Socialism: A Summary and Interpretation of Socialist Principles

by John Spargo

Obvious as this distinction may seem, it is very often lost sight of, and when recognized it presents difficulties which are almost insurmountable. It is well-nigh impossible to present statistically the relation of the concentration of capital to the concentration or diffusion of wealth, important as the point is in its bearings upon modern Socialist theory. While the distinction does not affect the argument that the concentration of capital and industry makes their socialization possible, it is nevertheless an important matter. If, as some writers, notably Bernstein,[107] the Socialist, have argued, the concentration of capital and industry really leads to the decentralization of wealth, and the diffusion of the advantages of concentration among the great mass of the people, especially by creating a new class of salaried dependents, then, instead of creating a class of exploiters ever becoming less numerous, and a class of proletarians ever becoming more numerous, the tendency of modern capitalism is to distribute the gains of industry over a widening area—a process of democratization in fact. It is very evident that if this contention is a correct one, there must be a softening rather than an intensifying of class antagonisms; a tendency away from class divisions, and to greater satisfaction with present conditions, rather than increasing discontent. If this theory can be sustained, the advocates of Socialism will be obliged to change the nature of their propaganda from an appeal to the economic interest of the proletariat to the general ethical sense of mankind. There can be no successful movement based upon the interests of one class if the tendency of modern capitalism is to democratize the life of the world and diffuse its wealth over larger social areas than ever before.

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

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

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

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

DIAGRAM
Showing the Distribution of Income by Classes in Prussia

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

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