter 2 siblealternatives,namely,eithertheincreaseinthenumberofpropertyowners referredtothecapitalists,whichwasnotincontradictionwithMarx’stheory,or it referred to the increase in the middle classes with some independent sources of income of their own. The thesis about the increase in the share of the middle classes is more serious, and, according to Kautsky, it contradicted the ideas presented in the Communist Manifesto. If the share of the capitalists and the wage workers was increasing simultaneously, then there could not possibly be anysimultaneousincreaseintheshareofthemiddleclasses.36Thethirdalternative was that Bernstein was simply referring to the increasing wellbeing of the wage workers in modern society. It would, however, be rather strange to speak about property in relation to wage workers and their income. Once more, the statistical evidence is found to be problematic. To begin with, it was restricted to too short a period, and secondly, it is very difficult to interpret the income statistics in terms of sources of income. As a whole, KautskywasnotconvincedofBernstein’scritiqueofMarxismandtheconcentration thesis. He was, however, willing to accept that economic developments in capitalism would lead not to the straightforward destruction of the middle classes, but rather to the transformation of the traditional middle classes (merchants, artisans, and so on) into a new kind of middle class.37 The argument about joint stock companies was presented by Bernstein as further evidence of the important role of the middle classes in capitalism. According to Bernstein, joint stock companies function as a counterfactor against the centralisation of property despite the centralisation of production. The evidence presented by Bernstein of the effects of joint stock companies on the dispersion of property was found to be quite inadequate by Kautsky. But even his theoretical arguments were – in Kautsky’s opinion – misleading and wrong. It is quite true that joint stock companies make the dispersion of ownership of capital possible in principle, but this does not prove anything about the actual dispersion taking place: The increase in the number of shareholders does not at all prove an increase in the number of property owners; it merely proves that in capitalist society the share form is increasingly becoming the most dominant form of ownership.38 36 Kautsky 1899a, pp. 84–5. 37 Kautsky 1899a, p. 98. 38 Kautsky 1899a, p. 100. the dispute over revisionism 55 His embittered struggle against historical necessity leads us to assume that he is paying homage to the view that it is altogether impossible for socialism to have a scientific basis.60 Bernstein’scritiquewasaimed atquestioningthe deterministicnatureof social development, vis-à-vis the role and nature of the economic laws of society.61 The problem with Bernstein’s argumentation is that, on the one hand, he was operating on an abstract philosophical level, criticising the doctrine of economic determinism, while on the other, he was trying to empirically falsify the historical explanations and predictions of Kautsky’stheory of capitalism. Thus, he made it relatively easy for Kautsky to defend his Marxist position. Bernstein constructedhistheoreticalopponentinsuchawaythatKautskycoulddenythe relevance ofhiscritique. Marxism wasneither a deterministicdoctrine,nor did the history of socialismdepend on the ever-increasing concentration of capital and the collapse of capitalism. Still, Bernstein’s critique was not totally irrelevant after all, as evidenced by Kautsky’s reaction to it. Kautsky had to admit – at least indirectly – that Bernstein pointed out an important problem in scientific socialism: In what sense is the socialist doctrine and the strategy of the working class based on the idea of the necessary economic development of capitalism? According to Kautsky, it was not the economic development alone that would determine the future of socialism. It was neither the concentration of capital nor any final and general crisis of capitalism that would give birth to a socialist society, but rather the increasing strength of a revolutionary working class movement. The dissolution of capitalism and the establishment of a socialist society would, in the final instance, be the outcome of class struggle. Only a revolutionary working class, conscious of its historical mission, could overthrow capitalism and realise the final goal of socialism. However, it can be claimed that Kautsky was unproblematically expecting that the subject of revolution would rather automatically emerge out of the development of capitalism. The political and moral strength of the proletariat was expected to increase in parallel to the objective conditions of socialism ripening in the form of concentration and socialisation of production inside 60 Kautsky 1899a, p. 19. Rosa Luxemburg summarised the crucial question of the dispute as follows: ‘The dilemma leads to another. Either Bernstein is correct in his position on the course of capitalist development, and therefore the socialist transformation of society is only a utopia, or socialism is not a utopia, and the theory of “means of adoptation” is false’ (1989, p. 29). 61 See also Arato 1973–4, p. 9. 56 chapter 2 capitalism.Thewageworkers wouldinevitablycome tounderstandtheir genuineinterestsbecausethey did nothaveanyalternativeopentothem other than a socialist revolution – otherwise they would only remain wage workers in a society where their fate was characterised by social and economic misery. It can be claimed that the conception of the immiseration of the working class was the indispensable link between Kautsky’s theory of capitalism and his theory of revolution. And in this respect, Bernstein’s critique of Kautsky’s determinism was partly justified, even though he was unable to formulate it quite explicitly. His discussion of determinism and free will in history tended more to confuse the issue than to clarify it. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_005 chapter 3 The Theory of Immiseration, Socialist Consciousness and the Intellectuals Kautsky was quite clearly at his strongest in criticising Bernstein’s conceptions about the role of the ‘property owners’ and the middle classes in society – as can be seen from Kautsky’s discussion of the role of the new middle class, which he preferred to call the intellectuals. Bernstein was generally referring to the increase in the number of property owners or people deriving some incomefromtheirproperty–andnotfromwagelabourexclusively–ortosmall entrepreneurs in different fields of industry. According to Kautsky, it would be more valid to discuss the role of intellectuals rather than property owners as the new middle class in modern capitalist society: Had Bernstein wanted to say nothing other than that the middle class is not dying out, with a new middle class taking the place of the old one, i.e. the ‘intelligentsia’ taking the place of the independent craftsmen and small merchants, then we would have conceded this to him without further ado.1 Kautsky’s concept of the intellectual was very broad. To him, an intellectual was any qualified worker representing some kind of organisational function in society. The representatives of free professions were a clear and rather uninterestingcaseofintellectuals–aspartoftheoldmiddleclasses.Thereason for the increase in the number of middle classes is the transmission of some of the functions of the exploiting classes to specific employed functionaries, qualified wage workers. The broadening of the functions of the modern state and modern enterprises has led to a remarkable increase in these functions. A relatively well-paid group of people with a specially qualified labour power has emerged. It would, however, be a grave misunderstanding to consider the new groups to be identical with the old middle classes. Their position and functions in society are rather different. It would, however, be equally erroneous to regard them as similar to the proletariat in a straightforward way. 1 Kautsky 1899a, p. 19. 58 chapter 3 They resemble the bourgeoisie in their way of life and they have close relations with it in other respects too. While representing the functions of capital, they assume many of the mental attitudes of the bourgeoisie as well: ‘From this too, an antagonism against the proletariat arises between the proletariat and the several “intelligentsias”’.2 The main characteristic of the new middle class stems from its privileged positionbased on theprivilegeofeducation [der PrivilegiumderBildung].Even though education has become relatively common among the population compared with the period of feudalism, it is still a privilege preserved for a narrow section of the population. Kautsky’s most interesting contribution to the analysis of the intellectuals was, however, his analysis of their class position. From this point of view, intellectuals do not form a homogeneous class. Their more privileged members are close to the bourgeoisie, while their least privileged members are almost proletarian in position. The most interesting group of intellectuals is, however, the increasing middle stratum of the middle class [die Mittelschichten der Mittelschichten], which is situated between the antiproletarian intellectuals sharing the attitudes of capitalists and the genuinely proletarian intellectuals. This group shares some of the features of both strata ina way similar tothe old traditional petit bourgeoisie.Thereare,however,two important differences: first, there is an important advantage from the point of view of the socialist movement: Itisdistinguishedfromitbyitsbroadintellectualhorizonsanditsinstructed ability to think abstractly. It is the stratum of the population that is most easily able to rise above its class and caste-narrowmindedness, to feel idealistically ‘above’ momentary and sectional interests, to look the enduring needs of the whole of society in the eye and to represent them.3 On the other hand, the middle stratum of the new middle class presents a feature that is disadvantageous from the point of view of socialism: it lacks the readiness to fight against capital. Being a relatively small group, without any specific class interest and without a unified organisation, it is not willing to fightforitsinterests.Moreover,itcaneasilysafeguardits interestsevenwithout fighting, while being in a relatively privileged position: 2 Kautsky 1899a, p. 131. 3 Kautsky 1899a, p. 133. immiseration, socialist consciousness and the intellectuals 59 They hate the class struggle and preach its abolition or at least its mitigation. For them, class struggle means insurrection, rebellion and revolution: such things are to be rendered superfluous by social reform.4 The future social and political development of the new middle class is a genuine problem for the fighting proletariat. Its social position is contradictory by its nature: Claiming them entirely for the cause of the proletariat would go too far. But it would be even more erroneous to simply count them amongst the ‘propertied’. Inthissocialstratumwecan find allthesocialcontradictions that characterise capitalism compressed into a small space. But in this microcosm,likeacrosssocietyasawhole, wefind the proletarianelement taking steps forward.5 The analysis of the new middle class (the intellectuals) is once again characteristic of the whole argumentation presented in Kautsky’s anti-critique against Bernstein. Kautsky did not try to deny the importance of all the arguments that Bernstein presented against the thesis of the concentration – or rather polarisation – of society. His aim was more to prove that despite the continued existence and even increase of the middle classes (small property owners, members of the new middle class), their position and functions in society had radically changed due to the development of capitalist relations and the concentration of capital. The groups remaining in between the proletariat and the bourgeoisie – even if not wholly proletarian in position and consciousness – had important features in common with the proletariat. They were gradually being proletarianised. Summing up the various proletarian elements in modern society, Kautsky came to the conclusion that at least two-thirds or even three-quarters of the population were already proletarian in character – and hence potential supportersofrevolutionarysocialdemocracy.6Eventhoughthey werenotuniform in their interests, in future it would be possible to unify all the proletarian elements behind the Social Democratic Party and win their support for genuine workers-rule.7 All that was needed was skilful and forceful agitation by the 4 Kautsky 1899a, p. 134. 5 Kautsky 1899a, p. 135. 6 Kautsky 1899a, p. 186. 7 Kautsky 1899a, pp. 192–3. 60 chapter 3 party and its representatives. One of the best-known elements in Kautsky’s thinking in this respect was his conception of immiseration. Atwo-foldtendencytowardsthe represssionand elevationofthe proletariat constantly operates in capitalist society. The contradiction in the tendency is, however, nothing but an expression of the general contradiction between capitalists and wage workers.8 The growing working class and its organisations are able to fight against increasing exploitation and its effects. However, exploitation as such cannot be eliminated in capitalism by an organised working class. The proletariat is able to improve its social position through class struggle, but this pertains to its moral rather than economic standing.9 In this respect, Kautsky is rather more pessimistic than Engels. In his critical comments on the Party Programme proposal (the Erfurt Programme), Engels pointed out that the workers are able to oppose – at least to some extent – the tendency towards increasing misery. They cannot, however, avoid the insecurity characteristic of their existence in capitalism.10 As Kautsky formulated it, thereexistsaconstanttendencytowardsincreasingmisery incapitalistsociety, even though many of its effects on the working class have been modified and changed: Thus in the sense of tendency which cannot be eradicated in capitalist society, and which is asserting itself on an ever greater scale, the phrase about an increase in misery and subordination, as well as outrage amongst the workers, is completely correct.11 The fight of the organised working class against exploitation has, however, changed the nature of misery in capitalism. In modern capitalism, it would be better to speak about social misery, rather than physical misery: However,yetanotherpoint ofview iscompatible withthe facts. The word poverty can mean physical poverty, but it can also mean social poverty. Poverty in the first sense of the word is measured by the physiological needs of human beings. However, these are not the same in all places and 8 Kautsky 1899a, p. 115. 9 Kautsky 1936, p. 200. 10 Engels 1974–2004e, p. 223. Engels’s Critique of the Draft of Social Democractic Programme of 1891 was originally written in 1891, but it was first published in 1901 in Die Neue Zeit (see Engels 1974–2004e, p. 599, n. 183). 11 Kautsky 1899a, p. 116. immiseration, socialist consciousness and the intellectuals 61 at all times. Yet the differences they exhibit are nowhere near as large as the social needs, the non-satisfaction of which creates social poverty.12 In the physiological sense, the Marxist conception of growing misery would obviously be false. But in its wider social meaning, the concept is still valid: But if the working class rising out of physical poverty is such a slow process,thenitfollowsthatthereisaconstantincreaseintheclass’ssocial misery, because labour productivity increases tremendously quickly. This then means nothing other than that the working class remains cut off from the progress of culture to an increasing extent, that the bourgeoisie living standard rises more quickly than that of the proletariat, that the social contradiction between the two of them grows.13 In the above quotation, the growing social misery of the working class could be understood as being almost synonymous with the increasing accumulation of capital. Due to the increase in the productivity of labour, capital accumulates faster than the total wages in society. The relative share of the national product received by the bourgeoisie is getting bigger. If the struggle against capital is caused by growing misery, and if the growing misery is synonymous with the accumulation of capital in general, then the theoretical implications of this conception are rather devastating. But in Kautsky’s opinion, the growing miseryisalsoreflectedintheincreasingnumberofwomenandchildrenamong the labour force. Social misery is indeed a permanent element of capitalism, as permanent as exploitation, and in countries where capitalism is still only establishing its relations, the misery is even more obvious. In such regions, one could even speak of pure physical misery. Hence, Kautsky was able to summarise his discussion of immiseration as follows: Thus poverty is everywhere in the capitalist mode of production. This poverty is even greater, the more proletarians there are, the more smallscale enterprises are degraded by or made dependent on capital. But this also means more struggle against poverty, more working-class indignation against capitalist rule.14 12 Ibid. 13 Kautsky 1899a, p. 118. 14 Kautsky 1899a, p. 127. 62 chapter 3 In The Theory of Immiseration: A Helpless Critique of Capitalism [Die Verelendungstheorie: eine hilflose Kapitalismuskritik], Wolf Wagner discussed the dispute over revisionism mainly as a dispute of the theory of immiseration. Wagner is ready to admit that the study of the polemical writings of both Bernstein and Kautsky does not reveal so many explicit references to the problem of immiseration.15 The dispute seems to be primarily concerned with the theory of the collapse of capitalism. The development of the social position of wage workers was discussed only sporadically. Still, it is easy to agree with Wagner that the concept of immiseration was perhaps the most important single part of the revolutionary socialist doctrine as presented by Kautsky. It was essential to Kautsky’s thinking because it made sense of the general emphasis he placed on the future development of the socialist revolutionary consciousness among wage workers.16 And it was generally understood to be one of the cornerstones of the scientific socialism of Engels and Marx.17 To Bernstein’s general theoretical argument, the fate of the working class was important too. It was important to show that the worker’s position could be improved in capitalism. Bernstein did not, however, primarily discuss the development of the value and price of labour power. Rather, he tried to show that the devastating consequences of the capital-wage labour relation could alreadybeavoidedor atleastsidesteppedincapitalismbyintroducingworkers’ 15 Wagner 1976, p. 23. 16 However, in The Agrarian Question, Kautsky definitely denied that the growing misery of the proletariat was a necessary precondition of its revolutionary aspirations. Improving the position of the proletariat as consumers did not eliminate the necessity for class struggle; on the contrary, it even improved its conditions: ‘Modern wage-labourers remain proletarian so long as they are not in possession of their means of production, regardless of how satisfactory their status might be as a consumer, and what they – as a consumer – might own, be it jewellery, furniture or even a small house. In fact, far from making them unfit for proletarian class struggle, improving their position as a consumer enables them tostruggleall the morevigorously. Proletarianclass struggle is notthe outcomeof poverty, but of the antithesis between the proletarian and the owner of the means of production. The establishment of social peace will not be brought about by the overcoming of poverty – even if this were to prove possible – but by overcoming this antithesis. And this can only occur when the working population regains possession of its means of production’ (Kautsky 1988, p. 314). 17 Wagner presents a list of the works of Marx supporting the thesis that Marx also shared a conception of immiseration. In Wagner’s opinion, it does not, however, form a central element of the works of the ‘mature’ Marx (i.e. Capital). (See Wagner 1976, p. 18, n. 14; for a discussion of the role of immiseration in Marx’s Capital, see Chapter 17). immiseration, socialist consciousness and the intellectuals 63 co-operatives andjuridicalmeasuresbythe stateandlocal authorities.The fate of the working class could be improved in spite of capitalism. In answering Bernstein’s critique, Kautsky formulated his revision of the immiserationdoctrine – and introducedtheconcept of social miserydiscussed above. (Kautsky was, of course, trying to show that it was no revision after all. According to Kautsky, the Erfurt Programme should have been quite understandable to anyone familiar with Marx’s work. The misunderstandings were duetoanimperfectknowledgeof Capital).18In defending the ‘Marxist’conception of immiseration against various critics, Kautsky gave various definitions of the concept – the growing misery had to be understood as only a tendency19 – but in its most general meaning it became equivalent to the discrepancy between the growing cultural needs of wage workers and their means of satisfying them. There cannot be any fixed definition of these needs. They are cultural needs because they vary from one society to another. The growth of culturalneeds keptpacewiththe struggle and organisationofthe proletariat.20 The discussion of the Gorlitz Party Programme shortly after the war is even more interesting in this respect. Kautsky defended the Erfurt Programme against the revisions in the new programme. According to him,21 the doctrine of immiseration could be understood in three different ways: (1) The increase in the share of wage workers was, as such, part of immiseration – more and more workers were working for capital and under the command of capital; (2) Immiseration was only a tendency, the realisation of which depended on several factors, especially the power of the organised working class; (3) The misery of the wage workers is only a ‘relative’ concept: ‘Under different historical circumstances, this same life situation can on one occasion be perceived as favourable, and on another occasion as unfavourable’.22 Thelast formulationis by far the most interestingand at the same timemost problematic. It could be interpreted as proving that Kautsky had adopted a position similar to the concept of ‘relative deprivation’ in sociology (workers compare their position with that of other groups or classes in society and/or with their own former position and feel deprived if the experience is unsatisfying).However,thisinterpretationis not correct.Kautskyrepresented a position that was, after all, more materialist. 18 Kautsky 1889a, pp. 127–8. 19 Kautsky 1889a, p. 115. 20 Kautsky 1889a, p. 118. 21 Kautsky 1968a, pp. 246–9. 22 Kautsky 1968a, p. 249. 64 chapter 3 For Kautsky, as well as for Bernstein, the ‘civilising’ influence of the struggle of the organised working class and its organisations was enormous; the working class was supposed to develop nothing less than a new and higher sense of morals in its common struggle. And the new cultural needs were going to developin thecommon actionof the workers too.23 Thegrowingsense of solidarity among the workers was an important factor in this development. The organised and educated working class would not be content with its former means of satisfying needs. This is the basis for the different experiences of the same life situation [Lebenslage] at different times. The conflict between classes would not diminish in power despite the concessions the capitalists were forced to make to an organised working class. New needs were continuously developed in the common action of the working class. Hence, even though Kautsky did not formulate the problem accordingly, he could perhaps be interpreted as having claimed that there is a permanent discrepancy between the value of labour power and the wages actually paid by the capitalists. Kautsky did not, however, base his ideas of the new conditions of wage workers on any analysis of the possible changes in the production process of capital. (He was not actually speaking of any reproduction of the labour power at all, nor did he use the phrase ‘value of labour power’ [der Wert der Arbeitskraft] in this context.) The thesis of growing misery in the Erfurt Programme was based on an analysis of the growing use of unskilled labour, the use of women’s and children’s labour power, the moral dispersion of the working class family, and so on. The new needs of the wage workers were not a result of any new ‘needs’ in the production process of capital (such as the use of skilled labour and the rise in the general level of education; the only factor that is mentioned in this context is the growing intensity of labour). The new needs are produced by the organised class struggle only: ‘In this way, the proletariat unceasingly grows in number, moral strength, intelligence, unity and indispensability’.24 The class struggle fought by the organised proletariat constitutes a permanent learning process for the workers. That is why Kautsky’s vision of the condi23 In an article published in 1907–8, Verelendung und Zusammenbruch, Kautsky emphasised the role of immiseration as a factor contributing to the moral and intellectual power of the proletariat: ‘Marx’s great deed precisely consisted in not merely seeing the aspects of the working class’s misery which degrade it, but also those that cause them to revolt and thus rise up’ (Kautsky 1907–8b, p. 550). 24 Kautsky 1968b, p. 164. immiseration, socialist consciousness and the intellectuals 71 proletarianstandpoint,theory–andintellectuals–legitimatetheirleadingrole in the movement. And in this respect, Kautsky’s concept of Marxism is representative of the theoretical thinking of Second International Marxism. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_006 chapter 4 Socialism as Science Kautsky’s argument that the socialist perspective and scientific socialism are brought into the labour movement from outside by bourgeois intellectuals, who have taken the proletarian standpoint, seems to display an ambivalence, namely, that the intellectuals1 are able to develop scientific socialism precisely because they do not have a clear class position of their own. As a result, not only do they represent higher learning and scientific knowledge, but they also have a specific capacity for abstract thinking. And it seems to be their classless position that endows them with a wider perspective in their thinking: ‘However, the intelligentsia is distinguished from both of these classes by its broader intellectual horizons, its better education in how to think abstractly and its lack of united class interests’.2 Concrete interests in the daily struggle make it impossible for the other classes in society to understand the general laws of social development, the specific subject matter of scientific socialism.3 On the other hand, Kautsky seems to believe that the modern proletariat is the only rightful heir to bourgeois culture [Bildung]. A wage worker has no use for scientific knowledge in improving his social and economic position. He cherishes scientific knowledge for its own sake, like an ancient philosopher: One of the most striking aspects of modern society is the proletariat’s thirst for knowledge. Whereas all other classes seek to dawdle away their 1 In referring to the intellectuals as creators and producers of scientific socialism, Kautsky was clearly using the concept in a narrower sense than when talking about intellectuals as the new middle class having some organisational functions in capitalism. He did not, however, explicitly discuss the different uses of the concept, and he did not therefore make any distinction between critical intellectuals and the intellectuals as a social class. 