III. (2)

In the first section of this chapter we stated that the development of corporate methods of doing business brought a new factor into the development of capitalism which apparently worked at cross-purposes with those tendencies of capitalistic development which, according to Marx, were to result in the destruction of the middle classes of capitalist society. We also stated there that this presented to Marx-students the problem of harmonizing the Marxian prognosis as to the tendencies of development of capitalism with this new factor, and that the Revisionists were not equal to the task, and therefore came to the conclusion that Marx's prognosis was wrong. We interrupted the argument in order to give in the second section a characterization of the different social classes of the capitalist society which Manx had before him, in order to understand his position with reference to them. This was necessary in order that the reader may get the full meaning of the argument that we are going to present here in an endeavor to show that the Marxian prognosis of the development of capitalism and its ultimate fate, as well as the delineation of the social system which is going to take its place, need no revision, any more than any other part of his theoretical system. We shall now, therefore, return to our revisionist friends, and particularly to their leader, Eduard Bernstein.

The main points of Bernstein's position on this subject, as already stated, are: 1st, that as a matter of fact the concentration of capital is not as rapid as Marx or some Marxists imagined or believed. 2nd, that as a matter of fact there is no centralization of capital, that wealth does not accumulate in few hands only to the exclusion of all others, and that the middle class is, therefore, growing instead of disappearing. And 3rd, that the reason for the divergence in the tendencies of the concentration of capital on the one hand, and the centralization of wealth on the other, is due to the development of the new social factor, the corporation.

This being a purely theoretical discussion, the first point can hardly be considered. Theoretically only the tendency of the evolutionary phenomena is of any importance. What may, therefore, have been of very great importance in the discussion between Bernstein and Kautsky, which embraced other than purely theoretical matters, may be of only secondary importance here. The length of time which History will take to complete the evolutionary process outlined by Marx is no part of the Marxian theoretical system. Marx never stated it, and it could, therefore, only be surmised what his opinion on this subject was. But even if he had expressly stated it, that would not, of itself, make it part of his theoretical system. Besides, the ground is so well covered by Kautsky that one does not feel like doing less, and can hardly do more, than reproduce the Kautsky argument in full. And as considerations of space do not permit us to do that, we must refer those of our readers who may be interested in this phase of the discussion to the original.

As to whether, and how far, the second point made by Bernstein is of any importance in the discussion of the Marxian theory will be considered later. Here we will examine the phenomenon supposed to have been noted by him. We have already mentioned the fact that the only proof on which Bernstein relies to establish his second proposition are certain statistics as to incomes. But right here the fallacy of his statistical method becomes apparent. Aside from the fact that there is no standard by which you can measure the different grades or divisions of incomes as high, middle or low, and any such division must, therefore, necessarily be arbitrary, and aside from the fact that such standard must vary, not only from country to country, but even between places in one country and even in close proximity with each other, and (and that is of paramount importance) from time to time, there is the cardinal defect that income, as such, is no index whatever to either social or economic position. A man's income does not, necessarily, place him in any social position, and need not, necessarily, be the result of a certain economic condition, except under certain exceptional circumstances when, as Marx would put it, quantity passes into quality. The mere statement of a man's income does not, therefore, give his social position or economic condition, unless it be first proven that certain incomes can only be derived in a certain way, or from certain sources. Bernstein glides over carelessly from incomes to property, assuming that the derivation of a certain income implies the possession of a certain amount of property. But this nonchalance is due to an absolute lack of understanding of the real questions at issue. As a matter of fact, a given amount of income does not always, nor even in the majority of cases, indicate the possession of a given amount of property. A farmer, a manufacturer, a grocer, a teacher, an army officer and a mechanical engineer, may all have the same income, and yet their social position, their economic condition, and the amount of property which each possesses may be entirely and radically different. The question is, or should be, not what is a man's income, but what does he derive it from? And, under what conditions, and in what manner does he do it. And this does not mean merely that the inquiry should be directed to the amount of property he possesses, or whether he possesses any at all, but also, if he does possess property, to the question of what it consists of and how it is employed in order to yield the income. The importance of this last point will immediately suggest itself if the reader will recollect what we said in the second section of this chapter on the psychological and ideological effects of the different kinds of property and the different occupations. But we shall discuss this more at length further below.

