Socialism: A Summary and Interpretation of Socialist Principles Part 8

We must also distinguish between the concentration of industry and the concentration of wealth. While there is a natural relation between these two phenomena, they are by no means identical. The trustification of a given industry may bring together a score of industrial units in one gigantic concern, so concentrating capital and production, but it is conceivable that every one of the owners of the units which compose the trust may have a share in it equal to the capital value of his particular unit, but more profitable. In that case, there can obviously be no concentration of wealth. What occurs is that all are benefited by certain economies, in exact proportion to their holdings in the capital stock. It may even happen that a larger number of persons partic.i.p.ate, as shareholders, in the amalgamation than were formerly concerned in the ownership of the units of which the amalgamation is composed. a.s.suming, for the purposes of our argument, that these persons are represented by new capital, that the former owners of independent units share upon an equitable basis, there will be increased diffusion of wealth instead of its concentration. As Professor Ely says, "If the stock of the United States Steel Corporation were owned by individuals holding one share each, the concentration in industry would be just as great as it is now, but there would be a wide diffusion in the ownership of the wealth of the corporation."[106]

Obvious as this distinction may seem, it is very often lost sight of, and when recognized it presents difficulties which are almost insurmountable. It is well-nigh impossible to present statistically the relation of the concentration of capital to the concentration or diffusion of wealth, important as the point is in its bearings upon modern Socialist theory. While the distinction does not affect the argument that the concentration of capital and industry makes their socialization possible, it is nevertheless an important matter. If, as some writers, notably Bernstein,[107] the Socialist, have argued, the concentration of capital and industry really leads to the decentralization of wealth, and the diffusion of the advantages of concentration among the great ma.s.s of the people, especially by creating a new cla.s.s of salaried dependents, then, instead of creating a cla.s.s of exploiters ever becoming less numerous, and a cla.s.s of proletarians ever becoming more numerous, the tendency of modern capitalism is to distribute the gains of industry over a widening area--a process of democratization in fact. It is very evident that if this contention is a correct one, there must be a softening rather than an intensifying of cla.s.s antagonisms; a tendency away from cla.s.s divisions, and to greater satisfaction with present conditions, rather than increasing discontent.

If this theory can be sustained, the advocates of Socialism will be obliged to change the nature of their propaganda from an appeal to the economic interest of the proletariat to the general ethical sense of mankind. There can be no successful movement based upon the interests of one cla.s.s if the tendency of modern capitalism is to democratize the life of the world and diffuse its wealth over larger social areas than ever before.

The exponents of this theory have based their arguments upon statistical data chiefly relating to: (1) The number of taxable incomes in countries where incomes are taxed; (2) the number of investors in industrial and commercial countries; (3) the number of savings bank deposits. As often happens when reliance is placed upon the direct statistical method, the result of all the discussion and controversy upon this subject is extremely disappointing and confusing. The same figures are used to support both sides of the argument with equal plausibility. The difficulty lies in the fact that the available statistics do not include all the facts essential to a scientific and conclusive result.

It is not intended here to add to the Babel of voices in this discussion, but to present the conclusions of two or three of the most careful investigators in this field. Professor Ely[108] quotes a table of incomes in the Grand Duchy of Baden, based upon the income tax returns of that country, which has formed the theme of much dispute. The table shows that in the two years, 1886 and 1896, less than one per cent of the incomes a.s.sessed were over 10,000 marks a year, and from this fact it has been argued that wealth in that country has not been concentrated to any very great extent. In like manner, the French economist, Leroy-Beaulieu, has argued that the fact that in 1896 only 2750 persons in Paris had incomes of over 100,000 francs a year betokens a wide diffusion of wealth and an absence of concentration.[109] But the important point of the discussion, the _proportion of the total wealth owned by these cla.s.ses_, is entirely lost sight of by those who argue in this manner. Further, it must always be borne in mind that there is a decided tendency in all income tax schedules to understate the amount of incomes above a certain size, the larger the income the more likelihood of its being understated in the returns. The psychology of this fact needs no elaborate demonstration. Taking the figures for the Grand Duchy of Baden as they are given, we have no particulars at all concerning the number of incomes under 500 marks, but of the persons a.s.sessed upon incomes of 500 marks and over, in 1886, the poorest two thirds had about one third of the total income, and the richest 0.69 per cent had 12.78 per cent of the total income. So far, the figures show a much greater concentration of wealth than appears from the simple fact that less than one per cent of the incomes a.s.sessed were over 10,000 marks a year.