2 Kautsky 1894–5a, p. 76. 3 According to Leineweber, Kautsky’s theoretical discussion of the social position of intellectuals was the first Marxist contribution to a class theory of ‘intelligentsia’ (Leineweber 1977, p. 58). It is interesting to note that Karl Mannheim’s famous concept of ‘free-floating intelligentsia’ [freischwebende Intelligenz] is clearly a further extrapolation of Kautsky’s ideas. The classless position of intellectuals is the central theme of Mannheim’s theory of intelligentsia in Ideology andUtopia (1960,pp.136–46). Thereis, however, an important differencebetween Kautsky and Mannheim, insofar as in Mannheim’s thinking, intellectuals – although situated between classes – do not constitute a new middle class (see Mannheim 1960, p. 139). socialism as science 73 leisure time in the most mindless possible way, the proletariat strives for education [Bildung] with veritable greed … And this thirst for knowledge is entirely disinterested. Knowledge cannot help the machine-worker to increase his income. He seeks truth for its own sake, not for material gain. He therefore does not limit himself to a single, smaller domain of knowledge: his eye is on the whole: he seeks to understand the whole of society, the whole world. The most difficult conundrums lure him most, he delights in addressing himself to questionsof philosophyandmetaphysics.It is oftendifficult tobring himback down to solid earth from the clouds.4 The proletariat is the inheritor of the philosophical spirit of the ancient aristocracy because it is interested in the most general and abstract problems of the world for the sake of pure knowledge. Kautsky’s argument is similar to that used in connection with the intellectuals: they too have a wider spiritual horizon. And science – the great science – is something that deals with the general and necessary development of the world and society in particular. The specific interests and needs of the various groups of population are often a hindrance to a correct understanding of these general tendencies and laws. Scientific socialism has a double role in relation to the proletariat: to make it recognise its common goals and general interests, and to make it possible for the proletariat to reach these goals with maximum efficiency. It is, however, not legitimate to draw any ideals from scientific knowledge.5 In this respect, Kautsky made a rather clear neo-Kantian distinction between values and science: Even Social Democracy, as an organisation of the proletariat in its class struggle, cannot [dispense with] the moral ideal, the moral indignation against exploitation and class rule. But this ideal has nothing whatsoever to do with scientific socialism, which is the scientific examination of the laws of the development and movement of the social organism, for the purpose of knowing the necessary tendencies and aims of the proletarian 4 Kautsky 1934, pp. 156–7 (translation modified BL). 5 For a discussion of the neo-Kantian impact on Marxism, and Kautsky and Bernstein especially, see Colletti 1972, pp. 72–6. The distinction between factual statements [Sachurteile] and value statements [Werturteile] is crucial in the neo-Kantian tradition. It is characteristic in this respect that Karl Vorländer, who in his Kant and Marx of 1911 proposed to unite and supplement historical materialism with Kant, approvingly referred to Kautsky’s conception of ethics and science (see Vorländer 1924). 74 chapter 4 class struggle … Science has only to do with the recognition of necessity. It can certainly arrive at prescribing a shall, but this may only come up as a consequence of insight into the necessary.6 Science cannot ascribe any ideals or goals to action; it can, however, reveal the direction of development and, hence, the necessary outcome of history.7 In this sense, it can be of assistance in showing that some goals of action are impossible to achieve (i.e. wage workers have no other realistic alternative but socialist society to liberate them from the exploitation of capital). Hence, the unifying role of science is based on the recognition of the laws of development of society: ‘Without socialist theory they are not able to recognise the unity of their interests. The individual strata of the proletariat are alien to each other, occasionally even hostile’.8 Apart from its role as a unifying force, science can function as a guideline in the struggle for socialism, that is to say, only with the help of science is the proletariat able to reach its historical goals with the maximum efficiency and minimum use of energy: Only through a recognition of the social process, its tendencies or aims, can this waste be ended, the strength of the proletariat concentrated, the workers brought together into great organisations united around a commonaim,withallpersonalitiesandmomentaryactionssubordinated tothe permanent class interests,and those interests,inturn, placed atthe 6 Kautsky1909b,pp.202–3.Indiscussingthelimitsofscienceandscientificknowledge,Kautsky alsomadeadistinctionbetweenindividualandmassphenomena.Onlythelattercanbecome the object of scientific study and knowledge: ‘The field of science only extends as fas as the field of discernible necessity. Where this ends, science ends too. Its frontiers are expanding on a daily basis, but we are not yet far enough to be able to scientifically fathom the will of the individual in society, i.e. to be able to recognise it as necessity. The field of science only extends as far as the field of discernible necessity. We can only subject mass phenomena to scientific investigation’ (Kautsky 1900–1, p. 358). It is, however, somewhat unclear whether this distinction is thought to be one of principle, or whether it is a practical limitation due to the present stage of the development of science. 7 Kautsky’s discussion of science as revealing the necessity in history was certainly influenced by Engels’s conception of freedom and necessity in Anti-Dühring. According to Engels, in socialism humans will consciously make use of the laws governing the development of society. For Engels, then, socialism does not abolish the natural laws of society, but will be equal to the conscious utilisation of these laws in the interest of humanity. ‘The laws of his own social action … will then be used with full understanding, and so mastered by him’ (Engels 1974–2004d, pp. 254–71). 8 Kautsky 1919a, p. 29. socialism as science 75 service of collective social evolution. In other words, theory is the factor that raises to the highest degree the strength which it is possible for the proletariat to develop. Theory does this by teaching the workers how to use the powers arising at any given stage of economic development in the most effective manner and by preventing the waste of those powers.9 Because the proletariat does not realise its own power in the present society, the analysis of the development of society and the class position of the proletariat is a necessary step on the way to the establishment of proletarian power. The proletariat is in a more fortunate position than the earlier revolutionary classes in history.10 Its science is the most developed form of knowledge. The new science was developed from the proletarian standpoint. Yet, to Kautsky, the proletarian and the scientific standpoint are identical, because the proletariat represents progress in history. In this sense, its general interests are identical to the interests of the whole of society: But no party has ever delved into the social tendencies of its time so deeply, and understood them as precisely as social democracy has. That is due not to social democracy’s merit, as to its good fortune. It owes its superiority to the fact that it stands on the shoulders of bourgeois economy, which carried out the first scientific investigation of social relations and conditions.11 The revolutionary proletariat is the rightful heir to this theoretical aspiration, which is dying out with the increasing conservatism and reactionary nature of the bourgeoisie.12 The proletariat can and must base its whole action and 9 Kautsky 1919a, p. 44. 10 Cf. also: ‘Yet social democracy’s great fortune stems from the fact that it has the fortune of possessingatheorythatcanguideitbetterthananyotherthroughthelabyrinthofmodern society and shows that its aims point in the same direction as that of necessary social development, whereas those of our opponents go in the opposite direction. Our aims thereforeprovetobeirresistible,whereasthose of ouropponentsprovetobebarren…But oursocialist theory doesnot merelypointout thegeneraldirectionof socialdevelopment, but it also makes it possible for us topredict the coming situation, and what this situation demands, with greater certainty than would otherwise be the case. It makes it possible for us to prepare ourselves for such situations, and to exploit them most rapidly and energetically’ (Kautsky 1905–6, p. 859). 11 Kautsky 1910b, p. 123 (translation modified BL). 12 Kautsky 1902–3a, p. 730. 76 chapter 4 struggle on scientific knowledge of the laws of society. In this very sense, the proletarian standpoint is the scientific one, and the proletariat the inheritor of the scientific world outlook of the bourgeoisie. The scientific perspective is synonymous with the recognition of the objective necessary laws of society, and the recognition of these necessities is identical to the general proletarian interest: And these outlooks are no mere expectations of conditions which simply ought to come, which we simply wish and will, but outlooks at conditions which must come, which are necessary. Certainly not necessary in the fatalist sense, that a higher power will present them to us of itself, but necessary, unavoidable in the sense that the inventors improve technology and the capitalists, in their desire for profit, revolutionise the whole of economic life in its entirety, as it is also inevitable that the workers aim for shorter hours of labour and higher wages, that they organise themselves, that they fight the capitalist class and its state, as it is inevitable that they aim for the conquest of political power and the overthrow of capitalist rule. Socialism is inevitable because the class struggle and the victory of the proletariat is inevitable.13 The scientific interest is not, however, identical to the specific interests of the wage workers, and the proletariat cannot come to know the social necessities all by itself in its practical political action. It presupposes that the proletarian science – a new positive science more scientific than its predecessors – is developed.14 Socialism is inevitable, but only on condition that its inevitability is understood by the proletariat; however, the problem is not unsolvable since the proletariat will inevitably come to understand this inevitability. It has no other alternative. Once the development of society towards greater concentration and polarisation is understood and recognised, the interests of the 13 Kautsky 1910b, p. 206 (translation modified BL). 14 Cf. also: ‘As soon as it has arrived at self-consciousness to some extent, an ascendent class, which cannot achieve complete equality or develop freely within the framework of the society in which it is arising, has to strive to replace the existing form of society with another one that suits its interests’ (Kautsky 1902–3a, p. 729). Leineweber has suggested an interesting interpretation of such a conception of scientific socialism. The classless socialist science anticipates the future classless society: ‘Without knowing it, he [the theoretician] is ideally where the proletarian scatters about in reality’ (Leineweber 1977, p. 70). socialism as science 77 proletariat become identical to the demands of progress in society, and the coalition of science and proletariat is accomplished. Kautsky’s comment on the discussion about Mach and Machism15 – a lively discussion among Marxists of his time, as shown also by Lenin’s Materialism and Empirio-criticism16 – is typical both of his willingness to avoid any disputes which would endanger the unity of the party and which in his opinion are also totally irrelevant from the point of view of social theory and practical politics. For Kautsky, Marxism was essentially a positive science of society and of history, and it did not include any specific theory of knowledge. Even though materialism is characteristic of Marxism, questions of the theory of knowledge are irrelevant to Marxism, and the stand adopted by a Marxist on these questions is exclusively a private matter for every individual member of the party. The main task of the proletariat is to learn Marxist theory of capitalism and thematerialistconceptionofhistory,andespeciallytorecognisetheimmediate tasks in its own country. Compared with these main truths of Marxism, the theoretical clarity about different versions of the theory of knowledge is of secondary importance.17 15 Kautsky 1909a. 16 Lenin 1967i. 17 In this respect, Lenin’s position could be characterised as a total antithesis. In his opinion, questions concerning the theory of knowledge are of immediate interest to the party. Il’enkov (1980) accordingly interpreted the importance of Lenin’s Materialism and Empirio-criticism mainly from the point of view of the political line of the Russian Social Democratic Party: the main result of Lenin’s critique of Mach’s theory of knowledge is that a Menshevik having a false conception of the strategy of the party but a correct position in the theory of knowledge is less dangerousthan a Bolshevik representing a Machist theory of knowledge. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_007 chapter 5 The Capitalist Law of Appropriation: Kautsky’s Interpretation of Karl Marx’s Economic Thought One would expect that the phenomenon of revisionism would have had something to do with the question of the dual nature of consciousness of the working class. However, revisionism was never a serious theoretical problem for Kautsky. He could cherish illusions that the theoretical authority and the programme of the party were not seriously challenged by revisionism because, in his opinion, revisionism had not yet presented any alternative scientific theory endangering the role of Marxism in the movement. As a matter of fact, it had not presented any theory at all. In this respect, it could better be compared to the historical school of national economy.1 On the other hand, one would expect Kautsky to have wondered why the proletariat, in his opinion already a decisive majority in the developed capitalist countries, had not been ready to take over state power. The only explanation he offered was that the proletariat was not yet ripe for its historical mission. Regarding Germany, Kautsky’s optimism in this respect, shared by Engels,2 was understandable. During the relatively short period since the abolition of the socialist law, the party had succeeded quite well in the parliamentary elections. The final victory was only a question of time. Minor setbacks could be explained by concrete political conditions. In England, however, the situation should have been theoretically more challenging. The increase of the proletariat and its organisation into trade unions had tended to weaken the revolutionary spirit of the labour movement. As a matter of fact, in England – as was already pointed out by Engels – there had not been any genuinely socialist movement of importance, but only ‘eclectic, average socialism’.3 However, Kautsky never developed any theoretical explanation for the phenomenon of revisionism or reformism inside the party and trade unions. He clearly understood revisionism as only a singular event in the development of Social Democracy and did not analyse it at all in the wider context of emerging 1 Kautsky 1902–3a, pp. 727–8. 2 Engels 1974–2004f, pp. 521–2. 3 Engels 1974–2004c, p. 297. the capitalist law of appropriation 79 reformist tendencies in the labour movement. In 1902, in The Three Crises of Marxism [Die drei Krisen des Marxismus] Kautsky could already state that the newest crisis in Marxism, the challenge posed by revisionism, had been overcome and had not left any permanent effects on Social Democracy: ‘Above all, it had almost no affect at all on the main thing, i.e. practical Marxism, almost completely untouched, which is understandable’.4 This crisis did not have any real reasons: it was caused exclusively by the personal reaction of certain persons. Thus it did not leave any permanent traces and ‘as of yet, the most recent crisis of Marxism has not even brought about a fundamental revision of our programmes’.5 InanarticlewrittenshortlyaftertheDresdenPartyCongressin1903,Kautsky could triumphantly announce that ‘the declarations and votes in Dresden signify the burial of theoretical revisionism as a political factor’.6 Finally, in an article dedicated to the seventieth birthday of Bernstein in 1920, Kautsky could even afford to give his former opponent credit for having discussed the new problems posed by imperialist politics and economic prosperity, and connected with the relations of Social Democracy with radical bourgeois parties.7 At the same time, Kautsky nevertheless preserved his old position, and stated that the development of capitalism had subsequently made the problems posed by Bernstein obsolete: When imperialism went from its first stage into its second stage, when prosperity and continual trade-union victories were replaced by rapid inflation and the stagnation of the trade-union struggle, the question of the correctness of Marx’s prognoses ceased to play a role.8 The problems posed by Bernstein were thus understood to have been connected only with a specific economic conjuncture of capitalism. However, even according to Kautsky’s own conception, reformism was a natural feature of the labour movement in its initial stages of development. Without the political guidance of the party provided with a socialist theory, the labour movement could never become conscious of its genuine interests. Obviously, Kautsky believed that once the labour movement was politically organised and the proletariat had adopted the essentials of scientific socialism, reformism could 4 Kautsky 1902–3a, p. 727. 5 Ibid. 6 Kautsky 1902–3d, p. 814. 7 Kautsky 1920a, pp. 45–6. 8 Kautsky 1920a, p. 47. 80 chapter 5 no longer gain any permanent footing in the movement. Revisionism was only a temporary indiscretion on the part of some party intellectuals caused by ignorance and insufficient knowledge of the wider perspectives of social development. There are several explanations as to why the proletariat cannot attain a general and common class consciousness in its economic struggle scattered throughout Kautsky’s work (petit-bourgeois traditions and remnants, labour aristocracy, and so on), but the main obstacle is clearly one of principle: there are limits of principle to economic consciousness that can never be overcome automatically. In this respect, Kautsky’s dualism is rather devastating. Political consciousness and the struggle for power – whether inside or outside of parliament – have practically nothing to do with the daily interests of the wage workers, yet the labour movement is supposed to develop automatically and out of necessity into a revolutionary political party. The mediator is the Social Democratic Party in possession of the scientific socialism and the right strategy. The best form of political struggle in this respect is parliamentary politics. Electoral campaignshaveanimportantorganisationalfunction.Theyarethebestmeans of organising the proletariat of the whole country into common action.9 Theoretically, Kautsky’s conception of the economic vs. socialist consciousness of the wage workers, and the political consequences drawn from it, are deeply rooted in his interpretation of Marx’s ‘economic thought’. Kautsky’s book The Economic Doctrines of Karl Marx [Karl Marx’ Ökonomische Lehren], written inco-operationwith Bernsteinand under theguidance ofEngels,10 was originally published in 1887. It could be argued that at least in some of its basic interpretations, The Economic Doctrines of Karl Marx presents the core of the Marxism of the Second International; the fundamental aspects of this interpretation were shared by most theoreticians of the time. The basic idea behind the Kautskyan interpretation of Capital was the historical character of its economic theory; Capital is basically a presentation of the historical development of capitalism, the most important part of which is the presentation of the historical law of capital accumulation. Kautsky is quite explicit in his interpretation in this respect. In the preface to his book, he formulated the task of his presentation not only as a popularisation [Gemeinverständlichung] of Capital, but also, in an important sense, as a further development of Marx’s economic thought.11 9 Kautsky 1911a, p. 137. 10 Steenson 1978, p. 66. 11 Kautsky 1906b, pp. ix–x. the capitalist law of appropriation 87 ideas of freedom and equality seem to be more a form of falsification performed by the bourgeois theoreticians than a real manifestation of the relation between capital and wage labour.25 As soon as the sphere of production is substituted for the field of circulation, this falsification should become apparent to everyone.26 The same ambivalence is present in Kautsky’s discussion of the transformation of the form of appropriation. The new form of appropriation is, according to Kautsky, based on the old one, but in Kautsky’s historical interpretation it is unclear in which sense. On the one hand, the appropriation of surplus value does not violate the rules of commodity circulation,27 while on the other hand, the laws of commodity production are transformed into their opposites. In a similar way, the recognition of the commodity form becoming the general form of labour’s products only in developed capitalism28 did not lead Kautsky to problematise his conception of simple commodity production. This ambivalence of Kautsky’s thinking could be interpreted as resulting from the specific character of The Economic Doctrines of Karl Marx. On the one hand, Kautsky simply presented Marx’s central ideas in a condensed form paraphrasing Marx; on the other hand, he also developed Marx’s theory following his own interpretation of its shortcomings. The main result of Projekt Klassenanalyse’s interpretation of The Economic Doctrines of Karl Marx in any case remains valid: In Kautsky’s conceptualisationofCapital,thereis no needtoproblematisethe specificcharacterof capital relation as a relation of both exploitation and equality. The equality and freedom of commodity producers belong to an earlier mode of production, simple commodityproduction,whereasincapitalismtherelationbetweencapitaland wage labour is basically a relation of exploitation. At the very end of his The Economic Doctrines of Karl Marx, Kautsky formulated his socialist perspective in a way that shows the similarity between his conception and that of Friedrich Engels: Thus everything presses for a solution of the contradiction, which is embodied in the capitalist mode of production, the contradiction between the social character of labour and the traditional form of appropriating the means of production and the products.29 25 Kautsky 1936, p. 68. 26 Kautsky 1936, p. 71. 27 Kautsky 1936, p. 63. 28 Kautsky 1936, pp. 2–3. 29 Kautsky 1936, p. 244. 88 chapter 5 Further: We can also perceive the sole path that is left for the further development ofsociety:the adaptation of theformofappropriationtothe mode ofproduction [the assumption of the means of production by society – BL], the complete and unreserved accomplishment of the transformation, which has only been half carried out by capital, of production from isolated productionintosocialproduction.With this,however,a newepoch opens for mankind.30 The conception of the basic contradiction of capitalism in terms of the contradiction between the private form of appropriation and the social character of production or means of production was first formulated by Engels in his AntiDühring.31Kautsky’sreadingofCapitalasahistoricalpresentationwithastrong emphasis on the transformation of the form of appropriation quite clearly goes back to Anti-Dühring.32 Engels formulated the basic contradiction as follows: The means of production, and production itself had become in essence socialised. But they were subjected to a form of appropriation which presupposes the private production of individuals, under which, therefore, everyone owns his own product and brings it to market. The mode of production is subjected to this form of appropriation, although it abolishes the conditions upon which the latter rests. This contradiction, which gives to the new mode of production its capitalistic character, contains the germ of the whole of the social antagonisms of today.33 This contradiction is the specific capitalistic form of the general contradiction betweenthemeansofproductionandtherelationsofproduction;itshowshow big capitalist industry is faced with the limits set by the very capitalist mode of production.34 During an earlier historical stage of simple commodity production, there could be no question of the ownership of the products of labour. Every pro30 Ibid. 31 Engels 1974–2004d. For a more detailed discussion, see Gronow 1975. 32 For Engels’s historicising interpretation of Marx’s Capital and its influence on the theory of capitalism of the Marxists of the Second International, see also Paul 1978, pp. 44–58. For a further discussion, see Chapter 15. 33 Engels 1974–2004d, p. 258. 34 Ibid. the capitalist law of appropriation 89 ducer was the owner of his own means of production and the right of property wasbasedonone’sownlabour. The developmentofcapitalism,however,transforms the means of production used in big workshops and manufacture into ‘such means of production which are already social in reality’. Engels continues: But the socialised means of production and their products were still treated, after this change, just as they had been before, i.e., as the means of production and the products of individuals. Hitherto, the owner of the instruments of labour had himself appropriated the product, because, as a rule, it was his own product and the assistance of others was the exception. Now the owner of the instruments of labour always appropriated to himself the product, although it was no longer his product but exclusively the product of the labour of others. Thus, the products now produced socially were not appropriated by those who had actually set in motion the means of production and actually produced the commodities, but by the capitalists.35 The contradiction between the social character of production and the private form of appropriation also reproduces itself as a contradiction between the planned organisation of production in a single factory and the anarchy of the market. All the main contradictions in capitalism can be deduced from this basic one. They become apparent during periods of violent crises, in which the ‘mode of production is in rebellion against the mode of exchange, the productive forces are in rebellion against the mode of production which they have outgrown’.36 On the one hand, an overproduction of products and means of production; on the other hand, oversupply of workers. The contradiction has developed into absurdity.37 There is a clear difference between the formulation of the basic contradiction of capitalism by Engels’s and Marx’s conception of capitalistic appropriation. Marx takes up the problem of appropriation in the chapter dealing with the transformation of surplus value into capital. As soon as the labour power of the wage worker is bought using capital produced during an earlier capital relation (surplus value is transformed into capital), the form of appropriation is reversed, even though the relation between the capitalist and wage labourer 35 Engels 1974–2004d, pp. 257–8. 