Socialism and International Economic Order

CHAPTER III KARL MARX AND HIS FOLLOWERS: THEIR CRITIQUE OF THE CAPITALIST MODE OF PRODUCTION

INTRODUCTION

Karl Marx, driven to investigate contemporary social problems by his powerful intellect and by an ardent desire to change the world, never quite succeeded in shaking off the influence of Hegel under whom he had studied in Berlin. For the last time in the history of human thought, Hegel had attempted to explain the universe and man’s relation to it by one single system. Hegel taught that the dialectic development of human history was marked by, and its essence found in, the increasing self-realization of the Spirit toward a unity of the rational with the real. This Spirit was manifested in a growing human consciousness which, by the act of understanding, assimilated and thereby mastered all objects until absolute knowledge was attained. This knowledge was regarded as synonymous with the reintegration (Rückkehr zu sich selbst) of the Spirit.1

Hegel regarded the State as the nodal point between the self-realization of the Spirit and man’s cooperation in this process. In fact, he came to regard the Prussian State as the last phase of history—the very union of the rational with the real, the divine upon earth. Marx, discarding this conclusion from the outset, nevertheless accepted the theory of history moving in progressive stages toward a definite and superior goal, and of man’s ability to control this process. However, one of Marx’s principal points of divergence was his view that “it is not the consciousness of men that determines their being, but on the contrary, their social being determines their consciousness.”2

Marx summarized his theoretical framework as follows:

In the social production which men carry on they enter into definite relations that are indispensable and independent of their will; these relations of production correspond to a definite stage of development of their material powers of production. The totality of these relations of production constitutes the economic structure of society—the real foundation, on which legal and political superstructures arise and to which definite forms of social consciousness correspond. The mode of production of material life determines the general character of the social, political, and spiritual processes of life.3

Thus, he clearly distinguishes the mode of production as the fundament of any historical stage from the particular “legal and political superstructure” built on it at that time. And this distinction now provides him with the tools for the explanation of that issue in which he is interested foremost, the problem of social change. He continues his summary:

At a certain stage of their development, the material forces of production in society come in conflict with the existing relations of production, or—what is but a legal expression for the same thing—with the property relations within which they had been at work before. From forms of development of the forces of production these relations turn into their fetters. Then occurs a period of social revolution. With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed.4

He goes on:

The bourgeois relations of production are the last antagonistic form of the social process of production; not in the sense of individual antagonisms, but of conflict arising from conditions surrounding the life of individuals in society. At the same time, the productive forces developing in the womb of bourgeois society create the material conditions for the solution of that antagonism. With this social formation, therefore, the pre-history of human society comes to an end.5

It is apparent that the science of economics has no independent place in Marxian analysis; the only function attributed to it is the explanation of social phenomena. And since Marx is interested in the social phenomena of the capitalist period only, he sets himself the task, as he writes in the preface to Volume I of Capital, “to lay bare the economic law of motion of modern society.”6 This basic law he and Friedrich Engels had already stated in the Communist Manifesto (1848):

The history of all hitherto existing society is the history of class struggle.7

Applying this law to the period under consideration, it follows

that the relations between capital and wage labor determine the entire character of the mode of production.8

Hence, Marx’s “economic” investigations are concentrated on these relations. His approach is of a “highly socialized nature” (G. D. H. Cole): “Individuals are dealt with only insofar as they are the personifications of economic categories, embodiments of particular class relations and class interests.”9

THE ELEMENTS OF MARXIAN POLITICAL ECONOMY

The essential elements of Marx’s theoretical structure are: “commodities,” “abstract labor,” and “surplus value,” all concepts which belong to a particular, namely the capitalist, mode of production. Surplus value is derived from the capitalist’s power to compel the suppliers of labor to work more hours than are “socially” necessary to produce their means of subsistence. Marx defines the value of both commodities and labor as expressing “the connection that exists between a certain article and the portion of the total labor time of society required to produce it.”10 Because wages represent only the value of labor thus defined, the capitalist is able to appropriate part of his produce for nothing. For a detailed discussion of these concepts, the reader is referred to Paul M. Sweezy’s The Theory of Capitalist Development.11

Marx calls the expansion of surplus value (or more precisely of that part of it which is being reinvested by the entrepreneur) accumulation. He regards accumulation as the driving motor of the capitalist mode of production:

Competition makes the immanent laws of capitalist production to be felt by each individual capitalist as external coercive laws. It compels him to keep constantly extending his capital, in order to preserve it, but extend it he cannot except by means of progressive accumulation.12

The capitalist thus cannot help acting in this way; his desire “to expand the value under his control (to accumulate capital) springs from his special position in a particular form of organization of social production.”13

Accumulation, however, means the production of more capital goods. But the introduction of additional productive equipment sets labor free, more labor than can be employed in the manufacture of new machinery. This surplus is called by Marx the Reserve Army; its function is to check wages and to uphold the rate of surplus value.

The process of capital accumulation and with it the size of the Reserve Army are subject to cyclical fluctuations. Marx advanced varying explanations for these fluctuations, but most of his followers later referred to passages scattered in Volume III of Capital, such as

The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.14

Here, Marx clearly takes up the thread of the underconsumption theorists. “Properly understood . . . , ‘underconsumption and ‘over-investment’ are opposite sides of the same coin.”15 Both are due to the fact that “in capitalistic society the means of production cannot become effective unless they have been turned beforehand into capital, i.e. the means of exploitation of human labor.”16

CONCENTRATION AND CENTRALIZATION OF CAPITAL

The accumulation process necessarily implies an increase, or, in Marx’s words, a concentration of capital17 in the hands of individual capitalists. At the same time, however, this concentration changes the production process itself because it raises not only the “organic composition of capital,” but also the percentage of fixed equipment within “constant capital.”18 The latter is a direct consequence of the competitive struggle which compels the entrepreneurs to lower their costs by rationalization. Thus,

with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under normal conditions.19

The growth of capital requirements may, however, outstrip the concentration of capital and will therefore lead to its centralization: this involves the “transformation of many small into few large capitals.” Hence, “it only presupposes a change in the distribution of capital already to hand and functioning.”20

This introduces an “altogether new force” into capitalist production:

the credit system. . . . By unseen threads it draws the disposable money, scattered in larger or smaller masses over the surface of society, into the hands of individual or associated producers. It is the specific machine for the centralization of capitals.21

Concurrent with the development of the credit system there emerges the stock company, the main characteristics of which are described by Marx as follows:

1.  An enormous expansion of the scale of production and of enterprises that was impossible for individual capitals . . .

2.  The capital . . . is here directly endowed with the form of social capital (capital of directly associated individuals) as distinct from private capital. . .

3.  Transformation of the actually functioning capitalist into a mere manager, administrator of other people’s capital and of the owner of capital into . . . a mere money capitalist.22

The stock company must therefore be regarded as a transitory element in the progress from the capitalist to the socialist mode of production.

Marx’s description of the centralization of capital was developed by Rudolph Hilferding into a coherent theory of corporations and of the new aspects they introduce into the capitalist mode of production. The freeing of the industrial capitalist from the function of industrial entrepreneur23 results in the rise of two distinct groups: the company directors and the banquiers. Hilferding, generalizing the German experience, assigns to the banquiers an increasingly important role in the capitalist production process because their institutions form the principal reservoirs of “financial capital.”24 But in addition, the banquiers are now able to manipulate their portefeuilles of negotiable securities in such a way as to assure themselves a majority not only in the larger stock companies, but also in their subsidiaries.

