Ludwig von Mises Institute

PART III  THE ALLEGED INEVITABILITY OF SOCIALISM
SECTION II  The Concentration of Capital and the Formation of Monopolies as Preliminary Steps to Socialism

Chapter 22
The Problem

Marx seeks to establish an economic foundation for the thesis that the evolution towards Socialism is inevitable, by demonstrating the progressive concentration of capital. Capitalism has succeeded in depriving the worker of private ownership in the means of production; it has consummated the "expropriation of the direct producers." As soon as this process is completed "the further socialization of labour and the further transformation of land and other agents into socially exploited and therefore collective means of production, together with the ensuing expropriation of private owners, assume a new form. That which is now to be expropriated is no longer the worker labouring independently but the capitalist exploiting the worker. This expropriation is carried out by the play of the inherent forces of capitalist production itself; by the centralization of capital, each individual capitalist deals the death-blow to a number of others." Hand in hand with this goes the socialization of production. The number of the "capitalist magnates" is continually decreasing. "The centralization of the means of production and the socialization of labour reach a point where they become incompatible with their capitalist framework. They burst it. The last hour of capitalist private property has arrived. The expropriators are expropriated." This is the "expropriation of the few usurpers by the mass of the people," through the "transformation of capitalist ownership, which actually rests already on social production, into social ownership," a process much less "lengthy, hard, and difficult" than was, in its own time, the process that transformed the private ownership of individuals doing their own work into capitalist ownership. [1]

Marx gives a dialectical turn to his contentions. "Capitalist private ownership is the first negation of the individual private ownership created by the workers' toil. But, with the inevitability of a natural process, capitalist production brings forth its own negation. It is the negation of the negation. This does not re-establish private ownership, by only individual ownership based on the achievements of the capitalist era: co-operation and the collective ownership of land and of the means or production produced by labour."[2] Strip these statements of the dialectic accessories and there remains the fact that the concentration of establishments, enterprises, and fortunes is inevitable. (Marx does not distinguish between these three and obviously regards them as identical.) This concentration would eventually lead to Socialism, as the world, once it was transformed into one single gigantic enterprise, could be taken over by society with perfect ease; but before that stage has been reached, the result will have been achieved by "the revolt of the ever-expanding working class which has been schooled, united, and organized by the very mechanism of the capitalist production."[3]

To Kautsky it is clear that "capitalist production tends to unite the means of production, which have become the monopoly of the capitalist class, into fewer and fewer hands. This evolution finally makes all the means of production of a nation, indeed of the whole world economy, the private property of a single individual or company, which disposes of them arbitrarily. The whole economy will be drawn together into one colossal undertaking, in which everything has to serve one master. In capitalist society private ownership in the means of production ends with all except one person being propertyless. It thus leads to its own abolition, to the lack of property by all and to the enslavement of all." This is a condition towards which we are rapidly advancing "more rapidly than most people believe." Of course, we are told, the matter will not go so far. "For the mere approach to this condition must increase the sufferings, conflicts, and contradictions in society to such an extent, that they become intolerable and society bursts its bounds and falls to pieces" unless evolution has previously been given a different direction.[4]

It should be observed that, according to this view, the transition from "High" Capitalism to Socialism is to be effected only by the deliberate action of the Masses. The Masses believe that certain evils are to be ascribed to private ownership in the means of production. They believe that socialist production is likely to improve their condition. It is therefore a theoretical insight which guides them. According to the materialist conception of history, however, this theory must itself be the inevitable result of a certain organization of production. Here we observe once more how Marxism moves in a circle when it tries to demonstrate its propositions. A certain condition must arise because evolution leads to it; evolution leads there because thought demands it; but thought is determined by being. This being, however, can be nothing more than that of the existing social condition. From the thinking determined by the existing condition the necessity of another condition follows.

There are two objections against which this whole chain of reasoning has no defence. It is unable to refute the contention of anyone who, though arguing on the same lines, regards thought as the cause, and society as that which is caused. And it has similarly no reply to the objection that future conditions may very well be misconceived, and that that which now seems so desirable may prove to be less tolerable than existing conditions. This, however, re-opens discussion on the advantages and disadvantages of types of societies, those existing and those sketched out by would-be reformers. But this is the very discussion which Marxism desired to suppress.

Let no one suppose that the Marxian doctrine of the concentration of capital can be verified by the simple method of consulting the statistics of establishments, incomes, and fortunes. The statistics of incomes and fortunes utterly contradict it. This can be definitely asserted in spite of all the imperfections of present statistical methods and all the difficulties which fluctuations in the value of money place in the way of using the material. With equal confidence one can say that the counterpart of the theory of concentration, the much discussed theory of increasing poverty—in which even orthodox Marxists can hardly continue to believe—is incompatible with the results of statistical investigation.[5] The statistics of agricultural holdings also contradict the Marxian assumptions. Those giving the number of the establishments in industry, mining and transport appear to confirm it. But figures that indicate a particular evolution during a limited period cannot be conclusive. The development in this brief span might run contrary to the long term trend. We shall do better, therefore, to leave statistics on both sides, both for and against. For it must not be forgotten that there is a theory underlying every statistical demonstration. Figures alone prove or disprove nothing. Only the conclusions drawn from the collected material can do this. And these are theoretical.

2 The Theory of Anti-Monopolistic Policy

The theory of monopoly goes deeper than the Marxian theory of concentration. According to it, free competition, the life blood of a society based on private ownership in the means of production, is weakened by the steady growth of monopoly. The disadvantages bred within the economy by the unlimited rule of private monopolies are, however, so great that society has no choice but to transform private monopoly by socialization into state ownership. However great an evil Socialism might be, it would be less harmful than private monopoly. Should it prove impossible to counteract the tendency towards monopoly in ever widening fields of production, then private ownership in the means of production is already doomed.[6]

It is clear that this doctrine calls for a searching investigation: first, as to whether evolution is really in the direction of monopoly control, and secondly as to what are the economic effects of such monopoly. Here one has to proceed with special care. The time at which this doctrine was first expounded was generally not favourable to the theoretical study of such problems. The emotional judgment of appearances rather than the cool examination of the essence of things was the order of the day. Even the arguments of such an outstanding economist as J. B. Clark are imbued with the popular hatred of the trusts. Utterances typical of contemporary politicians are to be found in the report of the German Socialization Commission of February 15th, 1919, where it was affirmed as "indisputable" that the monopolistic position of the German coal industry "constitutes an independent power which is incompatible with the nature of the modern state, and not merely the socialist one." It was, in the opinion of the Commission, "unnecessary to discuss anew the question whether and to what degree this power is misused to the detriment of the remaining members of society, those to whom it is raw material, the consumers, and the workers; its existence suffices to make evident the necessity for completely abolishing it." [7]

[1]Marx, Das Kapital, Vol. I, pp. 726 ff.

[2]Marx, Das Kapital, Vol. I, pp. 728 ff.

[3]Ibid., p. 728.

[4]Kautsky, Das Erfurter Programm, pp. 83 ff.

[5]Wolf, Sozialismus und kapitalistische Gesellschaftsordnung (Stuttgart, 1892), pp. 149 ff.

[6]Clark, Essentials of Economic Theory, pp. 374 ff., 397.

[7]Report of the Sozialisierungskommission über die Frage der Sozialisierung des Kohlenbergbaus vom 31 Juli 1920 (Appendix: Vorläufiger Bericht vom 15 Februar 1919), op. cit., p. 32.