The Collapse of Capitalism (1922)

From the February 1922 issue of the Socialist Standard
There is a notion widely held in certain circles that capitalism is in a state of collapse, or at least, that its collapse is imminent; and this is interpreted to mean that the existing system of society will reach a point at which the production and distribution of commodities will cease, and the whole of the mechanism of Society will fail any longer to operate. Those who propagate this conception naturally accept the view that the tactics of the working class organisation must be framed with this collapse always in mind.
The illustration given recently by one of them—Mr. Palme Dutt—was the comparison of the present social order to a house admitted to be in a far from perfect condition. Of the occupants there was a section which considered redecoration and repair to be sufficient, while another section thought that nothing less than demolition and building anew would meet the needs of the situation. These sections represent the reformists and revolutionaries respectively. Now, however, the war and the Russian revolution have brought new factors to bear, and the dispute has been removed to another plane, the only question now being not whether to destroy, but how to rebuild. The house is said, in fact, to have collapsed about the ears of the dwellers through its own rottenness.
This sounds plausible indeed, but argument by analogy is dangerous. Has capitalism collapsed? and to what extent have the war and the Russian revolution altered, apart from having merely intensified, the previous structural defects?
The Third International lays it down that “The present is the period of the breakdown of Capitalism,” but does the evidence support this or do the “Third’s” adherents act as if it were true? The answer is decidedly no.
In America Max Eastman (Communist) says “This statement is not true of the United States in the same immediate sense that it may be true of Europe. We are not in the period of the breakdown of
Capitalism . . . ” (Liberator, October.)
He continues: “We (the American Communists) are employing tactics that could never be appropriate in any other period.” Now, the American Communist Party has “gone west,” and it is generally agreed that part, if not all, of the cause of their failure, was their attempt to apply a policy based on a condition of affairs which did not exist. Does that support the view that Capitalism is in collapse?
In Canada, which was wildly alleged to be on the verge of revolution at the time of the post-war Winnipeg strikes, a general election has just taken place which has led to the defeat of the conservative party by avowedly capitalist Liberals; the election having been fought on a tariff issue. There has not, apparently, been one Socialist returned.
In Australia, despite its heavy roll of unemployed, and its wage reductions, the “Proletarian” (Melbourne, 7th November) writes: “But until the full force of the present world depression reaches our shores the Australian working class will not be very susceptible to Communist propaganda.”
In Europe, where the full effect of the trade depression has been felt, does the economic system show any noticeable lack of vitality, or do the capitalists act in any but their accustomed aggressive manner towards the workers? In spite of the enormous amount of unemployment, curtailment of production, and relative overstocking of markets, are there any strikingly new factors to be considered after one has allowed for the expected after-war depression, the destruction of the war and the blockade, the new political frontiers and the chaos of the exchanges, all of them more or less normal phases of capitalism or the usual experiences after previous wars?
The struggle for markets may have been intensified, but does this call for new revolutionary tactics?
What of the Russian revolution? Here, again, the importance has been overestimated. The replacing of Czarist feudal Russia by a capitalistic republic even if the latter remains permanently under the Bolshevik Government, is the net result of the revolution, and it has only loomed so large because of the more or less accidental circumstances that it was the Bolsheviks who were brought into prominence by it.
If capitalism were in collapse would the Bolsheviks be relying on capitalist enterprise to rebuild Russia, a process which they admit will take decades at least? Would our own Communist Party feel the need to ally itself with the Labour Party to get the latter into power? The fact is the capacity of the capitalist system to recover from its depression has been under-rated and the Communists have in practice been forced to discard their theory. From the day when Marx and Engels wrote “There is a spectre haunting Europe—the spectre of Communism” there have continually been people who have under-estimated, as well as others like Hyndman, who never understood, but were always seeing revolution imminent in every momentary pause or set-back in capitalistic development.
In the minds, too, of some of its adherents, this theory of collapse is nothing but a failure to appreciate the Marxian viewpoint. The idea of an actual physical stoppage of production is not Marxian. Societies do not collapse like jerry-built houses. Marx wrote :—”The knell of capitalist private property sounds when the monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with it, and under it,” but as Boudin particularly points out (Theoretical System of Karl Marx) “He does not say that production under the old system must become impossible before a revolution sets in” and again, “as far as the purely mechanical breakdown of capitalism is concerned . . . it is not a physical breakdown, as would be necessary in order to exclude the necessary intervention of conscious human activity, but rather a moral bankruptcy. Certainly there is absolutely nothing in the capitalist system to prevent it from relapsing into a sort of new feudalism or slavery . . .  ” (p. 253). What Marx did mean, therefore, by the idea of the breakdown of Capitalism was the working-out of its inherent contradictions plus recognition by the workers that the continued existence of a system of society based on their exploitation is unnecessary and intolerable and that the class of exploiters no longer performs useful social functions. The moment of that recognition is the moment of the overthrow of class domination.
But it may be said “Capitalism can no longer employ its wage slaves, nor feed the unemployed.” But did it ever? Is unemployment new? and did Capitalism even in its days of most virile expansion and development provide an adequate standard of living for workers, employed or unemployed? Did the capitalists trouble about security for their victims? Everyone knows they did not: and yet the system survived.
It is of no use waiting for the system to collapse, nor preparing a new economic structure to replace it. It will not go until the workers determine that it shall go, and the pressing service revolutionary organisations can perform is to prepare the workers’ minds for the possibility of the immediate establishment of Socialism. To return to Palme Dutt’s analogy, we have not yet reached the stage of convincing the worker that there is anything wrong with the house at all; he still thinks it is the unneighbourliness of the people upstairs or in the house next door.
Edgar Hardcastle

Prohibition (1925)

Image: The Socialist Standard. [Source:]

From the December 1925 issue of the Socialist Standard
We are not opposed to the Prohibition— of swipes and adulterated water. Nor do we, like the brewer and his friends, pretend that Prohibition is a matter of vital concern to the workers. There is a Socialist view on this matter, but, like our views on all questions, it is in conflict with those of the reformer. The brewer endeavours to convince us that drinking is a noble and commendable act, for the same reason that the Nonconformist cocoa manufacturer boasts of the food value of his product and supports the Temperance movement. Profit greed determines what they think good for the dear worker, and the Temperance reformer with the anti-Prohibitionist reflect their interests. “Drink causes poverty! ” says the former, in his inverted reasoning. The fact is that the workers are born poor and must remain poor within the capitalist system because wages never provide more than a bare existence even to the life abstainer. “Without drink,” the reformer tells you, “money formerly so spent could be used to purchase things more necessary.” He incidentally plays upon a weak spot by the glad news that such alternative expenditure will mean more wor-r-r-k. In face of the ever-increasing army of unemployed, willing to accept a job at the lowest possible price, the idea that the workers would continue to receive the same wage after a lowered cost of living—is a joke. The sum spent on drink is an item in the average wage; if it should become no longer necessary, the abstainers’ previous advantage will disappear. As a result of Prohibition, those engaged in the brewing industry, including auxiliary workers, publicans, barmen, maids, cork and glass makers, sign writers, carmen, etc., would lose their employment. In actual practice this is the fate of the present unemployed whose numbers are in excess of the requirements of capitalistically produced wealth. Some claim that drink causes wretchedness, but the pathologist could prove quite the reverse. We know by experience that poverty surroundings cause depression. Drink is merely an attempt to counter its effects. In a city like Glasgow, where poverty and slumdom stalk naked and unashamed, the craving for stimulants almost becomes a disease with some of the very poor. Unable to afford ordinary spirits, they resort to methylated spirits as. a substitute. It is vile living conditions that cause people to become hopeless sots; it drives them to the glamour of the tavern. Whilst capitalism persists, most moderate drinkers will continue by habit to take to the present method as the line of easiest resistance to obtain a makeshift social intercourse and infuse a little colour into a grey world. As to the need in the future for alcoholic beverages, that can be safely left to a generation wise enough to realise that this earth provides the only opportunity that they will have to enjoy paradise. Those who produce the best will have the best, for with the coming of a sane system of society the cheap and nasty pleasures reserved the workers will be laid to rest with all the sordidness of the present system.