36 Engels 1974–2004d, p. 263. 37 Kautsky 1936, p. 228. 90 chapter 5 still follows the principle of equal exchange of commodities, and even though the worker is paid the value of her or his labour power. The role of the original relation, the exchange of equivalents has, however, changed, since the exchange now belongs to the realm of appearance: firstthatthecapitalwhichexchangedforalabourpowerisitselfbutaportion of the product of others’ labour appropriated without an equivalent; and, secondly, that this capital must not only be replaced by its producer but replaced together with an added surplus.38 The relation of exchange between the capitalist and the worker becomes a relation belonging to the realm of appearance in the process of circulation. It becomes a mere form, alien to its contents.39 The ever repeated purchase and sale of labour is now the mere form; what really takes place is this: the capitalist again and again appropriates, without equivalent, a portion of the previously materialised labour of others, and exchanges it for a greater quantity of living labour. At first, the rights of propertyseemed tous tobe based on a person’sownlabour.Now,however, property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others or its product, and to be the impossibility, on the part of the labourer, of appropriating her or his own product. The separation of property from labour has been the necessary consequence of a law that appaerantly originated in the identity.40 The form of appropriation and the right to property is reversed in capitalism even according to Marx, but Marx is very careful to stress that the capitalist formof appropriationis stillbasedontheequalexchangeofcommodities–not only as a historical precondition, but also as a condition that is permanently present in capitalism. Even though the capitalist form of appropriation seems to contradict the original laws of commodity circulation, it does not exclude them: it is based on them. The whole secret of the capitalist form of appropriation is already inherent in the following formulation: The law of exchange requires equality only between the exchange-values of the commodities given in exchange for one another. From the very outset, indeed, it presupposes a difference between their use-values and 38 Marx 1974–2004l, p. 582. 39 Ibid. 40 Marx 1974–2004l, pp. 582–3. the capitalist law of appropriation 91 it has nothing to do with their consumption, which begins only after the contract has been concluded and executed.41 Taken as such, Marx’s formulation of the transformation of the law of appropriation seems to be quite similar to that of Engels and Kautsky. There is, however, an important difference, namely, in that Marx does not comprehend this transformation as consisting of any contradiction – not to speak of the basic contradiction of capitalism. The real content of the wage labour-capital relation is the appropriation of alien labour in the form of surplus value, but its form is the exchange of equivalents. This form is alien to its content and mere appearance [Schein], but a form that is preserved intact even in capitalism. While formulating the fundamental contradiction of capitalism as if there were a contradiction between the form and content of capital relation, Engels seems to be regressing into an almost moralising critique of capitalism. To Marx, the whole discussion of the capitalist form of appropriation is only a means of summarising the results of his analysis of surplus value production: capitalrelationis,asamatteroffact,arelationinwhichformerobjectifiedalien labour is exchanged for a larger amount of futurealien labour. Even though the law of exchange of equivalents is respected in the selling and buying of labour power, the result of the transaction is the exploitation of surplus labour. The law of appropriation is thus only another expression of the economic laws of capitalism. It summarises the analysis of the production of surplus value from thepointofviewoftherightofproperty,anditscriticalpointisdirectedagainst bourgeois economics. The bourgeois society is not the real world of liberty and equality,as propagatedbythe science ofeconomics,but aworldofexploitation and repression. The right of property is based not on the appropriation of one’s own labour, but on that of alien labour. The Schein of bourgeois society is thus revealed. IncriticisingEngels’sconception of appropriation,thecontextofhispresentation should, however, be kept in mind. Engels was analysing those elements ofcapitalismwhichanticipatedsocialism,eventhoughheratherunfortunately tried to deduce all the basic contradictions – and even economic crises – from the transformation of the form of appropriation. While discussing the social character of production – production as actually social in character – Engels 41 Marx1990, p. 731.The original German reads:‘Das Gesetzdes Austauschesbedingt Gleichheit nur für die Tauschwerte der gegeneinander weggegebenden Waren. Es bedingt sogar von vornherein Verschiedenheit ihrer Gebrauchswerte und hat absolut nichts zu schaffen mit ihrem Verbrauch, der erst nach geschlossnem und vollzognem Handel beginnt’ (Marx-Engels Werke, Volume 23, p. 611). 92 chapter 5 was obviously trying to analyse the conditions of socialism already developed inside capitalism. Marx was criticising capitalism immanently (for a discussionof Marx’simmanent critique,see Chapter14).Engels’s theoryof capitalism in Anti-Dühring ideally anticipates socialism, a classless society where all the contradictionsofcapitalismhavebeenovercome.Thesameelementofanticipation was also included in the corresponding formulations in Kautsky.42 More often,however,Kautskyformulatedthecontradictionintermsofthecontradictionbetweenthe organisedcharacterof productionand theanarchiccharacter of the market.43 The establishment of socialism is thought to imply the transformationof thetotalnational production intoa single big firm or co-operative factorywithaconsciousandplannedorganisationof productionbythe state.44 The crucial problem in Kautsky’s theory of capitalism was not the interpretation of the law of appropriation as such, but rather the interpretation of Marx’s Capital as an essentially historical presentation of the development of capitalism. For Kautsky, the core of Marxism was composed of the laws of accumulation and concentration of capital, which also included the conception of the inevitable proletarianisation of the majority of the population. The difference between the formulations of Engels and Kautsky was rather one of minor emphasis. The interpretation of Marx’s economic thought as being fundamentally a presentation of the historical laws of development of capitalism was already implicit in Engels’s thinking too. The socialist perspective connected with increasing capital concentration was a direct consequence of this interpretation. In a sense, the independ42 Kautsky 1936, p. 247. 43 ‘The economic machinery of the modern system of production constitutes a more and more delicate and complicated mechanism; its uninterrupted operation depends constantly more upon whether each of its wheels fits in with the others and does the work expected of it. Never yet did any system of production stand in such need of careful direction as does the present one. But the institution of private property makes it impossible to introduce plan and order into this system. The more that large production [Grossbetrieb] develops, the larger every single industry becomes, the better is the order to which the economic activity of each is reduced, and the more accurate and well considered is the plan upon which each is carried on, down to the smallest details. The joint operation of the various industries is, however, left to the blind force of free competition. It is at the expense of a prodigious waste of power and of materials and under stress of constantly increasing economic crises that free competition keeps the industrial mechanism in motion. The process goes on, not by putting every one in his place, but by crushing everyone who stands in the way. This is what is called “the survival of the fittest in the struggle for existence’ (Kautsky 1910b, pp. 50–1). 44 See Kautsky 1906a, pp. 117–19; Kautsky 1910b, pp. 99–101. the capitalist law of appropriation 93 ent producer owning his own means of production represents, in Kautsky’s thinking, the simple commodity production historically preceding capitalism in which the right of property was still based on one’s own labour. The big enterprise produced by capital concentration represents the capitalist form of appropriation. Continuous capital concentration proves that there is no return to the bourgeois paradise of natural rights.45 The task of the party and the intellectuals (or rather, party intellectuals) is to make the growing proletarian masses realise the irreversible nature of this development. 45 Kautsky 1910b, pp. 94–5. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_008 chapter 6 The Centralisation of Capital and Monopoly Formation In analysing Kautsky’s theoretical conceptions about the centralisation of capital and the formation of monopolistic associations and restrictions of competition, it should be remembered that Kautsky never developed any very systematic theoretical ideas about monopoly capital – or about imperialism.1 His formulations are scattered as smaller or larger remarks throughout most of his work, and they are, furthermore, usually connected with rather practical political questions and disputes (the policies of the Social Democrats against the war and restrictive tariffs). Care should be taken in analysing Kautsky’s position out of context. There are, however, certain basic ideas and problems that recur throughout his writings. The differences of emphasis caused by the different contexts of discussion should also be kept in mind. One of the earliest analyses of the formation of monopolies and their effects can be found in The Class Struggle [Das Erfurter Programm]. The new restrictions on competition which became visible and important during the last quarter of the nineteenth century were a result of the centralisation of capital andthedecreasingrateofprofit.Therateofprofithadatendencytodecreasein the long run because the organic composition of capital grew; the share of variable capital became smaller in comparison with the share of constant capital. Following Marx’s presentation of the problem, Kautsky argued that the longterm tendency of the rate of profit – and the rate of interest – to decrease could take place simultaneously with an increase in the rate of exploitation. Kautsky remarked that the rate of profit is, furthermore, negatively affected by increasingstateexpenditureandlandrentsubtractedfromthesurplusvalueproduced by industrial capital. The new restrictions of competition at the market are an attempt to compensate the decreasing rate of profit. The monopolistic associations – or the various forms of their existence (cartels, trusts, syndicates, and soon)– areable topricetheir commodities abovetheirrealvaluebyrestricting competition and the supply of products. Hence, they are able to get higher gain in the form of extra profit. The formation of big nationwide cartels is the most recent and visible form of this development.2 1 See Kraus 1978, pp. 57–8. 2 Kautsky 1910b, pp. 63–4. the centralisation of capital and monopoly formation 95 The restrictions of competition and the formation of cartels are made possible by the centralisation of capital. There are fewer and fewer independent firms operating on a certain market. The centralisation of capital has reduced the number of firms on many an important market to a handful of big enterprises co-operating with each other: When cartels are formed, the several concerns that have combined actually form just one concern,quiteoftenunder the guidance of a single head.3 Such cartels can already be found in certain importantfields ofproduction,especially intheproductionofrawmaterials(steeland coal cartels). Inhisarticle ImperialistWar [DerimperialistischeKrieg],Kautskystatedthat the motive force behind capitalist production is always the appropriation of extra or maximum profit. Every single capitalist tries to make more profit than his competitors. In general, the extra profit is based on the fact that the firm has a more advantageous position either on the market or in the production process: Capital was never satisfied with average profits, every capitalist always strove for extra profits. These can be achieved either through a particularly advantageous position on the market, through buying and selling, or through a particularly advantageous position in the production process.4 The advantages in the production process are due to more advanced means of production and higher productivity of labour, which make it possible to increase exploitation. As soon as the new methods of production became generalised, there is no extra profit to be appropriated. Such is, however, the case only during free competition. As soon as monopolies or cartels have been introduced and free competition gives way to restrictions of competitionthesituation changes.Cartellisationandmonopolyformationispromoted by the economic policy of the state functioning in the interests of big capital: The situation changes, however, as soon as monopoly replaces competition. And the time for this comes in the process of capitalist development. Not only does this process centralise capital amongst fewer and fewer hands; employers’ associations, joint-stock companies and banks also bring about the centralisation of the management and control of cap3 Kautsky 1910b, p. 65 (translation modified BL). 4 Kautsky 1916–17a, p. 475. 96 chapter 6 ital far more quickly than they centralise the property of the means of production. Thus there arises in advanced capitalist industrial states the regime of large monopolies and their dominance of [the] state [power].5 As a result, a new method of acquiring extra profits is introduced. The monopolies are able to reach an advantageous position in the market with the help of state power through colonial policy and high import tariffs: Again,thebigcapitalistsseektogainafavourable,monopolistpositionon the market with the help of the state [power]: on the one hand through import tariffs, which weaken foreign competition on the domestic market, relieve the employers’ organisations and give them the strength to carry out cut-throat competition [Schleuderkonkurrenz] on the world market. Ontheotherhand,the big capitalists seektodothisthroughcolonialpolicy –the incorporationofagriculturalterritoriesasdirectcolonies, or as vassal states to the industrial state, and through the monopolisation of these countries as outlets, sources of raw materials and sites of investment for exported capital.6 In his writings on imperialism (imperialism was not yet explicitly discussed in the Erfurt Programme),7 Kautsky analysed monopolistic extra profits almost exclusively in terms of a new state policy. Imperialism is essentially a new method of securing extra profits for the big cartels and monopolies. The extra profits are due to the restrictions of competition organised by the bourgeois state in the form of restrictive tariffs and colonial policy. According to Kautsky, monopoly profits are thus essentially politically mediated. In this sense, the discussion of monopolies and cartels is closely connected with a discussion of the world market and the orientation of national capitals and states towards changing international competition. Imperialism is a political method of guaranteeing higher profits for the big capitals.8 5 Kautsky 1916–17a, p. 477. 6 Ibid. 7 See, however, Kautsky 1910, pp. 83–4. 8 One can agree with Rainer Kraus that Kautsky’s theory of the formation of cartels and monopolieswasratherunsystematicandfragmentary.AccordingtoKraus,Kautskyexplained the formation of monopolies mainly by the strong position of finance capital; consequently, monopolies are sometimes understood to be atavistic phenomena at the time of increasing industrialisation (see Kraus 1978, p. 128). imperialism 103 Furthermore, it is not only the surplus withheld by the capitalist that the growing productivity of labor increases; it also increases the quantity of goods that are thrown upon the market. Along with the exploitation of labor grows the competition among capitalists, which becomes a bitter contest of each against all.11 The rapid growth of production and the accumulation of capital in industry are made possible by the development of the modern loan system and the constant supply of free workers on the labour market. There do not seem to be any natural limits to the increase of production. Even in Kautsky’s analysis of capitalism, there is the permanent danger that the proportional relations between the different sectors of production will be disturbed.Therelationbetweenthesectorsproducingthemeansofproduction and the means of consumption is especially important. If the right relation is not maintained, there will be serious disturbances in the market. The problem isthattheproportionalrelationsareconstantlychangingduetoimprovements in the technical and social relations of production. Equilibrium is achieved only through continuous disturbances and changes in prices and volumes of production.12 According to Kautsky, there is, however, an even more serious problem in capitalism connected with the establishment of the right proportional relations between the industrial and agrarian products and sectors. Whereas a non-capitalist mode of production is a necessary precondition for the realisation of the surplus value in Luxemburg’s conception, there is in Kautsky’s analysis a further difficulty connected with the relation between agrarian and industrial production due to differences in the rate of accumulation in these departments. The expansion of industrial production is always possible. Agricultural production is, however, always faced with natural limits – even in its capitalistic form.13 There are still other reasons why it cannot expand at the same rate as industry: The proportionality between industry and agriculture is necessary under any circumstances, but it is always in danger of being violated, first by migrationfromthecountrysidetothecities,whichdeprivesagricultureof labour-power in order to supply it to industry, and, secondly, through the 11 Kautsky 1910b, p. 70. 12 Kautsky 2011d, p. 759. 13 Kautsky 2011d, p. 764. 104 chapter 7 developmentofknowledgeandtechniqueinthecities,bymeansofwhich the productivity of industry is easily increased. Industrial production also has the tendency to develop more rapidly than agricultural production, because the number of producers and their average productivity grows more quickly in the former than in the latter.14 Industrial production is forced to accumulate and find an ever-increasing demand for its products: The individual capitalist must now constantly increase his production under all circumstances, and, if domestic demand does not naturally grow in the same proportion, then he must employ all the forces at his disposal to enlarge that demand artificially and to broaden the market. The intensity of industrial competition results fromthe fact that the drive and the possibility to accumulate capital and increase production are far greater in industry than in agriculture. This fact, resulting from the differences between industry and agriculture, in turn becomes one of the most powerful factors causing the distinction between them to grow.15 On the other hand, agricultural production is – in a rather trivial sense – a necessary basis for all economic enterprise as we cannot go on living for a single moment without the products of agriculture. If industrial production is toincreasecontinuously,anincreaseinagriculturalproductionandpopulation is also demanded. The agricultural sector must produce the raw materials and the foodstuffs consumed by industry and the industrial wage workers on an ever larger scale. But even more importantly, it must also be ready to buy the surplus produce of industry which is not consumed by the industrially active population.16 Kautsky’s main problem is, consequently, how to establish the right balance between agriculture and industry if the accumulation of capital is much faster in industry than in agriculture. The solution is the constant expansion of the agrarian areas and regions in the capitalist market: Capitalist accumulation in industry can only proceed unhindered and develop freely if the agricultural regions it serves as supplier and buyer 14 Kautsky 2011d, p. 762. 15 Kautsky 2011d, p. 766. 16 Kautsky 2011d, p. 767. imperialism 105 expand constantly, which requires a constant extension and improvement of the means of communication.17 If the agrarian areas do not constantly expand, there will be an oversupply of industrial products and an overdemand for agrarian products. As a consequence, capital accumulation will be seriously hindered and disturbed. Capitalism has tried to solve the problem by imperialism or colonial policy. Theexpansionofthemarketand the resourcesofraw materialswaspossible for Britain with a policy of free trade so long as it was the main industrial country in the world. As soon as other European countries developed their capitalist production and introduced protective tariffs to be able to compete with Britain, an international system of restrictive tariffs – and imperialism – was born.18 The main determinant of imperialism is thus the contradictory relation betweentheindustrialandtheagrariancountries,assummarisedbyKautskyin his booklet National State, Imperialist State and Confederation [Nationalstaat, imperialistischer Staat und Staatenbund]. In the same pamphlet – later to become famous as a polemical target of Lenin’s Imperialism, the Highest Stage of Capitalism – Kautsky referred to his article Imperialism [Der Imperialismus] published in Die Neue Zeit in 1913–14 as the best presentation of his conception of imperialism. He defined the concept of imperialism as follows: First of all, we must be clear about what we understand by imperialism. This word is used all the time today, but the more people talk about it and discuss it, the more indefinite it becomes, which of course makes understanding very difficult. By now, the meaning of the word imperialism has expanded so far that all the manifestations of modern capitalism are included in it – cartels, protective tariffs, the domination of finance, as well as colonial policy. In that sense, naturally, imperialism is a vital necessity for capitalism. But that knowledge is just the flattest tautology; all it says is that capitalism cannot exist without capitalism. If we take the word not in that general sense, but in its historical determination, as it originated in England, then it signifies only a particular kind of political endeavour, caused, to be sure, by modern capitalism, but by no means coincident with it.19 17 Ibid. 18 Kautsky 2011d, pp. 767–71. 19 Kautsky 2011d, p. 757. 106 chapter 7 Imperialism is consequently not to be understood as being synonymous with modern capitalism in general, but as a specific form of capitalist rule which is, by all means, caused by the economic development of capitalism but is not identical to it. Imperialism is a necessary companion of capitalism – if the modern conditions are taken as given: Imperialism is a product of highly developed industrial capitalism. It consists of the drive of every industrial capitalist nation to conquer and annex an ever-greater agrarian zone, with no regard to what nations live there.20 However,Kautskyfirmlybelievedthatimperialismasamethodofguaranteeing high profits is doomed to fail in the end; imperialistic policies based on the export of capital and protective tariffs cannot be continued eternally. There is a natural limit to the further development of imperialism. As soon as all the agrarian areas have been divided among the industrial nations, the expansion of imperialism comes to a natural end, and the only way open for further development is an open trade war: Capital and labour grow at home. The number of consuming industrial countries increases, whereas the number of agricultural countries decreases. In as far as these are still free, they will soon be completely divided up, and then there is only one way for the monopolised territory to further expand: this is no longer the battle between the industrial state and the agricultural state, but the bloody battle between the great industrial states, i.e. world war.21 The final result of the analysis proves that there are thus only two alternatives facing capitalism and imperialism: socialism or world war. World war is just one alternative to the system of world trade [Welthandelssystem] that is rapidly heading towards collapse; the other is socialist society.22 20 Ibid. Luxemburg’s characterisation of imperialism comes close to Kautsky’s definition: ‘Imperialism is the political expression of the accumulation of capital in its competitive struggle for what remains still open of the non-capitalist environment’ (Luxemburg 1963, p. 446). 21 Kautsky 1911b, p. 94. 22 Ibid. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_010 chapter 8 Imperialism and Its Alternatives Colletti saw the merit of Bernstein’s critique of Marxism as a response to the newdevelopmentsofcapitalismlargelyneglectedbyEngels,Kautskyandother theoreticians at the turn of the century. Because of his sensitivity to these new features of capitalism, Bernstein would be nearer to Lenin’s and Hilferding’s generation of Marxists than to Kautsky’s and Plekhanov’s: [Joint] stock companies, the development of cartels and trusts, the separation of ‘ownership’ and ‘control’, the growing ‘socialization of production’, ‘the democratization of capital’ etc., are all themes of Hilferding’s Finance Capital and Lenin’s Imperialism. That is why the most effective answers to Bernstein can be found in these texts.1 It may, however, be added that these new phenomena – especially trusts and cartels – became the subject for discussion among other Marxists, as well, including Kautsky, at the beginning of the century. Among Marxists they became part of an analysis of the new features of modern capitalism, namely, imperialism. Hans-Holger Paul pointed out that it was Parvus (Alexander Helphand) who was the first Marxist to conduct a special analysis of the transformations in the conjunctural development of capitalism due to imperialism: Thus it was Parvus who provided the first substantial theoretical determinations concerning an analysis of world-economic relationships, of the global economic boom. For the most part these were adopted by Kautsky and Rosa Luxemburg, and found their way into German social democracy’s official party statements.2 SomeofKautsky’s main ideaswerealreadypresentin oneofhis earliest articles on imperialism, Germany, England and World Politics [Deutschland, England und Weltpolitik] of 1900.3 In the first stage of imperialism, the colonies func1 Colletti 1972, p. 62. 