Going further, we compare the two years, 1886 and 1896, and find that this concentration increased during the ten-year period as follows: In 1886, there were 2212 incomes of more than 10,000 marks a.s.sessed, being 0.69 per cent of the total number. In 1896, there were 3099 incomes of more than 10,000 marks a.s.sessed, being 0.78 per cent of the total number. In 1886, 0.69 per cent of the incomes a.s.sessed amounted to 51,403,000 marks, representing 12.77 per cent of the total a.s.sessed wealth; while in 1896, 0.78 per cent of the incomes a.s.sessed amounted to 81,986,000 marks, representing 15.02 per cent of the total wealth so a.s.sessed. In 1886 there were 18 incomes of over 200,000 marks a year, aggregating 6,864,000 marks, 1.70 per cent of the total value of all incomes a.s.sessed; in 1896, there were 28 such incomes, aggregating 12,481,000 marks, or 2.29 per cent of the total value of all incomes a.s.sessed. The increase of concentration shown by these figures is not disputable, it seems to the present writer, when they are thus carefully a.n.a.lyzed, notwithstanding the fact that the table from which they are drawn is sometimes used to support the opposite contention.

According to the late Professor Richmond Mayo-Smith,[110] seventy per cent of the population of Prussia have incomes below the income tax standard, their total income representing only one third of the total income of the population. An additional one fourth of the population enjoys one third of the total income, while the remaining one third goes to about four per cent of the people. The significance of these figures is clearly shown by the following diagram:--

[Ill.u.s.tration:

DIAGRAM

SHOWING THE DISTRIBUTION OF INCOME BY CLa.s.sES IN PRUSSIA]

In Saxony the statistics show that "two thirds of the population possess less than one third of the income, and that 3.5 per cent of the upper incomes receive more than 66 per cent at the lower end." From a table prepared by Sir Robert Giffen, a notoriously optimistic statistician, always the exponent of an ultra-roseate view of social conditions, Professor Mayo-Smith concludes that in England, "about ten per cent of the people receive nearly one half of the total income."[111] These figures are rather out of date, it is true, but they err in understating the amount of concentration rather than otherwise, as the researches of Mr. Chiozza Money, M.P., and others show.[112]

In this country, the absence of income tax figures makes it impossible to get direct statistical evidence as to the distribution of incomes.

The most careful estimate of the distribution of wealth in the United States yet made is that by the late Dr. Charles B. Spahr.[113] Written in 1895, Dr. Spahr's book cannot be regarded as an accurate presentation of conditions as they exist at the present moment, yet here again there is every reason to believe that the process of concentration has gone on unchecked since he wrote. It is not necessary for our present purpose, however, to accept the estimate of Dr. Spahr as authoritative and conclusive. The figures are quoted here simply as the result reached by the most patient, conscientious, and scientific examination of the distribution of wealth in this country yet made. Dr. Spahr's conclusion was that in 1895 less than one half of the families in the United States were property-less; but that, nevertheless, seven eighths of the families owned only one eighth of the national wealth, while one per cent of the families owned more than the remaining ninety-nine per cent.

Mr. Lucien Sanial, in a most careful a.n.a.lysis of the census for 1900, shows that, cla.s.sified according to occupations, 250,251 persons possessed $67,000,000,000, out of a total of $95,000,000,000 given as the national wealth; that is to say, 0.9 per cent of the total number in all occupations owned 70.5 per cent of the total national wealth. The middle cla.s.s, consisting of 8,429,845 persons, being 29.0 per cent of the total number in all occupations, owned $24,000,000,000, or 25.3 per cent of the total national wealth. The lowest cla.s.s, the proletariat, consisting of 20,393,137 persons, being 70.1 per cent of the total number in all occupations, owned but $4,000,000,000, or 4.2 per cent of the total wealth. To recapitulate: Of the 29,073,233 persons ten years old and over engaged in occupations,

0.9 per cent own 70.5 per cent of total wealth.

29.0 per cent own 25.3 per cent of total wealth.

70.1 per cent own 4.2 per cent of total wealth.

