French and German Socialism in Modern Times

by Richard T. Ely

Now let us see how this produces pauperism and crises.

In society we find laborers, capitalists, and landlords. These classes can exist only because there is a division of labor, and laborers produce more than they consume. Landlords and capitalists receive what is called rent, which is any income derived from the fact of possession and not from labor. All the rest is labor’s share. Now how does it happen that rent-receiving classes are able to exist? in other words, how is one man enabled to take from another a part of the fruits of his labor? This is because private property in land and capital exists. Land and capital constitute the instruments of labor, and without them production is impossible. Their possessors refuse to give them up to another’s use unless a share of the produce is guaranteed them therefor, while the laborer’s hunger and the sufferings of his family compel him to assent. Labor is treated as a commodity. It is bought and sold like other commodities, and its value depends on its cost. What is the cost of labor? Manifestly the cost of continuing labor; in other words, such means as will enable the laborer himself to live and to beget children who shall continue to labor after he is gone. What the laborers require to live, and to marry, and beget children in sufficient numbers to supply the labor market, is their standard of life. This they obtain and no more. Labor costs labor, and is measured by labor; but labor produces more than it consumes, and this surplus-value is rent. Does the laborer’s standard of life rise with the increase in productivity of economic forces? No, it is even doubtful whether it is rising at all. Then the conclusion is inevitable that labor’s proportion or quota decreases. Rodbertus thinks he can prove, from the income returns in England since 1800, and from the division of the national product of England into rent, wages, and profits, that the increased production of machine power, estimated as equal to the labor of five hundred and fifty millions of men, has benefited wholly and entirely landlords and capitalists.[166] Rodbertus puts the matter as follows to laborers: “Under the régime of laissez-faire and with our present property laws, your level, your portion of the goods produced, tends to fall, not to rise; to convince yourselves, look at our situation in general. Has the separation in the incomes of social classes become greater or smaller since we possess machines and railroads, and productivity and production have increased so remarkably? The answer cannot, indeed, be doubtful. Or consider our situation in particular, and ask the oldest among you whether, during the last forty years, wages—real wages, measured in what wages will buy—have increased as much in your fatherland or your native city as land-rent, or, what is the same, the value of the land, and as much as capital has increased.”[167] We have here, then, an explanation of pauperism and of discontent. A man’s poverty does not depend so much upon what he has absolutely, as upon the relation in which his possessions stand to those of others about him, and upon the extent to which they allow him to share in the progress of the age. A cannibal in the Sandwich Islands is not poor because he has no coat; an Englishman is. When the vast majority were unable to read, a man was not poor or oppressed because he was unable to purchase books, but a German who to-day has not the means to do so is both poor and oppressed.[168]

Rodbertus undertakes, in the second place, to prove that crises result from the continued decrease in labor’s share of all the goods produced. His arguments are remarkable, and contain the ablest explanation yet given of the commercial and industrial crashes which occur every few years.[169]

Let us suppose that the total national production equals at a given moment ten millions of units. It makes no difference what a unit is. It may represent the value of ten oxen, five horses, one thousand bushels of wheat, ten tons of hay, and one hundred sheep, or it may equal the value of any other amount of economic goods. That is a matter of indifference. This production is divided between landlords, capitalists, and laborers, so that each class receives three millions of units, one million going to the state in the shape of taxes. Let us further assume that there is at this moment an equilibrium in production. Three millions of units of such goods, necessaries and comforts, as laborers require, are produced; three millions of units of necessaries, comforts, and luxuries are produced for capitalists; and a like amount for landlords. One million units of goods, such as the state requires, are produced. So long as this relation is maintained a cessation in production is needless. The laborers have the means of purchasing all that is produced for them, as have also landlords, capitalists, and state. If production is doubled, and the same relations are preserved, no crisis is thereby occasioned. But the difficulty lies in the fact that the same proportions are not preserved. Production increases, but the laborer’s share diminishes. He has not the means of purchasing what is produced for him. The capitalists and landlords do not increase their consumption of luxuries pari passu with the diminishing consumption of laborers, as they save in order to become wealthy. Their savings are invested in putting up factories and producing goods for laborers, which laborers have not the means of purchasing in the additional amounts. Cotton goods, cloths, and other commodities are heaped up, and finally there comes a crash. During the period of depression the proper relations are gradually restored. The production has increased to twenty millions of units, let us say, of which the laborers receive four millions of units. Equilibrium is restored, when four millions are produced for them and sixteen millions for the other classes of society. Consequently, in a state of increasing production, we observe an increased consumption of luxuries after every crisis. Production continues to increase in the same relations until the laborers are again unable to purchase what is produced for them, when goods are again heaped up, and we have the anomaly of magazines full of commodities for which there are no purchasers, although there are plenty who desire them. Those for whom they were destined have not the means of purchasing them; and this entails also distress upon others, those who handle these commodities, as well as upon a large part of the rest of society, owing to the close relations existing between different members of the social body. Equilibrium is finally restored by an increased consumption of luxuries. So long as economic life is not regulated these processes will never cease to repeat themselves.

