Imperialism and Social Classes

We shall for the moment postulate given class situations, as though every social class that ever existed were made up simply of a certain number of family units, which, for some reason or other, had chanced into their class and had persisted in it, forbidding other people access to it—in other words, as though class barriers were insurmountable. Now it is beyond dispute that within a class the relative position of families is forever shifting, that some families rise within their class, while others fall. And we are interested in the reasons why this happens. This can best be studied in individual historical situations. The scope of our own study imposes certain limitations on us, and we therefore choose but two examples that demonstrate the points in question—the German aristocracy of the Hohenstaufen period, and the industrial bourgeoisie of capitalism at its prime. It will be seen at once that the arguments to be enumerated apply beyond the cases under consideration.

5. The German nobility of the Hohenstaufen period formed not one class, but two: first, the princes (small in number after the Hohenstaufen reforms) and princely lieges [fürstengenossen] (who numbered in the hundreds, though most families of that position in the thirteenth century were extinct by the fifteenth); and second, the mere knights [ritterliche Burgherren]. There were differences between these two classes, not only in rank but also in law, mode of life, and power; nor did they intermarry. It was in the upper of the two that the restratification took place which found expression in the so-called constitutional reform of the Hohenstaufen period; but in both classes certain families, in terms of wealth and prestige, rose high above the level at which we find them at the outset of the period; while others sank down, languished, and grew impoverished. Why?

In the first place, there is an automatic increment to a position once elevated. To the family that looms above its fellows accrue new vassals, tenants, and properties, which slip from the grasp of families in decline. The rising family has better chances and is able to exploit them more effectively than the family on the downgrade. Rising power always invests in new power. But the explanatory value of this factor is greatly limited by the fact that it already presupposes an elevated or rising position. Of itself it would evidently account for only a modest increment, beyond which further gains would be dependent on new successes—as demonstrated by the rapid disintegration of even high positions. It can therefore be considered only a consequence and intermediate cause.

In the second place, hard-headed and practical shrewdness in the management of a given position plays a very great part. This factor manifestly explains a great deal about differences in family destiny, more specifically in three directions. Above all, the rise of many families is explained almost completely, that of others in part, by a single-minded marriage policy pursued over centuries with the object of enhancing their positions. Next, the success of such a policy, and of course success in general, requires an economic mobility that in turn presupposes shrewd and often ruthless exploitation of existing sources of revenue and rational utilization of their yield. Finally, the management of family position within the feudal system—and this means above all the energetic repression of neighboring lords, and sometimes also of vassals—presents a crucial and difficult problem which is solved with varying degrees of success. In certain outstanding cases, positions at the top are gained in this way rather than by the prior granting of privileges and rights on the part of the king—something that comes only subsequently. In other cases, the decline of a house can be explained by its failure to manage its position properly in spite of the fact that its claim to princely rank is as good as, or even better than, those that make the grade. This, in particular, explains a good deal about the varying success of princes—and, we may say in passing, about the uneven growth of territories in later ages.

In the third place, shifts in family position follow from differences in the way in which families stand up in the service of their feudal superiors. With some variations, this, of course, means almost exclusively war service. Only among the lower ranks of the knights does administrative and diplomatic skill count. High Church office is very important as a means of elevating the family—in Italy, for example, though not so much in Germany—at the time we are considering. Outstanding examples of such shifts, based on service, are obvious.

All this is best observed in the rise and further development of the later sovereign territories. The factors which have been enumerated explain even their original size, and certainly fully account for their subsequent expansion or contraction. The fortunes of dynasties rose and fell in keeping with the success or failure of their policies. At bottom, this is really beyond argument. Who, for example, would care to dispute that even in the seventeenth century, Saxony’s objective chances for hegemony were incomparably better that those of Brandenburg? Yet step by step Saxony lost its position, by persistently poor management on every hand, by ill-starred undertakings, by backing the wrong horse—in short by conduct that meant failure, or, to come right out and say so, through incompetence. Brandenburg, on the other hand, rose steadily, by conduct of the opposite kind. Yet apparent as the truth of this matter is, it can easily lead to an overestimate of the autonomy and importance of the physical individual. Nothing is more foreign in us than such an overestimate, let alone an orientation in the manner of Carlyle. We do not for a moment deny the dominance of objective social circumstances. Only the disposition of the people in general, of the stratum and of the individual family, is a part of these circumstances; and once the rest of the environment is given, this element does play the crucial role we claim for it—whether or not it be traced to other elements, which is the great question of the future, but does not here concern us.