2 Paul 1978, p. 146; see also Parvus 1897; 1895–6; 1900–1a and b; 1901. 3 Kautsky 2011b. 108 chapter 8 tioned as a market to realise industrial products.4 In the new present stage of imperialism, the export of capital becomes the decisive motive force for the acquisition of colonies: It is no longer a question merely of securing a market for the growing surplus of goods, but also of providing the increasing accumulation of capital with investment markets.5 Colonies and colonial trade are more profitable to finance – resulting from the increasing connections between moneyed and industrial capital6 – than to industrial capital: Just as it is certain that the industries of England and Germany are mutuallydependent,andthataninterruptionofcommercialrelationsbetween the two countries must have the most disastrous effects on their industrial development, so it is equally certain that finance-capital frequently has interests different from those of industrial capital.7 Even though industrial capital can profit from imperialism, the costs incurred by imperialistic methods are even higher. The only fraction of capital really benefiting from imperialism is, then, finance capital: The only beneficiary from the founding of colonies, from the modern expansion-policy,isfinance-capital,whichdrawsfurtheradvantagesfrom the failings of colonial governments and the consequent expenditures and loans for colonial purposes.8 Export and import tariffs and their consequences are the main interests in Kautsky’s earliest analysis of imperialism and imperialistic methods of government. In Treatises of Trade and Custom Duties [Die Handelsverträge und der 4 In the following, Kautsky’s first article on imperialism, Old and New Colonial Policy [Ältere und neuere Kolonialpolitik] of 1897–8, is not discussed. John H. Kautsky (1961, pp. 111–18) characterised this period of Kautsky’s thinking as ‘Schumpeterian’ (colonial policy was explained by the influence of the remnants of precapitalist expansionism of states), as opposed to his later industrial or capitalist explanations of imperialism. Only the ‘industrial’ explanations of imperialism will be discussed here. 5 Kautsky 2011b, p. 172. 6 Rainer Kraus (1978, p. 59) pointed out that in the earlier articles on imperialism in particular, Kautsky used the parallel terms of finance capital and high finance [hohe Finanz], and only after the publication of Hilferding’s Finanzkapital in 1910 did he use the term finance capital more systematically. 7 Kautsky 2011b, pp. 173–4. 8 Kautsky 2011b, p. 175. imperialism and its alternatives 109 Zolltariff ] written in 1903, Kautsky stated that a high rate of tariffs is not in the interests of industry. The abolition of industrial tariffs would clearly increase the productivity of the home industry and lower its production costs. Imperialistic customs policy and its consequence, colonialism, were also seen to be the main factors favouring militarism andthe armaments race. The best method of fighting imperialism is to oppose high import and export tariffs. Imperialism is a result of the economic policy of the state and there is no effective direct method of opposing it. Military strikes propagated by the party’s left wing have generally proved ineffective.9 In the third part, Value Theory and Colonial Policy [Werttheorie und Kolonialpolitik], of a series of articles called The Advantages of Colonies to the Workers [Die Nutzen der Kolonien für die Arbeiter],10 Kautsky already presented a line of argumentation that would later become central to his theory of imperialism. According to Kautsky, there are in principle two possible ways of developing capitalism. The first is essentially based on the repression of the working class, thesecondonacontinuousincreasein the productivityoflabour.However,the most important difference is that whereas the first method is in general disadvantageous to economic development, and thus also to the future perspective of establishing socialism, the second method effectively promotes general economic development and thus also the present conditions and the future possibilities of socialism: A modern capitalist state can only choose between two paths: one of them consists in crushing the proletariat using all available means. If it succeedsindoingthis,thentheproductivityoftheseworkerswilldwindle alongwith theirintelligenceandstrength,thestate’scompetitivenessand social wealth will fall and it will head towards total bankruptcy. The other path consists in the state promoting economic development as much as possible, seeking to physically and intellectually raise its proletariat. If this is the case then the proletariat develops, along with its strength and self-confidence, its urge to free itself from the yoke of state domination. Then labour productivity will increase and social wealth will prosper, as willthestate’s standing in the world. Atthesametime,however,the power and the standing of the proletariat will grow within the state, seeing the stateof socialismmaturerapidly. Thereisno other way outfor capitalism, because labour is the source of all value.11 9 Kautsky 1904–5, pp. 368–70. 10 Kautsky 1907b. 11 Kautsky 1907b, p. 3. 110 chapter 8 The development of the productive forces is the crucial question in evaluating the role of imperialism and its advantages and disadvantages for the proletariat: The development of the productive powers [forces of production] at the disposal of humanity is of the greatest importance to the proletariat … We must therefore investigate the effect[s] of colonial policy on the productive powers of mankind.12 Just as there are two possible alternatives of developing capitalism, so there are two methods of colonial policy itself. According to Kautsky, there are in principle two kinds of colonies: labour colonies and colonies of exploitation.13 The first are favourable to the working class and to the development of the productive forces in general. The labour colonies are a ‘powerful lever’ of human development, even though it must immediately be added that the aborigines are sometimes unjustly treated in them. By labour colonies Kautsky seemed to mean areas of settlement which are favourable and suited for the emigration of whitepeople and which consequently have a chance of developing an industry of their own.14 By the end of the last century, all the possible areas open for European settlement had already been taken into use and populated by Europeans. The new colonial policy emerging in the 1880s was of an altogether different type. It was based on the crude exploitation of non-European population and areas of the world, and its total effect on the development of humankind was negative. The new colonial areas were used exclusively to find profitable fields of investment for the surplus capital which could not be profitably invested in the home market.15 The new colonial policy thus marked the beginning of an era in which capitalism had become an obstacle to the future development of productive 12 Kautsky 2002, p. 95 (translation modified BL). 13 In a letter to Kautsky in 1882, Engels (1974–2004j, p. 322) made a similar distinction between colonies populated by European people and colonies occupied by European statesbutpopulatedmainlybyaborigines.AccordingtoEngels,thestrategyofthesocialist parties should take into account the respective differences in the situation of these colonies. Colonies presently populated by Europeans should all become independent, whereas those populated mainly by the natives should be taken over by the European proletariat and only then – albeit as soon as possible – can they look towards their independence. 14 Kautsky 2002, pp. 96–8. 15 Kautsky 2002, pp. 100–1. imperialism and its alternatives 111 forces – Kautsky’s main criterion in evaluating progressive or regressive states of society. It would not be true to say that capitalism has become totally ineffective in developing productive forces, but imperialism does concretely prove that there is another possible way of organising production, in which the development of productive forces would be more effective than in capitalism. Capitalism has become a hindrance to the development of productive forces.16 In this new era of capitalism, technical development is no longer a decisive factor in guaranteeing the appropriation of extra profits; on the contrary, extra profits are best achieved by restricting competition, and are made possible by the centralisation and reorganisation of capital, by the formation of trusts, cartels, and so on. The formation of cartelsandtrusts directlypromotes militarism while leading to a policy of high customs tariffs. Only socialism would open up a new era in the development of productive forces. In other words, socialism is the only alternative to imperialism: ‘But the abolition of militarism, like that of the system of cartels and trusts, is today only possible through socialism’.17 In the two articles, Socialism and Colonial Policy [Sozialismus und Kolonialpolitik] and Socialist Colonial Policy [Sozialistische Kolonialpolitik], Kautsky analysed the economic factors leading to imperialism in a way that was later to become common in Lenin’s theory on imperialism. First, the formation of monopolies is the decisive factor promoting imperialistic policies: The drive to monopoly, i.e. for the violent trampling of the consumers, in order to be able to fleece them at will, was even more of a factor in the state’s colonial policy than was the violent robbery of the producers. Those are the true mainsprings of colonial policy.18 Second, besides the formation of monopolies and the direct exploitation of consumers, the export of capitals is another important feature of imperialism. There is overproduction of both surplus value and of commodities in the developed capitalist countries due to the increase in productivity in industry and the increasing exploitation of the workers. Exporting commodities is typical of the earlier stages of capitalism whereas exporting capital becomes a dominating developing force in colonialism: ‘In other words, the capitalists do not export their products as commodities for sale to the foreign country, but as capital for the exploitation of the foreign country’.19 Investments in foreign 16 Kautsky 2002, pp. 101–2. 17 Kautsky 2002, p. 105. 18 Kautsky 1908–9, p. 38. 19 Kautsky 2002, p. 105. 112 chapter 8 countries are, on the other hand, risky, and these risks are minimised when the countries to which capital is exported become direct colonies of the country exporting capital. Colonial policy further promotes militarism and increases armaments.20 In Trade Policy and Social Democracy [Handelspolitik und Sozialdemokratie] of 1901,21 Kautsky for the first time developed his conception of the relation between agrarian and industrial countries – discussed earlier in Chapter 7 – as the decisive cause of imperialism. The uneven development of the different sectors of capitalism is promoted to being the decisive factor creating imperialism and colonialism, and leading to the application of imperialistic methods of government by the developed capitalist countries. In Trade Policy and Social Democracy, Kautsky further concretely identified imperialism with a specific political method of customs policy; economic development leads to the centralisation of capital and the formation of trusts and cartels. High tariffs are in the economic interests of cartels. On the other hand, export and import tariffs are favourable to the formation of trusts and cartels. They are, thus, both the cause and the effect of the centralisation of capital: Economic development as a whole drives the capitalists to form cartels and trusts. Yet nowhere do these thrive as rapidly and well as under the dominance of protective tariffs; the higher the latter, the more the former can develop and assert their power.22 Protective tariffs further promote policies of repression, the annexation of coloniesand tradewars. Theyareall essentialcompanionstothesystemofprotective tariffs.23 In a way reminiscent of Lenin’s and Luxemburg’s discussions of imperialism, Kautsky identified policies of violence with the monopolisation of capital and the formation of cartels. Violence is the essence of a cartel system: Violence is the essence of the cartel system; it seeks to thrash and keep down its opponents with violent means; it does not initially do so with shotguns and cannons, but with the most violent means of the economic 20 Kautsky 2002, p. 108. 21 Kautsky 1911b. 22 Kautsky 1911b, p. 39. 23 Kautsky 1911b, p. 17. imperialism and its alternatives 119 relations, which would prevent the development of any future contradictions and hostilities and would guarantee the further development of capitalism, a development more favourable to the working class as well. The alternative to imperialism as proposed by him was a democratic union of states based on a common trade treaty and free trade. This new proposition respected the criteria of democracy of nations and their right to self-determination.42 Even though the solution was new, Kautsky’s analysis of the causes of imperialism followed the arguments mainly presented earlier: The decisive cause of imperialism is the opposition between agrarian and industrial regions. The agrarian regions which industrial states are trying to annex are primitive and underdeveloped. Moreover, they have not reached the stage of democracy, because the material conditions of democracy have not yet been developed.43 There is, in fact, thus a civilising influence in imperialism, vis-à-vis the development of the productive forces in colonies; ensuring the material conditions for democracy is the historical task of imperialism. Thus imperialism is by nature not altogether reactionary. Themost importantexplanationof imperialism presentedin NationalState, Imperialist State and Confederation is the thought that even though imperialism is a consequence of the economic tendencies of capitalism, it is by no means a necessary result of these tendencies – a thought also presented in other writings: [O]ne will no longer conclude offhand, from the fact that imperialism finds its powerful economic driving forces in capitalism, that imperialism is inevitable as long as the capitalist mode of production exists or that it is absurd to want to oppose it within the framework of that mode of production.44 The increasing export of means of production instead of industrial products in general is a tendency of great importance. The new maxim of capital is to try to sell as much as possible and to buy as little as possible, and when every state favours this kind of policy, the conflicts are ready at hand. The centralisation of capital, the combination of finance with industrial capital and the changing patterns of foreign trade are, in fact, tendencies that will remain intact as long as capitalism prevails. On the other hand, the methods used by the state to 42 Kautsky 2011d, p. 802. 43 Kautsky 2011d, p. 804. 44 Kautsky 2011d, p. 810. 120 chapter 8 promote these tendencies – colonialism and imperialistic expansion – are not as such unavoidable.45 Even at present, there are modern examples of another approach to these problems. There already exist unions of states of another kind (the United States of America and South Africa or the ‘Burenrepublik’), which concretely prove that there is at hand another method that is both effective and possible: Imperialist needs [have] certainly played a role in its formation, but the acquisitions of territory on which it was built, with the exception of the Boerrepublic,weremade a centurybeforethe eraof imperialism,and the closeconnection ofthis confederationwasnot imposed upon the English possessions with the imperialist method of violence. On the contrary, it became a necessity for all parties concerned due to the force of attraction of democracy and, as we have already remarked, the free trade of the motherland.46 The imperialistic methods of expansion are by no means the most effective ones, and industrial capital in particular can profit more from other methods. Its commodities can be more effectively exported under the conditions of free trade not restricted by imperialistic customs policy.47 The best method for guaranteeing the export of commodities and the import of raw materials would be an effective treaty between all industrial states, as a result of which their mutual trade would all but resemble free trade.48 Such treaties, according to Kautsky, would be the most effective guarantee of peace and economic development in the future: The federation of states rather than the multinational state or the colonial state: that is the form for the great empires required by capitalism to reach its final, highest form in which the proletariat will seize power.49 Kautsky’s favourite thought of the two possible ways of developing capitalism was repeated intact in this writing as well. The first method is based on the most rapid development of the productivity of labour and productive forces. 45 Kautsky 2011d, p. 811. 46 Kautsky 2011d, pp. 827–8. 47 Kautsky 2011d, pp. 840–1. 48 See Kautsky 1915a, p. 73. 49 Kautsky 2011d, pp. 842–3. imperialism and its alternatives 121 The second method is based on the increasing direct and violent exploitation of labour. The first method is to be preferred, because it promotes the cause of socialism and the interests of the working class in general: The possibility lies in the fact that there are different ways of furthering capitalistdevelopment…To the first waybelongs the introductionofnew machines, better organisational forms of production and distribution, replacement of lower by higher operational forms, such as small-scale cultivation by large-scale cultivation, construction or improvement of means of transportation, better education and physical invigoration of the workers, and scientific structuring of the production-process.50 The first method could also lead to greater suffering among the working class, but it still creates better potential for its emancipation. It is, however, impossible simply to choose between the two methods according to the preference of the working class. The actual choice between the methods is made by power. As long as finance capital and its allies and representatives are in power, the second method will prevail and the development of capitalism will be limited. The task of the working class is to fight for the adoption of the first method and to win the support of other sections of the population for this common cause through propaganda and agitation. It should be remembered that this ‘people’s front’ is potentially a very conclusive one. Even the industrial capitalists can, at least in principle, be included in it. And because the adoption of imperialistic policy is purely a question of power, it can at any time be replaced by more democratic and peaceful methods of foreign trade. Nothing would, in Kautsky’s opinion, be a greater mistake than to think that the materialist conception of history makes it impossible to fight against imperialism. To oppose imperialism is, on the contrary, the most important and immediate task of the whole working class today.51 Thestrategy of theSocial Democratsin opposing imperialism couldbe compared with their attitude towards technical progress in capitalism. The motive force of capitalism is profit, but there are always different methods of promoting this goal. The Social Democrats should not, for instance, oppose technical progress as such – the introduction of new machines, the centralisation of capital, the scientific organisation of work, and so on – even though it is in 50 Kautsky 2011d, p. 846. 51 Kautsky 2011d, p. 848. 122 chapter 8 the interests of capital accumulation. While increasing the rate of exploitation and surplus value, technical progress due to the accumulation of capital is also beneficial to the working class. Technological progress improves both the conditions of revolutionary socialism and the material position of the wage workers. It is the task of the Social Democrats to guarantee that the workers get their share of the benefits of capital accumulation: ‘In this way, Social Democracy solves the apparent contradiction of its historical tasks, simultaneously struggling against and also promoting capitalism’.52 The result of Kautsky’s analysis of imperialism could be summarised as follows: There are two methods for promoting the economic expansion of modern capitalism. One is imperialism; the other is the expansion of free trade and the establishment of varying degrees of international political and economic association. Both methods fulfil the functions of capital expansion and aim at solving the problems of permanent overproduction. The first method, based on restrictive tariffs and colonial policy, will sharpen the contradictions between nations and further militarism and militant policy. It is also undemocratic because it is based on the repression of both the colonial people and the working class at home. Hence it does not promote the struggle for socialism. The second method is that of international economic associations. It is both democratic and, furthermore, more advantageous for the rapid economic and technological development of capitalism. This method is also antimilitaristic and the only possibility of avoiding devastating world war in the future. Thereseems tobe an interestingparadoxin Kautsky’sthinking.Eventhough imperialism is caused by the economic development of capitalism, imperialism is at the same time disadvantageous to its further development even from the point of view of capital accumulation. Why, then, is it the prevalent form of capitalist expansion? Kautsky’s answer was simple: imperialism is a pure question of will and political power. To understand imperialism we must, consequently, analyse the power relations in modern capitalism and the economic interests of the different power groups. Theoretically, the analysis is relatively clear. Imperialism is supported by and is exclusively in the interests of the big capital magnates, finance capital. The rest of the nation – with the exclusion of the big land owners – does not have any direct economic interests in the future of imperialism; all the people are – at least potentially – opponents of imperialism.TheroleofpowerinKautsky’sanalysisbecomesevenmoreaccentuatedbecauseimperialismisnotactuallyevenintheeconomicinterestsofthe 52 Kautsky 2011d, p. 847. imperialism and its alternatives 123 industrial capitalists; in the last instance, it does not even effectively promote the industrial development and technological progress of the nation and the accumulation of capital. In adopting the idea of the central role of finance capital in modern capitalism,Kautskywasabletodeterminetheonlygenuinesupportersofimperialism, the representatives of finance capital. There is a major difference between the economicinterestsofindustrialandfinancecapitalassuch.Industrialcapitalis a supporter of peace and democracy. From a historical perspective, it was interestedinrestrictingtheeconomicpoweroftheabsolutiststate–anditspolitical goal was to save in fiscal policy and state expenditure. Industrial capital is not interested in restrictive tariffs on raw materials and foodstuffs because they are apt to raise the costs of production. Industrial tariffs are accepted only in cases of industrial backwardness.53 The political and economic orientation of finance capital is totally different: Bycontrast,finance-capital,theclassofgreatmoney-lendersandbankers, tends to support absolute state-power and the violent assertion of its claims domestically and externally. It has an interest in great state-expenditures and public debts as long as they are not so large as to bring about the bankruptcy of the state. It is on good terms with large landed proprietors, and it has no objections to their preferential treatment through agrarian tariffs.54 Economicdevelopmenthasbroughtfinancecapitalintopower.Withtheintroduction of the joint stock companies, the biggest industrial capitalists have been united with finance capital. The close relation between industrial and money capital is a characteristic feature of imperialism: In that way, the largest and strongest part of industrial capital united with money-capital while, at the same time, initiating its rapprochement with large-scale landed property. Trusts and centralisation of the great banks carried this development to extremes.55 Because of the union of industrial and money capital, the political interests of finance capital become the general interests of the ruling class: 53 Kautsky 2011d, p. 812. 54 Ibid. 55 Ibid. 124 chapter 8 Thestatist tendenciesof finance-capital now became the generaltendencies of the entire ruling economic classes in the most developed capitalist states. That is one of the distinguishing features of the current period, which people have called the imperialist period.56 Thus, Kautsky concluded that the united industrial and finance capital is the new power bloc supporting imperialism, which lends further support to the thesis that imperialism is really only a question of power; it is the result of theeconomic andpolitical dominationof financecapital, dominationnot only in relation to the ‘people’ but also within the capitalist class as such. Finance capital has forced the industrialists to adopt imperialist policy even though it is not even beneficial to future industrial developments. In his last article on imperialism The Imperialist War [Der imperialistische Krieg],57writtenduringthewar,Kautskyagainrepeatedmanyofthearguments presented in most of his earlier writings. According to him, it is important to understand that even though the war was in fact of an imperialistic nature, it couldnot beexplainedexclusivelybytheeconomicfactorsof imperialism.And evenmoreimportantly,imperialismwouldnotbeatallnecessaryforthe future development of capitalism. And Kautsky repeated his former arguments about imperialism being only one possible method of appropriating extra profit – the motive force of every single capital – and even though the appropriation of extra profits is the decisive motive force of capitalism which will remain in power as long as capitalism prevails, there are also other ways of guaranteeing the effective appropriation of profits and accumulation of capital.58 Imperialism is only a question of power, in the very same sense as the determination of the length of the normal work-day. Kautsky did not tire of repeating that imperialism is purely a question of power, andthatthefutureof imperialism isaccordinglydecided bytherespective power of its opponents and adherents. Imperialism does not, furthermore, characterise the policy of all the capitalist countries. It is only characteristic of the big capitalist states. Imperialism thus is, and in this respect Kautsky is consistent in all his writings, only a specific economic policy of capitalism which – by all means – is influenced by the economic development of capitalism (the centralisation of capital, the domination of finance over industrial capital,theproblemof industrialandraw materialmarkets,andtheproblemof 56 Kautsky 2011d, p. 813. 