Startling as these figures are, it will be evident upon reflection that they do not adequately represent the amount of wealth concentration. The occupational basis is not quite satisfactory as applied to the richest cla.s.s. It serves for the proletarian cla.s.s, of course, and for a very large part of the middle cla.s.s. In these cla.s.ses, as a rule, the _occupied_ persons represent wealth ownership. But this is by no means true of the richest cla.s.s. In this cla.s.s we have a very considerable proportion of the wealth owned by _unoccupied_ persons, such as the wives rich in their own right, children and other unoccupied members of families rich by inheritance. Mr. Henry Laurens Call, in a paper read before the American a.s.sociation for the Advancement of Science, at Columbia University, at the end of 1906, made these figures the basis of the startling estimate that one per cent of our population own not less than ninety per cent of our total wealth.

There is a peculiarity of modern capitalism which enables the great capitalists to control vastly more wealth than they own. Take any group of large capitalists, and it will be found that they _control_ a much greater volume of capital than they _own_. The invested capital of a mult.i.tude of small investors is in their keeping, and they can and do use it for purposes of their own. Thus we have a concentration of capitalist control which goes far beyond the concentration of ownership.

And this concentration of the essential control of the capital of a country becomes more and more important each year. It is recognized to-day that the most important capitalist is not he who himself owns the greatest amount of capital, but he who controls the greatest amount, quite irrespective of its ownership.

The growth of immense private fortunes is an indisputable evidence of the concentration of wealth. In 1854 there were not more than twenty-five millionaires in New York City, their total fortunes aggregating $43,000,000. There were not more than fifty millionaires in the whole of the United States, their aggregate fortunes not exceeding $80,000,000. To-day there are several individual fortunes of more than $80,000,000 each. New York City alone is said to have over two thousand millionaires, and the United States more than five thousand. By a curious mental process, the _New York World_, when the first edition of this little book appeared, sought to prove in a labored editorial that the increase of millionaires tended to prove an increasing diffusion of wealth rather than the contrary. It is hardly worth while, perhaps, making any reply to such puerility. Every student knows that the multimillionaire is only possible as a result of the concentration of wealth, that such fortunes are realized by the absorption of numerous smaller ones. Further, it is only necessary to add that all the millionaires of 1854, together with the half millionaires, owned not more than about $100,000,000 out of the total wealth, which was at that time something like $10,000,000,000. In other words, they owned not more than one per cent of the wealth of the country. In 1890, when the wealth of the country was slightly more than $65,000,000,000, Senator Ingalls could quote in the United States Senate a table showing that the millionaires and half millionaires of that time, 31,100 persons in all, owned $36,250,000,000, or just fifty-six per cent of the entire wealth of the United States.[114] Professor Ely accepts the logic of the statistical data gathered in Europe and the United States, and says "such statistics as we have ... all indicate a marked concentration of wealth, both in this country and Europe."[115]

VII

Summing up, we may state the argument of this chapter very briefly as follows: The Socialist theory is that compet.i.tion is self-destructive, and that the inevitable result of the compet.i.tive process is to produce monopoly, either through the crushing out of the weak by the strong, or the combination of units as a result of a conscious recognition of the wastes of compet.i.tion and the advantages of cooperation. The law of capitalist development, therefore, is from compet.i.tion and division to combination and concentration. As this concentration proceeds, a large cla.s.s of proletarians is formed on the one hand, and a small cla.s.s of capitalist lords on the other, an essential antagonism of interests existing between the two cla.s.ses. Petty industries may continue to exist, though, upon the whole, the tendency is toward their extinction.

In certain industries, their number may even increase, but their relative importance is constantly decreasing. While Socialism does not preclude the continued existence of small private industry or business, it does require and depend upon the development of a large body of concentrated industry, monopolies which can be transformed into social monopolies whenever the people may decide so to transform them. These conditions are being fulfilled in the evolution of our economic system.