A circle of people is emerging who, due to their own capital strength or as the representatives of the concentrated strength of capital owned by others (bank presidents), are represented on a great number of company boards. A kind of personal union is thus formed between the different stock companies as well as between these and the banks, a factor which must be of the greatest influence on the policy of these companies since a common interest of possession (Besitzinteresse) arises among the various companies.25

Unlike this group, the managers, having no funds of their own, become mere employees.

The stock company finds accumulation greatly facilitated. The financial means at its disposal are large enough to enable its executives to achieve more security and stability by the formation of reserves. Thus,

the expansion of a capitalistic enterprise having been converted into a stock company, freed from the fetters of individual ownership, can now take place purely according to technical requirements.26

This strengthens its competitive position with respect to those entrepreneurs whose scope of action is still limited by their personal capital. But the growing power position of the stock companies on the market is not wholeheartedly welcomed by the banks:

The victory of one enterprise is the defeat of others in which the bank was equally interested. . . . Hence the bank is aiming at establishing monopoly.27

The door is thereby opened to the combination movement; the formation of cartels, mergers, and trusts and the increased centralization of banks provoke each other.28 Thus,

the capital magnate and the finance capitalists increasingly unite the control of total national capital by controlling bank capital.29

This excessive centralization of capital and power in the hands of a small and, at that, decreasing group of persons has important economic and political consequences. In the first place, it destroys the price mechanism:

When monopolistic combinations abolish competition, they abolish the sole means of realizing an objective price law. Price ceases to be an objective magnitude; it becomes the calculated result of those who willfully and consciously fix it. . . . Instead of being necessarily independent from the will and consciousness of the participants, it becomes arbitrary and subject to chance.30

Secondly, the tendency to expand investment following technical innovations is restrained by the fact that competition no longer compels the entrepreneurs to rationalize production to the same degree as was necessary prior to the monopolistic control of markets. Hence, the accelerated rate of accumulation will exceed capital requirements so that it will become imperative to look for favorable investment opportunities abroad.

Thirdly, therefore, “Monopoly Capital”31 will induce a profound change in international economic relations. On the one hand, it will become vital to eliminate external, along with internal, competition. On the other hand, the ground must be prepared for capital export.

CAPITALISM AND THE WORLD MARKET

But we have rushed ahead. Let us return for a moment to competitive capitalism to which Marx devoted the bulk of his analysis, and summarize his implications on the nature of international trade under this mode of production.

Marx’s Views

We have seen that “in order that capital may be able to arise and take control of production, a definite stage in the development of trade is assumed.”32 Capital accumulation necessarily leads to an ever broadening extension of the market until it embraces the whole world:

The old-established national industries . . . are dislodged by new industries, whose introduction becomes a life and death question for all civilized nations, by industries that no longer work up indigenous raw material, but raw material drawn from the remotest zones; industries whose products are consumed, not only at home, but in every quarter of the globe. . . . In place of the old local and national seclusion and self-sufficiency, we have intercourse in every direction, universal interdependence of nations. And as in material, so also in intellectual production; the intellectual creations of individual nations become common property.33

Elsewhere Marx writes: “The credit system and competition of the world market [form] the basis and the vital element of capitalist production.”34 The progress of industrialization and the development of world trade react upon and enforce each other. Marx describes “the dual nature of this effect” as follows:

Since foreign trade cheapens partly the elements of constant capital and partly the necessities of life for which the variable capital is exchanged, it tends to raise the rate of profit by increasing the rate of surplus value and lowering the value of constant capital. It generally acts in this direction by permitting an expansion of the scale of production. It thereby hastens the process of accumulation, on the one hand, but causes the variable capital to shrink in relation to constant capital, on the other, and thus hastens a fall in the rate of profit. In the same way, the expansion of foreign trade, although the basis of the capitalist mode of production in its infancy, has become its own product . . . with the further progress of the capitalist mode of production, through the innate necessity of this mode of production—its need for an ever expanding market.35

This passage implies, however, that the workers, unlike the capitalists, derive no benefits from the international division of labor. To the extent to which expenditures for the workers’ means of subsistence are reduced by the import of cheap foodstuffs, the value of their labor power also diminishes. Carey’s view is completely false, Marx argues,

that the wages of the different nations are directly proportional to the degree of productiveness of the national working days. . . . The whole of our analysis of the production of surplus value shows the absurdity of this conclusion.36

Marx draws a sharp division line between his own, “qualitative” value analysis and the view of “the Free Trade bagmen”; the former

has shown that the form or expression of the value of a commodity originates in the nature of value, and not that value and its magnitude originate in the mode of their expression as exchange value. . . . The modern hawkers of Free Trade who must get rid of their article at any price, on the other hand, lay most stress on the quantitative aspect of the relative form of value. For them, there consequently exists neither value nor magnitude of value anywhere except in its expression by means of the exchange relation of commodities, that is, in the daily list of prices current.37

The author concludes that international exchange, under capitalism, lastly “only transfers the contradictions to a wider sphere and gives them greater latitude.”38

Rise of Finance Capital

In the concluding parts of Hilferding’s book, entitled The Economic Policy of Finance Capital, one feels almost a kind of nostalgia in those passages in which the author treats the period of free trade. This period, Hilferding writes, was characterized by the undisputed advantage of British industrialism which required both unhampered import of foodstuffs and raw materials—hence the abolition of the Corn Laws in 1846—and the freedom of exports of manufactured goods to all parts of the world. Britain had

only a minor interest in the possession of colonies. . . . The demand for active colonial policy, which was very expensive, raised taxes, and weakened the parliamentary regime at home, receded before free trade propaganda.39

The “newcomers,” especially the United States and Germany, however, had already somewhat modified the pure free trade doctrine in that, following the recommendations of Carey and List, they introduced tariffs to protect their infant industries. The rationale of these tariffs was to accelerate economic development within the United States and Germany until equal footing was reached with England, and free trade could be permitted. But from the outset they necessarily introduced monopolistic elements into the economic order of the protected states. Whereas British industry had developed organically from small beginnings to its later greatness, German capitalism, once freed from its political fetters,

could of course . . . not repeat the British experience. Endeavors were rather to be made to start development at home, if possible, from the technical and economic level already reached by the more advanced country.40

Because of a general lack of accumulation, the German stock company assumed, along with the functions already described, a new one; it became the instrument

for raising the necessary capital which . . . was not only unavailable to the individual industrial capitalist, but to the capitalist class as a whole.41

In this way, the money owned by the other classes could be concentrated and placed at the disposal of industry. It is therefore not surprising that

not England, the free trade country, but protectionist Germany and the United States have become the model countries for capitalist development.42

But

this coincidence of tariff protection with the financing of industry through the banks was, with rapid industrial development, bound to encourage tendencies for cartelization which in turn created a new interest in tariff protection, thereby changing its function.43

The new function of tariffs guarantees to cartels, in addition to their continued existence, an extra profit corresponding to the difference between the protected home market price and the world market price. As more and more countries isolate themselves with high tariff walls, however, the export of commodities and thereby the advantages derived from large-scale production become severely limited. But if the sale of goods across national frontiers is restricted, capital is still free to flow abroad. It is the more ready to do so in that it is available in sufficient quantities to the monopolists and is attracted by extra profits abroad. Protection thus becomes a

motive for transferring, instead of commodities, the production of commodities itself. . . . It thus becomes possible for a developed country to overcome the detrimental impact of tariff protection on the profit rate by means of capital export.44

Already Marx had pointed out that the export of investment funds was due not to an absolute, but only to a relative surplus of capital in the lending country—relative, that is, to the existing level of employment and consumption.45 Whereas it lies, Marxists repeat, in the general nature of capitalism to keep this level below its optimum, this “contradiction” becomes even more apparent as competition is being replaced by “Monopoly Capital.” As J. A. Hobson put it:

It is not industrial progress that demands the opening up of new markets and areas of investment, but mal-distribution of consuming power which prevents the absorption of commodities and capital within the country.46

Hilferding elaborated a systematic theory of the policy of finance capital and its economic and political consequences. Capital export is defined as “the export of value which is destined to produce surplus value abroad.”47 This policy is governed by three objectives:

(1) the creation of an economic territory as large as possible, which is, (2) fenced off by protective tariff walls against foreign competition and therefore, (3) becomes the sphere of exploitation of the national monopolistic combines.48

1. The Importance of Economic Territory. High tariff protection divides the world into separate economic units and thereby reduces or even destroys the preconditions for a rational international division of labor according to comparative advantage.49 The greater the territory under national jurisdiction, the less the disadvantages due to the “slackening development of the forces of production” are felt. Small countries are most severely affected by the disintegration of a formerly unified world market, whereas larger areas adjust more easily to both natural and economic changes and, what is most important to monopolists, they tend to increase profits. Thus, the size of territory possessed by a state is in strong correlation to the international competitive position of its most powerful groups.