As we have already stated, however, in the first section of this chapter, the real strength of Bernstein's argument does not lie in the statistical data with which he attempts to prove his alleged facts, but in the social phenomenon which he observed and which seems to counteract the evolutionary tendencies of capitalism described by Marx. The real meat of his argument lies in the third point mentioned above. The real question is: how does the modern development of that social economic factor, the substitution of corporate in the place of individual economic action on the part of the capitalists, react on the fortunes of that class. Our inquiry must not, however, be limited to the question of the division of income within that class, but also as to how, in what manner and under what circumstances, this division is being effected. We must find out not only how much each capitalist gets as his share of surplus-value created by the working class, but how his share is determined and what he must do in order to get it. Into what relations does his getting it, and the manner in which he gets it, bring him to his fellow-capitalists, the other classes of society, and society at large, that is, the social organization as a whole.

Bernstein says, in discussing the importance of the Marxian theory of value, that the fact of the creation by the working class of surplus-value, and its absorption by the capitalist class being provable empirically as a fact (to his satisfaction, of course) it makes no difference by what economic laws it is brought about. This may be good enough reasoning when one starts out from so-called “ethical” premises, but is absolutely inadequate from the scientific historico-economic point of view. We have already sufficiently pointed out the great importance of the difference which does exist, in its purely economic bearings, and now we wish to insist on it because of what might be termed its social or ideological importance. For it is not the mere fact of the creation by one class of surplus-value or a surplus-product and its absorption by another class, but the way in which it is done that gives its character, including its ideology, to society as a whole and to each and every class and subdivision of a class therein. In examining, therefore, the influence of the development of the corporation on the fortunes of the capitalist class, it is not only the effect upon its numbers, but also and mainly the effect upon its character that is to be considered, for on the latter may depend the character of the whole social system. Upon the latter may also depend the durability of the social system and its speedy transformation into another. We shall, therefore, examine the question from both aspects.

And first as to numbers. Does the substitution of corporate for individual effort arrest the shrinkage of the numbers of the capitalist class or develop a tendency to its expansion, as Bernstein asserts? Decidedly not. And even Bernstein's empirical-statistical method, poor as it is, shows this. Bernstein does not deny the absolute and relative growth of the working class. And as the working class and capitalist class can only grow, aside from their proportional growth with the growth of population, at the expense of each other, they evidently cannot both grow at the same time. But this is just what is evidently happening if Bernstein is to be believed. Both the capitalist class and the working class are simultaneously growing at the expense of each other! Only the uncritical handling of mere figures could betray him into such an absurdity. A careful examination, on the other hand, of the actual phenomena under consideration would have shown him that while the corporation may arrest the rapidity of progress in the shrinking process of the capitalistic ranks, it cannot do away with the process itself. The capitalist class must shrink!

In this connection we must, in the first place, consider the fact, already noted by Marx, that the corporation itself is a means towards the concentration of capital, with all that it implies. By combining the smaller capitals of the individual capitalists, and more particularly by turning over to the big capitalists the small capitals of the middle class and upper strata of the working class, either directly or indirectly, by means of banking and savings institutions, such tremendous concentrations of capital and industrial undertakings are made possible which otherwise could not, or could only with great difficulty, take place. This places the whole industrial system on a higher plane of capitalization and must necessarily force out a lot of small capitalists by making their capital inadequate for the undertakings in which they are engaged, and the return on their capital, owing to the increased falling of the rate of profits, insufficient to sustain them. Thus, while on the one hand this form permits these small people, or some of them, to combine their capitals and thereby gain a new lease of life, long or short as the case may be, it on the other hand gives additional impetus to the very forcing out process which makes their individual independent position untenable. While in one way it retards the shrinking process it, in another way, accelerates it.