Social Reform or Revolution



Image: Rosa Luxemburg. [Source:]

Written: 1900, 1908
Source: Social Reform or Revolution, by Rosa Luxemburg
Publisher: Militant Publications, London, 1986 (no copyright)
First Published: 1900 (revised second edition 1908)
Translated: Integer
Online Version: Rosa Luxemburg Internet Archive ( 1999
Transcription/Markup: A. Lehrer

Reform or Revolution?

Image: Reform or Revolution? [Source:]



Chapter 1: The Opportunist Method

Chapter 2: The Adaptation of Capitalism

Chapter 3: The Realisation of Socialism Through Social Reforms

Chapter 4: Capitalism and the State

Chapter 5: The Consequences of Social Reformism and General Nature of Reformism

Chapter 6: Economic Development and Socialism

Chapter 7: Co-Operatives, Unions, Democracy

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Image: Reflections on resistance, reform, and revolution [Source:]

There are some good YouTube Videos that talk about Luxemburg’s “Social Reform or Revolution”:




Chapter VII Co-operatives, Unions, Democracy

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Image: The Hand That Will Rule the World – One Big Union. [Source:

Bernstein’s socialism offers to the workers the prospect of sharing in the wealth of society. The poor are to become rich. How will this socialism be brought about? His article in the Neue Zeit (Problems of Socialism) contain only vague allusions to this question. Adequate information, however, can be found in his book.

Bernstein’s socialism is to be realised with the aid of these two instruments: labour unions – or as Bernstein himself characterises them, economic democracy – and co-operatives. The first will suppress industrial profit; the second will do away with commercial profit.

Co-operatives – especially co-operatives in the field of production constitute a hybrid form in the midst of capitalism. They can be described as small units of socialised production within capitalist exchange.

But in capitalist economy exchanges dominate production. As a result of competition, the complete domination of the process of production by the interests of capital – that is, pitiless exploitation – becomes a condition for the survival of each enterprise. The domination of capital over the process of production expresses itself in the following ways. Labour is intensified. The work day is lengthened or shortened, according to the situation of the market. And, depending on the requirements of the market, labour is either employed or thrown back into the street. In other words, use is made of all methods that enable an enterprise to stand up against its competitors in the market. The workers forming a co-operative in the field of production are thus faced with the contradictory necessity of governing themselves with the utmost absolutism. They are obliged to take toward themselves the role of capitalist entrepreneur – a contradiction that accounts for the usual failure of production co-operatives which either become pure capitalist enterprises or, if the workers’ interests continue to predominate, end by dissolving.

Bernstein has himself taken note of these facts. But it is evident that he has not understood them. For, together with Mrs. Potter-Webb, he explains the failure of production co-operatives in England by their lack of “discipline.” But what is so superficially and flatly called here “discipline” is nothing else than the natural absolutist regime of capitalism, which it is plain, the workers cannot successfully use against themselves.

Producers’ co-operatives can survive within capitalist economy only if they manage to suppress, by means of some detour, the capitalist controlled contradictions between the mode of production and the mode of exchange. And they can accomplish this only by removing themselves artificially from the influence of the laws of free competition. And they can succeed in doing the last only when they assure themselves beforehand of a constant circle of consumers, that is, when they assure themselves of a constant market.

It is the consumers’ co-operative that can offer this service to its brother in the field of production. Here – and not in Oppenheimer’s distinction between co-operatives that produce and co-operatives that sell – is the secret sought by Bernstein: the explanation for the invariable failure of producers’ co-operatives functioning independently and their survival when they are backed by consumers’ organisations.

If it is true that the possibilities of existence of producers’ co-operatives within capitalism are bound up with the possibilities of existence of consumers’ co-operatives, then the scope of the former is limited, in the most favourable of cases, to the small local market and to the manufacture of articles serving immediate needs, especially food products. Consumers’ and therefore producers’ co-operatives, are excluded from the most important branches of capital production – the textile, mining, metallurgical and petroleum industries, machine construction, locomotive and ship-building. For this reason alone (forgetting for the moment their hybrid character), co-operatives in the field of production cannot be seriously considered as the instrument of a general social transformation. The establishment of producers’ co-operatives on a wide scale would suppose, first of all, the suppression of the world market, the breaking up of the present world economy into small local spheres of production and exchange. The highly developed, wide-spread capitalism of our time is expected to fall back to the merchant economy of the Middle Ages.

Within the framework of present society, producers’ co-operatives are limited to the role of simple annexes to consumers’ co-operatives. It appears, therefore, that the latter must be the beginning of the proposed social change. But this way the expected reform of society by means of co-operatives ceases to be an offensive against capitalist production. That is, it ceases to be an attack against the principal bases of capitalist economy. It becomes, instead, a struggle against commercial capital, especially small and middle-sized commercial capital. It becomes an attack made on the twigs of the capitalist tree.

According to Bernstein, trade unions too, are a means of attack against capitalism in the field of production. We have already shown that trade unions cannot give the workers a determining influence over production. Trade unions can determine neither the dimensions of production nor the technical progress of production.

This much may be said about the purely economic side of the “struggle of the rate of wages against the rate of profit,” as Bernstein labels the activity of the trade union. It does not take place in the blue of the sky. It takes place within the well-defined framework of the law of wages. The law of wages is not shattered but applied by trade-union activity.

According to Bernstein, it is the trade unions that lead – in the general movement for the emancipation of the working class – the real attack against the rate of industrial profit. According to Bernstein, trade unions have the task of transforming the rate of industrial profit into “rates of wages.” The fact is that trade unions are least able to execute an economic offensive against profit. Trade unions are nothing more than the organised defence of labour power against the attacks of profit. They express the resistance offered by the working class to the oppression of capitalist economy.

On the one hand, trade unions have the function of influencing the situation in the labour-power market. But this influence is being constantly overcome by the proletarianisation of the middle layers of our society, a process which continually brings new merchandise on the labour market. The second function of the trade unions is to ameliorate the condition of the workers. That is, they attempt to increase the share of the social wealth going to the working class. This share, however, is being reduced with the fatality of a natural process by the growth of the productivity of labour. One does not need to be a Marxist to notice this. It suffices to read RodbertusIn Explanation of the Social Question.