2. Enclosure of Economic Territory by Tariff Walls. This, and the corresponding exclusion of foreign competition, constitute the vital basis for the existence of cartels. For the latter, “the endeavor to increase tariffs becomes as unrestricted as the endeavor for profits.”50

3. Exclusive Exploitation by National Monopolistic Combines is an objective relating to colonial policy. It raises several aspects which will, according to socialist doctrine, eventually seal the doom of capitalism. In the first place,

the export of capital has, particularly in the form of industrial and finance capital, greatly accelerated the upheaval of social conditions and the drawing of the earth into the orbit of capitalism. Capitalistic development did not take place autonomously in each country; together with capital, the capitalistic conditions of production and exploitation were also imported and always at their most advanced stage.51

The development of transport facilities was a decisive milestone in the history of capital export. The construction of roads and railway lines absorbed extensive funds, but at the same time opened new markets and cheapened overseas products. Whether or not the final effects of this process were beneficial to the native country depended, according to Hilferding, on the use which was made of foreign capital apart from being invested in infrastructure. If it was invested in local consumption goods industries, the favorable consequences could not be denied in spite of the fact that the transfer of profits to the mother country extraordinarily slowed down the further development of capitalism. Economic emancipation became impossible, however, whenever the capitalist classes

were aiming at securing the domination over raw materials for their rapidly developing capital goods industries,52

leaving no basic materials to the native countries with which they could build up their own industries.

However, the penetration of capitalism into the “nations without history” does not proceed smoothly; the necessary propertyless labor force53 and a legal framework have as yet to be created. Usually, these things cannot be achieved satisfactorily without the application of force and this in turn calls for intervention by the metropolitan State.

This is the second important aspect of the drive of finance capital for reaching its goals: it cannot attain them unless it captures the State to serve its immediate interests in spite of the fact that these interests are diametrically opposed to those of the majority of the citizens. This alliance of powerful private groups with government is not only necessary to repress native resistance to capitalistic exploitation; it becomes imperative if one remembers that the monopolistic groups of other developed countries are faced with the same problems and also invoke the help of their official authorities.

Competition on the world market, where the price of a commodity is the only determining factor, is replaced by competition on the capital market. . . . Capital export now becomes a means for securing the industrial market for the capital exporting country. The receiving state has no choice: it becomes a debtor and dependent on the creditor whose terms it must accept. . . . The struggle for markets becomes the struggle for investment opportunities of loanable funds between national bank groups. Because, due to the international equalization of interest rates, economic competition is confined within relatively close limits, the economic struggle rapidly grows into a struggle for power which is waged with political weapons.54

The outcome of this struggle decisively depends on the size of the territory dominated directly by a State and indirectly by its finance capital. The corresponding rush for interest spheres and colonies generates severe conflicts between national states and further tends to strengthen their internal and external power and, with it, the importance of armaments industries. Finance capital develops an ideology entirely contrary to the old liberal ideals of the bourgeoisie. It

does not want freedom, but domination; it does not care for the independence of the individual capitalist, but demands his joining combinations. It abhors the anarchy of competition and stands for organization, yet only with the aim of competing on higher and higher levels. But in order to achieve this, to maintain and increase its predominance, it requires . . . a politically powerful state which does not need to have regard to the opposite interests of other states in shaping its commercial policy. Finance capital finally presupposes a state which is strong enough to pursue an expansionary policy and annex colonies.55

Finance capital thus eliminates humanitarian illusions and realistically considers politics

to be the business of capitalistic syndicates at one time struggling against each other, at another time reconciled.56

The Seeds of a Future Socialist Order

This statement leaves open two possibilities with regard to future development. Will imperialist wars, leading to the self-destruction of the capitalist system, become inevitable, or do sufficient elements of peace and stability survive which, though certainly not capable of upholding capitalism forever, render possible a gradual and constitutional transition to socialism?

For Hilferding, imperialist wars are probable though not inevitable. He and numerous other socialist authors who, after the outbreak of World War I, came to be called “opportunists” by Lenin, thought to discern some encouraging features of this capitalistic phase which were destined to prepare the working class for its leading role. Jean Jaurès, summarizing Hilferding, thus wrote:

Interests become more and more diversified, mobilized, intermingled, and enlaced; the great cooperations of industrial and financial capitalism are at work across the frontiers of races and tariffs; and the banks, the great banks, establish themselves behind the enterprises; they finance and subsidize them, but by doing so, they coordinate their activities in the same manner that they subsidize far off branches in all countries and beyond the seas. This is how the power of the banks is set up, coordinating capital flows, interweaving interests. . . .57

Does this passage not evoke the picture of a future socialist world order strikingly similar to that outlined by the Saint-Simonians? Jaurès in fact envisages la grande banque at the center of all economic activity, impartially allocating capital among the different countries according to their labor resources and market potentials. The various, by then of course socialist, states (démocraties éclairées et autonomes) will both fruitfully cooperate with and exercise their control over this central agency, and under these conditions, economic expansion will take place peacefully, “without territorial monopoly, without industrial monopoly, without tariff monopoly.”58

Thus, for Jaurès, the existence of these monopolies still constitutes a threat to international stability. Karl Kautsky goes one step farther, developing an idea belonging to Hilferding which the latter author had mentioned briefly. It suggests the possibility of a giant cartel, directing world production and eliminating crises.59 Kautsky writes:

From the purely economic point of view it is not impossible that capitalism will yet go through a new phase, that of . . . ultra-imperialism60

which would be characterized by “the joint exploitation of the world by internationally combined finance capital.”61

The constitutional socialists thus stress the uniting and peaceful aspects of the policy of finance capital. They follow the corresponding tactic of letting the fruit take its time to mature until it is ripe to be picked by the socialist parties. They are the precursors of the “internationalist approach” to the problem of a socialist world order which will be treated in the next chapter.

Lenin’s Thesis

Unlike the “opportunists,” Lenin, relying heavily on Hilferding, maintained that finance capital was by its nature bellicose. The need for ever larger protected markets, he taught, and the growing requirements of the advanced industries for raw materials make it imperative for the monopolistic combines, backed by their respective states, to dominate large and rich territories. Since no “free” areas remain, the capitalists divide the world among themselves. They do this

not out of any particular malice, but because the degree of concentration which has been reached forces them to adopt this method in order to get profits. And they divide it in proportion to “capital,” in proportion to “strength,” because there cannot be any other system of division under commodity production and capitalism.62

In accordance with this strength, “capitalist alliances based on the economic division of the world”63 come and go until a constellation is reached which makes the starting of a new war of redivision a promising enterprise. The rise of new imperialist powers and the divergent rates of economic development in the various parts of the world—a typical feature of capitalism, especially in its monopolistic stage64—make recurring wars inevitable. These are fought not only over agrarian, that is, underdeveloped areas: even highly industrialized regions form the object of conquest for hegemony-minded states.65 For Lenin, therefore, imperialism is definitely the last stage of capitalism which will be overthrown by the revolutionary proletariat.