6. In the case of the capitalist bourgeoisie of Europe—say, of the post-Napoleonic period—we also hold to the assumption that we are dealing with established data insofar as the situations of the class and of the individual families are concerned. We presume that each family already owns its enterprise, or its share in one. The only question we ask is this: how does it happen that one family rises, while the other falls—quite apart from accidents, to which we attribute a certain importance but not the crucial role? The rising and falling are facts. No matter which area we study, we always find that the relative position of families in the class situation we have described—other families are of no concern to us at this point—undergoes change, not in such a way that the “big” ones grow bigger and the “small” ones smaller, but typically the other way round. In the textile area of Brno, the silk region of Krefeld, the iron-working district around Birmingham, for example, certain families have maintained their position for more than half a century, in many cases considerably longer. Yet, by and large, the families that led around the middle of the nineteenth century are not on top of the heap today. Some of those that are most successful now were then scarcely recognized as members of the class, while some of those that were most successful then are accepted only with reservations today. Manifestly, concentration and the formation of corporations complicate our analysis, and it will be well if we make a distinction between the competitive private and one-man firm, on the one hand, and the modern large-scale enterprise and trust, on the other.

The characteristic feature of the former is the element of family property and the coincidence of family and business success. A first reason for shifting family position is offered by the automatism of accumulation, asserted by Marx. The “capitalist” who is bigger at the outset of the period captures more profit than the smaller one. His proportionate accumulation is therefore larger, and he improves his productive plant more rapidly. The discrepancy grows, until the wealthier exploiter outstrips the poorer one in the competitive field and forces him to the wall. This view is a typical example of how bias in favor of a theory blinds the theorist to the simplest facts, grotesquely distorting their proportions. Manifestly, the captured surplus value does not invest itself but must be invested. This means on the one hand that it must not be consumed by the capitalist, and on the other hand that the important point is how it is invested. Both factors lead away from the idea of objective automatism to the field of behavior and motive—in other words, from the social “force” to the individual—physical or family; from the objective to the subjective. It may be objected that the logic of the social situation forces the individual to invest his profits, that individual motivation is only a fleeting intermediate phase. This is true, as far as it goes, and must be acknowledged by any reasonable person. Naturally the individual psyche is no more than a product, an offshoot, a reflex, and a conductor of the inner necessities of any given situation. But the crucial factor is that the social logic or objective situation does not unequivocally determine how much profit shall be invested, and how it shall be invested, unless individual disposition is taken into account. Yet when that is done, the logic is no longer inherent solely in the system as distinct from the individuality of the industrialist himself. Marx, in fact, in this case as in general, implies an assumption about average behavior—an assumption that includes an economic psychology, however imperfect. The automatism as such does not exist, even though we shall presently encounter its elements—saving and the improvement of productive plant—as elements of industrial-family behavior. We can speak of an automatism, with respect to an existing class position, only in the sense that, as in the earlier example, that position does have a tendency to rise on its own, to a moderate extent, and even more a tendency to maintain itself, because the well-established firm can make better deals, attract new customers and suppliers, and so on.

The second reason for the phenomenon with which we are concerned at the moment lies in the disposition to save, which varies from family to family. (If the term “saving” must be avoided as implying a positive value judgment, we can speak of an energetic policy of withholding.) This serves to make the class position secure, and adherence to such a policy over several generations is the factor that in many cases turns small family enterprises into large ones. It is a policy that is very conspicuous in families that practice it. Most of us have observed members of successful business families who watch with extreme care over expenditures which members of other classes, even when their incomes are incomparably smaller, do not hesitate a moment to make. In their personal lives, such families often live with curious frugality, sometimes against a background that, for reasons of prestige, may be quite luxurious and out of keeping with their parsimony. True, of itself this does not carry much weight, though contrary behavior may be one of the most important reasons for a decline.