In other words, the objective conditions of capitalist society transform the two economic functions of the trade unions into a sort of labour of Sisyphus,[2] which is, nevertheless, indispensable. For as a result of the activity of his trade unions, the worker succeeds in obtaining for himself the rate of wages due to him in accordance with the situation of the labour-power market. As a result of trade union activity, the capitalist law of wages is applied and the effect of the depressing tendency of economic development is paralysed, or to be more exact, attenuated.

However, the transformation of the trade union into an instrument for the progressive reduction of profit in favour of wages presupposes the following social conditions; first, the cessation of the proletarianisation of the middle strata of our society; secondly, a stoppage of the growth of productivity of labour. We have in both cases a return to pre-capitalist conditions,

Co-operatives and trade unions are totally incapable of transforming the capitalist mode of production. This is really understood by Bernstein, though in a confused manner. For he refers to co-operatives and trade unions as a means of reducing the profit of the capitalists and thus enriching the workers. In this way, he renounces the struggle against the capitalist mode of production and attempts to direct the socialist movement to struggle against “capitalist distribution.” Again and again, Bernstein refers to socialism as an effort towards a “just, juster and still more just” mode of distribution. (Vorwärts, March 26, 1899).

It cannot be denied that the direct cause leading the popular masses into the socialist movement is precisely the “unjust” mode of distribution characteristic of capitalism. When the Social-Democracy struggles for the socialisation of the entire economy, it aspires therewith also to a “just” distribution of the social wealth. But, guided by Marx’s observation that the mode of distribution of a given epoch is a natural consequence of the mode of production of that epoch, the Social-Democracy does not struggle against distribution in the framework of capitalist production. It struggles instead for the suppression of the capitalist production itself. In a word, the Social-Democracy wants to establish the mode of socialist distribution by suppressing the capitalist mode of production. Bernstein’s method, on the contrary, proposes to combat the capitalist mode of distribution in the hopes of gradually establishing, in this way, the socialist mode of production.

What, in that case, is the basis of Bernstein’s program for the reform of society? Does it find support in definite tendencies of capitalist production? No. In the first place, he denies such tendencies. In the second place, the socialist transformation of production is for him the effect and not the cause of distribution. He cannot give his program a materialist base, because he has already overthrown the aims and the means of the movement for socialism, and therefore its economic conditions. As a result, he is obliged to construct himself an idealist base.

“Why represent socialism as the consequence of economic compulsion?” he complains. “Why degrade man’s understanding, his feeling for justice, his will?” (Vorwärts, March 26, 1899). Bernstein’s superlatively just distribution is to be attained thanks to man’s free will; man’s will acting not because of economic necessity, since this will is only an instrument, but because of man’s comprehension of justice, because of man’s idea of justice.

We thus quite happily return to the principle of justice, to the old war horse on which the reformers of the earth have rocked for ages, for the lack of surer means of historic transportation. We return to the lamentable Rosinate on which the Don Quixotes of history have galloped towards the great reform of the earth, always to come home with their eyes blackened.

The relation of the poor to the rich, taken as a base for socialism, the principle of co-operation as the content of socialism, the “most just distribution” as its aim, and the idea of justice as its only historic legitimisation – with how much more force, more with and more fire did Weitling defend that sort of socialism fifty years ago. However, that genius of a tailor did not know scientific socialism. If today, the conception tore into bits by Marx and Engels a half century ago is patched up and presented to the proletariat as the last world of social science, that too, is the art of a tailor but it has nothing of a genius about it.

Trade unions and co-operatives are the economic support for the theory of revisionism. Its principal political condition is the growth of democracy. The present manifestations of political reaction are to Bernstein only “displacement.” He considers them accidental, momentary, and suggests that they are not to be considered in the elaboration of the general directives of the labour movement.

To Bernstein, democracy is an inevitable stage in the development of society. To him, as to the bourgeois theoreticians of liberalism, democracy is the great fundamental law of historic development, the realisation of which is served by all the forces of political life. However, Bernstein’s thesis is completely false. Presented in this absolute force, it appears as a petty-bourgeois vulgarisation of results of a very short phase of bourgeois development, the last twenty-five or thirty years. We reach entirely different conclusions when we examine the historic development of democracy a little closer and consider, at the same time, the general political history of capitalism.

Democracy has been found in the most dissimilar social formations: in primitive communist groups, in the slave states of antiquity and in medieval communes. And similarly, absolutism and constitutional monarchy are to be found under the most varied economic orders. When capitalism began, with the first production of commodities, it resorted to a democratic constitution in the municipal-communes of the Middle Ages. Later, when it developed to manufacturing, capitalism found its corresponding political form in the absolute monarchy. Finally, as a developed industrial economy, it brought into being in France the democratic republic of 1793, the absolute monarchy of Napoleon I, the nobles’ monarchy of the Restoration period (1850-1830), the bourgeois constitutional monarchy of Louis-Philippe, then again the democratic republic, and against the monarchy of Napoleon III, and finally, for the third time, the Republic.

In Germany, the only truly democratic institution – universal suffrage – is not a conquest won by bourgeois liberalism. Universal suffrage in Germany was an instrument for the fusion of the small States. It is only in this sense that it has any importance for the development of the German bourgeoisie, which is otherwise quite satisfied with semi-feudal constitutional monarchy. In Russia, capitalism prospered for a long time under the regime of oriental absolutism, without having the bourgeoisie manifest the least desire in the world to introduce democracy. In Austria, universal suffrage was above all a safety line thrown to a foundering and decomposing monarchy. In Belgium, the conquest of universal suffrage by the labour movement was undoubtedly due to the weakness of the local militarism, and consequently to the special geographic and political situation of the country. But we have here a “bit of democracy” that has been won not by the bourgeoisie but against it.

The uninterrupted victory of democracy, which to our revisionism as well as to bourgeois liberalism, appears as a great fundamental law of human history and, especially, modern history is shown upon closer examination to be a phantom. No absolute and general relation can be constructed between capitalist development and democracy. The political form of a given country is always the result of the composite of all the existing political factors, domestic as well as foreign. It admits within its limits all variations of the scale from absolute monarchy to the democratic republic.

We must abandon, therefore, all hope of establishing democracy as a general law of historical development even within the framework of modern society. Turning to the present phase of bourgeois society, we observe here, too, political factors which, instead of assuring the realisation of Bernstein’s schema, led rather to the abandonment by bourgeois society of the democratic conquests won up to now.

Democratic institutions – and this is of the greatest significance – have completely exhausted their function as aids in the development of bourgeois society. In so far as they were necessary to bring about the fusion of small States and the creation of large modern States (Germany, Italy), they are no longer indispensable at present. Economic development has meanwhile effected an internal organic cicatrisation.

The same thing can be said concerning the transformation of the entire political and administrative State machinery from feudal or semi-feudal mechanism to capitalist mechanism. While this transformation has been historically inseparable from the development of democracy, it has been realised today to such an extent that the purely democratic “ingredients” of society, such as universal suffrage and the republican State form, may be suppressed without having the administration, the State finances, or the military organisation find it necessary to return to the forms they had before the March Revolution.[3]

If liberalism as such is now absolutely useless to bourgeois society it has become, on the other hand, a direct impediment to capitalism from other standpoints. Two factors dominate completely the political life of contemporary States: world politics and the labour movement. Each is only a different aspect of the present phase of capitalist development.