SUMMARY AND CONCLUSIONS

Marx’s analysis of the development of capitalism incorporated various elements. To the basic principles of earlier anti-capitalist economic theory centering around labor value, he added his own version of Hegelianism, that is, historical materialism.

The idea of a progressive historical development had, as we remember, already dominated the Saint-Simonian school. The idea now becomes the cornerstone of “scientific socialism.” It is suggested that history is a dialectical evolution, marked by the struggle between two antagonistic classes. Each class has its historically determined task to fulfill, but it must go off the stage as soon as the “material forces of production” have established a new mode of production, releasing new forces and demanding new institutions for their future development. This doctrine is not proved by Marx; it nevertheless provides the basis on which he builds his theoretical edifice.

Capitalism, with all its peculiarities (such as the law of value, accumulation and concentration of capital, and crises) is but an historical stage in human evolution. But because this evolution is regarded as a rational process, there must be a point at which human inequality and exploitation will disappear. This, then, is the final and logical goal of historical development. It will be achieved when the most progressive class vanquishes its former exploiters by a worldwide revolution and establishes new and final “property relations” excluding social antagonisms.

These two basic elements of Marxist doctrine then—(1) rational historical development and (2) relations of production, leading to the concept of classes—provide the key to understanding the future international order which the author of Capital and his followers anticipated. The internationalization of all human affairs, so forcefully initiated by capitalism, will be brought to its logical conclusion under socialism: the world community. “The workingmen have no country.”66 Just as they are uniting as a class to throw off the yoke of capitalist exploitation, they will be bound together by a deep unity of purpose and solidarity after having achieved their common aim. This will provide the safe fundament on which to build the socialist world order.

According to this doctrine, men are not free to choose the economic order under which they wish to live. Either they have understood historical materialism and are working for the accelerated advent of socialism; or, if they cling to the principles of capitalism, they are to be regarded as the defenders of exploitation. To illustrate the method of Marxist argumentation, the following passage written by Lenin is quoted:

The bourgeois reformists, and among them particularly the present-day adherents of Kautsky . . . try to belittle the importance of facts of this kind [i.e. imperialistic wars, E. T.] by arguing that it would be “possible” to obtain raw materials in the open market without a “costly and dangerous” colonial policy; and that it would be “possible” to increase the supply of raw materials to an enormous extent “simply” by improving agriculture. But these arguments are merely an apology for imperialism, an attempt to embellish it, because they ignore the principle feature of modern capitalism: monopoly. Free markets are becoming more and more a thing of the past. . . . Where, except in the imagination of the sentimental reformists, are there any trusts capable of interesting themselves in the condition of the masses instead of the conquest of colonies?67

And the same author asks:

Is it not a fact that the more rapidly trade and capitalism develop, the greater is the concentration of production and capital which gives rise to monopoly? And monopolies have already come into being—precisely out of competition.68

Thus, there is no use in yearning for things which definitely belong to the past; instead, all attention must be focused on clearing the road of history by promoting the socialist cause.

But what will be the fate of national states in a future socialist order? Marx, as we shall see in Chapter V, did not ignore their reality; but he believed that national states were the political superstructure corresponding to the capitalist mode of production and that they would eventually be displaced by the international class solidarity of the proletariat.

Was Marx accurate in discarding the State as a primordial reality from his theoretical system and in building the latter on the concept of class? Is it admissible to deal only with “personifications of economic categories” instead of with individuals? On the answer to these questions depends not only the soundness of his explanation of capitalism, but also the validity of his implications relative to an integrated socialist world order.

For the time being, states still exist, and very powerful and aggressive ones at that, as the authors on imperialism attempted to show. What is, in their view, the common feature of these states? That a small minority has succeeded in taking over government and in running the state’s affairs to its own, exclusive interests. Clearly, dominium is here united with imperium, and a thorough organization of all human activities serves the purpose of national power politics. This is precisely the kind of state against which Proudhon so eloquently warned his readers. The question of whether Hilferding’s theses correctly reflect “capitalist” reality at the turn of the century is irrelevant to this context. But we are interested in the international economic consequences of an “enclosed” centralized state, consequences which were accurately analyzed by this author. This raises two interesting points. If Lenin is right in maintaining that it is “the latest stage of capitalism” which produces such undesirable results, what becomes of socialist theory propagating to continue and complete the international division of labor brought about by the forces of capitalism? Conversely, if Hilferding’s conclusions are the outcome not of a particular historical stage, but of a particular internal political setup of states, socialists can hope to restore peace and order only by postulating a decentralized and depoliticalized internal order. Our investigations so far have shown that this would lead to an inner contradiction of socialist thought.

NOTES TO CHAPTER III

69For more details cf. Tucker, R. C, Philosophy and Myth in Karl Marx. Cambridge, Cambridge University Press, 1961, Chapter II.

70Preface to A Contribution to the Critique of Political Economy (Zur Kritik der politischen Oekonomie). Berlin, 1859, quoted in Bottomore, T. B. (ed.), Karl Marx. Selected Writings In Sociology And Social Philosophy. New York, McGraw-Hill, 1964, p. 51.

71Ibid.

72Ibid., pp. 51-52.

73Ibid., pp. 52-53.

74Capital: A Critical Analysis of Capitalist Production. Volume I, edited and translated by D. Torr, London, Allen & Unwin, 1949, p. xix, italics original.

75The Communist Manifesto (1848). English translation of 1888, edited by Friedrich Engels, quoted in Ebenstein, W., Great Political Thinkers. Plato to the Present. New York, Holt, Rinehart & Winston, 1964, p. 691.

76Preface to Volume I, p. xix.

77Ibid., p. xvi.

78Capital, I, p. 74.

79Sweezy, P. M., The Theory of Capitalist Development. Principles of Marxian Political Economy. New York, Oxford University Press, 1942, 398p.

80Capital, I, p. 130.

81Sweezy, P. M., op. cit., p. 84.

82Capital, III, pp. 472-73.

83Sweezy, P. M., op. cit., p. 183. Rosa Luxemburg in her book Die Akkumulation des Kapitals traced the necessity of capitalist expansionism to overseas territories back to the impossibility to “realize” at home that part of surplus value which is not consumed by the entrepreneur. For the capitalist countries as a whole, the only way out of this dilemma was to sell their surplus production to non-capitalist consumers. However, the backward areas of the world were thereby gradually drawn into the capitalist orbit so that this escape from the basic contradictions of capitalism could only be a temporary one. Rosa Luxemburg’s theory was severely criticized by numerous socialist authors and was to be completely overshadowed by R. Hilferding’s analysis of finance capital which became the basis of Lenin’s doctrine of imperialism.

84Engels, F., Herrn Eugen Dührings Umwälzung der Wissenschaft. 6th ed., Stuttgart, Dietz, 1907, p. 298.

85“Concentration of the means of production and of the command over labor . . . is identical with accumulation.” Capital, I, p. 640.

86According to Marx, the value of any commodity produced under capitalist conditions is expressed by the sum of c (“constant capital,” i.e. materials and machinery used up in production), v (the outlay for wages), and s (surplus value). The “organic composition of capital” is given by the ratio:.

87Capital, I, p. 640.

88Ibid.

89Ibid., p. 641.

90Capital, III, p. 427.