Another point to be considered in this connection is the fact that the corporation is the chosen and well-adapted means of all forms of dishonest and speculative undertakings, by means of which the unscrupulous rich manage to relieve the confiding, because helpless, poorer strata of the capitalist class of whatever individual competition has left to them. In times of “prosperity” all sorts of industrial and commercial undertakings are organized which no one would dream of organizing if he had to do it with his own capital. But as the corporation form permits the “promotion” of these schemes at the expense of the public, there will always be found enough “promoters” who are willing to “take a chance” with and at the money of the “general public,” which is composed of the lower strata of capitalism. This “public” not being in a position economically to compete with the magnates of capital, are willing to nibble at their schemes in the hope of finding some profitable employment for the remnants of their former fortunes or their savings.

Then comes the panic or the “contraction” and all the bubbles burst, leaving the field strewn with the corpses of the small fry, the would-be-capitalists despite the fact that their means were insufficient to give them standing as capitalists individually. Another and very important aspect of this phenomenon will be considered later in another connection. Here we simply want to point out the fact that the corporation is not merely a means of permitting the small capitalists to participate in the economic undertakings which they could not tackle on their own account, but also of relieving them of their small capitals, and either wasting them or transferring them to the large capitalists, directly or indirectly. This was pointed out at the beginning of the discussion by Kautsky, and since then we have had abundant proof of the great possibilities of this relieving process. The exposures of Thomas W. Lawson have shown that the very loftiest pillars of capitaldom engage in this relieving process, not merely as an incident to the natural “expansion” and “contraction” of the commercial world, but deliberately, with malice aforethought, manufacturing to order “expansion” and “contraction” in order to accelerate the relieving process. These exposures have also shown that where the small fry do not nibble themselves in propria persona, their bankers, savings banks and other depositaries do it for them, as if they were vying with each other to prove the correctness of the Marxian prognosis.

It must not be assumed, however, that this relieving process is due entirely to dishonesty on the part of the big sharks of capitalism in dealing with their weaker brethren. On the contrary, the process itself is a natural one, due to the natural workings of the corporation. This process is only accelerated by the exposed “evils,” by the abuses of the corporate form of doing business, for there are natural, as well as artificial, panics and contractions, and they all result in the transfer of the capitals of the small fry to the big sharks, or in their utter waste and destruction, as will be seen later.

Aside, however, from the “evils” and “abuses” of the corporation system, aside from the casual, although periodically recurring, waste of small capitals and their transfer to the big magnates of capital in times of panics and contractions, the usual and necessary results of the corporation system, its very uses and mode of operation are such as to make it almost nugatory as a preservative of the numbers of the capitalist class— as a means of staying off the destruction of the independent middle class.

The ordinary and usual course of corporation business is such that only a few persons, the rich who organize and control it, get most or all of the benefits derived therefrom. In order that we may clearly understand this point we must bear in mind the difference between business and loan capital. There is a difference between the return a man gets from his capital when he employs it in business himself and when he lends to another capitalist to be used in the same business. In the first contingency he gets all the profit that is made in the business, in the second only that part of the profit which is called interest. The amount of interest is not always the same proportion of the amount of profit realized, but it is always only a share and never the whole thereof. In determining the proportionate share of the owner of the capital and the undertaking capitalist, respectively, in the profits realized in the business, all other things being equal, regard is had to the risk assumed or undergone by the owner of the capital, the lowest proportion being paid as interest where the owner of the capital takes no risks whatever. This is interest proper. The balance of the profit, whatever is left after the deduction of this interest for the mere use of the capital with no risk attached, remains in the hands of the capitalist, according to capitalistic notions, for his work of supervision of the industrial undertaking and the risks involved in it. If a capitalist lends his money on insufficient security he gets higher interest. But this higher interest is really not pure interest; it is interest proper together with an additional premium (part of the profit in its narrower sense) paid for the risk run by the man who makes the loan.