57 Kautsky 1916–17a. 58 Kautsky 1916–17a, p. 475. imperialism and its alternatives 125 overproduction and underconsumption). It is not, however, totally determined by these economic tendencies or factors. Both the problem of markets and of the appropriation of extra profits can be solved through means and methods other than imperialism. The main strategic conclusion drawn by Kautsky from his analysis is that it is both rational and possible to oppose the use of imperialistic methods in capitalism. The only possible alternatives open to capitalism are not simply socialism or war (or socialism or barbarism); there is also another alternative open for further development, an alternative that would be democratic by its nature and more effective in promoting the development of productive forces. There is an interesting shift in emphasis in Kautsky’s thinking on modern capitalism revealed in comparing the Erfurt Programme and the writings on imperialism in the beginning of the century with the studies written during the war. In the earlier writings, the formation of cartels is connected with the problem of the decreasing rate of profit, and the introduction of tariffs and colonial policy is explained by overproduction and the realisation problems of cartels. The general contradiction between industrial and agrarian production was further emphasised by Kautsky as an explanation of imperialism. These explanations were preserved intact in the later writings too, but now the political power of finance capital was understood to be the basic factor promoting imperialism. In Kautsky’s later writings, colonial policy and imperialism were explained as being adopted mainly because they are in the central interests of the cartels, or rather finance capital. However, both explanations are easy to combine. In the earlier discussion, the explanation of the source of extra profit was essentially a political one as well; cartels are able to appropriate high profits due to the economic policy of the bourgeois state including annexation of colonies and high import tariffs. The state is a political instrument in the hands of big cartels and finance capital. Kautsky always thought and wanted to emphasise that imperialism is only one of the several possible alternatives or methods of the economic policy of the state – a method guaranteeing the profits of centralised capital or high finance. In Kautsky’s analysis, imperialism then is more of an exception in the development of capitalism caused by a rather specific and historically exceptional constellation of political and economic forces in the developed capitalist countries during the last decades of the nineteenth century. It is by no means the necessary outcome of the economic development of capitalism in Europe. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_011 chapter 9 Imperialism as the Last Stage of Capitalism Ever since the publication of Kautsky’s main writings on imperialism, he has been criticised for his characterisation of imperialism as only one possible alternative to the future development of capitalism. An early and perhaps the best-known critique came from Lenin, who criticised Kautsky for his exclusivelypolitical definitionofimperialism.Inthisrespect,onecan agreewithJohn H.Kautsky’sinterpretationofKarlKautsky’stheoryofimperialismaspresented in his article on Schumpeter and Kautsky: Whether Kautsky inclined to the Schumpeterian ‘pre-industrial’ or the Hilferdingian ‘industrial’ explanation of imperialism certain elements of his thought remained constant; it was banking capital rather than industrial capital in its pure form that was a driving force, if not the driving force, of imperialism … and finally, imperialism was merely one possible form of the general and inevitable phenomenon of industrial expansionism into agrarian areas and hence was not necessary to capitalism.1 The same argument was presented even more forcefully by Rainer Kraus: Since the 1880s, the essential feature of Kautsky’s theory of imperialism consisted in attempting to demonstrate the groundlessness of virtually allarguments in favourofcolonial expansion,in asfaras these arguments were prejudiced by the view that colonies were necessary for the survival of capitalist society.2 Even though Kautsky did not simply think of imperialism as being an atavism in capitalism caused by pre-capitalist remnants in society, and even though Kautsky’s theory is not in this respect identical to that of J.A. Hobson, Joseph Schumpeter and Emil Lederer, as claimed by Gottschalch,3 it is true that Kautskyunderstoodimperialism as beingmoreofanexceptioninthe normal development of capitalism. Or rather, imperialism is both a permanent problem 1 John H. Kautsky 1961, p. 118. 2 Kraus 1978, p. 171. 3 Gottschalch 1962, p. 89. imperialism as the last stage of capitalism 127 caused by the unequal development of industrial and agrarian production and apoliticallyavoidableproblemtobeeliminatedassoonas the poweroffinance capital could be eliminated. As stated earlier, Kautsky’s conception of imperialism resembled that of Lenin’s in many respects. To both of them, imperialism is a consequence of the centralisation and monopolisation of capital and the formation of cartels and trusts. Furthermore, the centralisation of capital is a necessary feature of capitalism. Another characteristic feature of imperialism is the power and domination of finance capital over industrial capital, and the importance of the export of capital compared with the export of commodities. Kautsky’s emphasis on the role of protective tariffs did not, on the other hand, figure in Lenin’s analysis – a fact already indicating that Kautsky, more so than Lenin, analysed imperialism as a concrete historical form of the economic policy of the state. Neither did the idea of the difference and conflict between agrarian and industrial countries and production explain the annexation of colonies and their economic importance to Lenin – even though it was also mentioned by Lenin. For Kautsky, this difference was the most important single cause of imperialistic policy. The main and decisive difference, however, is that whilst Kautsky understoodimperialism as a specific political method of guaranteeing the profits of capital, Lenin also considered imperialism as being a specific and necessary stage in the economic development of capitalism. To Lenin, the future of capitalism was by nature necessarily violent; it represented the repression of the people and led to the stagnation of productive forces and repressive methods of government. In the analysis of imperialism of both Kautsky and Lenin, there was, however, one more important common characteristic: power is the new decisive factor in imperialism, and relations of power and dominance replace relations of a purely economic character in imperialism. In defining imperialism as the monopolistic phase of capitalism, Lenin did notyetdifferessentiallyfromKautsky’sanalysis.NeitherKautskynorLenindiscussed in any great detail the nature of the transformation of free competition into monopolistic competition. They simply stated that monopolistic competition – to a certain extent – takes the place of free competition and that this transformation is made possible by the centralisation of capital – at least in the internal market. It must nevertheless be admitted that Lenin discussed the relation between free competition and monopolistic competition in more detail than Kautsky. To Kautsky, the monopolistic organisations were simply the most influential power organisations in a society realising their interests in state policy. Kautsky did not formulate any explicit conception of competition in capitalism. 128 chapter 9 According to Lenin, monopoly is the economic essence of imperialism. However, this definition must be complemented by a list of other defining characteristics of imperialism: And so … we must give a definition of imperialism that will include the following five of its basic features: 1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; 2) the merging of bank capital with industrial capital, and the creation, on the basis of this ‘finance capital’, of a financial oligarchy; 3) the export of capital as distinguished from the export of commodities acquires exceptional importance; 4) the formationofinternationalmonopolistcapitalistassociationswhichshare the world among themselves; and 5) the territorial division of the whole world among the biggest capitalist powers is completed.4 Having presented the above list, Lenin was ready to formulate a ‘more complete’ definition of imperialism: Imperialism is capitalism at the stage of development at which the dominance of monopolies and finance capital is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalists has been completed.5 Immediately after presenting his own ‘definition’ of imperialism, Lenin criticised Kautsky’s conception. According to Lenin, Kautsky made two grave mistakes in his analysis of imperialism. To begin with, Kautsky’s conception of imperialism was restricted to a certain specific political method of capitalist states. The second mistake was that Kautsky emphasised imperialism as being equivalent to the method of annexation of colonies. Kautsky’s definition of imperialism as a specific political form or method of capitalist states was as such correct but, in Lenin’s opinion, incomplete. Kautsky forgot that imperialism is essentially reactionary and violent by nature. At least in this respect Lenin’s critique of Kautsky was, however, misdirected. On several occasions, Kautsky stated explicitly that imperialism is reactionary and violent in char4 Lenin 1967d, pp. 745–6. 5 Lenin 1967d, p. 746. theoretical sources of kautsky’s and lenin’s studies 135 Capital, Karl Kautsky’s National State, Imperialist State and Confederation (and other writings by Kautsky, for example, Imperialism), and J. Hobson’s Imperialism. These studies influenced Lenin’s theoretical conceptions more or less directly.4 The idea of the importance of the export of capital and of rentier states stems from Hobson. Luxemburg and Kautsky figured more as negative examples for Lenin, to be criticised for their mistakes. Lenin’s relation with them was highly polemical. Luxemburg’s analysis of imperialism, which was well-known among Marxists in the beginning of the twentieth century, was not referredtoinLenin’sstudy,butitisknownfromothersources(suchashisnotebooks on imperialism) that Lenin regarded Luxemburg’s theory as false and that he planned to write a separate analysis to prove it.5 The importance of capital export exceeded the importance of the export of commodities in both Lenin’s and Kautsky’s respective analyses of imperialism. To Lenin, the role of capital export was even more important than it was to Kautsky; the fact that capitalist states become rentier states and live on the rents received from profitable investments in colonies is one of the main characteristics of imperialism. As already pointed out, Lenin relied heavily on Hilferding’s Finance Capital in his analysis of imperialism; Hilferding excessively discussed both the problem of foreign markets and export of capital. However, he paid more attention than Lenin to the emergence of new protectionism in international economic relations.6 Lenin’s idea of the rentier state stemmed – as readily acknowledged by him – from another main work on imperialism of the time, namely, Hobson’s Imperialism, published for the first time in 1902.7 It is not known whether Kautsky was acquainted with Hobson’s theory, but his emphasis on the role of capital export in imperialist relations is an indicator of thefactthatthemainideasofimperialismweresharedbymanyofthetheoreti4 In the beginning of Imperialism as the Highest Stage of Capitalism, Lenin referred to Hobson andHilferdingas the maininspirations forhis theory ofimperialism (see Lenin1967a,p.684). 5 Leontev 1969, p. 87. 6 Hilferding 1981, pp. 301–10; see also Hilferding 1902–3. 7 Hobson 1948. The factors mentioned by Lenin leading to the increase and necessity of export of capital are, in fact, a combination of both Hobson’s and Kautsky’s theories of imperialism. Despite his critique of Kautsky’s analysis of the relation between the industrial and agrarian areas and production, Lenin, in fact, mentioned the slow increase of agrarian production as one of the factors leading to imperialism via overproduction: ‘if capitalism could develop agriculture, which today is everywhere lagging terribly behind industry, if it could raise the living standards of the masses, who in spite of the amazing technical progress are everywhere still half-starved and poverty-stricken, there could be no question of a surplus of capital’ (Lenin 1967d, p. 723). 136 chapter 10 cians of the time. The export of capital is in various theories of imperialism also an important factor explaining the stagnation of productive forces and economic development in general. When capital is exported, it is not invested in domestic industry and thus industrial development degenerates. According to Hobson, the basic facts about modern capitalism are the following: Whatever figures we take, two facts are evident. First, that the income derived as interest upon foreign investments enormously exceeded that derived as profits upon ordinary export and import trade. Secondly, that while our foreign and colonial trade, and presumably the income from it, were growing but slowly, the share of our import values representing income from foreign investments was growing very rapidly.8 On Hobson’s account, the only people to benefit from the new colonial markets are the finance capitalists, or as he prefers to call them, the investors. The manufacturers and trading classes do not benefit from ‘aggressive imperialism’: Aggressive Imperialism, which costs the taxpayer so dear, which is of so little value to the manufacturer and trader, which is fought with such grave incalculable peril to the citizen, is a source of great pain to the investor who cannot find at home the profitable use he needs for his capital, and insists that his government should help him to profitable and secure investment.9 The main cause of imperialism and of the export of capital was that ‘the power of production far outstripped the actual rate of consumption’.10 During free competition, an increase in production leads to the lowering of prices, whereas monopolies and trusts are able to maintain high prices and both limit consumption and collect high profits. This is a cause of action which ‘at once limits the quantity of capital which can be effectively employed and increases the share of profits out of which fresh savings and fresh capital will spring’.11 Trusts and combinations of capital cannot invest their profits inside the trusted8 Hobson 1948, p. 53. 9 Hobson 1948, p. 51. 10 Hobson 1948, p. 75. 11 Hobson 1948, p. 76. theoretical sources of kautsky’s and lenin’s studies 137 industry:‘Everywhereappearexcessivepowersofproduction,excessivecapital in search of investment … It is this economic condition of affairs that forms the taproot of Imperialism’.12 It is thus not industrial progress as such which causes the export of capital and imperialism, but the maldistribution of consuming power. The general overproduction is caused by saving, which is explained by a distribution of income that does not follow according to needs. Profits and interests from imperialism are excessive elements of income which have no ‘legitimate raison d’être’ and no proper place in the normal economy of production and consumption. Thus there is a remedy for imperialism ready at hand: if all the classes could convert their needs into an effective demand for commodities, there would not be any excessive capital, nor would there be any fight for foreign markets. And consequently, there would not be any need for imperialism either.13 If the power of consumption of the population could be increased, the exportofcapitalwouldbecomeunnecessary,aswouldthefightforforeignmarkets. Unless the power exercised by trusts and cartels over foreign policy is made ineffective, capitalism will necessarily become parasitic, militaristic and undemocratic – all features of imperialism also analysed by Lenin and Kautsky. According to Hobson, ‘the whole struggle of so-called Imperialism upon its economic side is towards a growing parasitism’.14 Imperialism also leads to increasing military expenditure and endangers the maintenance of peace.15 Imperialism has a tendency from democracy to reaction because representative institutions do not function in an empire: ‘The antagonism with democracy drives to the very roots of Imperialism as a political principle’.16 Even according to Hobson, imperialism is repressive by nature, and its repressiveness stems from its very economic nature: Finally, the spirit, the policy, and the methods of Imperialism are hostile totheinstitutionsofpopularself-government,favouringformsofpolitical tyranny and social authority which are the deadly enemies of effective liberty and equality.17 12 Hobson 1948, p. 81. 13 Hobson 1948, pp. 82–7. 14 Hobson 1948, p. 107. 15 Hobson 1948, p. 138. 16 Hobson 1948, p. 145. 17 Hobson 1948, p. 152. 138 chapter 10 Hobson’s final verdict on imperialism was a moral one: ‘It is the besetting sin of all successful states, and its penalty is unalterable in the order of nature’.18 Imperialism is an expression of the lower instincts of man, of the animal struggle for existence which prevents the cultivation of higher inner qualities of both man and nation. The relation between Lenin’s conception of imperialism and Hobson’s was very similar to the relation between Lenin and Kautsky. Lenin adopted practicallyallthe resultsofthe analysis butdidnot approveofitsconsequences.Lenin even directly compared Hobson with Kautsky: neither accepted the economic necessity of imperialism and referred to democratic methods of government as a remedy. But in one respect, Hobson was more honest than Kautsky. Hobson was a democratic liberal and did not pretend to be anything else. He was consistent in recommending a liberal policy against imperialism. Kautsky pretended to be a real Marxist, but in fact committed the sin of revisionism. And an honest liberal is always better than a false Marxist, at least one knows where everybody stands.19 According to Lenin, Hobson’s analysis of imperialism as basically being caused by a redistribution of income by trusts and combinations of capital was thus in principle correct, but the conclusions drawn from it were wrong. Eliminating imperialist politics by increasing the power of consumption of the population is only a liberal’s dream, and doomed to failure. The ‘iron law’ of imperialism, of which monopoly is the economic essence, does not permit any alternatives to imperialism and its consequences, war and barbarism, apart fromsocialism –analternativealsoformulatedbyKautskyat anearlier stageof the development of his conception of imperialism. Whereas Kautsky’s theory of imperialism remained essentially the same in practically all his writings on thesubject, thestrategicconclusions drawn fromit variedandit is the strategic conclusions that were the main target of Lenin’s critique. Most important and, at the same time, most problematic is Lenin’s relation to Hilferding’s Finance Capital, which was perhaps the most influential Marxist study on modern capitalism published before the First World War. It gave rise to wide debate. It is not known in detail to what extent Finance Capital influenced Kautsky’s ideas on imperialism.20 Kautsky’s article devoted to the 18 Hobson 1948, p. 368. 19 Lenin 1967d, pp. 763–5. 20 The theoretical influence of Kautsky and Hilferding on one another has been evaluated differently by different authors. John H. Kautsky stated that ‘Hilferding owed a significant debt to Kautsky’s influence’ (1961, p. 114). Steenson claimed that Kautsky was influenced byHilferding’sstudy (1978, p.174).Krausseemed toagreewith JohnH. Kautskyin claiming theoretical sources of kautsky’s and lenin’s studies 139 presentation and critique of Finance Capital published in Die Neue Zeit in 1910 did not discuss Hilferding’s study in any detail. It is true that Kautsky21 criticised Hilferding’s conception of money (in a similar way to Lenin in his notebooks on imperialism),22 but otherwise he presented Hilferding’s ideas more or less uncritically, and devoted the major part of the review to a presentation of his own ideas about the development and explanation of crises in modern capitalism. It is, anyhow, quite certain that Lenin adopted the concept of finance capital and the merger of industrial with finance capital from Hilferding’s work, and it is also rather probable that Kautsky’s discussion of the role of finance capital in imperialism was influenced by Hilferding’s work. It is further quite probable that Kautsky’s idea of ultra-imperialism was an extrapolation of Hilferding’s discussion about the general cartel, which Kautsky reformulated concerning international relations (an idea also discussed in detail by Lenin). Thus, it could perhaps be claimed that Finance Capital was the most important theoretical work discussing the development of modern capitalism during the Second International, a fact explicitly acknowledged by Kautsky. Kautsky characterised Finance Capital as the fourth volume of Capital.23 Hilferding had become an acknowledged Marxist even before the publication of Finance Capital by taking part in the theoretical discussion concerning thetransformationproblemortherelationbetweenvaluesandpricesinMarx’s Capital, actualised by the publication of the third volume of Capital in 1894.24 The essential elements of the idea of a ‘Generalkartell’or of an organised capitalism were first formulated by Hilferding in an article ‘The Functional Change in Protective Tariffs’ [Der Funktionswechsel des Schutzzölles] as early as 1903: in its hunger for profit, capital can no longer achieve what it originally did by exploiting the workers of a factory … so it seeks to do so in another way:bysubjectingtheentirepopulationtotheorganisedpowerofcapital. The organisation of the working class confronts the organisation of the capitalist class in a unified manner.25 that it is true that Karl Kautsky influenced and even initiated many of the thoughts later formulatedbyHilferding(seeKraus1978,p.68).Theproblemmaybefairlysafelysolvedby assuming influences in both directions and by assuming that the general ideas expressed by both Kautsky and Hilferding were shared by many Marxists of the period. 21 Kautsky 1910–11, p. 771. 22 Lenin 1963–74d, p. 334. 23 Kautsky 1910–11, p. 883. 24 Hilferding 1973b [1904]. 25 Hilferding 1902–3, p. 275. 140 chapter 10 The organised capitalist class – organised in cartels and trusts – transforms the state into a tool of exploitation. This new form of exploitation is readily recognised as such by every single member of the proletariat, and the proletariat is forced to make an end to this exploitation by occupying the state power.26 This new organisation of capitalism is an immediate predecessor of socialism. The socialisation of production has been completed, not in the interests of the social totality, but in order to increase exploitation of this totality to the utmost: It is the immediate predecessor of socialist society because it is its absolute negation: the conscious socialisation of all economic powers available in contemporary society. Yet this is not a centralisation in the interests of the majority of society, but in order to increase the exploitation of this majority to previously unheard of levels.27 In this article, Hilferding was still mainly interested in the new features of trade policy explained by the new organisational forms of capital. The most important feature in this respect is the changing function of protective tariffs. From a protection against foreign competition, they are transformed in the hands of the cartels into a method of eliminating competition on both the domestic and the international market in order to obtain higher prices.28 Increasing contradictions of capitalism are the necessary consequence of the policies of the cartels, and the new colonial policy is a further consequence of this system.29 Shortly after the publication of Lenin’s Imperialism, some of his commentators pointed out that in fact Lenin only presented Hilferding’s ideas in a more popular form.30 Even a superficial study of Lenin’s work on imperialism is enough to prove that there are many ideas common to both works. Lenin seemed to adopt some of the main ideas about monopoly, finance capital and cartelsratherdirectlyfromHilferding.Lenin’sfirstlistof thecontentsof Imperialism follows almost point by point the contents of Hilferding’s FinanceCapital 26 Hilferding 1902–3, p. 280. 27 Hilferding 1902–3, p. 281. 28 Hilferding 1902–3, pp. 276–7. 29 Hilferding 1902–3, pp. 278–9. 30 Horowitz is a more recent commentator of the same opinion (see Horowitz 1970). Cf. also Gottschalch:‘Among the Marxisttheoreticians Lenin is closest toHilferding’ (Gottschalch 1962, p. 142). theoretical sources of kautsky’s and lenin’s studies 141 (atthis stage,heplanned exclusivelytowritea critique of Kautsky).31 The order of the chapters in the final version of the study was already different as the discussion of banks was preceded by a study of monopolisation and the concentration of capital. Lenin regarded Hilferding as a Marxist scholar and presented almost no theoretical critique of his ideas. In his notebooks on imperialism, Lenin gave only a short list of the contents and a summary of the book without any further comments.32 In Imperialism, Lenin criticised Hilferding for defining finance capital without taking into account the fact that the formation of finance capital presupposes the existence of monopolies. Shortly after the above comment, however, Lenin admitted that Hilferding did, in fact, analyse the concentration of capital and the formation of cartels before discussing financecapital.33Lenin’scritiquewasthusratherformal,dealingwiththeorder of presentation and not the analysis as such. AccordingtoHilferding,the characteristicfeaturesof modern capitalism are those acts of concentration which emerge, on the one hand, as the substitution of free competition by cartels and trusts and, on the other, as the close liaisons between industrial and bank capital. It is this relation between industrial and bank capital which gives the capital ‘the form of finance capital, its supreme and most abstract expression’.34 According to Hilferding: An ever-increasing part of the capital of industry does not belong to the industrialists who use it. They are able to dispose over capital only through the banks, which represent the owners. On the other side, the banks have to invest an ever-increasing part of their capital in industry, and in this way they become to a greater extent industrial capitalists. I call bank capital, that is, capital in money form which is actually transformed in this way into industrial capital, finance capital. So far as its owners are concerned, it always retains the money form; it is invested by them in the form of money capital, interest-bearing capital, and can always be withdrawn by them as money capital. But in reality the greater part of the capital so invested with the banks is transformed into industrial, productive capital (means of production and labour power) and is 31 Lenin 1963–74d, pp. 201–2. 32 Lenin 1963–74d, pp. 333–8. 33 Lenin 1967d, pp. 710–11. 34 Hilferding 1981, p. 21. 