The interindustrial and international trustification of industry shows a remarkable fulfillment of the law of capitalist concentration which the Socialists were the first to formulate; the existence of petty industries and businesses, or their numerical increase even, being a relatively insignificant matter compared with the enormous increase in large industries and businesses, and their share in the total volume of industry and commerce. In agriculture, concentration, while it does not proceed so rapidly or directly as in manufacture and commerce, and while it takes directions and forms unforeseen by the Socialists of a generation ago, proceeds surely nevertheless. Along with this concentration of capital and industry proceeds the concentration of wealth into proportionately fewer hands. While a certain diffusion of wealth takes place through the mechanism of capitalist concentration, by developing a new cla.s.s of highly salaried officials, and enabling numerous small investors to own shares in great industrial and commercial corporations, it is not sufficient to balance the expropriation which goes on in the compet.i.tive struggle, and it is true that a larger proportion of the national wealth is owned by a minority of the population than ever before, that minority being proportionately less numerous than ever before. Further, the peculiar financial organization of modern capitalist society enables the ruling capitalists to control and use to their own advantage the wealth of others invested in industrial and commercial corporations. Thus to the concentration of ownership must be added the concentration of control, which plays an increasingly important part in capitalist economics.

Whatever defects there may be in the Marxian theory, as outlined by Marx himself, and whatever modifications of his statement of it may be rendered necessary by changed conditions, in its main and essential features it has successfully withstood all the criticisms which have been directed against it. Economic literature is full of prophecies, but in its whole range there is not an instance of prophecy more literally and abundantly fulfilled than that which Marx made concerning the trend of capitalist development. And Karl Marx was not a prophet--he but read clearly the meaning of certain facts which others had not learned to read, the law of social dynamics. That is not prophecy, but science.

FOOTNOTES:

[94] _Studies in the Evolution of Industrial Society_, by R. T. Ely, page 95.

[95] _Capital_, Vol. I (Kerr edition), page 837.

[96] _Briefe und Auszuge aus Briefen von Joh. Phil. Becker, Jos.

Dietzgen, Friederich Engels, Karl Marx u. A. an F. A. Sorge und Andere_, Stuttgart, 1906.

[97] H. W. Macrosty, _The Growth of Monopoly in English Industry_ (Fabian Tract).

[98] _Our Benevolent Feudalism_, by W. J. Ghent, pages 17-21.

[99] A factor of tremendous importance in the maintenance of petty industries and business establishments in this country, which Marx could not have antic.i.p.ated, has been the unprecedented volume of foreign immigration. Not only have some menial personal services--such as shoe cleaning, for example--been transformed into regular businesses by immigrants from certain countries, but the ma.s.sing together of immigrants, aliens in language, customs, tastes, and manners, provides a very favorable soil for the development of small business enterprises.

[100] _The Social Revolution_, by Karl Kautsky, Part I, page 144. See also the argument by Paul Lafargue, Marx's son-in-law, that Socialism will not oppose petty agriculture by private individuals working their own farms.--_Revue Politique et Parliamentaire_, October, 1898, page 70.

[101] Kautsky, _The Social Revolution_, page 144.

[102] The figures are quoted from _Socialism Inevitable_, by g.a.y.l.o.r.d Wilshire, pages 325-326.

[103] The table is quoted from _Socialism Inevitable_, by g.a.y.l.o.r.d Wilshire, page 326.

[104] The cost of raising wheat in California, where large farming has been most scientifically developed, is said to vary from 92.5 cents per 100 pounds on farms of 1000 acres to 40 cents on farms of 50,000 acres.

[105] _The American Farmer_, by A. M. Simons, page 97.

[106] _Studies in the Evolution of Industrial Society_, by Richard T.

Ely, page 255.

[107] _Die Voraussetzungen des Sozialismus_, by Edward Bernstein, page 47.

[108] _Studies in the Evolution of Industrial Society_, by Richard T.

Ely, pages 261-262.

[109] _Essai sur la repart.i.tion des richesses et sur la tendance a une moindre inegalite des conditions_, par Leroy-Beaulieu, page 564.

[110] _Statistics and Economics_, by Richmond Mayo-Smith, Book III, Distribution.

[111] _Statistics and Economics_, by Richmond Mayo-Smith, Book III, Distribution.

[112] Cf. _Riches and Poverty_, by Chiozza Money, M.P.; also, _Fabian Tract_, No. 5.

[113] _The Present Distribution of Wealth in the United States_, by Charles B. Spahr (1896).

[114] _Writings and Speeches of John J. Ingalls_, page 320.

[115] _Studies in the Evolution of Industrial Society_, page 265.