In a corporation the work of supervising the undertaking engaged in by the concern is not done by the stockholders, but by paid officers and employes. These officers and employes are always the rich who organize and control it, and they not only eat up all that part of the profits which goes to the capitalist for his work of supervision, but usually a great deal more in the shape of high salaries and incidental expenses. This part of the profit of all of the capital interested goes to the big capitalists only, the small fry get none of it. And if by some chance a small capitalist should get this (which would only be possible in the exceptional case where all stockholders are small men) it would still remain true that only one would get it, and the remaining stockholders would not get that part of the profit which goes to every independent capitalist.

There remains, therefore, to the stockholding capitalist only the interest proper and that part of the profit which goes as compensation for risk. In this respect the stockholding capitalist is placed in the same position as the lending capitalist; the greater the risk involved in holding stock in a certain corporation the greater will be his return (if he gets any), and the smaller the risk the less his return, in the shape of dividends. But the risks which he takes here are not only the risks of the business venture, but also those of dishonest corporate management. Besides, even in the question of the profitableness of the business there is the possibility of fraud, for he is obliged to rely on the judgment of others who may be interested only in the venture to the extent of their ability to draw large salaries. The result of all this is that the prospective stockholder is desirous of investing in a safe corporation, that is to say, in corporations at the head of which are big capitalists who hold out some kinds of guaranty or promise as to results. But the safer the corporation the more is the investor, not only the bondholder but even the stockholder, reduced to the position of a person who lends his money to it, at least as far as the amount of profits he receives on his capital is concerned. This can be seen any day on the stock exchange. The safer the corporation the more is the dividend reduced to the level of mere interest. In speaking of dividend in this connection we mean, of course, the amount of the dividend as a percentage on the capital invested. Sometimes a very safe corporation pays very large dividends (although this is unusual), but in such an event the value of the stock will be so much above par as to bring the dividend down to the proper level. The small capitalist who desires to invest in a corporation is, therefore, between the Scylla of taking all sorts of risks which are not present in the case of the independent industrial undertaker, and the Charybdis of getting no return on his capital except interest.

But as interest is only a share of the whole profit, and usually a small one at that, it is very evident that not all, and not even most, of the capitalists who possess sufficient capital to furnish them an independent income at the prevailing rates of profit, if they could remain independent undertakers, will be able to derive such income as stockholders of a corporation. A good many of them will necessarily have to fall out at the bottom. Usually these are the people who furnish the capital for all sorts of venturesome schemes with alluring promises, which result disastrously. Being unable to maintain their position as capitalists by investing in safe corporations, they desperately risk their small capitals in these undertakings, hoping to retrieve by a stroke of luck what they lost by the force of economic evolution.

But this is not yet all. Those smaller capitalists whose capital is for the time being sufficient to maintain them as rentiers of capitalism, as investors in safe corporations, are by no means sure of their position. We have already shown that the rate of profit has a tendency to fall. With the falling of the rate of profit falls that portion of it which is paid as interest, directly or in the shape of dividends, to bond and stockholders of corporations. This makes a capital which is sufficient to maintain a man independently to-day insufficient for that purpose to-morrow. Thus the falling-out-at-the-bottom process increases as capitalism progresses.

Some of the causes and processes noted above are slow in their operation. But one thing is certain, they are there and working their deadly havoc in the ranks of the capitalistic cohorts constantly and surely. The tendencies of capitalistic development cannot, therefore, be mistaken. Not only can not the capitalist class, that is, its lower stratum which is commonly called the middle class, grow, but it must surely and constantly diminish.

This diminishing process in the capitalist ranks, the passing from the capitalist class into the proletariat, may, however, and, owing to certain circumstances which will be considered later, frequently does assume such forms that the whole process becomes veiled and not easily recognizable. Here again the corporation plays a part, although not a very important one. Its part here consists in furnishing some additional folds for the veil which covers this process.