142 chapter 10 invested in the productive process. An ever-increasing proportion of the capital used in industry is finance capital, capital at the disposition of the banks which is used by the industrialists.35 Even though banks have always functioned in capitalist production as mediatorsof moneycapital,financecapitalonlycomes intobeingwiththefoundation of joint stock companies and the coming into being of fictive capital.36 Lenin accepted Hilferding’s definition of finance capital with a slight difference of emphasis:finance capitalismonopolisedcapitalandthe centralisationofbank capital is also its precondition: The concentration of production; the monopolies arising therefrom; the merging or coalescence of the banks with industry – such is the history of the rise of finance capital and such is the content of that concept.37 The foundation of joint stock companies makes it possible to mobilise and centralise capital for the disposal of industrial capital. At the same time, banks become owners and controllers of industrial enterprises. The above analysis was accepted by Kautsky in all its essentials.38 In his study, Hilferding stated that, in principle, there are no obstacles or limits to the formation of cartels. Thus the concentration of capital will finally lead to the formation of one single general cartel: The ultimate outcome of this process would be the formation of a general cartel. The whole of capitalist production would then be consciously regulated by a single body which would determine the volume of all production in all branches of industry. Price determination would become a purelynominalmatter,involvingonlythedistributionofthetotalproduct between the cartel magnates on one side and all the other members of society on the other … The cartel would distribute the product.39 35 Hilferding 1981, p. 225. 36 Hilferding 1981, p. 301. 37 Lenin 1967d, p. 711. 38 In a review of Hilferding’s Finanzkapital, Kautsky approvingly referred to Hilferding’s conception of finance capital: ‘The capitalist future belongs to finance capital. However, both at home and abroad this represents the most brutal and violent form of capital’ (Kautsky 1910–11, p. 769). 39 Hilferding 1981, p. 234. theoretical sources of kautsky’s and lenin’s studies 143 The regulation and distribution of production by finance capital will finally substitute the specific role and nature of value as the regulator of production and distribution in capitalism. A society governed by a general cartel would be a consciously regulated society, which would, however, still retain its antagonistic nature. The formation of a general cartel would, in fact, be economically, if not politically, possible: In itself, a general cartel which carries on the whole of production, and thus eliminates crises, is economically conceivable, but in social and political terms such an arrangement is impossible, because it would inevitably come to grief on the conflict of interests which it would intensify to an extreme point. But to expect the abolition of crises from individual cartels simply shows a lack of insight into the causes of crises and the structure of the capitalist system.40 It is not difficult to find formulations in Lenin’s work on imperialism to support the interpretation that he accepted Hilferding’s theoretical conceptions and even the idea of an all-powerful cartel. In particular, Lenin seemed to trust the capacity of the banks to direct and govern the production and distribution of products: These single figures show perhaps better than lengthy disquisitions how the concentration of capital and the growth of bank turnover are radically changing the significance of the banks. Scattered capitalists are transformed into a single collective capitalist. When carrying the current accounts of a few capitalists, a bank, as it were, transacts a purely technical and exclusively auxiliary operation. When, however, this operation growstoenormousdimensionswefindthatahandfulofmonopolistssubordinate to their will all the operations, both commercial and industrial, of the whole of capitalist society; for they are enabled … first, to ascertainexactlythefinancial position ofthevariouscapitalists,then tocontrol them, to influence them by restrictingor enlarging, facilitating or hindering credits, and finally to entirely determine their fate, determine their income, deprive them of capital, or permit them to increase their capital rapidly and to enormous dimensions, etc.41 40 Hilferding 1981, p. 297. 41 Lenin 1967d, pp. 700–1. 144 chapter 10 In the foreword to Buharin’s Imperialism and the World Economy, Lenin presentedmostexplicitlyhisownconceptionofthepossibilityoftheformation of an international general cartel or ultra-imperialism. His conception seemed to follow Hilferding’s formulation of the question: Can it be denied, however, that a new phase of capitalism is ‘imaginable’ in the abstract after imperialism, namely, ultra-imperialism? No, it cannot. Such a phase can be imagined. But in practice this means becoming anopportunist,turningawayfromtheacuteproblemsofthedaytodream of the unacute problems of the future … There is no doubt that the trend of development is towards a single world trust absorbing all enterprises withoutexceptionandall stateswithoutexception.Butthis development proceeds in such circumstances, at such a pace, through such contradictions, conflicts and upheavals – not only economic but political, national, etc. – that inevitably imperialism will burst and capitalism will be transformed into its opposite long before one world trust materialises, before the ‘ultra-imperialist’, world-wide amalgamation of national finance capitals takes place.42 In the above characterisation of the possibility of the formation of a general trust, there is, however, one important difference from Hilferding’s conception. For Lenin emphasised that not only are there political contradictions, as claimed by both Hilferding and Kautsky, which prevent the establishment of a general worldwide trust and transform capitalism into its opposite (socialism) before the stage of ultra-imperialism is reached, but there are even economic contradictions. Both Hilferding and Kautsky seemed to think that such a development would – at least in principle – be economically possible. According to Lenin, such thinking is abstract. On the other hand, even the context of Kautsky’s argumentation should be kept in mind. He was arguing against the idea of the realisation of socialism as a result of purely economic collapse. Actually, Lenin’scritique oftheconceptionofultra-imperialismwasnotallthatdifferent fromKautsky’sownideas.EventoKautsky–onecouldclaim–theideaofultraimperialism was an abstract possibility arrived at through an extrapolation of the economic tendencies present in capitalism which would thus actually be prevented by many possible intervening counterfactors. The main difference between Lenin’s and Hilferding’s respective conceptions of monopolist or finance capital sprang from the differences in their 42 Lenin 1963–74c, p. 107. locke, smith and marx’s critique of private property 247 gination of commodities, and so also the original process of their appropriation, lies, therefore, beyond circulation.84 Because the original appropriation of commodities does not belong to the sphereofcirculation,theprocessinwhichtheprivatepropertyownersareborn is postulated as being based on the original appropriation of nature’s products through labour: How they became private proprietors, i.e. how they appropriated objectified labour, is a circumstance which appears not to fall within the examination of the simple circulation at all.85 A commodity can be thought only to be a product of one’s own labour, because the process through which the owners have become owners of commodities takes place, in a way, behind the backs of the exchangers: And since from its standpoint, alien commidities, i.e. alien labour, can be appropriated only through the alienation of one’s own labour, the pre-circulation process of commodity appropriation necessarily appears from this standpoint as appropriation through labour, and just as the latter is appropriation of the products of Nature, it equally appears as the juridical title to property.86 The process of circulation is a ‘pure appearance’ because it is based on conditions which are not set by it, but which are given in relation to it: Considered in itself, circulation is the mediation of presupposed extremes.But it doesnotposittheseextremes.Asthetotalityofmediationit itself must be mediated, as total process. That is why its immediate being is pure semblance. It is the phenomenon of a process running behind its back.87 According to Marx, the right to private property is considered by all the modern economists since John Locke to be based on one’s own labour; the title to property is thought to be a result of the objectification of one’s own labour. 84 Marx 1974–2004i, pp. 461–2. 85 Marx 1974–2004i, p. 462. 86 Ibid. 87 Marx 1974–2004i, p. 479. 248 chapter 15 The situation is, however, paradoxical, because the problem of the legitimation of property is actualised only in a society based on the division of labour and the production of commodities, in a society where labour becomes social only through exchange. The right to private property and the law of appropriation valid in simple commodity production are thought to be valid in a bourgeois society too. They are transplanted into a capitalist society without recognising that their realisation is possible only in the ‘golden period’ of simple commodityproduction,inastateofsocietycharacterisedbytheownershipofthemeans of production by every individual producer. The right to private property in a bourgeois society is postulated into a historical period in which the conditions of this society were not at all present: That would produce the strange result that the truth about the bourgeois society’slawof appropriationwouldhavetobetransferredtoatimewhen this society itself did not exist, and the basic law of property, to the time of propertylessness.88 According to Marx’s analysis, there is thus a paradox in the thinking of political economy: private property in a bourgeois society is legitimated by the appropriation of nature’s products by labour, by the eternal relation of humans to nature. This is a further consequence of the postulate that the right to property is read back into a hypothetical state of nature preceding the capitalist production of commodities and private property. The laws of bourgeois society are thus thought to be natural laws which are eternally valid. And consequently, the freedom and equality of every commodity owner and producer associated withprivatepropertyand exchangeofcommodities areregardedasthe natural properties of humankind. Marx argued that the ideas of freedom and equality of individuals as bourgeois ideas of justice in reality have their origin in the sphere of circulation, in the exchange of exchange values. As exchangers of commodities, individuals are in fact free and equal: From the act of exchange itself, each of the subjects returns upon himself as the ultimate end of the entire process, as the dominant subject. In this way, therefore, the subject’s complete freedom is realized.89 88 Marx 1974–2004i, p. 463. 89 Marx 1974–2004i, p. 471. locke, smith and marx’s critique of private property 249 Every subject is only an exchangerof commodities, and as such all are equal: ‘As subjects of exchange, their relation is therefore that of equality’.90 Every individual recognises the other as an owner of a commodity, as an autonomous individual, and does not try to use force to seize the property of another. The act of exchange presupposes common consent even though both partners of exchange are only realising their egoistic interests: ‘The general interest is precisely the generality of self-seeking interests’.91 Marx summarised his ideas about equality and freedom by saying that the economic form (exchange) determinesthesubjectsasequalwhilethecontentsoftheprocess(thematerial needs which drive individuals to exchange with each other) determine their freedom. The exchange of exchange values is thus the ‘productive basis of freedom and equality’: Equality and freedom are thus not only respected in exchange based on exchange values but, also, the exchange of exchange values is productive, the real basis of all equality and freedom. As pure ideas they are merely the idealized expressions of this basis; as developed in juridical, political, social relations, they are merely this basis to a higher power.92 In order to express the economic relation, the relation between capital and wage labour as a legal relation, as a relation of property, all we have to do – according to Marx – is analyse the process of value increase as a process of appropriation.93 The right to property is in capitalism, in fact, based on alien labour: For example, the fact that surplus labour is posited as surplus value of capital means that the worker does not appropriate the product of his own labour; that it appears to him as alien property; inversely, that alien labour appears as the property of capital. This second law of bourgeois property, the inversion of the first … becomes just as established in law as the first. The first is the identity of labour with property; the second, labour as negated property, or property as negation of the alien quality of alien labour.94 90 Marx 1973, p. 241. 91 Ibid. 92 Marx 1973, p. 245. 93 Marx 1973, p. 469. 94 Marx 1973, pp. 469–70. 250 chapter 15 Still, within the sphere of circulation the capitalist can only acquire the title to property, to an alien commodity by giving away her or his own commodity. And her or his own commodity can only be thought to have been produced by her or his own work. Both the capitalist and the wage worker are free and equal commodity exchangers who own their own commodities – money capital and labour power, respectively – and can only acquire the other’s property by exchange and mutual consent.95 As has already been pointed out, private property and the ideas of freedom and equality are paradoxically thought by classical political economy to have their full validity in the golden period, in the postulated state of nature preceding bourgeois society. This idea is based on the contradictory assumptions of both the identity of producer and appropriator (‘simple commodity production’) and the generalisation of commodity relations, relations of the exchange of exchange values.96 The whole ambiguity follows – as seen from Marx’s critical perspective – from the identification of abstract with concrete labour, which leads to the identification of social relations with the relations of nature. In the classical thinking, labour constitutes both the intersubjective relations of exchange and humanity’s relation to nature, the original appropriation of nature’s products. By mixing nature with labour, humans appropriate nature’s products and achieve a title to property. By objectifying our labour, we 95 Cf. ‘In order that these objects may enter into relation with each other as commodities, their guardians must place themselves in relation to one another, as persons whose will resides in those objects, and must behave in such a way that each does not appropriate the commodity of the other, and part with his own, except by means of an act done by mutualconsent.Theymustthereforemutuallyrecogniseineachothertherightsofprivate proprietors. This juridical relation, which thus expresses itself in a contract, whether such contract be part of a developed legal system or not, is a relation between two wills, and is but the reflex of the real economic relation between the two. It is this economic relation that determines the subject-matter comprised in each such juridical act’ (Marx 1974–2004l, p. 55). 96 The mistake of the utopian socialists (especially Proudhon) resulted from similar contradictory assumptions. According to Marx, they wanted to preserve the relations of commodity exchange and private property but get rid of their consequences, capital and money: ‘What this reveals, on the other side, is the foolishness of those socialists (… who want to depict socialism as the realization of the ideals of bourgeois society articulated by the French revolution) who demonstrate that exchange and exchange value etc. are originally (in time) or essentially (in their adequate form) a system of universal freedom and equality, but that they have been perverted by money, capital, etc … It is just as pious as it is stupid to wish that exchange value would not develop into capital, nor labour which produces exchange value into wage labour’ (Marx 1973, p. 248). locke, smith and marx’s critique of private property 251 create a common denominator for our and others’ products, thus constituting the exchange relations. As products of our very labour, commodities are alienable and can be exchanged with each other. People enter into social relations as private property owners. According to Marx’s own self-understanding, the discovery of the dual character of labour, the distinction between abstract and concrete labour, was the ‘greatdiscovery’ whichmadeitpossible for himtocriticise and solvetheanomalies of classical political economy.97 It still is labour, but now abstract labour, a special social form of labour, which constitutes the social relations of commodity exchangers. Labour as concrete labour produces use values and constitutes humanity’s relation to nature, our exchange of substance with nature. More concretely, the analyses of the dual character of labour and the production process of capital made it possible to show how surplus value is created ‘both outside and inside circulation’; the specific use value of labour power is to create new value which is materialised in the production process, whereas the exchange between capital and wage labour still follows the rule of equal exchange. The value of labour power (and the wage of the wage labourer in the ideal case) is determined by the costs of its reproduction. Even though fully compensatingthe wageworker, thecapitalist is still able toappropriatesurplus value. Marx’s discovery also made it possible for him to understand how capitalist private property – which seems to be based exclusively on the labour of its owner – in reality, is based on the appropriation of the products of alien labour. The unity of property and labour is destroyed. The pronounced inequality of possessions cannot be justified by the general well-being of the whole nation, as Smith and Locke were inclined to think. As Marx understood it, in a bourgeois society, accumulation of misery takes place alongside the accumulation of riches. 97 Marx 1867; cf. Marx 1974–2004l, p. 51. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_018 chapter 16 The Principle of Labour There seems to be an ambivalence in Marx’s presentation of commodity circulation in the beginning of Capital. On the one hand, circulation as presented in Capital is an ‘outer surface’ [Oberfläche] under which the production of commodities and of surplus value is hidden. It is, however, the necessary starting point of the analysis from which the more developed determinations are derived.1 The exchange of equivalents is the starting point of the transformation of money into capital: The conversion of money into capital has to be explained on the basis of the laws that regulate the exchange of commodities, in such a way that the starting-point is the exchange of equivalents … His development into a full-grown capitalist must take place, both within the sphere of circulation and without it.2 On the other hand, on several occasions Marx discussed the transformation of money into capital (and the development of commodity into money) as if he were describing a process of transformation from a historically preceding, simple exchange and circulation of commodities into a later, more developed one: Production and circulation of commodities can take place, although the great mass of the objects produced are intended for the immediate requirementsof their producers,arenot turnedintocommodities,andconsequently social production is not yet by a long way dominated in its length and breadth by exchange-value. The appearance of products as commodities pre-supposes such a development of the social division of labour, that the separation of use-value from exchange-value, a separation which first begins with barter, must already have been completed. But such a degree of development is common to many forms of society, which in other respects present the most varying historical features … 1 Hochberger 1974, pp. 166–7. 2 Marx 1974–2004l, pp. 176–7. the principle of labour 253 Yet we know by experience that a circulation of commodities relatively primitive, suffices for the production of all these forms. Otherwise with capital.3 In Capital and the Grundrisse, Marx’s critical intention was to prove that the appropriation of surplus value and the accumulation of capital is completely possiblefollowingthe rules of commodity circulation;thedevelopmentofcapitalist production follows from simple circulation of commodities according to itsownimmanentlaws.Thelawofappropriationofsimplecommodityproduction is transformed into the law of capitalist appropriation, but the very rules of exchange of commodities remain the same in capitalism too: To say that the intervention of wage labour adulterates commodity production is to say that commodity production must not develop if it is to remain unadulterated. To the extent that commodity production, in accordancewithitsowninherentlaws,undergoesafurtherdevelopment, into capitalist production, the property laws of commodity production must undergo a dialectical inversion so that they become laws of capitalist appropriation.4 By analogy, while discussing the transformation of the values of commodities into product prices, Marx similarly referred to a historically preceding, less developed exchange of commodities, which takes place directly according to values. Value is, then, both theoretically and historically the ‘prius’, the primary determinor, of the capitalist mode of production. In Marx’s Capital, the capitalist commodity production was thus understood to have developed from a simple production of commodities characterised by the individual ownership of the means of production by every producer. In simple commodity production, appropriation of products was really based on one’s own labour and only labour could create a right to private property: The exchange of commodities at their values, or approximately at their values, thus requires a much lower stage than their exchange at their prices of production, which requires a definite level of capitalist development … Apart from the domination of prices and price movement by the law of value, it is quite appropriate to regard the values of commodities as 3 Marx 1974–2004l, p. 180. 4 Marx 1990, pp. 733–4. 254 chapter 16 not only theoretically but also historically prius to the prices of production. This applies to conditions in which the labourer owns his means of production, and this is the condition of the land-owning farmer living off his own labour and the craftsman, in the ancient as well as in the modern world.5 On the other hand, Marx was quite explicit in his statement that only after the introduction of the wage relation, and consequently the accumulation of capital, does the production of commodities become the general and dominating form of production: ‘Only where wage labour is its basis does commodity production impose itself upon society as a whole; but it is also true that only there also does it unfold all its hidden potentialities’.6 It was Friedrich Engels who, in his interpretation of Marx’s Capital, canonisedthe conceptionof ‘simple commodity production’. In Anti-Dühring, simple commodity production is understood to be a specific mode of production preceding capitalism.7 This conception was preceded by the interpretation of the historical nature of Marx’s presentation already in Engels’s 1859 review of Marx’s A Contribution to the Critique of Political Economy [Zur Kritik der politischenÖkonomie]. Marx’s method was, according to Engels, basically historical: ‘With this method we begin with the first and simplest relation which is historically, actually available, thus in this context with the first economic relation to be found’.8 The simple and historically first relation is that of two commodities in exchange. Political economy consequently takes the concept of a commodity as its starting point. The logical presentation and development of categories in Marx’s work generally follows their actual historical development: The point where this history begins must also be the starting point of the train of thought, and its further progress will be simply the reflection, in abstract and theoretically consistent form, of the historical course. Though the reflection is corrected, it is corrected in accordance with laws provided by the actual historical course, since each factor can be examined at the stage of development where it reaches its full maturity, its classical form.9 5 Marx 1974–2004l, pp. 175–6. 6 Marx 1990, p. 733. 7 Engels 1974–2004d, pp. 257–9. 8 Engels 1974–2004b, p. 225. 9 Ibid. the principle of labour 255 The history of political economy [die literarischen Abspiegelungen], generally speaking, follows the development from the more simple to the more complex relations corresponding to the actual development of these relations. However, it must be freed and abstracted from many accidental turns in their development. In the logical presentation or analysis, these contingencies have been eliminated, and consequently the historical development is presented in its pure form.10 In his recension, Engels did not yet postulate the existence of simple commodity production as a historical stage of production preceding capitalism. He even stated that the analyses in the beginning of the treatise started from the commodity of a fully developed commodity exchange: If we examine the various aspects of the commodity, that is of the fully evolved commodity and not as it at first slowly emerges in the spontaneous barter of two primitive communities, it presents itself to us from two angles, that of use-value and of exchange-value.11 Even though it is unclear as to whether Engels thought that a fully developed exchange of commodities was only possible after the wage relation had been introduced, his statement nevertheless problematised the historical interpretation.12 Engels’s interpretation of the logical presentation as corresponding to the actual historical one was further and more strongly developed in his afterword and supplement to the 1895 edition of Capital.13 Now Engels directly stated as a historical fact that there had existed a long period of commodity productionin whichexchangehad takenplace directlyaccordingtovaluesand in which the means of production had belonged to the individual producers themselves.14 And Engels further claimed that Marx’s theory of value was valid for the whole period of simple commodity production: In a word: the Marxian law of value holds generally, as far as economic laws are valid at all, for the whole period of simple commodity produc10 Ibid. 11 Engels 1974–2004b, p. 226. 12 See also Backhaus 1981, p. 119. 13 Backhaus 1981, pp. 120–1. 14 ‘This makes clear, of course, why in the beginning of his first book Marx proceeds from the simple production of commodities as the historical premise, ultimately to arrive from this basis to capital – why he proceeds from the simple commodity instead of a logically and historically secondary form – from an already capitalistically modified commodity’ (Engels 1974–2004g, p. 16). 