The third reason lies in differences in efficiency—the quality of technical, commercial, and administrative leadership of the enterprise, primarily along traditional lines. Behavior giving rise to such differences may, for our purposes, be adequately described in terms of hard-headedness, concentration on profit, authority, capacity for work, and inexorable self-discipline, especially in renouncing other aspects of life. This latter feature often escapes consideration, because the outsider is likely to observe these people in the practice of compensatory and conspicuous excesses. The significance of such efficiency lies not so much in immediate results as in increased credit ratings that open up opportunities for expansion.

Actually, among the obstacles in the way of the rise of an industrial family, eventual lack of capital is the least. If it is otherwise in good condition, the family will find that in normal times capital is virtually thrust upon it. Indeed, one may say, with Marshall, that the size of an enterprise—and here that means the position of the family—tends to adapt itself to the ability of the entrepreneur. If he exceeds his personal limitations, resultant failure will trim the size of his enterprise; if he lacks the capital to exploit such personal resources as he does possess, he is likely to find the necessary credit. But in considering this process of expansion, we come upon a fourth reason for the varying success of business dynasties. Such expansion is not simply a matter of saving and efficient routine work. What it implies is precisely departure from routine. Elaboration of an established plant, the introduction of new production methods, the opening up of new markets—indeed, the successful carrying through of new business combinations in general—all these imply risk, trial and error, the overcoming of resistance, factors lacking in the treadmill of routine. Most members of the class are handicapped in this respect. They can follow suit only when someone else has already demonstrated success in practice. Such success requires a capacity for making decisions and the vision to evaluate forcefully the elements in a given situation that are relevant to the achievement of success, while ignoring all others. The rarity of such qualifications explains why competition does not function immediately even when there are no outward barriers, such as cartels; and this circumstance, in turn, explains the size of the profits that often eventuate from such success. This is the typical pattern by which industrial fortunes were made in the nineteenth century, and by which they are made even today; and these factors typically enhance family position, both absolutely and relatively. Neither saving nor efficient management as such are the crucial factors; what is crucial is the successful accomplishment of pertinent tasks. When one studies the history of great industrial families, one almost always comes upon one or more actions of this character—actions on which the family position is founded. Mere husbanding of already existing resources, no matter how painstaking, is always characteristic of a declining position.

In corporate industry it is necessary to woo support, to negotiate with and handle men with consummate skill. Elections and appointments become essential elements in the individual career. These factors are not as prominent in family enterprise, and as a result the standard type of “manager” and “president” is quite different from the proprietary factory entrepreneur of yore. The art of “advancement” counts; the skillful prospers; political connections are of importance; articulateness is an asset. The man who skillfully disposes of a troublesome private matter for an important stockholder need not worry about a bungled shipment. The implications of this situation are the discrepancy between those qualities that enable a man to reach a leading position and those that enable him to hold it—a discrepancy foreign to family enterprise. There is still another discrepancy, likewise foreign to family enterprise—that between the personal success of the man at the head and the success of the enterprise itself. If this difference does not make itself more strongly felt, this is owing largely to persistence in the class of training in the methods of individually owned business, to which even men who have no such family background are assimilated and disciplined.

We should also mention that rising specialization and mechanization, reaching right up to the leading functions, has thrown open positions at the top to men with purely technical qualifications that would, of themselves, be inadequate to the needs of family enterprise. A laboratory chemist, for example, may come to head a major chemical enterprise, even though he is not at all the business leader type. A giant industry may be dominated by a lawyer who would push a simple factory to the brink of bankruptcy in no time.

Here too, however, it is always “behavior” and “aptitude” that explain shifts in the relative positions which originally existed. Only in this case, these positions are primarily individual. They affect the family position—by the opportunities opened up, the connections established, and the chances to make money which are presented—but not to the same extent as in the competitive family undertaking. Indeed, in corporate enterprise there is a tendency to evaluate negatively any orientation of leading figures toward personal aggrandizement, to put obstacles in its way, and thus to substitute for the motive of personal profit other motives of a purely personal character—prestige in expert circles, interest in “problems,” the urge for action and achievement.