Some Marx critics, and Bernstein is among them, talk as if Marx saw only one process, and that one the constant passing of former capitalists of the middle class into the ranks of the proletariat. No doubt there are some passages to be found in Marx's writings which at first blush give such an impression. And as a general statement of a tendency this is true too. But that does not necessarily exclude some cross-current which may affect the original and prime tendency described by him, although it cannot completely negate it. Hence the danger of relying on single passages in Marx without careful examination as to their connection, and the immediate purposes for which they are used in the connection in which they are found. Hence, also, the ease with which all sorts of contradictions are found in Marx, according to his critics, as was already pointed out in another connection. It took Marx several bulky volumes to expound systematically his theoretical system, and then his work remained unfinished. He could not at each point recount all the circumstances which might affect or modify the tendencies or laws discussed, and which might be contained in other parts of his work. He assumed that the reader would remember them and read all the passages relating to the same subject together. Sometimes he purposely gave absolute form to a statement which he intended to qualify, and made certain assumptions he himself did not believe in, intending later to modify the absolute form of the statement or show the incorrectness of the assumption, in order to more clearly and systematically present his theory.

As regards the matter now under discussion there can be ho doubt but that Marx did not mean to say that all those who are reduced from the ranks of capitalism by the progress of capitalism become proletarians. Some of them may, for a time at least, remain in the position of half capitalist, half proletarian, in that they may derive a part of their income from their property and part thereof from their labor. But even those who have lost all their property may still become proletarians in the antique sense only, that is, persons who possess nothing, but they may not be proletarians in the modern sense of the word, that is, laborers who are not in possession of their means of production. They may cease to be capitalists and still not become laborers; they may live by their wits instead of by their labor, or become mere sponges on their former co-classites. It is our opinion that, with the progress of capitalism, the percentage of this last mentioned class of people is growing larger among those who lose caste by reason of the elimination process of the middle class.

Hence the cry of the so-called “new middle class,” raised by the Revisionists. Hence, also, the peculiar features of the statistics as to incomes. It is not because there is no process of Centralization of wealth accompanying the Concentration of capital, as Bernstein would have us believe, that there is apparently a wide diffusion of small incomes which are not the proceeds of wages. This phenomenon is due, first, to the fact that with the concentration of capital wage-slavery has been growing upwards, embracing constantly new occupations, such as by their character and remuneration were not properly within its domain on a lower rung of capitalistic evolution. This class has been particularly increased by the development of the corporation. And secondly, to the increase of the class of people, who, although not possessing any property, still manage to maintain themselves in real or apparent independence and without coming, formally at least, within the purview of wage-slavery.

This brings us to the question of the effect of the recent economic development on the character of the middle class. Before passing, however, to the examination of that question, we desire to note the fact that much of the talk and statistics about the supposed slowness of the process of the concentration of industrial undertakings is due to the merely apparent and formal independent existence of many undertakings and undertakers that are really mere dependent parts of a large, concentrated, industrial enterprise. And we also desire to mention here the fact that Heinrich Cunow, one of the ablest of the younger generation of socialist writers in Germany, has done splendid service in pointing this out.

But, one may ask, while it may be true that the processes which you have described show that not all the members of the present or former middle class can remain in their position of small capitalists, deriving their income from the possession of property, there still does remain this “new” middle class which is not reduced to the position of proletarians. This “new” middle class, while it possesses no property, or not sufficient property to count economically, is still a class distinct and apart from the proletariat, and if numerous enough is a force to be reckoned with. And as to the great numbers of this class the income statistics are certainly an indication. Those incomes which can not possibly be the result of wage-labor must be the incomes of this “new” middle class, unless they are the incomes of the property owning middle class, and the income statistics therefore certainly prove at least one thing, and that is that the “new,” property-less middle-class, together with the old propertied middle-class, certainly form at present quite a formidable class and diminish only slowly. Where is the difference, as far as the subject that interests us (the approaching transformation from capitalism to socialism), is concerned between the old and the new middle classes? Isn't Bernstein right, after all, when he says that if the coming of socialism were dependent on the disappearance of the middle class the socialists might as well go to sleep, for the time being at least?