91Hilferding, R., Das Finanzkapital. Marx-Studien, Vol. 3, Wien, Wiener Volksbuchhandlung, 1927, p. 112.

92I.e. capital in money form which is transformed into industrial capital. Ibid., p. 283.

93Ibid., p. 132.

94Ibid., p. 138.

95Ibid., p. 231, italics original.

96Ibid., p. 280.

97Ibid., p. 284.

98Ibid., p. 286.

99Sweezy suggests to replace the term “Finance Capital” by “Monopoly Capital” since, as the possibilities of large-scale industries to plough back their profits increase, the influence of bank financing decreases. The real source of capital is shifted into the monopolized enterprises themselves.

100Capital. Vol. II [The Process of Circulation of Capital), edited by F. Engels, Moscow, Foreign Languages Publishing House, 1957-1959, p. 31.

101The Communist Manifesto. Quoted in Ebenstein, W., op. cit., p. 693.

102Capital, III, p. 109.

103Ibid., p. 232.

104Capital, I, pp. 574-75.

105Ibid., p. 30.

106Capital, II, p. 468.

107Hilferding, R., op. cit., p. 378.

108Ibid., p. 382.

109Ibid., p. 383.

110Ibid.

111   Ibid., pp. 383-84.

112Ibid., p. 389.

113“If capital is sent abroad, this is not done because it absolutely could not be applied at home, but because it can be employed at a higher rate of profit in the foreign country. But such capital is absolute excess capital for the employed laboring population and for the home country in general. It exists as such alongside with relative over-population, and this is an illustration of how both of them exist side by side, and mutually influence one another.” Capital, III, p. 251.

114Hobson, J. A., Imperialism. A Study. 3rd ed., London, Allen & Unwin, 1938, p. 85.

115Hilferding, R., op. cit., p. 395, italics added.

116Ibid., p. 412.

117“Protective tariff implies a restriction of economic territory and thereby a slackening development of the forces of production because it diminishes the optimum size of factories, impedes specialization, and thwarts international division of labor, which causes capital to flow to those production branches for which a country is best suited. This has all the more importance in that . . . tariffs are frequently the result of political power struggles between the different industrial groups.” Ibid., p. 391.

118Ibid., pp. 385-86.

119Ibid., p. 406.

120Ibid., p. 419.

121This is done by the “expropriation of the natives from whom the land and hence the traditional basis of their subsistence is taken away. . . . Expropriation at the same time converts these natives into a proletariat which becomes the helpless object of exploitation.” Ibid., p. 401. Another possibility to achieve the same result presents itself, according to Hilferding, by the introduction of a tax system which exacts from the natives such high contributions that they are unable to meet them except by incessant work in the service of foreign capital. Ibid., p. 402.

122Ibid., pp. 408-9.

123Ibid., p. 426. Joseph Schumpeter, in his essay “The Sociology of Imperialism” (reprinted in his Imperialism and Social Classes. Translated by H. Norden, edited by P. M. Sweezy, Oxford, Blackwell, 1951, pp. 3-130), arrives at very similar conclusions. He underlines, however, that “export monopolism does not grow from the inherent laws of capitalist development” (ibid., p. 117, italics original); its aggressive designs are rather the outcome of pre-capitalist forces, “survivals of the autocratic alignment of interests and they endure wherever the autocratic state endures on the old basis and with the old orientation. . . . They bear witness to the extent to which essentially imperialist absolutism has patterned not only the economy of the bourgeoisie, but also its mind—in the interests of autocracy and against those of the bourgeoisie itself” (ibid., pp. 124-25). However, “such factors will be politically overcome in time, no matter what they do to maintain among the people a sense of constant danger of war, with the war machine forever primed for action. And with them, imperialisms will wither and die” (ibid., p. 130). The same author, in his famous book Capitalism, Socialism and Democracy, 4th ed., London, Allen & Unwin, 1957, “tried to show that a socialist form of society will inevitably emerge from an equally inevitable decomposition of capitalist society” (ibid., p. xiii). Curiously enough, he says nothing about the international economic consequences of socialism, but seems to take for granted the doctrine of the Saint-Simonians and most other socialists that autocratic states essentially belong to a past phase of historical development and will, in due course, disappear along with the international conflicts they have engendered.

124Hilferding, R., op. cit., p. 428.

125Speech held on November 19, 1909, quoted in Freymond, J., Lénine et l’impérialisme. Lausanne, Payot, 1951, pp. 46-47.

126Quoted ibid., p. 50.

127Hilferding, R., op. cit., p. 372. The author adds, however, that he thinks such a state of affairs socially and politically impossible due to the conflict of interests which, far from being reconcilable, would be sharpened to the extreme.

128Die Neue Zeit, April 30, 1915.

129Ibid.

130Lenin, V. I., Imperialism, The Highest Stage of Capitalism. New York, International Publishers, 1951, p. 75.

131Ibid.

132Ibid., p. 63.

133Ibid., p. 45.

134Communist Manifesto, in Ebenstein, W., op. cit., p. 701.

135Lenin, V. I., op. cit., p. 83.

136Ibid., p. 113, italics original.