As a result of the development of the world economy and the aggravation and generalisation of competition on the world market, militarism and the policy of big navies have become, as instruments of world politics, a decisive factor in the interior as well as in the exterior life of the great States. If it is true that world politics and militarism represent a rising tendency in the present phase of capitalism, then bourgeois democracy must logically move in a descending line.

In Germany the era of great armament, began in 1893, and the policy of world politics inaugurated with the seizure of Kiao-Cheou were paid for immediately with the following sacrificial victim: the decomposition of liberalism, the deflation of the Centre Party, which passed from opposition to government. The recent elections to the Reichstag of 1907 unrolling under the sign of the German colonial policy were, at the same time, the historical burial of German liberalism.

If foreign politics push the bourgeoisie into the arms of reaction this is no less true about domestic politics – thanks to the rise of the working class. Bernstein shows that he recognises this when he makes the social-democratic “legend,” which “wants to swallow everything” – in other words, the socialist efforts of the working class – responsible for the desertion of the liberal bourgeoisie. He advises the proletariat to disavow its socialist aim so that the mortally frightened liberals might come out of the mousehole of reaction. Making the suppression of the socialist labour movement an essential condition for the preservation of bourgeois democracy, he proves in a striking manner that this democracy is in complete contradiction with the inner tendency of development of the present society. He proves, at the same time, that the socialist movement is itself a direct product of this tendency.

But he proves, at the same time, still another thing. By making the denouncement of the socialist aim an essential condition of the resurrection of bourgeois democracy, he shows how inexact is the claim that bourgeois democracy is an indispensable condition of the socialist movement and the victory of socialism. Bernstein’s reasoning exhausts itself in a vicious circle. His conclusion swallows his premises.

The solution is quite simple. In view of that fact that bourgeois liberalism has given up its ghost from fear of the growing labour movement and its final aim, we conclude that the socialist labour movement is today the only support for that which is not the goal of the socialist movement – democracy. We must conclude that democracy can have no support. We must conclude that the socialist movement is not bound to bourgeois democracy but that, on the contrary, the fate of democracy is bound up with the socialist movement. We must conclude from this that democracy does not acquire greater chances of survival, as the socialist movement becomes sufficiently strong to struggle against the reactionary consequences of world politics and the bourgeois desertion of democracy. He who would strengthen democracy should want to strengthen and not weaken the socialist movement. He who renounces the struggle for socialism renounces both the labour movement and democracy.

[2] The mythological king of Corinth who was condemned to roll a huge stone to the top of a hill. It constantly rolled back down against making his task incessant.

[3] The German revolution of 1848, which struck an effective blow against the feudal institutions in Germany.

Chapter VI Economic Development and Socialism

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Image: Panorama of the Lujiazui Finance and Trade Zone in Pudong, Shanghai. [Source:]

The greatest conquest of the developing proletarian movement has been the discovery of grounds of support for the realisation of socialism in the economic conditionof capitalist society. As a result of this discovery, socialism was changed from an “ideal” dreamt of by humanity for thousands of years to a thing of historic necessity.

Bernstein denies the existence of the economic conditions for socialism in the society of today. On this count his reasoning has undergone an interesting evolution. At first, in the Neue Zeit, he simply contested the rapidity of the process of concentration taking place in industry. He based his position on a comparison of the occupational statistics of Germany in 1882 and 1895. In order to use these figures for his purpose, he was obliged to proceed in an entirely summary and mechanical fashion. In the most favourable case, he could not, even by demonstrating the persistence of middle-sized enterprises, weaken in any the Marxian analysis because the latter does not suppose as a condition for the realisation of socialism either a definite rate of concentration of industry – that is, a definite delay of the realisation of socialism – or, as we have already shown, the absolute disappearance of small capitals, usually described as the disappearance of the petit bourgeoisie.

In the course of the latest development of his ideas Bernstein furnishes us, in his book, a new assortment of proofs: the statistics of shareholding societies. These statistics are used in order to prove that the number of shareholders increases constantly and as a result the capitalist class does not become smaller but grows bigger. It is surprising that Bernstein has so little acquaintance with his material. And it is astonishing how poorly he utilises the existing data in his own behalf.

If he wanted to disprove the Marxian law of industrial development by referring to the condition of shareholding societies, he should have resorted to entirely different figures. Anybody who is acquainted with the history of shareholding societies in Germany knows that their average foundation capital has diminished almost constantly. Thus while before 1871 their average foundation capital reached the figure of 10.8 million marks, it was only 4.01 million marks in 1871, 3.8 million marks in 1873, less than a million from 1882 to 1887, 0.52 million in 1891 and only 0.62 million in 1892. After this date the figures oscillated around 1 million marks, falling to 1.78 in 1895 and to 1.19 in the course of the first half of 1897. (Van de Borght: Handwörterbuch der Staatsswissenschaften, 1.)

Those are surprising figures. Using them, Bernstein hoped to show the existence of a counter-Marxian tendency for retransformation of large enterprises into small ones. The obvious answer to his attempt is the following. If you are to prove anything at all by means of your statistics, you must first show that they refer to the samebranches of industry. You must not show that small enterprises really replace large ones, that they do not. Instead, they appear only where small enterprises or even artisan industry were the rule before. This, however, you cannot show to be true. The statistical passage of immense shareholding societies to middle-size and small enterprises can be explained only by referring to the fact that the system of shareholding societies continues to penetrate new branches of production. Before, only a small number of large enterprises were organised as shareholding societies. Gradually shareholding organisation has won middle-size and even small enterprises. Today we can observe shareholding societies with a capital of below 1,000 marks.

Now, what is the economic significance of the extension of the system of shareholding societies? Economically, the spread of shareholding societies stands for the growing socialisation of production under the capitalist form – socialisation not only of large but also of middle-size and small production. The extension of shareholding does not, therefore, contradict Marxist theory but on the contrary, confirms it emphatically.

What does the economic phenomenon of a shareholding society actually amount to? It represents, on the one hand, the unification of a number of small fortunes into a large capital of production. It stands, on the other hand, for the separation of production from capitalist ownership. That is, it denotes that a double victory being won over the capitalist mode of production – but still on a capitalist base.

What is the meaning, therefore, of the statistics cited by Bernstein according to which an ever-greater number of shareholders participate in capitalist enterprises? These statistics go on to demonstrate precisely the following: at present a capitalist enterprise does not correspond, as before, to a single proprietor of capital but to a number of capitalists. Consequently, the economic notion of “capitalist” no longer signifies an isolated individual. The industrial capitalist of today is a collective person composed of hundreds and even of thousands of individuals. The category “capitalist” has itself become a social category. It has become “socialised” – within the frame-work of capitalist society.

In that case, how shall we explain Bernstein’s belief that the phenomenon of share-holding societies stands for the dispersion and not the concentration of capital? Why does he see the extension of capitalist property where Marx saw its suppression?

That is a simple economic error. By “capitalist,” Bernstein does not mean a category of production but the right to property. To him, “capitalist” is not an economic unit but a fiscal unit. And “capital” is for him not a factor of production but simply a certain quantity of money. That is why in his English sewing thread trust he does not see the fusion of 12,300 persons with money into a single capitalist unit but 12,300 different capitalists. That is why the engineer Schulze whose wife’s dowry brought him a large number of share from stockholder Mueller is also a capitalist for Bernstein. That is why for Bernstein the entire world seems to swarm with capitalists.