256 chapter 16 tion–thatis,uptothetimewhenthelattersuffersamodificationthrough the appearance of the capitalist form of production … Thus, the Marxian law of value has general economic validity for a period lasting from the beginning of exchange, which transforms products into commodities, down to the 15th century of the present era.15 Thelawof valueis approximated ashavinggoverned theexchangeof commodities for a period of around fiveto seven-thousand years. Engels’s interpretation was made even more problematic by the fact that he seemed to think that the law of value resulted from conscious action on the part of the producers: how then could they exchange these products of theirs for those of other laboring producers otherwise than in the ratio of labor expended on them? … No other exchange is possible in the whole period of peasant natural economy than that in which the exchanged quantities of commodities tend to be measured more and more according to the amounts of labor embodied in them.16 And further: People in the Middle Ages were thus able to check up with considerable accuracy on each other’s production costs for raw material, auxiliary material, and labor-time – at least in respect of articles of daily general use.17 Thus,inEngels’sinterpretation,the lawofvaluewouldnotbealawwhich,even though executed by the acts of exchange of individuals, still functioned blindly behindthebacks of these individual actors;rather,itwouldsimplybeamethod of counting the expenses of production.18 15 Engels 1974–2004h, p. 887. 16 Engels 1974–2004h, p. 885. 17 Ibid. 18 Backhaus ironically formulated what Engels seemed to think happened in the ancient society of fishermen and hunters. Fishermen and hunters could not supposedly exchange their products because the incommensurability of their use values excluded the possibility of exchange. One fine day, they were nevertheless lucky enough to get the idea of abstracting from the use value of their commodities and the concrete character of their labour. They found out that the property of being products of labour in general is the the principle of labour 263 It was thus Marx’s intended materialism that, according to Backhaus, was the main reason for his historical fables about simple commodity production and the historical development of money. Marx, in fact, on several occasions referred to the necessity of introducing money because of the increasing division of labour and the increasing exchange of products, as if money had been invented in order to overcome the difficulties encountered in actual exchange of products in a period of history in which pre-monetary exchange of commodities had prevailed: The further the division of labour develops the more does the product cease to be a medium of exchange. The necessity of a general medium of exchange arises, a medium independent of the specific production of each and every one.45 In Capital, the formulation of the same problem was more problematic. The existence of a general equivalent was seen to be necessary to any exchange between several commodities, but the introduction of money was still understood as a solution to the difficulties due to the increasing division of labour: Thenecessityforavalue-formgrowswiththeincreasingnumberandvariety of the commodities exchanged. The problem and the means of solution arise simultaneously. Commodity-owners never equate their own commodities to those of others, and exchange them on a large scale, without different kinds of commodities belonging to different owners being exchangeable for, and equated as values to, one and the same special article.46 Backhaus saw the reason for Marx’s insistence on the categorial presentation corresponding to actual historical development of the different forms of value as a desire to proceed materialistically and to correct his seemingly idealistic manner of presentation. One could, however, claim that there were other reasons for Marx’s procedure, reasons that are closely connected with another essential interpretative argument of Backhaus. For Backhaus, Marx’s ‘labour theory of value’ was a necessary consequence of his conception of an objective value: the idea of the necessary form of the appearance of value (money) 45 Marx 1973, p. 199. Cf. ‘The money can overcome the difficulties inherent in barter only by generalizing them, making them universal’ (Marx 1973, pp. 149–50). 46 Marx 1974–2004l, p. 99. 264 chapter 16 could only be developed on the basis of an objective theory of value and, consequently, the labour theory of value. An objective or ‘absolute’ value can only be based on labour.47 It is not, however, at all clear why such an absolute value should be exclusively understood in this way. On the contrary, it could be claimed that such a position is highly problematic; and Marx’s introduction of the concepts of abstract and concrete labour as producing use value and value, respectively, wasratherstraightforward,withoutanyspecificgrounds.Stapelfeldt48interestingly pointed out that Marx’s introduction of abstract labour in his reasoning as the identical property of the commodities making possible their exchange is highlyproblematic.The definition wasjustified only throughnegation;according to Marx’s reasoning, the common quality on which the identity of labour’s products is based cannot be any substantial or natural quality of theirs, or their use value, because as use values commodities evidently are qualitatively different. The only possible identical quality of commodities after the abstraction or negation of their natural qualities or use values is their property as products of labour in general: ‘If we then leave out of consideration the use value of commodities, they have only one common property left, that of being products of labour’.49 Marx did not, however, give any further arguments in favour of the identification of the common quality found in the products of labour with labour in general.50 As Stapelfeldt pointed out, the difficulty in Marx’s operation of abstraction culminates in its result. Marx abstracted from the determination of products as products of labour and once more got as the result – abstract human – labour: ‘ForMarxabstractsfromtheproductsoflabour,butpresentsasaresulttheonly thing remaining – abstract human labour’.51 47 Backhaus 1981, p. 141. 48 Stapelfeldt 1979, p. 111. 49 Marx 1974–2004l, p. 48. 50 Marx’s argument was, consequently, not convincing as such. It is easy to think of other common identical qualities of products in use. The price of commodities can be understood as being determined by their potential demand and supply, as was pointed out by Böhm-Bawerk in his classical critique of Marx’s labour theory of value (see BöhmBawerk 1973 [1896]), which amounts to their determination by the marginal utilities. To take another extreme example, as was shown by Simmel (1900), one could also postulate a specific metaphysical sphere of values; or one could interpret value as a specific socially determinedquality ofcommoditiesdue tothe socialform of organisationoflabour,aswas the case in Rubin’s theory of abstract labour and value (see Rubin 1973 [1924]). 51 Stapelfeldt 1979, p. 115. the principle of labour 265 One further problem in Marx’s procedure of abstraction is the definition of use value as a product of useful or concrete labour. In the beginning of his discussion of the dual character of a commodity, Marx defined use values simply as useful things which satisfy human needs. In discussing the dual nature of labour, Marx said that as such they are the product of useful activity: ‘To resume, then: In the use value of each commodity there is contained useful labour, i.e., productive activity of a definite kind and exercised with a definite aim’.52 According to Stapelfeldt, Marx needed a more determined definition of use value, or a definition of the identical quality of use values for his further argument.53 Use values are not simply useful things. Use values are also products of labour, of a specific productive or useful activity: So far therefore as labour is a creator of use value, as useful labour, it is a necessary condition, independent of all forms of society, for the existence of the human race; it is an eternal nature-imposed necessity, without which there can be no material exchanges between man and Nature, and therefore no life.54 In Stapelfeldt’s opinion, Marx’s procedure of abstraction was only legitimate because of the presupposed truth imbedded in classical political economy. Marx’s analysis of a commodity is only understandable when it is understood that it takes place within this tradition of thought, which becomes evident during the problematised argumentation of abstract labour as determining the common quality of commodities. Marx’s dual reference to labour makes his closerelationtonaturalrightstheoryandclassicalpoliticaleconomyevident.55 Marxdidnot,however, only adopttheconceptof labour fromclassical political economy. He also criticised it for its ambivalence. In Marx’s opinion, classical political economy lacked the understanding of the dual nature of labour. In classical political economy, the concept of labour referred both to humanity’s relation to nature and to the intersubjectivity of social relations, and remains thus undifferentiated. After the introduction of the dual concept of labour, the different use values and concrete products of labour can, on the one hand, be regarded as equal because abstract labour has been objectified in them. Their comparability is based on abstract labour. On the other hand, the concrete 52 Marx 1974–2004l, p. 52. 53 Stapelfeldt 1979, p. 115. 54 Marx 1974–2004l, p. 52. 55 Stapelfeldt 1979, p. 117. 266 chapter 16 labour producing use values is closely tied to nature’s substance and is in every case as different as its products. They cannot thus be considered as identical to one another. In order to emphasise the contrast, Marx named the equal substance of commodities as ‘abstract human labour’, and understood it to be a result of abstraction. But abstract labour can, on the other hand, only be the common quality of commodities because labour is, in fact, materialised in use values; they are in some strong sense products of labour. Classical political economy never understood this difference in its concept of labour and was criticised by Marx accordingly.56 Itisessential,however,thattheconceptofvalueshareswiththatof‘concrete labour’ the idea that labour has in reality been objectified and materialised in its products.57 The reproduction of social relations thus takes place within the production of use values – the value has concrete labour as its necessary precondition – which in Stapelfeldt’s opinion determines Marx’s doctrine as both materialistic and dialectical: The critique of political economy is materialist because it shows that value is the abstraction from man’s relationship to nature, that the existence of value is therefore conditioned by concrete labour and that the products of labour are reduced to its form of appearance. This materialism is dialectical because it formulates the experience of a bifurcation of society’sandman’srelationshiptonature,of abstractandconcretelabour … The doctrine of the double-character of the labour embodied in commiditiesdefinesthe critique ofpoliticaleconomyas a dialecticaltheory.58 As Stapelfeldt has pointed out, Marx’s critique of the concept of labour was only convincing because of its close conceptual relation to classical political economy. It adopted its standards of critique from the latter: The critique of political economy is only able to be constituted by attaching itself to the false aporia of classical political economy, by proving to solve political economy’s thoroughgoing rupture of concrete and abstract labour in all relevant specifications and thereby gaining both the experiential basis of the criticised as well as the critic’s own benchmark of critique.59 56 Stapelfeldt 1979, pp. 121–2. 57 Stapelfeldt 1979, pp. 133–4. 58 Stapelfeldt 1979, p. 224. 59 Stapelfeldt 1979, pp. 251–2. the principle of labour 267 Thecritiquewasdirectedagainstboththecapitalistmodeofproductionand its scientific expression. It aimed at destroying the claim of reason of bourgeois society, the concept of reasonable society, which projects the social relations into natural relations, into humankind’s relations to nature.60 Marx did not, however, only redefine the concept of labour by introducing his conception of the dual character of labour. He also redefined the concept of labour in another sense, and in so doing radicalised the critical potency of his analysis. It was essential to Marx that through labour the very goalorientedactivityofapersonismaterialisedinitsproductsandobjectifiedinthe socialrelationstoo.AccordingtoLange,61thisconceptualredefinitionoflabour already took place in the Economic and Philosophical Manuscripts of 1844, in which Marx discovered labour to be the real principle of national economy: The fact expresses merely that the object which the labour produces – labour’s product – confronts it as something alien, as a power independent of the producer. The product of labour which has been embodied in an object, which has become material; it is the objectification of labour.62 In Marx’s manuscript, objectification [Vergegenständlichung] became synonymous with becoming a material object. Labour is, then, materialised very concretely in the products of labour.63 Marx’s conceptual operation made it possible for him to radicalise the concept of labour into a model of objectification or alienation and use it as a critical model.64 The concept of objectification of labour made it possible to understand and to criticise the national economic state of affairs [nationalökonomischer Zustand] or bourgeois society, and the process of private property. Private property and the relations of bourgeois society are reduced to the worker’s alienated self-relation to himself and to his alienated relation to the products of his own labour (the product of his labour, his very labour process, and the essence of human species [Gattungswesen] all become alienated). The very opposition of classes in a bourgeois society is based on the missing selfand object relation of the worker65 The same idea of materialisation and objectification of labour was also strongly present in Capital: ‘A use value, or useful article, therefore, has value 60 Stapelfeldt 1979, pp. 64–5. 61 Lange 1980, p. 55. 62 Marx 1974–2004b, p. 272. 63 Lange 1980, p. 56. 64 Lange 1980, pp. 68–9. 65 Lange 1980, pp. 81–2. 268 chapter 16 only because human labour in the abstract has been embodied or materialised init’.66Byanalogy,theusevalueofacommodityrepresentsmaterialisedlabour. The main difference of Marx’s later critique of political economy in relation to the manuscript of 1844 was that labour was no longer understood to be the real principle of the bourgeois society. According to Marx, it was now wrong to say that capital is just the result of accumulated labour. In the Grundrisse, for instance, Marx claimed that the characterisation of capital as accumulated labour in no way described capital specifically, but in fact described any instrument of production.67 Lange, however, claimed that while beginning the presentation of Capital with commodity and money, Marx was, in fact, still indirectly beginning it with the category of labour. Labour did not then become the very principle of national economy, but its contradictory principle: As such, labour itself is a contradiction to be unveiled, the fundamental contradiction, even, on which the contradiction of labour and capital and class-antagonisms are then based. Labour cannot therefore be the point of departure of the presentation unveiling the ever more fundamental contradictions that destroy illusory unities, despite labour itself being, in an estranged way, ‘by itself’ or ‘for us’ – the theoretical observers – a principle.68 In Capital, Marx did not begin his analysis with the concept of labour, or with alienated labour, but with the concept of commodity. Labour, then, is conceptually redefined; labour producing commodities has a dual character. Labour is no longer – as it was in Ökonomisch-philosophische Manuskripte – the fundamentalprincipleofthenationaleconomy,fromwhichallfurtherconsequences ensue,butrathera principleofacontradictorynature.Despitethisself-critique and conceptual redefinition, Marx was, however, strongly indebted to classical political economy and its predecessor, the natural law theory. It was the concept of labour and the labour theory of value which Marx interpreted to be the rational core of classical political economy. And certain important elements of it can already be found in natural rights thinking. Classical thinking does, however, result in anomalies as reconstructed by Marx, because of its misunderstanding of the dual character of labour and the specific historical 66 Marx 1974–2004l, p. 48. 67 Marx 1973, pp. 85–6; see also Lange 1980, p. 146. 68 Lange 1980, p. 150. the principle of labour 269 and social form of labour in a society ruled by commodity exchange. But still one can agree with Schanz69 – and Lange – in interpreting labour as the most important concept in Marx’s Capital too. As has already been pointed out, Marx’s argument included another important conceptual redefinition of the concept of labour, which was not present in classical political economy or natural rights theory. Marx understood labour to be materialised and objectified in its products,in commodities. For instance, it was essential for Marx to emphasise that abstract labour could only be objectified in the material products of labour. In discussing his value form analysis, Marx stated that human labour power is always objectified in a specific form, in the product of specific concrete labour: Humanlabour,plainandsimple,theexpenditureofhumanlabourpower, may be capable of any determination, but in and of itself undetermined. It can only be realised, only objectified, when human labour-power is expended in a specific form, as specific labour, for only specific labour is confronted with a natural substance, an external material, within which it is objectified.70 Marx was ridiculing Hegelian concepts, which can objectify themselves without any external substance: ‘Only the Hegelian “concept” is capable of objectifying itself without external material’.71 From his conception of objectification it also follows that the value of a commodity can only appear in the use value of another commodity; in Marx’s opinion, value must appear and it can only come into appearance in the relation of two commodities. As stated by Marx, one peculiarity of the value form is that use value becomes the form of appearance of its direct opposite, value, or to put it in another way, concrete labour becomes the form of appearance of its opposite, abstract labour.72 In another context, Marx wrote that it is wrong to say that labour is the sole source of riches. Nature is equally a source of use value, the universal substantial form of riches: ‘Labour is not the source of all wealth. Nature is just as much the source of use values (and it is surely of such that material wealth consists!) as labour, which itself is only the manifestation of a force of nature, human labour power’.73 Marx furthermore added that 69 Schanz 1981, p. 260. 70 Marx 1867, p. 18. 71 Ibid. 72 Marx 1974–2004l, pp. 67, 69. 73 Marx 1974–2004f, p. 81. In Capital, Marx approvingly paraphrased William Petty: ‘Labour is the father (of material wealth) and the earth is its mother’ (Marx 1974–2004l, p. 5). 270 chapter 16 only insofar as humankind relates itself to nature as its owner and treats it as belonging to it, does human labour become the source of use values and consequently of riches. It is only because people cannot objectify their labour without the necessary means and objects of production originally created by nature that private property and capital, too, are possible at all. Otherwise any person possessing her or his own labour power exclusively could work and support themselves without the consent of the person owning and controlling the instruments of labour and the necessary resources of nature.74 Taking into account Marx’s redefinition of labour and discussion of the concept of labour, it becomes possible to explicate his critique of private property and the form of capitalist appropriation. Marx’s critique was twofold: It is not humanity’s relation to nature via labour that constitutes private property. Private property is not based on a person’s right to appropriate the products of his own labour. Private property furthermore has the exchange of commoditiesasits necessary precondition.It isfirstestablished in asocietywhereprivate labour is transformed into social labour through exchange of commodities. But it was equally important for Marx to understand that commodities are appropriated from natureby materialising labour in them, and the materialisation of labour is not possible without the corresponding potentialities of nature. Marx then not only criticised what, in his understanding, was the fundamental legal conception of private property in classical political economy. He also adopted and – by redefining the concept of labour – radicalised its central insight. In capitalism, private property is not based on labour; in fact, the products of alien labour are approriated by capitalists without an equivalent. And in general, it is never labour – the productive relation of a human being to nature – that constitutes private property. Legal and political ideas are only reflexions or expressions of more fundamental social relations of production. Still, even for Marx – and even in capitalism – products are originally appropriated from nature by labour. It is the labour power, the productive activity of the worker, that is materialised in commodities, and in the material elements of riches in general. As has already been pointed out, Backhaus claimed that it was Marx’s intendedmaterialismthatmadehimattempttojustifyhisvalueformanalysisascorresponding to an actual historical development from less developed forms of value into more developed ones. Considering the previous discussion of Marx’s concept of labour, one can, however, go even further and claim that it was Marx’s labour theory of value – recognised by Backhaus as the only alternative 74 Marx 1974–2004f, p. 81. the principle of labour 271 to determine an objective value – that is to be blamed. The same problem can alsobeformulatedasfollows:becauseofhis labourtheoryofvalue,Marxinfact did analyse the production of commodities before circulation and exchange of commodities. At the beginning of Capital, Marx analyses not only the simple circulation of commodities, but also the simple production of commodities. Rubin75 recognised that there is a seeming ambivalence in Marx’s reasoning at this point: on the one hand, value and abstract labour were already presupposed before the exchange of commodities could take place, and on the other hand, value was first constituted in the very process of exchange.76 The same duality of reasoning can also be formulated in Rubin’s own words as follows: By showing that there can be no value-form without value, at the same timeMarxpreciselydemonstratedthatthissocialformwillremainempty without the substance of labour [Arbeitssubstanz] that fulfils it.77 Rubin solved the problem by assuming that in production oriented towards a market, the very production process already has a specific social form: it is 75 Rubin 1973, p. 110. 76 Sohn-Rethel’s critical interpretation of Marx’s analysis of the forms of value pointed out the same ambivalence as Rubin’s. Sohn-Rethel went even further and suggested that Marx’s analysis at the beginning of Capital is inconsistent because Marx does not clearly distinguish between the problems of the magnitude and the form of value (see SohnRethel 1978, p. 21; see also Sohn-Rethel 1972, p. 235). Inspired by Sohn-Rethel’s interpretation, Pietilä proposed an original solution to the problem of the relation between the ‘historical and logical’ in Marx’s analysis of the form of value corresponding to the quantitative and qualitative aspects pointed out by Sohn-Rethel (Pietilä 1984). The first level consists of ‘a “logical” theory aiming to show that money is nothing but “the necessary form of expression of the immanent value measure of commodities, viz. the labour time”’ (Pietilä 1984, p. 63). ‘The second level, in turn, would indicate the historicaldevelopment of the structure of exchange relations and the necessities of this structure – precisely in the premonetary era’ (Pietilä 1984, p. 64). Pietilä’s interpretation is problematic because there is hardly any analysis of the development of the structure of exchange relations in Capital except of the exchange of commodities. The form of value analysed by Marx is always the form of value of a commodity; the use value of a commodity becomes the form of appearance of the value of another commodity. And consequently, the quantitative and form aspects are closely intertwined in Marx’s argumentation. Therefore Marx’s presentation can hardly be read as both an analysis of primitive (pre-monetary) exchange of products and an analysis of a developed exchange of commodities, respectively. As will be shown in the present study, it is exactly – to use Sohn-Rethel’s expression – the ‘quantitative’ aspect of value in Marx’s reasoning that explains his historicising intention. 77 Rubin 1973, p. 81. 272 chapter 16 labelled by exchange from the very beginning.78 Production and circulation of commodities thus are mutually conditioned. But Rubin’s argument did not really solve the problem; it only reformulated it. The same ambivalence is also present in Marx’s twofold critique of both Ricardo and Bailey, a critique discussed both by Backhaus in the context of the logical and historical presentation in Marx’s Capital, and in the present context by Rubin himself.79 As was already pointed out in Marx’s reconstruction of the history of political economy, Bailey and Ricardo were made to criticise one another. Ricardo’s fault, then, was that he neglected to analyse the specific form of labour, the value form which first constitutes value. Ricardo, in Marx’s opinion, however, correctly identified the substance of value with labour. The other debater, Bailey, did not admit that exchange presupposes that commodities have an objective value, a common quality making their exchange possible, and consequently he dismissed the whole concept of value as a metaphysical entity not needeed by political economy. But Bailey’s theory too had its own merits. He correctly recognised that the value of a commodity can only appear in its relation to anothercommodity.Thus,both Bailey andRicardoprovidedcertaininvaluable insights adopted by Marx in his analysis of value and value form. The importance of Marx’s critique of Ricardo received special emphasis in Backhaus’s analysis. For the present argument, Marx’s critique of Bailey is more important. In rejecting value as an unnecessary entity for the analysis of the exchange of commodities, Bailey failed to understand that in order to be exchanged, two commodities must already possess a common qualitative propertymakingtheirexchangepossible.AndlikeRicardo,Marxidentifiedthis common quality with value, and the substance of value with labour. Without being an independent item in Marx’s analysis – value admittedly was always thought to be connected with its value form, as pointed out by Rubin80 – the elements of a labour theory of value were indispensable to Marx’s theory. They can be said to form the Ricardian – and Smithian – heritage in Marx’s thinking. They can also be said to constitute Marx’s Marxism. It can now be claimed that by identifying value with a specific social form of labour, and by identifying the substance of value with labour, Marx opened uphis argumentationtoa historicalinterpretationof thedevelopmentof value forms. It was thus Marx’s labour theory of value that led him to present those ‘pseudodialectical fables’ referred to by Backhaus.81 Because of the labour the78 Rubin 1973, p. 112. 