• 1.“Socialism, then, will flourish in proportion as the consciousness grows that there is something vitally wrong in the industrial organization of society.” Guthrie, W. B., Socialism Before the French Revolution. New York, Macmillan, 1907, p. 68. As Robert Owen expresses it: “Until society can be made to understand the impracticability of improving its conditions under the existing circumstances and can be induced to change these circumstances in toto, no real advantages can be obtained for mankind.” Lectures on an Entire New State of Society. London, 1820, p. 138.
• 2.Cf. Karl Marx’s 11th Thesis on Feuerbach. In Borkenau, F. (ed.), Karl Marx. Frankfurt/M., Fischer, 1956, p. 42.
• 3.The term “liberal” is used here in its original European sense. “Liberalism is a belief in the value of human personality, and a conviction that the source of all progress lies in free exercise of individual energy; . . . it therefore involves a readiness to use the power of the state for the purposes of creating the conditions within which individual energy can thrive, of preventing all abuses of power, of affording to every citizen the means of acquiring mastery of his own capacities and of estabhshing a real equality of opportunity. . . .” Encyclopaedia Britannica, Vol. XIII, 1959, p. 999d.
• 4“It follows from what has been said that the system here established, if it is to be realized, should be adopted or rejected in entirety.” Fichte, J. G., op. cit., p. 103.
• 5Freyer, H., op. cit., p. 26.
• 6Heuss, A., “Hellas. Die archaische Zeit.” Propyläen Weltgeschichte, ed., G. Mann and A. Heuss, Berlin, Propyläen Verlag, 1962, III, p. 373.
• 7Ibid.
• 8“They will go to mess and live together like soldiers in a camp. . . . They alone of all the citizens may not touch or handle silver or gold, or be under the same roof with them or wear them, or drink from them. And this will be their salvation, and they will be the saviors of the State.” Quoted from Republic, Book I, in Gray, A., The Socialist Tradition. Moses to Lenin. London, Longmans, 1946, p. 19.
• 9Plato, Laws. With an English translation by R. G. Bury, London, Heinemann, 1926, Vol. I, Book I, p. 9.
• 10Ibid., Vol. II, Book XII, p. 477.
• 11Ibid., Book VII, p. 135.
• 12Ibid., p. 149.
• 13Ibid., Book XII, p. 547.
• 14Ibid., p. 537.
• 15Ibid., p. 521.
• 16Ibid., Book VII, p. 185.
• 17Ibid., Book XI, p. 413.
• 18Ibid., Book VIII, p. 171.
• 19Ibid., Vol. I, Book IV, pp. 257-59, italics added.
• 20Ibid., Vol. II, Book VIII, p. 185.
• 21Ibid.
• 22Ibid., p. 187.
• 23Ibid., Book XII, p. 503.
• 24Ibid. Plato lays down the following rules: “First, no man under forty years old shall be permitted to go abroad to any place whatsoever; next, no man shall be permitted to go abroad in private capacity, but in a public capacity permission shall be granted to heralds, embassies, and certain commissions of inspection. . . . These men, when they return home, will teach the youth that the political institutions of other countries are inferior to their own.” Ibid., p. 505.
• 25Ibid., p. 507.
• 26Ibid.
• 27Ibid., p. 509.
• 28Ibid., p. 511.
• 29Ibid. “The officials . . . shall have a care lest any such strangers introduce any innovation, and they shall duly dispense justice to them, and shall hold such intercourse as is necessary with them, but to the least extent possible.” Ibid., p. 513.
• 30Guthrie, W. B., op. cit., p. 64.
• 31Ibid.
• 32Ibid., p. 68.
• 33More, Sir Thomas, The Utopia. In Latin from the edition of March 1518 and in English from the first edition of Ralph Robynson, translated in 1551, edited by J. H. Lupton. Oxford, Clarendon Press, 1895, p. 118.
• 34Ibid., p. 119.
• 35Ibid., p. 140.
• 36Ibid., p. 157.
• 37Ibid., pp. 170-71.
• 38Ibid., pp. 171-72.
• 39Ibid., p. 245.
• 40Ibid., p. 244.
• 41Ibid., p. 154.
• 42Ibid., pp. 154-55, italics added.
• 43Ibid., p. 179.
• 44Ibid., p. 251.
• 45Guthrie, W. B., op. cit., p. 54.
• 46Fichte, J. G., op. cit., pp. 4-5.
• 47“I have described property as the exclusive right to actions, by no means to things.” Ibid., pp. 5-6, italics original.
• 48Ibid., p. 4.
• 49Ibid., p. 56, italics original.
• 50Ibid., p. 14.
• 51Ibid., p. 19.
• 52Ibid., p. 26, italics added.
• 53Ibid.
• 54Ibid., p. 27, italics original.
• 55Ibid.
• 56Ibid.
• 57Ibid., p. 41, italics original.
• 58“The wealth of a person does not depend on how many pieces of money he possesses, but on how large a part of total circulating money he holds.” Ibid., p. 42.
• 59“Every possibility of world trade presupposes the availability of a universally accepted means of exchange. . . . Hence, our task should be solved in the following way: all world money possessed by the citizens, that is all gold and silver, should be brought out of circulation and exchanged for a new national currency which would be valid only inside the country.” Ibid., pp. 99-100, italics original.
• 60Ibid., p. 111.
• 61Ibid.
• 62“The import and use of commodities which serve prestige purposes only can at once be prohibited.” Ibid., p. 115.
• 63Ibid., p. 113, italics original.
• 64Fichte clearly realized this and also the danger of inflation it implies. Therefore, in order to assure the success of the monetary reform, “the government formally renounces, for eternal times, to increase arbitrarily and to its own advantage the quantity of circulating national money.” Ibid., p. 103. The author goes so far as demanding that the centrally fixed prices must be constitutionally laid down and guaranteed.
• 65Ibid., p. 114.
• 66Ibid., p. 90, italics original.
• 67Ibid., p. 119.
• 68Ibid., pp. 94-95, italics added.
• 69SOCIALISTS HAVE CONCLUDED that something is fundamentally wrong with the “society” in which they live. Consequently, they feel compelled to change it.
• 70SOCIALISTS HAVE CONCLUDED that something is fundamentally wrong with the “society” in which they live. Consequently, they feel compelled to change it.
• 71The main target of socialist criticism, therefore, is the liberals’ stress on individual freedom and utility. Such freedom and utility, it is argued, lead to particularism and chaos. Since the profit motive is founded on considerations of individual as distinct from collective welfare, it is, in the opinion of socialists, totally unsuitable as a means of regulating the economy. Unlike the liberals, therefore, the socialists are primarily preoccupied with the exaltation of the community, and the subordination of the individual to it.
• 72Freyer compares the inner organizational structure of an ideal commonwealth with the “cosmos of the Greek philosophers: finite, round and numerically ordered so that it can simply and clearly be governed by static laws.” To this self-inclusive system all forces not rooted in its laws, and which therefore threaten to interfere with its proper functioning, must appear hostile and dangerous. The only choice a Utopian author leaves his reader is an uncompromising take it or leave it. Hence, a utopia must be strictly isolated from the rest of the world; “all factors and forces which by their nature transgress borderlines and join countries, must at the outset be viewed suspiciously in utopias.”
• 73Freyer compares the inner organizational structure of an ideal commonwealth with the “cosmos of the Greek philosophers: finite, round and numerically ordered so that it can simply and clearly be governed by static laws.” To this self-inclusive system all forces not rooted in its laws, and which therefore threaten to interfere with its proper functioning, must appear hostile and dangerous. The only choice a Utopian author leaves his reader is an uncompromising take it or leave it. Hence, a utopia must be strictly isolated from the rest of the world; “all factors and forces which by their nature transgress borderlines and join countries, must at the outset be viewed suspiciously in utopias.”
• 74Mankind will always be indebted to Plato for the prototype of the ideal commonwealth. This author lived at a time when democracy, the long cherished political order of Athens, had degenerated into a “bustle of rancour and baseness.” In this period of political disintegration and liberated individualism, Socrates had been sentenced to death and executed by the Athenian authorities. The rising philosophical school of the Sophists relativized all moral institutions as being solely dependent on human will in general, and that of the strong in particular.
• 75Against this philosophical anarchism Plato set his theory of the objective existence of absolute principles, the highest of which was justice. Justice may be recognized by an intelligible act and thus refuses to tolerate any authority besides itself, not even that of laws. “What is just can only be discerned for each individual case with respect to the Idea and by the one who possesses the necessary capability; that is, by the philosopher. . . . The just in the highest sense, hence the one who discerns, is therefore himself the law and thus above the rigid letter.”
• 76Human domination is thus openly admitted, but it must be domination by the chosen few endowed by nature, as an old Greek legend has it, with golden hearts. Plato’s goal is to found a state which would personify the moral Idea. The first prerequisite for such a state is unity of purpose, directed at the attainment of absolute justice. The second step is to devise a way of life for the “lovers of wisdom” which would bring them into closest communication with the Idea and its dictates. To achieve this end, Plato established severe rules for the philosophers, forbidding them to have families and private possessions and forcing them into a life of military discipline. Here, for the first time, the ideal of asceticism was linked with the denunciation of gold and silver which was identified with wealth and was regarded as the last cause of human greed and egoism.
• 77Plato, well aware that his Politeia was not realizable on this earth, designed, in his “Nomoi,” a second-best State in which the rulers were less enlightened and therefore, as the title indicates, in need of a coherent framework of guiding laws. Plato retains the military structure in the interior, he even defines “the well-constituted State” as one which “ought to be organized in such a way as to be victorious in war over all other States.” Elsewhere he writes:
• 78The main principle is this: that nobody, male or female, should ever be left without control, nor should anyone, whether at work or in play, grow habituated in mind to acting alone and on his own initiative, but he should live always, both in war and peace, with his eyes fixed constantly on his commander and following his lead.
• 79For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 80For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 81For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 82For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 83For this purpose, it is necessary to liberate the citizens from their “lust for wealth which allows a man no leisure time for attention to anything else save his own private property.” And the author continues: “That the laws previously ordained serve to repress the majority of desires, is not surprising.” This is so because “all our laws must always aim at one single object which, as we agreed, is quite rightly named ‘Virtue.’” The State and its citizens are identical in that they both require “the salvation of laws;” therefore, “everyone shall regard the friend or enemy of the State as his own personal friend or enemy.”
• 84Internal economic life is strictly regimented. Thus, “each several craftsman in the State shall have one single craft and gain from it his living.” Or again:
• 85The Law-wardens must meet in consultation with experts in every branch of retail trade, and at their meetings they must consider what standard of profits and expenses produces a moderate gain for the trader, and the standard of profits and expenses thus arrived at they must prescribe in writing; and this they must insist on—the market stewards, the city stewards and the rural stewards, each in their own sphere.
• 86Most of the Greeks arrange for their food to be derived from both land and sea, but our people will derive it only from the land. This makes the lawgiver’s task easier.
• 87For if the State was to be on the sea-coast, and to have fine harbors, and to be deficient in many products, instead of productive of everything—in that case it would need a mighty savior and divine lawgivers, if, with such a character, it was to avoid having a variety of luxurious and depraved habits. As things are, however, there is consolation in the fact of that eighty stades. Still, it lies unduly near the sea, and the more so because, as you say, its harbors are good; that, however, we must make the best of. . . . Our State has compensation in the fact that it is all-productive; and since it is hilly, it cannot be highly productive as well as all-productive; if it were, and supplied many exports, it would be flooded in return with gold and silver money—the one condition of all, perhaps, that is most fatal, in a State, to the acquisition of noble and just habits of life.
• 88What remains of foreign trade is severely guarded by the State. It is true that “no toll shall be paid in the State by anyone either on exported goods or on imports,” but this is practically meaningless since
• 89Frankincense and all such foreign spices for use in religious rites, and purple and all dyes not produced in the country, and all pertaining to any other craft requiring foreign imported materials for a use that is not necessary, no one shall import; nor, on the other hand, shall he export any of the stuff which would of necessity remain in the country. . . .
• 90In regard to arms and all instruments of war, if there is need to import any craft or plant or metal or rope or animal for military purposes, the hipparchs and generals shall have control of both imports and exports, when the State both gives and takes, and the Law-wardens shall enact suitable and adequate laws therefor; but no trading for the sake of gain, either in this matter or in any other, shall be carried on anywhere within the boundaries of our State and country.
• 91the intermixture of States with States naturally results in a blending of characters of every kind, as strangers import among strangers novel customs: and this result would cause immense damage to peoples who enjoy a good polity under right laws.
• 92reputation in the eyes of others, whether for goodness or the reverse, is a thing that should never be lightly esteemed.
• 93The State may send out “inspectors,” i.e. men over fifty years of age and of great merit, “who desire to survey the doings of the outside world in a leisurely way.” But they must be “incorruptible, so as to confirm thereby such of his native laws as are rightly enacted, and to amend any that are deficient.” On their return, the inspectors will report to a “mixed body of young men and old” on “anything important they may have learnt elsewhere.”
• 94The State may send out “inspectors,” i.e. men over fifty years of age and of great merit, “who desire to survey the doings of the outside world in a leisurely way.” But they must be “incorruptible, so as to confirm thereby such of his native laws as are rightly enacted, and to amend any that are deficient.” On their return, the inspectors will report to a “mixed body of young men and old” on “anything important they may have learnt elsewhere.”
• 95The State may send out “inspectors,” i.e. men over fifty years of age and of great merit, “who desire to survey the doings of the outside world in a leisurely way.” But they must be “incorruptible, so as to confirm thereby such of his native laws as are rightly enacted, and to amend any that are deficient.” On their return, the inspectors will report to a “mixed body of young men and old” on “anything important they may have learnt elsewhere.”
• 96But if, on the other hand, such an inspector appears to be corrupted on his return, in spite of his pretensions to wisdom, he shall be forbidden to associate with anyone, young or old; wherein if he obeys the magistrates, he shall live as a private person, but if not, he shall be put to death.
• 97All foreigners—whether in a public capacity or on a private visit—are, immediately upon their arrival, taken care of by State officials or by priests. Plato is especially distrustful of that “inevitable emigrant” choosing “summer, as a rule, for his annual visits.”
• 98“Plato was the intellectual father of socialists as well as of philosophers.” But whereas he “had a more general abstract end in view . . . , More was interested in the practical solution of actual and present social problems, and busied himself with plans to alleviate existing unfortunate conditions.” These conditions resulted from the enclosure movement in sixteenth-century England. Therefore, “the appearance of ‘Utopia’ marks the beginning of the modern social problems as they show themselves in the incipient stages of the capitalistic period.”
• 99“Plato was the intellectual father of socialists as well as of philosophers.” But whereas he “had a more general abstract end in view . . . , More was interested in the practical solution of actual and present social problems, and busied himself with plans to alleviate existing unfortunate conditions.” These conditions resulted from the enclosure movement in sixteenth-century England. Therefore, “the appearance of ‘Utopia’ marks the beginning of the modern social problems as they show themselves in the incipient stages of the capitalistic period.”
• 100“Plato was the intellectual father of socialists as well as of philosophers.” But whereas he “had a more general abstract end in view . . . , More was interested in the practical solution of actual and present social problems, and busied himself with plans to alleviate existing unfortunate conditions.” These conditions resulted from the enclosure movement in sixteenth-century England. Therefore, “the appearance of ‘Utopia’ marks the beginning of the modern social problems as they show themselves in the incipient stages of the capitalistic period.”
• 101The Island of which Hythloday enthusiastically reports is in the form of a horseshoe and its shores are washed by a calm and friendly sea. However, when Utopus first conquered “Abraxa,” it was a peninsula. This wise king made it an island by cutting an isthmus of fifteen miles. The entry into Utopia’s inviting bay is, moreover, made treacherous by nature because of dispersed rocks and shallows—the safe passages being known only to the fortunate inhabitants themselves.
• 102that they do not think felicity to rest in all pleasure, but only in that pleasure that is good and honest. . . . They define virtue to be a life ordered according to nature . . . and that he does follow the course of nature who in desiring and refusing things is ruled by reason.
• 103This greatly simplifies the economic process. Both men and women work and, since private property is unknown, there is no distinction between rich and poor. Hence, an idle class which must be supported does not exist. In addition, the demand for goods and services is reduced because homespun garments “are throughout all the Island of one fashion . . . seemly and comely to the eye, fit both for winter and summer.” Simple but abundant meals are taken in common, and whatever else is produced is done so in good and lasting quality. Hence, six hours of daily work are sufficient to provide for the Utopians’ necessities; the rest of the time is devoted to common recreation, games, and studies. But even so, the inhabitants cannot help producing surplus. All commodities are stored in warehouses or markets;
• 104from hence the father of every family or every householder fetches whatsoever he and his have need of, and carries it away with him without money, without exchange, without any gage or pledge. For why should anything be denied to him; seeing there is abundance in all things, and that it is not to be feared lest any man will ask more than he needs.
• 105then of those things whereof they have abundance, they carry forth into other countries great plenty; as grain, honey, wool, flax, madder, purple dye, felles, way, tallow, leather and livestock. And the seventh part of all these things they give frankly and freely to the poor of that country. The residue they sell at a reasonable and mean price. By this trade of traffic or merchandise, they bring into their own country not only great plenty of gold and silver, but also all such things as they lack at home, which is almost nothing but Iron. And by reason they have long used this trade, now they have more abundance of these things than any man will believe.