Poverty and commercial panics can be banished only by arrangements which guarantee to laborers a share in the national product, which increases pari passu with increasing production. How is this to be done? I cannot, in this place, give the details, which must be sought in Rodbertus’s writings, particularly in his “Normal Arbeitstag.” I will sketch the outlines of his plan.

The state must interfere. An estimate must be made of the value of the national product, and of the share which laborers receive at the time of the valuation. We will assume that all the products of society during a year can be produced by four millions of hours of the labor of an average man. The value of the yearly production equals four millions of hours. Let us suppose that the laborers receive the product of one million hours. They are given in exchange for this receipts, a kind of paper money, the unit of which is one hour. All that is produced finds its way first into magazines, and laborers and others, on presenting labor-time money, receive its value in goods. If the productivity of labor doubles, an hour will secure double the amount of goods. This is the solution, then, of the problem of securing for the laborers a fixed share of production and an amount of goods which increases with increased production.

It is probably in itself, per se, not impossible. What is lacking is the will. This makes it practically impossible. Many practical men have regarded the scheme with favor. Indeed, a German architect has prepared and published tables showing the value of the product of an average hour’s work in the building trade, and of the share received by the laborer himself.[170] Their accuracy was not disputed by builders, though they doubted the advisability of letting the laborers know exactly the proportion which constituted their wages. Rodbertus did not claim that it would be the task of a day to carry out this plan, but he thought a state which regarded lightly the expenditure of four hundred millions for military purposes ought not to begrudge one hundred millions at once, and perhaps more hereafter, to banish pauperism and stagnation in trade and industry. He spoke of one or two centuries as necessary to realize these plans. He did not, however, regard private property in land and capital as the ultimate form of their possession, although the above scheme allows both. He thought there were three stages in economic development. In the first, private property in human beings—slavery, serfdom, and vassalage—existed; in the second, that in which we now live, private property in capital—i.e., the instruments and means of labor—was a social institution; in the third, private property in income alone was to be allowed. Each one was to enjoy in this third stage the full fruits of his labor.

It is needless to say that Rodbertus waged no crusade against land or capital. No one was ever so great a fool as to do that. Every social democrat, even, admits the necessity of both land and capital. He did not, however, believe that it was forever necessary that capitalists and landlords as separate classes should exist. There is the same difference between capital and capitalist as there is between labor and slave. Once, he who waged war on slavery was looked upon as a man who was trying to abolish labor. In the future Rodbertus thinks we will separate in the same manner capital and capitalist, and abolish the capitalist class as we have already abolished the slave-holding class. This does not at all imply equality. Great differences could still exist, but they would be based on merit.

A period of laissez-faire was held by Rodbertus to denote a transitional stage and a preparation for a different social organization. After the social order of the Roman republic, which was founded on the possession of many slaves, and production on a large scale by them, had had its day, freedom in trade and commerce reigned under the emperors, but was terminated by the feudal system of the Middle Ages, for which state it was only preparatory. In the same manner, the present imperfect and unsatisfactory organization, or, as he perhaps would have said, disorganization, was to end in a higher social stage. It was wicked and impious to hope for an improvement from laissez-faire, which he called a fool’s paradise. Good things did not come to us in this world of themselves. It was intended that we should work for them, and for their attainment use all the instrumentalities which Providence has committed to us, the state included.

All of the leading socialists of to-day, to whatever socialistic group they may belong, have been influenced greatly by Rodbertus. An understanding of his theories renders it comparatively easy to understand Marx and Lassalle.