Here too, the theoretic base of his economic error is his “popularisation” of socialism. For this is what he does. By transporting the concept of capitalism from its productive relations to property relations, and by speaking of simple individuals instead of speaking of entrepreneurs, he moves the question of socialism from the domain of production into the domain of relations of fortune – that is, from the relation between Capital and Labour to the relation between poor and rich.

In this manner we are merrily led from Marx and Engels to the author of the Evangel of the Poor Fisherman. There is this difference, however. Weitling, with the sure instinct of the proletarian, saw in the opposition between the poor and the rich, the class antagonisms in their primitive form, and wanted to make of these antagonisms a lever of the movement for socialism. Bernstein, on the other hand, locates the realisation of socialism in the possibility of making the poor rich. That is, he locates it in the attenuation of class antagonisms and therefore in the petty bourgeoisie.

True, Bernstein does not limit himself to the statistics of incomes. He furnishes statistics of economic enterprises, especially those of the following countries: Germany, France, England, Switzerland, Austria and the United States. But these statistics are not the comparative figures of different periods in each country but of each period in different countries. We are not therefore offered (with the exception of Germany where he repeats the old contrast between 1895 and 1892), a comparison of the statistics of enterprises of a given country at different epochs but the absolute figures for different countries: England in 1891, France in 1894, United States in 1890, etc.

He reaches the following conclusion: “Though it is true that large exploitation is already supreme in industry today, it nevertheless, represents, including the enterprises dependent on large exploitation, even in a country as developed in Prussia, only half of the population occupied in production.” This is also true about Germany, England, Belgium, etc.

What does he actually prove here? He proves not the existence of such or such a tendency of economic development but merely the absolute relation of forcesof different forms of enterprise, or put in other words, the absolute relations of the various classes in our society.

Now if one wants to prove in this manner the impossibility of realising socialism one’s reasoning must rest on the theory according to which the result of social efforts is decided by the relation of the numerical material forces of the elements in the struggle, that is, by the factor of violence. In other words, Bernstein, who always thunders against Blanquism [See: Louis Blanqui], himself falls into the grossest Blanquist error. There is this difference, however. To the Blanquists, who represented a socialist and revolutionary tendency, the possibility of the economic realisation of socialism appeared quite natural. On this possibility they built the chances of a violent revolution – even by a small minority. Bernstein, on the contrary, infers from the numerical insufficiency of a socialist majority, the impossibility of the economic realisation of socialism. The Social-Democracy does not, however, expect to attain its aim either as a result of the victorious violence of a minority or through the numerical superiority of a majority. It sees socialism come as a result of economic necessity – and the comprehension of that necessity – leading to the suppression of capitalism by the working masses. And this necessity manifests itself above all in the anarchy of capitalism.

What is Bernstein’s position on the decisive question of anarchy in capitalist economy? He denies only the great general crises. He does not deny partial and national crises. In other words, he refuses to see a great deal of the anarchy of capitalism; he sees only a little of it. He is – to use Marx’s illustration – like the foolish virgin who had a child “who was only very small.” But the misfortune is that in matters like economic anarchy little and much are equally bad. If Bernstein recognises the existence of a little of this anarchy, we may point out to him that by the mechanism of the market economy this bit of anarchy will be extended to unheard of proportions, to end in collapse. But if Bernstein hopes to transform gradually his bit of anarchy into order and harmony while maintaining the system of commodity production, he again falls into one of the fundamental errors of bourgeois political economy according to which the mode of exchange is independent of the mode of production.

This is not the place for a lengthy demonstration of Bernstein’s surprising confusion concerning the most elementary principles of political economy. But there is one point – to which we are led by the fundamental questions of capitalist anarchy – that must be clarified immediately.

Bernstein declares that Marx’s law of surplus value is a simple abstraction. In political economy a statement of this sort obviously constitutes an insult. But if surplus value is only a simple abstraction, if it is only a figment of the mind – then every normal citizen who has done military duty and pays his taxes on time has the same right as Karl Marx to fashion his individual absurdity, to make his own law of value. “Marx has as much right to neglect the qualities of commodities till they are no more than the incarnation of quantities of simple human labour as have the economists of the Böhm-Jevons school to make an abstraction of all the qualities of commodities outside of their utility.”

That is, to Bernstein, Marx’s social labour and Menger’s abstract utility are quite similar – pure abstractions. Bernstein forgets completely that Marx’s abstraction is not an invention. It is a discovery. It does not exist in Marx’s head but in market economy. It has not an imaginary existence, but a real social existence, so real that it can be cut, hammered, weighed and put in the form of the money. The abstract human labour discovered by Marx is, in its developed form, no other than money. That is precisely one of the greatest of Marx’s discoveries, while to all bourgeois political economists, from the first of the mercantilists to the last of the classicists, the essence of money has remained a mystic enigma.

The Boehm-Jevons abstract utility is, in fact, a conceit of the mind. Or stated more correctly, it is a representation of intellectual emptiness, a private absurdity, for which neither capitalism nor any other society can be made responsible, but only vulgar bourgeois economy itself. Hugging their brain-child, Bernstein, Böhm and Jevons, and the entire subjective fraternity, can remain twenty years or more before the mystery of money, without arriving at a solution that is different from the one reached by any cobbler, namely that money is also a “useful” thing.

Bernstein has lost all comprehension of Marx’s law of value. Anybody with a small understanding of Marxian economics can see that without the law of value, Marx’s doctrine is incomprehensible. Or to speak more concretely – for him who does not understand the nature of the commodity and its exchange the entire economy of capitalism, with all its concatenations, must of necessity remain an enigma.

What precisely was the key which enabled Marx to open the door to the secrets of capitalist phenomena and solve, as if in play, problems that were not even suspected by the greatest minds of classic bourgeois economy? It was his conception of capitalist economy as an historic phenomenon – not merely in the sense recognised in the best of cases by the classic economists, that is, when it concerns the feudal past of capitalism – but also in so far as it concerns the socialist future of the world. The secret of Marx’s theory of value, of his analysis of the problem of money, of his theory of capital, of the theory of the rate of profit and consequently of the entire existing economic system is found in the transitory character of capitalist economy, the inevitability of its collapse leading – and this is only another aspect of the same phenomenon – to socialism. It is only because Marx looked at capitalism from the socialist’s viewpoint, that is from the historic viewpoint, that he was enabled to decipher the hieroglyphics of capitalist economy. And it is precisely because he took the socialist viewpoint as a point of departure for his analysis of bourgeois society that he was in the position to give a scientific base to the socialist movement.

This is the measure by which we evaluate Bernstein’s remarks. He complains of the “dualism” found everywhere in Marx’s monumental Capital. “The work wishes to be a scientific study and prove, at the same time, a thesis that was completely elaborated a long time before the editing of the book; it is based on a schema that already contains the result to which he wants to lead. The return to the Communist Manifesto (that is the socialist goal! – R.L.), proves the existence of vestiges of utopianism in Marx’s doctrine.”