In answer to such questions we will say: As already pointed out, it is not part of the Marxian doctrine that all middle classes must disappear before the advent of socialism, and the fact, therefore, that there may be developing a new middle class is no warrant for the assertion that the Marxian theory needs revision. Provided, of course, that the new middle class is sufficiently different to make a difference. It was shown already that Marx's prognosis as to the centralization of wealth through the disappearance of the property-owning middle-class is correct. And this is one of the decisive moments in the evolution from capitalism to socialism. It is not so much the merging of the persons who compose the middle class into the proletariat that is required as their severance from their property. For the passing of our society from its capitalistic form of production to a socialistic form of production, that is, for the socialization of the means of production, the only things that are of paramount importance are, first, that these means of production should be social in their character, and the more social the better (the concentration of capital); and, second, that these means of production should lend themselves to social management, that is, be in the hands of as few persons as possible (the centralization of wealth). It is of comparatively little importance how the surplus-value produced by the working class, the income of the capitalist class, is distributed. The question of this distribution is of any importance only in two aspects: 1st, in so far as it reacts on the centralization of wealth by permitting greater or less numbers to maintain their position as property-owners; and, 2nd, in so far as it may affect the ideology of the different classes of society.

In the first aspect, as we have already seen, the “new” middle-class is harmless. Its existence does not retard the process of the centralization of wealth, but, on the contrary, is its direct result. It is, therefore, only in the second aspect that any significance whatever could be attached to it. Let us see what it amounts to?

But before proceeding any further we must state that the possession of capital, property, being of the essence of a capitalistic class, the introduction of this so-called “new” property-less middle-class has created no end of confusion. A very great proportion of what is termed new middle class, and appears as such in the income statistics, is really a part of the regular proletariat, and the new middle class, whatever it may be, is a good deal smaller than might be supposed from the tables of incomes. This confusion is due, on the one hand, to the old and firmly-rooted prejudice, according to which Marx is supposed to ascribe value creating properties only to manual labor, and on the other to the severance of the function of superintendence from the possession of property— effected by the corporation as noted before. Owing to these circumstances large sections of the proletariat are counted as belonging to the middle class, that is, the lower strata of the capitalist class. This is the case with almost all those numerous and growing occupations in which the remuneration is termed “salary” instead of “wages.” All these salaried persons, no matter what their salaries may be, who make up perhaps the bulk, and certainly a great portion, of the “new” middle class, are in reality just as much a part of the proletariat as the merest day-laborer. Except, of course, in those instances where, by reason of the amount of their salary, they are in a position to, and do, save and invest. In so far as such investment takes place (as in the case of those who invest the remnants of their capital while depending for their support mainly on some useful occupation) they are on the border line between capital and labor, and are akin in their position to the ruined peasants who, before abandoning their villages, attempt to remain farmers by doing “something on the side.” These cases are, however, not very numerous, and their condition is merely transitory. Another exception that should be noted is of those cases where the salary is so large that it evidently exceeds the value of the labor of the recipient. It will be found, however, in such instances, that such salary is paid only to capitalists who are really in control of the corporation which pays it to them, and is part of the process by which the big capitalists relieve the small ones of part of the profits coming to them. With these negligible exceptions, salaried persons are really part of the proletariat, no matter what they themselves think about it.

It is true that by reason of their descent, associations, habits and modes of thought these persons feel a certain solidarity with the upper class rather than with the class to which they belong. But this does not change their social-economic status, and, so far as their usefulness for the work for socialism, they present a problem which is only different in degree, but not in kind, from the general problem of the organization of the working class for its emancipation from wage-slavery. In the solving of the special problem, as well as in the general, the change in the character of the middle class is of quite some importance.