• 106Now, therefore, they do not care whether they sell for ready money or else upon trust to be paid at a day, and they have the most part in debts. But in so doing they never follow the credence of private men, but the assurance or warrantise of the whole city, by instruments and writings made in that behalf accordingly. . . . The most part of it they never ask. For that thing which is to them of no profit, to take it from others to whom it is profitable, they think it no right nor conscience. But if the case so stand that they must lend part of that money to another people, then they require their debt; or when they have war.
• 107Of course, the Utopians will never go to battle because of unsettled trade matters. But they will do so
• 108in defence of their own country or to drive out of their friends’ land the enemies that had come in or . . . to deliver from the yoke and bondage of tyranny some people that be oppressed with tyranny. Which things they do by mere pity and compassion.
• 109There may be still another occasion for war. It may happen that the Utopian population (despite institutional attempts at regulation) so increases that it “exceeds the due number throughout the whole island.” In such a case,
• 110they build up a town under their own laws on the nearest part of the mainland where the inhabitants have much waste and unoccupied ground, receiving also the inhabitants to them, if they will join and dwell with them. . . . But if the inhabitants of that land will not dwell with them, to be ordered by their laws, then they drive them out of those boundaries which they now mark out for themselves. . . . For they account this the most just cause of war when any people holds a piece of ground void and vacant to no good nor profitable use, keeping others from the use and possession of it which notwithstanding by the law of nature ought thereof to be nourished and relieved.
• 111The Utopians readily observe this law by returning the colonizers to their native cities as soon as the Island’s number of inhabitants has become deficient. Beyond that, only “very few” go to foreign countries and this only “for some reasonable cause” such as trading.
• 112Utopia’s chief instruments of war are gold and silver. These precious metals are used to hire mercenaries and to lavishly reward foreign agents charged with the outright murder of a hostile prince or to “procure occasions of debate and dissention to be spread among their enemies.” The Utopians themselves, though well trained and prepared for war, fight only if they must to defend their country.
• 113“The first socialistic theorist, Sir Thomas More,” wrote his Utopia as a reaction against the social evils of his time. General humanitarian feelings and a strong empathy with the miserable lot of the poor classes merged, in the eighteenth century, into the powerful current of thought which was set free by the Enlightenment. History and politics were now subjected to the analysis of reason. A natural and reasonable social, political, and economic order was supposed to exist, derivable from the knowledge of human character. The “social contract” offered a normative formula which indicated how society should be built if its construction were influenced only by reason and not also by error, lust for power, and custom.
• 114Johann Gottlieb Fichte, at the turn of the century, combined French rationalism and radicalism with German nationalism. Unlimited freedom, he wrote, means no freedom at all since “no one may appropriately put something into effect and rely for one moment on its duration. This antagonism of the free forces can only be counteracted by the individuals making a mutual agreement.” This agreement restricts the liberty of its participants equally and contains the assignment of an exclusive right to a determined “free” activity to each participant. The agreement thereby constitutes property.
• 115Johann Gottlieb Fichte, at the turn of the century, combined French rationalism and radicalism with German nationalism. Unlimited freedom, he wrote, means no freedom at all since “no one may appropriately put something into effect and rely for one moment on its duration. This antagonism of the free forces can only be counteracted by the individuals making a mutual agreement.” This agreement restricts the liberty of its participants equally and contains the assignment of an exclusive right to a determined “free” activity to each participant. The agreement thereby constitutes property.
• 116it is the State’s function to assign property to each and then only to protect his corresponding rights.
• 117unless it fixes the exact number of those who are permitted to work in a given branch and provides for production of the necessary means of subsistence for all. It is only through this closure that a branch of activity becomes the property of the class which works in it.
• 118the superfluous is always to be set behind the things which are indispensable or hard to dispense with. . . . All should first have enough to eat and be permanently accommodated before anyone decorates his dwelling; all should have warm and comfortable clothes before anyone puts on a sumptuous gown. . . . It is inadmissible to say ‘I can pay for it.’ It is very unjust that one person is able to afford the unnecessary whereas his fellow citizens lack the essentials.
• 119The government guarantees not only work, but also a ready market to its citizens. This is possible on the basis of the general plan. Prices are fixed by the State, and have a legal character.
• 120The State is obligated to guarantee to all citizens, by law and coercion, the conditions resulting from this equilibrium of mutual intercourse. Yet it is unable to do so if any person outside its laws and dominion has any influence on this equilibrium. It is therefore imperative to cut off the possibility of such an influence. All intercourse with foreigners must be forbidden and made impossible to its subjects.
• 121the government, in order to continuously guarantee its subjects the fulfillment of their customary needs, must be able to rely on the fact that a certain quantity of goods is being traded. How can it count on the foreigner’s contribution to this quantity since he is outside the government’s dominion? It is to fix and warrant the price of a commodity. How can it succeed with respect to the foreigner if it is unable to determine those prices which prevail in his country and at which he buys the raw materials? If the government sets him a price which he cannot afford, he will henceforth avoid its market and deficiency in the satisfaction of customary needs will result. It is to guarantee to each subject the sale of his products at the due price. How can it do so if the subject sells on foreign markets where different commodity relations prevail which it can neither survey nor influence?
• 122a closed commercial state just as it is a closed imperium of laws and individuals.
• 123Each man as well as each commodity belongs either to its jurisdiction or it does not: “there is no third choice.” It follows that any foreign trade that may be judged necessary falls to the exclusive competence of the government “just as it alone is to decide on war, peace, and alliances.”
• 124Each man as well as each commodity belongs either to its jurisdiction or it does not: “there is no third choice.” It follows that any foreign trade that may be judged necessary falls to the exclusive competence of the government “just as it alone is to decide on war, peace, and alliances.”
• 125A closed commercial state . . . can turn into money whatever it desires, provided only that it declares to accept this and no other money. . . . It would thus create a national currency without even raising the question as to whether this money would or would not be accepted abroad, since for a closed commercial state foreign countries are as good as nonexistent.
• 126A closed commercial state is utterly indifferent to whether there is, to speak in customary language, a large or a small circulation of money. The total sum of circulating money simply represents the total quantity of publicly traded goods.
• 127In the first place private foreign trade is to be made impossible by depriving citizens of all international means of payment. This deprivation must be preceded by the following measure:
• 128Immediately before the promulgation of the new national currency, the government buys all foreign goods existing in the country. . . . This purchase takes place partly in order to assess the available stock and the present needs for these commodities, and partly in order to centralize their price fixing.
• 129By the same stroke with which it introduces the new national currency, it is to take over all assets and liabilities resulting from foreign trade.
• 130Henceforth, the government will decide which commodities will continue to be exported and imported.
• 131The government pays to or claims world currency from the foreigner and then pays to or claims national currency from the citizen.
• 132The same method of control will be applied to all foreign trade transactions and their corresponding payments. The separation of currencies will be paralleled by a separation of the internal price level from that prevailing on the world market. Therefore,
• 133the citizen does not buy at the price the government pays to the foreigner for a commodity, but at the one prescribed by internal law with due consideration for the citizen’s fair subsistence during the time he resells it.
• 134Exports are to be similarly regimented. The prices of foreign goods are gradually raised so as to break the citizens of their habit of desiring them, the final aim being “that the State completely isolates itself from any foreign trade.”
• 135Fifthly, “simultaneously with the execution of these measures the State is to move into its natural frontiers.” This leads us to an interesting point of Fichte’s political theory. He writes:
• 136Certain areas of the earth’s surface, including their inhabitants, are clearly destined by nature to form political units. They are separated from the rest of the earth by large rivers, seas, inaccessible mountains. . . . It is these indications of nature as to what is to remain united and what is to be separated that one has in mind when speaking, in modern politics, of the natural frontiers of empires; a consideration which should be taken far more seriously than is commonly done. Nor is sole emphasis to be placed on strong and militarily well protected frontiers, but much rather on productive independence and self-sufficiency.