But what is Marx’s “dualism” if not the dualism of the socialist future and the capitalist present? It is the dualism of Capitalism and Labour, the dualism of the bourgeoisie and the proletariat. It is the scientific reflection of the dualism existing in bourgeois society, the dualism of the class antagonism writhing inside the social order of capitalism.

Bernstein’s recognition of this theoretic dualism in Marx as “a survival of utopianism” is really his naïve avowal that he denies the class antagonisms in capitalism. It is his confession that socialism has become for him only a “survival of utopianism.” What is Bernstein’s “monism” – Bernstein’s unity – but the eternal unity of the capitalist regime, the unity of the former socialist who has renounced his aim and has decided to find in bourgeois society, one and immutable, the goal of human development?

Bernstein does not see in the economic structure of capitalism the development that leads to socialism. But in order to conserve his socialist program, at least in form, he is obliged to take refuge in an idealist construction placed outside of all economic development. He is obliged to transform socialism itself from a definite historical phase of social development into an abstract “principle.”

That is why the “co-operative principle” – the meagre decantation of socialism by which Bernstein wishes to garnish capitalist economy – appears as a concession made not to the socialist future of society but to Bernstein’s own socialist past.

Chapter V The Consequences of Social Reformism and General Nature of Reformism

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Image: Capitalism is NOT Working. [Source:]

In the first chapter we aimed to show that Bernstein’s theory lifted the program of the socialist movement off its material base and tried to place it on an idealist base. How does this theory fare when translated into practice?

Upon the first comparison, the party practice resulting from Bernstein’s theory does not seem to differ from the practice followed by the Social Democracy up to now. Formerly, the activity of the Social-Democratic Party consisted of trade union work, of agitation for social reforms and the democratisation of existing political institutions. The difference is not in the what, but in the how.

At present, the trade union struggle and parliamentary practice are considered to be the means of guiding and educating the proletariat in preparation for the task of taking over power. From the revisionist standpoint, this conquest of power is at the same time impossible or useless. And therefore, trade union and parliamentary activity are to be carried on by the party only for their immediate results, that is, for the purpose of bettering the present situation of the workers, for the gradual reduction of capitalist exploitation, for the extension of social control.

So that if we don not consider momentarily the immediate amelioration of the workers’ condition – an objective common to our party program as well as to revisionism – the difference between the two outlooks is, in brief, the following. According to the present conception of the party, trade-union and parliamentary activity are important for the socialist movement because such activity prepares the proletariat, that is to say, creates the subjective factor of the socialist transformation, for the task of realising socialism. But according to Bernstein, trade-unions and parliamentary activity gradually reduce capitalist exploitation itself. They remove from capitalist society its capitalist character. They realise objectively the desired social change.

Examining the matter closely, we see that the two conceptions are diametrically opposed. Viewing the situation from the current standpoint of our party, we say that as a result of its trade union and parliamentary struggles, the proletariat becomes convinced, of the impossibility of accomplishing a fundamental social change through such activity and arrives at the understanding that the conquest of power is unavoidable. Bernstein’s theory, however, begins by declaring that this conquest is impossible. It concludes by affirming that socialism can only be introduced as a result of the trade-union struggle and parliamentary activity. For as seen by Bernstein, trade union and parliamentary action has a socialist character because it exercises a progressively socialising influence on capitalist economy.

We tried to show that this influence is purely imaginary. The relations between capitalist property and the capitalist State develop in entirely opposite directions, so that the daily practical activity of the present Social Democracy loses, in the last analysis, all connection with work for socialism. From the viewpoint of a movement for socialism, the trade-union struggle and our parliamentary practice are vastly important in so far as they make socialistic the awareness, the consciousness, of the proletariat and help to organise it as a class. But once they are considered as instruments of the direct socialisation of capitalist economy, they lose out not only their usual effectiveness but also cease being means of preparing the working class for the conquest of power. Eduard Bernstein and Konrad Schmidt suffer from a complete misunderstanding when they console themselves with the belief that even though the program of the party is reduced to work for social reforms and ordinary trade-union work, the final objective of the labour movement is not thereby discarded, for each forward step reaches beyond the given immediate aim and the socialist goal is implied as a tendency in the supposed advance.

That is certainly true about the present procedure of the German Social Democracy. It is true whenever a firm and conscious effort for conquest of political power impregnates the trade-union struggle and the work for social reforms. But if this effort is separated from the movement itself and social reforms are made an end in themselves, then such activity not only does not lead to the final goal of socialism but moves in a precisely opposite direction.

Konrad Schmidt simply falls back on the idea that an apparently mechanical movement, once started, cannot stop by itself, because “one’s appetite grows with the eating,” and the working class will not supposedly content itself with reforms till the final socialist transformation is realised.

Now the last mentioned condition is quite real. Its effectiveness is guaranteed by the very insufficiency of capitalist reforms. But the conclusion drawn from it could only be true if it were possible to construct an unbroken chain of augmented reforms leading from the capitalism of today to socialism. This is, of course, sheer fantasy. In accordance with the nature of things as they are the chain breaks quickly, and the paths that the supposed forward movement can take from the point on are many and varied.

What will be the immediate result should our party change its general procedure to suit a viewpoint that wants to emphasise the practical results of our struggle, that is social reforms? As soon as “immediate results” become the principal aim of our activity, the clear-cut, irreconcilable point of view, which has meaning only in so far as it proposes to win power, will be found more and more inconvenient. The direct consequence of this will be the adoption by the party of a “policy of compensation,” a policy of political trading, and an attitude of diffident, diplomatic conciliation. But this attitude cannot be continued for a long time. Since the social reforms can only offer an empty promise, the logical consequence of such a program must necessarily be disillusionment.

It is not true that socialism will arise automatically from the daily struggle of the working class. Socialism will be the consequence of (1), the growing contradictions of capitalist economy and (2), of the comprehension by the working class of the unavoidability of the suppression of these contradictions through a social transformation. When, in the manner of revisionism, the first condition is denied and the second rejected, the labour movement finds itself reduced to a simple co-operative and reformist movement. We move here in a straight line toward the total abandonment of the class viewpoint.

This consequence also becomes evident when we investigate the general character of revisionism. It is obvious that revisionism does not wish to concede that its standpoint is that of the capitalist apologist. It does not join the bourgeois economists in denying the existence of the contradictions of capitalism. But, on the other hand, what precisely constitutes the fundamental point of revisionism and distinguishes it from the attitude taken by the Social Democracy up to now, is that it does not base its theory on the belief that the contradictions of capitalism will be suppressed as a result of the logical inner development of the present economic system.

We may say that the theory of revisionism occupies an intermediate place between two extremes. Revisionism does not expect to see the contradictions of capitalism mature. It does not propose to suppress these contradictions through a revolutionary transformation. It wants to lessen, to attenuate, the capitalist contradictions. So that the antagonism existing between production and exchange is to be mollified by the cessation of crises and the formation of capitalist combines. The antagonism between Capital and Labour is to be adjusted by bettering the situation of the workers and by the conservation of the middle classes. And the contradiction between the class State and society is to be liquidated through increased State control and the progress of democracy.