79 Rubin 1973, p. 72. 80 Rubin 1973, pp. 81–2. 81 This does not mean that Backhaus’s suggestion of Marx’s intended materialism as the the theory of increasing misery and the critique of capitalism 279 basis, labour power.8 If this tendency towards falling rate of profit shows the objective limits of capitalism, the law parallel to it, the capitalist law of relative overpopulation, shows the subjective limits of capitalism. After abandoning the Ricardian position of the determination of wages through the physical existence minimum and the iron law of wages in the 1850s,9 Marx no longer adhered to a straightforward theory of the continuously growing misery of the wage workers. The wage worker does not necessarily represent absolute poverty any more, as he did in Marx’s earlier writings. The increasing productivity of labour makes it possible for the real wages (and consumption) of the workers to rise even as the value and price of their labour power decrease and the rate of surplus value increases. Consequently, the worker does not in this respect necessarily have any subjective experience either of the contradictory character of the capital relation or of any direct immiseration of his or her economic or social position: At the moment where immiseration is only seen in relation to the development of capital, but where living standards rise, the theory of immiseration can no longer claim to provide anything towards explaining the comingintobeingof revolutionaryconsciousness.Anyimmiserationthat is not perceived as such [sinnlich erfahren] cannot be an expression of ‘necessity’ as ‘need’.10 The immiseration theory was, however, preserved intact in another way by Marx. Due to the increasing organic composition of capital (the relation of constant to variable capital), total capital accumulated faster than its variable 8 ‘Beyond a certain point, the development of the powers of production becomes a barrier for capital; hence the capital relation a barrier for the development of the productive powers of labour … The last form of servitude assumed by human activity, that of wage labour on one side, capital on the other, is thereby cast off like a skin, and this casting-off itself is the result of the mode of production corresponding to capital; the material and mental conditions of the negation of wage labour and of capital, themselves already the negation of earlier forms of unfree social production, are themselves results of its productionprocess.Thegrowingincompatibilitybetweentheproductivedevelopmentofsociety and its hitherto existing relations of production expresses itself in bitter contradictions, crises, spasms. The violent destruction of capital not by relations external to it, but rather as a condition of its self-preservation, is the most striking form in which advice is given it to be gone and to give room to a higher state of social production’ (Marx 1973, pp. 749–50). 9 See Vygodskyi 1970, pp. 20–1; see also Schanz 1981, p. 289. 10 Sieferle 1979, p. 198; cf. Wagner 1976, pp. 15–16. 280 chapter 17 part;asMarxunderstoodit,the amount of employedworkersdoesnot increase intact with the accumulated capital: On the one hand, therefore, the additional capital formed in the course of accumulationattractsfewerand fewerlabourersinproportiontoits magnitude. On the other hand, the old capital periodically reproduced with change of composition, repels more and more of the labourers formerly employed by it.11 A continuously increasing reserve army of unemployed workers follows from this: The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production …12 The rationale of the increasing industrial reserve army from the point of view of capital is its influence on the demand and supply of labour power and, consequently, on thewagelevel.Wagesareautomaticallykeptin control.The price of labour power tends towards the existential minimum under circumstances ofdecreasingdemandandincreasingsupplyoflabourpower.Thefollowingformulation shows clearly, according to Sieferle,13 that Marx was, even in Capital, introducing the concept of growing misery, once again: Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital.14 The possibility of the experience of the ‘universal negativity’ of the position of the working class, which in Sieferle’s opinion is a precondition of the destructionofcapitalism,is afterallasubjectivelyexperiencedphenomenonin Marx’s 11 Marx 1974–2004l, pp. 622–3. 12 Marx 1974–2004l, p. 625. 13 See Sieferle 1979, pp. 201–2. 14 Marx 1974–2004l, p. 640. the theory of increasing misery and the critique of capitalism 281 later thinking too, because of the growing army of unemployed and the consequent misery and suffering of the wage workers under capitalism. Thus Marx did not need to present any more specific problematisation of the development of the consciousness of the working class on a phenomenological level that would have shown how the mystification of the surface can be penetrated and overcome.15 Sieferle criticised Marx’s presentation of the capitalist law of population or thelawofrelativeoverpopulationbecause it isbased on theideaof the increasing organic composition of capital. The same critique that can be directed at the ‘falling rate of profit’ doctrine can be directed at the population law. A priori, one cannot forecast any necessity for a continuously growing reserve army. Sieferle’s critique of this law was almost a standard one: only if the value composition of capital were necessarily to rise and only if the rate of surplus value were not to rise fast enough, would the expected conclusion follow.16 One could, however, easily add some more doubts about the validity of the law. Marx was drawing from it conclusions that quite obviously could be drawn only at a later stage of his presentation. The general law of accumulation was an absolute and abstract law, as pointed out by Wagner.17 The expected conclusions could possibly follow only after the introduction of the problems of realisation and competition, and so on. The accumulation of capital was analysed, in the first volume of Capital, in its ‘pure form’ and, consequently, it can onlybe shownthat– inrelationtoits owngrowth– capitalcontinuouslystrives to get rid of its own basis of value increase, namely living labour, by increasing both absolute and relative surplus value and the productivity of labour. Fromthisonecannotdrawanyconclusionsconcerningthehistoricalfateofthe working class, even less concerning the necessity for any continuously increasing misery. All that Marx could say at this stage of his presentation was that there is a tendency towards the existence of a relative overpopulation, that is, relative to the accumulated capital; capital accumulates faster than employment increases. But at the same time, employment can be increasing as well, albeit at a slower rate. Even if one were to accept the doctrine of the increasing organic composition of capital, it would not be correct to deduce from it any empirical forecasts about increasing overpopulation and unemployment, even less about any necessary decrease in the realwages of labour power or the increasing misery of the proletariat. And it is in principle as impossible to have 15 Sieferle 1979, p. 202. 16 Sieferle 1979, pp. 162–3. 17 Wagner 1976, pp. 79–81. 282 chapter 17 any experience of the relative – that is, relative to the reproduction of capital – overpopulation and relative pauperisation of the proletariat as it is to experience the growing relative exploitation (or ‘relative immiseration’). Whatever one thinks about the doubts over the nature of the general law of accumulation, Sieferle’s interpretation is in any case interesting because he claimed that Marx’s Capital included a phenomenological level of presentation relevant to the development of class consciousness. In analysing the consequences of capital accumulation, Marx was explicitly discussing the historical fate of the proletariat under capitalism. More specifically, Marx was trying to show that the inner contradictions and limitations of the production of surplus value come to appearance on the surface of society in an empirically apprehensible way, as the misery and poverty of the workers. Thus the universalnegativityinherentinthesocialcategoryofwagelabourcanbeexperiencedbythe majorityof thepopulation; thewageworkers cometorealisethat the capital relation must be overthrown to allow the free development of the individual.Thewageworker as an ‘absolute pauper’ representing‘absolute negativity’isnotonlysomethingthatscientificanalysisoftheessenceofcapitalism can reveal. It is also something that every worker can and must feel in her or his own body and soul. One could claim that the role of the theory of immiseration in Second International Marxism, and in Kautsky’s thinking specifically, is very similar to that explicated by Sieferle in discussing Marx’s Capital. Just as crisis development, centralisation of capital, and the generalisation of wage labour were thought to reveal the objective limits of capitalism, so the increasing misery was thought to express its subjective limits. The revolutionary consciousness is born out of theinsightthatcapitalismhas nothing tooffertheworkingmasses.Whilemaking the capitalists richer, wage workers are doomed to ever increasing misery. As already pointed out, the central role of the law of the increasing misery of the working class was accepted to be a crucial element of Marxism by both the orthodox Marxists and the ‘revisionists’ of the Second International. They only disagreed over the empirical validity of the law. However, it may be doubted whether Marx’s discussion of the capitalist law of population could in any way be understood either as a phenomenological level of the analysis of consciousness (Sieferle), or as a discussion of the normative standards of the participants forming part of Marx’s transcending critique (Lohmann). The discussion is closely connected with the postulates and conclusions of classical theories of bourgeois society. It is here suggested that Marx’s discussion of the general law of accumulation and the fate of the working class in Capital should be considered strictly within the context of his critique of political economy. Marx was, first of all, criticising the respective the theory of increasing misery and the critique of capitalism 283 laws of Ricardo (1817)18 and Malthus (1798),19 and trying to prove that the tendency towards increasing overpopulation and the falling rate of profit are not eternal natural laws, but rather, on the contrary, historical laws which are specifictocapitalism. ForRicardo, thefallingrateofprofitresultedfromthediminishing productivity of land taken into use cumulatively.20 In Capital, Marx was directly commenting on Malthus: The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production and in fact every special historic mode of production has its own special laws of population, historically valid within its limits and only in so far as man has not interfered with them.21 There is, however, yet another context which is even more relevant to the interpretation of Marx’s law of accumulation and overpopulation. In Capital, Marx stated: The action of the law of supply and demand of labour on this basis completes the despotism of capital. As soon, therefore, as the labourers learn the secret, how it comes to pass that in the same measure as they work more, as they produce more wealth for others, and as the productive power of their labour increases, so in the same measure even their function as a means of the self-expansion of capital becomes more and more precarious for them; as soon as they discover that the degree of intensity of the competition among themselves depends wholly on the pressure of the relative surplus population.22 The law of supply and demand of labour power in a sense completes the analysis of the despotism of capital in Marx’s critique of political economy: 18 Ricardo 1971. 19 Malthus 1970. 20 See Ricardo 1971, pp. 71–2; cf. Marx 1973, pp. 606–7. 21 Marx 1974–2004l, pp. 625–6. The translation confuses the two sentences at the end. The original German version of Das Kapital finishes with ‘an abstact law of population only existsfor plants andanimals as far as man has not historicallyinterferedwith them’(Marx 1969b, p. 669). 22 Marx 1974–2004l, p. 634. 284 chapter 17 as soon as wage workers come to recognise that they, in fact, produce riches alien to themselves in the form of capital, while becoming poorer themselves, capitalism has come to an end. By reproducing capital on an enlarging scale, they reproduce their own situation as wage workers, a situation characterised by both insecurity and brutality. In the Economic and Philosophical Manuscripts of 1844, the same idea was already formulated in abstract terms: ‘The worker becomes all the poorer the more wealth he produces, the more his production increases in power and size’.23 In Grundrisse, the conclusion can be found in a more developed form already resembling Marx’s analysis in Capital: He [the worker] has produced not only the alien wealth and his own poverty, but also the relation of this wealth as independent, self-sufficient wealth,relativetohimselfasthepovertywhichthiswealthconsumes,and from which wealth thereby draws new vital spirits into itself, and realizes itself anew.24 And further: It here becomes evident that labour itself progressively extends and gives an ever wider and fuller existence to the objective world of wealth as a power alien to labour, so that, relative to the values created or to the real conditions of value-creation, the penurious subjectivity of living labour capacity forms an ever more glaring contrast.25 The discussion of the general law of accumulation and the fate of the working class in Capital can then be interpreted to be a more developed formulation of the above ideas.26 By showingthe mechanism through which the reproduction and accumulation of capital makes the capitalist richer and the worker poorer, Marx is concluding his critique of natural rights thinking and classical political economy. The analysis of the reproduction of capital proved how the value 23 Marx 1974–2004b, pp. 271–2. 24 Marx 1973, p. 453. 25 Marx 1973, p. 455. 26 In Critiqueof the Gotha Programme, Marx approvingly referred to a formulation according to which the misery of the working class is continuously increasing while the capitalists are becoming all the richer: ‘In proportion as labour develops socially, and becomes thereby a source of wealth and culture, poverty and destitution develop among the workers, and wealth and culture among the nonworkers’ (Marx 1974–2004f, pp. 82–3). the theory of increasing misery and the critique of capitalism 285 increase of capital takes place at the cost of living labour, and how wage labour continuously reproduces the social force that dominates the life activity of the worker. The production of a relative overpopulation, the other side of the accumulation of capital, shows furthermore that while continuously reproducing the conditions of further accumulation of capital, wage labour simultaneously reproduces its own relative superfluousness. The wage worker thus continuously reproduces the relation of domination of capital over herself, or the domination of dead over living labour, a domination which most concretely comes into appearance as the relative overpopulation of workers: But in fact, it is capitalistic accumulation itself that constantly produces, and produces in the direct ratio of its own energy and extent, a relativity redundant population of labourers, i.e., a population of greater extent than suffices for the average needs of the self-expansion of capital, and therefore a surplus population.27 The other side of the accumulation of capital is the accumulation of misery as explicitly stated by Marx: ‘It establishes an accumulation of misery, corresponding with accumulation of capital’.28 In Marx’s critique of capitalism, the original identity of labour, property and use value as postulated by John Locke and Adam Smith was definitely broken. Rather than increasing the conveniences of human life by adding more labour to nature’s products as promised by Locke, those who work are deprived of even the mere necessities of life and of the very means of their living. Neither does the increasing wealth of a nation – followed by inequality of property – guarantee that a human existence will extend even to the lowest ranks of people, as promised by Smith. The general well-being of the greatest number does not follow from the growing wealth of a nation. The accumulation of capital results more in the most inhuman existence of the greatest number of people, the working class. In Marx’s analysis, the accumulation of capital completes the despotism of capital,29 and proves the dependence of the wage worker on the conditions of the reproduction of capital leading to the utmost brutality and insecurity of the whole life situation of the wage workers.30 27 Marx 1974–2004l, p. 624. 28 Marx 1974–2004l, p. 640. 29 Nielsen 1980. 30 The list of the ‘vices’ of capital quoted by Marx is impressive: ‘within the capitalist system all methods for raising the social productiveness of labour are brought about at the cost of the individual labourer; all means for the development of production transform 286 chapter 17 At the end of the first volume of Capital, Marx thus implicitly claimed that bourgeoissociety does not keep itspromiseof reasonasformulatedbyclassical thinking, and the legitimation of private property, money and capital through their social consequences, the human existence of humankind, cannot be justified. However, Marx was clearly exaggerating his case, while emphasising the almost continuous and inevitable immiseration of the working class.31 But it clearly was not sufficient for Marx only to prove that wage labour produces riches in a form alien to itself and that, whether or not better paid, wage labour continuously reproduces the capital relation – and the conditons of its own further existence – on a larger scale. Marx did not only stop at the point of proving that wage labour both reproduces on the one side more capitalists and on the other side more wage workers and the continuous dominance of capital over itself, as stated at the beginning of the chapter on the general law of accumulation: The more or less favourable circumstances in which the wage working class supports and multiplies itself, in no way alter the fundamental character of capitalist production. As simple reproduction constantly reproduces the capital relation itself, i.e., the relation of capitalists on themselves into means of domination over, and exploitation of, the producers; they mutilate the labourer into a fragment of a man, degrade him to the level of an appendage of a machine, destroy every remnant of charm in his work and turn it into a hated toil; they estrange from him the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power; they distort the conditions under which he works, subject him during the labour process to a despotism the more hateful for its meanness; they transform his life-time into working-time, and drag his wife and child beneath the wheels of the Juggernaut of capital’ (Marx 1974–2004l, p. 639). 31 As shown by Carlsen et al. (1980; see also Schanz 1981), there is an important dimension in Marx’s thinking concerning the civilisatoric dynamism of capitalism that is especially pronounced in the Grundrisse. According to Marx, the development of a free and rich individuality with universal needs and capacities results from the civilisatoric influence of capital. Marx never explicitly reflected on the relation between his conception of the civilisatoric influence of capital in Grundrisse and the results of his analysis of the fate of the working class in Capital. At first sight, there would seem to be in Marx’s thinking a duality similar to that presented by Kautsky concerning the position of the working class in capitalism. According to Kautsky, there are both elevating and repressive tendencies operating in capitalism. Whereas the elevating tendencies in Kautskys argumentation are always connected with the struggle of the working class against capitalism, in Marx’s thinking they are, however, inherent in the very civilisatoric dynamism of capital. the theory of increasing misery and the critique of capitalism 287 the one hand, and wage workers on the other, so reproduction on a progressive scale, i.e., accumulation, reproduces the capital relation on a progressive scale, more capitalists or larger capitalists at this pole, more wage workers at that … Accumulation of capital is, therefore, increase of the proletariat.32 Evidently Marx wanted to prove more than could actually be proved on the basis of his premises. He wanted to prove that the existence of the proletariat, the greatest number of the people within capitalism, is inclined to become more brutal and inhuman in a very concrete sense. Thus Marx opened up his case for a direct empirical interpretation – and falsification – of his theory and a historical critique of it. At least certain parts of his analysis can legitimately be understood to form a historical prognosis of the ever-worsening economic and social condition of the working class in capitalism. And it was the Second International Marxism that adopted this interpretation and prophecy as its own and absolutised it into the very cornerstone of its scientific socialism. 32 Marx 1974–2004l, p. 609. © koninklijke brill nv, leiden, 2016 | doi: 10.1163/9789004306653_020 Conclusion The main purpose of the present study has been to analyse and reconstruct the theory of capitalism formulated and developed by Karl Kautsky at the turn of the twentieth century. The specific importance of Kautsky’s contribution to the development of Marxism lies in the fact that in interpreting and commenting on what he understood to be the essential ideas of Karl Marx’s economic thought, he explicitly and more or less systematically formulated a doctrine that can be claimed to constitute the common core of the social theory of traditional Marxism. Despite the obvious and important differences in the conceptions of the leading Marxists of the time – especially in their strategic and political conclusions – in their understanding of the nature of capitalism they share important common ideas. These ideas have far-reaching consequences for their analysis of imperialism, for the evaluation of the conditionsofthefuturerevolution,andforthe understanding of thecomingsocialist society. Kautsky’s Marxism springs from certain crucial misunderstandings in his interpretation of Marx’s theory of capitalism: his interpretation of Marx’s Capital fails to pay attention to the specific character of Marx’s theory as a critique of political economy. Still, a critical reconstruction of the social theory of traditional Marxism is not only useful in pointing out differences in Marx’s and Marxism’s analysis and critique of bourgeois society. It also leads to the problematisation and re-evaluation of certain crucial conceptions in Marx’s own reasoning. Marxism does not only represent what could be called a deformation of Marx’s critique of political economy; there is a Marxism of Marx too. Kautsky’s most original contribution to the development of Marxism lies in his formulation of the laws of capitalist development. In Kautsky’s own understanding, these laws were already presented by Marx in Capital. Consequently, Kautsky understood it as his task both to defend Marx’s theory againstattemptsatempiricalfalsificationandtoapply itinanalysingthedevelopment of the present capitalism and the conditions for a socialist revolution. His understanding of the law of capital accumulation as a historical and empirical law predicting the continuous concentration and centralisation of capital did, however, already include a specific interpretation of Marx’s theory of capitalism. In Kautsky’s opinion, the main importance of Marx’s Capital lay in the fact that it proved that, due to the centralisation of capital, a capitalist society is polarised into essentially two classes where – to quote an apt characterisation by Arato – ‘an insignificant non-working minority owns everything and a work- conclusion 295 Kautsky, Luxemburg and Lenin all emphasised the violent and reactionary nature of imperialism. It was partly explained by the political forces active in imperialism. The bourgeoisie was understood as having given up its former democraticaspirationsandashavingtakenrefugeinviolentmethodsofrepression both in its relation to the ‘domestic’ working class and in international relations. There were, however, other more deeply rooted reasons explaining this strategic evaluation of imperialism. It could be claimed that it was not onlyimperialism that wasunderstoodas reactionary; capitalism ingeneralwas reactionary. To both Kautsky and Lenin, democracy and equality were simply tactical weapons used by the rising bourgeoisie in its struggle against feudalism and absolutism. They were political ideals that in principle had nothing to do with the social relations of a bourgeois society. It was Kautsky’s conception of democracy and dictatorship that is especially revealing in this respect too. The role of democracy in Kautsky’s thinking is rather peculiar: it determines his specific position in the political spectrum of the Second International Marxists. To Kautsky, democracy was not only – as it was to many a Marxist – the most effective political institution to be used in organising and schooling a socialist and revolutionary working class. Parliamentary democracy also offered the best possible measuring stock for evaluating the actual strength of the proletarian organisations. However, to Kautsky, democracy was not only a tactical question. He was obviously a principal democrat by conviction. In Kautsky’s opinion, socialism without democracy was only a caricature of socialism. He demanded that the democratic rights of the minority should be respected during the socialist revolution, and he proclaimed that parliamentarydemocracywouldbetheidealformofasocialistrule.Kautskywas,however, equally convinced that the socialist transformation of bourgeois society would not be a process of gradual transition. It would be a revolutionary process, preceded by a political revolution. And – at least until the Russian Revolution – Kautsky also thought that this revolutionary transformation of society would take place under a dictatorship of the proletariat. It was the way he combined parliamentary democracy and the dictatorship of the proletariat in his thinking that was peculiar to Kautsky’s political position. There was not, however, any contradiction in his thinking. According to his definition, the dictatorship of the proletariat would be equal to Social Democraticmajorityrule inparliament.Assoon astheSocialDemocraticParty occupied the majority of the seats in parliament, it would declare a socialist revolutionundertheauspicesofthedictatorshipoftheproletariat.Butadictatorship of the proletariat would respect democratic principles; it would realise the will of the majority while also respecting the rights of the minority. [Document text truncated for crawler view.]