It is true that the present procedure of the Social Democracy does not consist in waiting for the antagonisms of capitalism to develop and in passing on, only then, to the task of suppressing them. On the contrary, the essence of revolutionary procedure is to be guided by the direction of this development, once it is ascertained, and inferring from this direction what consequences are necessary for the political struggle. Thus the Social Democracy has combated tariff wars and militarism without waiting for their reactionary character to become fully evident. Bernstein’s procedure is not guided by a consideration of the development of capitalism, by the prospect of the aggravation of its contradictions. It is guided by the prospect of the attenuation of these contradictions. He shows this when he speaks of the “adaptation” of capitalist economy.

Now when can such a conception be correct? If it is true that capitalism will continue to develop in the direction it takes at present, then its contradictions must necessarily become sharper and more aggravated instead of disappearing. The possibility of the attenuation of the contradictions of capitalism presupposes that the capitalist mode of production itself will stop its progress. In short, the general condition of Bernstein’s theory is the cessation of capitalist development.

This way, however, his theory condemns itself in a twofold manner.

In the first place, it manifests its utopian character in its stand on the establishment of socialism. For it is clear that a defective capitalist development cannot lead to a socialist transformation.

In the second place, Bernstein’s theory reveals its reactionary character when it refers to the rapid capitalist development that is taking place at present. Given the development of real capitalism, how can we explain, or rather state, Bernstein’s position?

We have demonstrated in the first chapter the baselessness of the economic conditions on which Bernstein builds his analysis of existing social relationships. We have seen that neither the credit system nor cartels can be said to be “means of adaptation” of capitalist economy. We have seen that not even the temporary cessation of crises nor the survival of the middle class can be regarded as symptoms of capitalist adaptation. But even though we should fail to take into account the erroneous character of all these details of Bernstein’s theory we cannot help but be stopped short by one feature common to all of them. Bernstein’s theory does not seize these manifestations of contemporary economic life as they appear in their organic relationship with the whole of capitalist development, with the complete economic mechanism of capitalism. His theory pulls these details out of their living economic context. It treats them as disjecta membra (separate parts) of a lifeless machine.

Consider, for example, his conception of the adaptive effect of credit. If we recognise credit as a higher natural stage of the process of exchange and, therefore, of the contradictions inherent in capitalist exchange, we cannot at the same time see it as a mechanical means of adaptation existing outside of the process of exchange. It would be just as impossible to consider money, merchandise, and capital as “means of adaptation” of capitalism.

However, credit, like money, commodities and capital, is an organic link of capitalist economy at a certain stage of its development. Like them, it is an indispensable gear in the mechanism of capitalist economy, and at the same time, an instrument of destruction, since it aggravates the internal contradictions of capitalism.

The same thing is true about cartels and the new, perfected means of communication.

The same mechanical view is presented by Bernstein’s attempt to describe the promise of the cessation of crises as a symptom of the “adaptation” of capitalist economy. For him, crises are simply derangements of the economic mechanism. With their cessation, he thinks, the mechanism could function well. But the fact is that crises are not “derangements” in the usual sense of the word. They are “derangements” without which capitalist economy could not develop at all. For if crises constitute the only method possible in capitalism – and therefore the normal method – of solving periodically the conflict existing between the unlimited extension of production and the narrow limits of the world market, then crises are an organic manifestation inseparable from capitalist economy.

In the “unhindered” advance of capitalist production lurks a threat to capitalism that is much greater than crises. It is the threat of the constant fall of the rate of profit, resulting not only from the contradiction between production and exchange, but from the growth of the productivity of labour itself. The fall in the rate of profit has the extremely dangerous tendency of rendering impossible any enterprise for small and middle-sized capitals. It thus limits the new formation and therefore the extension of placements of capital.

And it is precisely crises that constitute the other consequence of the same process. As a result of their periodic depreciation of capital, crises bring a fall in the prices of means of production, a paralysis of a part of the active capital, and in time the increase of profits. They thus create the possibilities of the renewed advance of production. Crises therefore appear to be the instruments of rekindling the fire of capitalist development. Their cessation – not temporary cessation, but their total disappearance in the world market – would not lead to the further development of capitalist economy. It would destroy capitalism.

True to the mechanical view of his theory of adaptation, Bernstein forgets the necessity of crises as well as the necessity of new placements of small and middle-sized capitals. And that is why the constant reappearance of small capital seems to him to be the sign of the cessation of capitalist development though it is, in fact, a symptom of normal capitalist development.

It is important to note that there is a viewpoint from which all the above-mentioned phenomena are seen exactly as they have been presented by the theory of “adaptation.” It is the viewpoint of the isolated (single) capitalist who reflects in his mind the economic facts around him just as they appear when refracted by the laws of competition. The isolated capitalist sees each organic part of the whole of our economy as an independent entity. He sees them as they act on him, the single capitalist. He therefore considers these facts to be simple “derangements” of simple “means of adaptation.” For the isolated capitalist, it is true, crises are really simple derangements; the cessation of crises accords him a longer existence. As far as he is concerned, credit is only a means of “adapting” his insufficient productive forces to the needs of the market. And it seems to him that the cartel of which he becomes a member really suppresses industrial anarchy.

Revisionism is nothing else than a theoretic generalisation made from the angle of the isolated capitalist. Where does this viewpoint belong theoretically if not in vulgar bourgeois economics?

All the errors of this school rest precisely on the conception that mistakes the phenomena of competition, as seen from the angle of the isolated capitalist, for the phenomena of the whole of capitalist economy. Just as Bernstein considers credit to be a means of “adaptation,” to the needs of exchange. Vulgar economy, too, tries to find the antidote against the ills of capitalism in the phenomena of capitalism. Like Bernstein, it believes that it is possible to regulate capitalist economy. And in the manner of Bernstein, it arrives in time at the desire to palliate the contradictions of capitalism, that is, at the belief in the possibility of patching up the sores of capitalism. It ends up by subscribing to a program of reaction. It ends up in an utopia.

The theory of revisionism can therefore be defined in the following way. It is a theory of standing still in the socialist movement built, with the aid of vulgar economy, on a theory of capitalist standstill.

Chapter IV Capitalism and the State

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Image: State Capitalism: How It Works. [Source:]

The second condition of the gradual realisation of socialism is according to Bernstein, the evolution of the State in society. It has become a commonplace to say that the present State is a class State. This, too, like referring to capitalist society, should not be understood in a rigorous absolute manner, but dialectically.

The State became capitalist with the political victory of the bourgeoisie. Capitalist development modifies essentially the nature of the State, widening its sphere of action, constantly imposing on it new functions (especially those affecting economic life), making more and more necessary its intervention and control in society. In this sense, capitalist development prepares little by little the future fusion of the State to society. It prepares, so to say, the return of the function of the state to society. Following this line of thought, one can speak of an evolution of the capitalist State into society, and it is undoubtedly what Marx had in mind when he referred to labour legislation as the first conscious intervention of “society” in the vital social process, a phrase upon which Bernstein leans heavily.

But on the other hand the same capitalist development realises another transformation in the nature of the State. The present State is, first of all, an organisation of the ruling class. It assumes functions favouring social developments specifically because, and in the measure that, these interests and social developments coincide, in a general fashion, with the interests of the dominant class. Labour legislation is enacted as much in the immediate interest of the capitalist class as in the interest of society in general. But this harmony endures only up to a certain point of capitalist development. When capitalist development has reached a certain level, the interests of the bourgeoisie, as a class, and the needs of economic progress begin to clash even in the capitalist sense. We believe that this phase has already begun. It shows itself in two extremely important phenomena of contemporary social life: on the one hand, the policy of tariff barriers, and on the other, militarism. These two phenomena have played an indispensable, and in that sense a progressive and revolutionary role in the history of capitalism. Without tariff protection the development of large industry would have been impossible in several countries. But now the situation is different.

At present, protection does not serve so much to develop young industry as to maintain artificially certain aged forms of production.

From the angle of capitalist development, that is, from the point of view of world economy, it matters little whether Germany exports more merchandise into England or England exports more merchandise into Germany. From the viewpoint of this development it may be said that the blackamoor has done his work and it is time for him to go his way. Given the condition of reciprocal dependence in which the various branches of industry find themselves, a protectionist tariff on any commodity necessarily results in raising the cost of production of other commodities inside the country. It therefore impedes industrial development. But this is not so from the viewpoint of the interests of the capitalist class. While industry does not need tariff barriers for its development, the entrepreneurs need tariffs to protect their markets. This signifies that at present tariffs no longer serve as a means of protecting a developing capitalist section against a more advanced section. They are now the arm used by one national group of capitalists against another group. Furthermore, tariffs are no longer necessary as an instrument of protection for industry in its movement to create and conquer the home market. They are now indispensable means for the cartelisation of industry, that is, means used in the struggle of capitalist producers against consuming society in the aggregate. What brings out in an emphatic manner the specific character of contemporary customs policies is the fact that today not industry, but agriculture plays the predominant role in the making of tariffs. The policy of customs protection has become a tool for converting and expressing the feudal interests in capitalist form.

The same change has taken place in militarism. If we consider history as it was – not as it could have been or should have been – we must agree that war has been an indispensable feature of capitalist development. The United States, Germany, Italy, the Balkan States, Poland, all owe the condition or the rise of their capitalist development to wars, whether resulting in victory or defeat. As long as there were countries marked by internal political division or economic isolation which had to be destroyed, militarism played a revolutionary role, considered from the viewpoint of capitalism. But at present the situation is different. If world politics have become the stage of menacing conflicts, it is not so much a question of the opening of new countries to capitalism. It is a question of already existing European antagonisms, which, transported into other lands, have exploded there. The armed opponents we see today in Europe and on other continents do not range themselves as capitalist countries on one side and backward countries on the other. They are States pushed to war especially as a result of their similarly advanced capitalist development. In view of this, an explosion is certain to be fatal to this development, in the sense that it must provoke an extremely profound disturbance and transformation of economic life in all countries.

However, the matter appears entirely different when considered from the standpoint of the capitalist class. For the latter militarism has become indispensable. First, as a means of struggle for the defence of “national” interests in competition against other “national” groups. Second, as a method of placement for financial and industrial capital. Third, as an instrument of class domination over the labouring population inside the country. In themselves, these interests have nothing in common with the development of the capitalist mode of production. What demonstrates best the specific character of present day militarism is the fact that it develops generally in all countries as an effect, so to speak, of its own internal, mechanical, motive power, a phenomenon that was completely unknown several decades ago. We recognise this in the fatal character of the impending explosion which is inevitable in spite of the complete impending explosion which is inevitable in spite of the complete indecisiveness of the objectives and motives of the conflict. From a motor of capitalist development militarism has changed into a capitalist malady.

In the clash between capitalist development and the interest of the dominant class, the State takes a position alongside of the latter. Its policy, like that of the bourgeoisie, comes into conflict with social development. It thus loses more and more of its character as a representative of the whole of society and is transformed, at the same rate into a pure class state. Or, to speak more exactly, these two qualities distinguish themselves more from each other and find themselves in a contradictory relation in the very nature of the State. This contradiction becomes progressively sharper. For on one hand, we have the growth of the functions of a general interest on the part of the State, its intervention in social life, its “control” over society. But on the other hand, its class character obliges the State to move the pivot of its activity and its means of coercion more and more into domains which are useful only to the class character of the bourgeoisie and have for society as a whole only a negative importance, as in the case of militarism and tariff and colonial policies. Moreover, the “social control” exercised by this State is at the same time penetrated with and dominated by its class character (see how labour legislation is applied in all countries).

The extension of democracy, which Bernstein sees as a means of realising socialism by degrees, does not contradict but, on the contrary, corresponds perfectly to the transformation realised in the nature of the State.

Konrad Schmidt declares that the conquest of a social-democratic majority in Parliament leads directly to the gradual “socialisation” of society. Now, the democratic forms of political life are without a question a phenomenon expressing clearly the evolution of the State in society. They constitute, to that extent, a move toward a socialist transformation. But the conflict within the capitalist State, described above, manifests itself even more emphatically in modern parliamentarism. Indeed, in accordance with its form, parliamentarism serves to express, within the organisation of the State, the interests of the whole society. But what parliamentarism expresses here is capitalist society, that is to say, a society in which capitalist interests predominate. In this society, the representative institutions, democratic in form, are in content the instruments of the interests of the ruling class. This manifests itself in a tangible fashion in the fact that as soon as democracy shows the tendency to negate its class character and become transformed into an instrument of the real interests of the population, the democratic forms are sacrificed by the bourgeoisie, and by its State representatives. That is why the idea of the conquest of a parliamentary reformist majority is a calculation which, entirely in the spirit of bourgeois liberalism, pre-occupies itself only with one side – the formal side – of democracy, but does not take into account the other side, its real content. All in all, parliamentarism is not a directly socialist element impregnating gradually the whole capitalist society. It is, on the contrary, a specific form of the bourgeois class State, helping to ripen and develop the existing antagonisms of capitalism.

In the light of the history of the objective development of the State, Bernstein’s and Konrad Schmidt’s belief that increased “social control” results in the direct introduction of socialism is transformed into a formula that finds itself from day to day in greater contradiction with reality.

The theory of the gradual introduction of socialism proposes progressive reform of capitalist property and the capitalist State in the direction of socialism. But in consequence of the objective laws of existing society, one and the other develop in a precisely opposite direction. The process of production is increasingly socialised, and State intervention, the control of the State over the process of production, is extended. But at the same time, private property becomes more and more the form of open capitalist exploitation of the labour of others, and State control is penetrated with the exclusive interests of the ruling class. The State, that is to say the politicalorganisation of capitalism, and the property relations, that is to say the juridical organisation of capitalism, become more capitalist and not more socialist, opposing to the theory of the progressive introduction of socialism two insurmountable difficulties.

Fourier’s scheme of changing, by means of a system of phalansteries, the water of all the seas into tasty lemonade was surely a fantastic idea. But Bernstein, proposing to change the sea of capitalist bitterness into a sea of socialist sweetness, by progressively pouring into it bottles of social reformist lemonade, presents an idea that is merely more insipid but no less fantastic.

The production relations of capitalist society approach more and more the production relations of socialist society. But on the other hand, its political and juridical relations established between capitalist society and socialist society a steadily rising wall. This wall is not overthrown, but is on the contrary strengthened and consolidated by the development of social reforms and the course of democracy. Only the hammer blow of revolution, that is to day, the conquest of political power by the proletariat can break down this wall.