And the character of the middle class has changed. Nay, the character of the whole capitalist class has changed by reason of this substitute of corporate undertakings in place of individual enterprise. And not only this, but the character of our whole social system is undergoing a change of quite some importance by reason thereof. And these changes have already wrought great changes in the ideology of the different classes composing our society, and are going to entirely revolutionize it. The famous phrase of a well-known English statesman, “We are all socialists now,”[b] was not as idle as some people supposed it to be. Of course the gentleman who uttered it may not himself have quite realized its full import, but the fact that he uttered it is one of the proofs of its correctness, although he may have attached to it an entirely different meaning from the one we give it. Its real meaning is this: The philosophy of individualism, the ideology of private ownership of property, and particularly of individual enterprise, is doomed; and the philosophy of collectivism, the ideology of the collective ownership of the means of production and of the social organization of human enterprise, is fast taking its place. The change is taking place not only in the realm of jurisprudence, which is the immediate expression of accomplished economic facts, but also in the remoter fields of art and philosophy. As yet there is chaos. None can mistake the “breaking up of old ideals,” but only very few can see the whole meaning and import of it: that a new society, and a new ideology to correspond, are forcing their way and making rapid strides.

Spencerianism, that purest expression of capitalism, and not so very long ago the reigning philosophy, is dead and forgotten. And every new day surprises us by the official throwing overboard of some remnant of that philosophy which was still clung to the day before. Socialism is the order of the day. But not merely the “menace of socialism,” which simply reflects the growth of the organization of the working class, but the recognition of collectivist principles and the expression of collectivist ideas. The session of the American Congress just closed gave remarkable evidence of that. It is not what was accomplished there, but what was conceded in principle that interests us here. It is not, therefore, the legislation or attempted legislation for the benefit of the working class only that must be considered, but all legislative attempts which show this change of ideology.

In this connection we desire to state that there is some basis of fact in the cry raised in some capitalist quarters that Roosevelt is more “dangerous” as a socialist than Bryan. We do not think much of the socialism of either, and believe that they are both quite “safe,” but we really think that Roosevelt is not quite as “sane” from the capitalist point of view. The difference between them is that between reactionary and progressive capitalism. It is the difference between anti-trust laws and railway rate legislation. Both classes of legislation are purely capitalistic measures, designed to protect the small capitalists against the big ones. But the methods adopted are based on fundamentally different social principles. As was already mentioned in an earlier part of this chapter, the anti-trust law is a capitalistic measure pure and simple, based on the theory that the State had only police duties to perform. Railway rate regulation, on the other hand, proceeds upon the theory that social means of production are there primarily for the benefit of society as a whole, and are, therefore, subject to social control. That does not mean that railway rate regulation is of any importance in itself. Neither regulation nor even ownership of railways by the capitalistic state are of any importance. But the assumption of regulation, particularly in a purely capitalistic country like the United States, is of significance as showing the drift of ideas. It is also of significance that attention is diverted from incomes, the Bryan mode of attacking capitalism, to the control of production, the field on which the real battles for the reorganization of the social structure will have to be fought out.

These changes in ideology have not come about because people have obtained a “better insight” into the true relation of things, but because the basis of all ideology, the economic relations within our society, have changed, are changing. The private ownership of the means of production is the basis of capitalistic society, and therefore of all capitalistic ideology. And by ownership is not meant merely the derivation of revenue, but real ownership, that is, control. A capitalistic class not owning any capital, as the so-called “new” middle class, is a contradiction in terms, an anomaly. But no less anomalous is the position of a capitalist who owns but does not control his property. That wonderful artist, Gorky, with the true insight of genius, has divined this truth and has expressed it when he made one of his characters say that the true importance of wealth is the power of control that it gives one over other people. But this power of control does not lie in the revenue which one derives from wealth, but in the control of this wealth itself, which in our society is synonymous with means of production.

The truth is that the “new” property-less middle class is not a capitalistic class. It is no middle class at all. It is true that it stands in the middle between the capitalist class and the working class, and in this sense it is more of a “middle” than the old middle class which was nothing but the lower strata of the capitalist class. But it is no class. A class is not merely an aggregation of individuals having a more or less similar income obtained in a more or less similar way. In order that any aggregation of individuals should really form a social class they must perform some social-economic function. The existence of the “new middle class” is entirely too aerial to give it position as a social class. They are either merely “hangers on” of some other class, or hang in the air entirely, where they obtain their income from “wind.” This “class” has none of the characteristics and none of the ideas of the bourgeoisie which we have described. It not only has no love for property as such, because it does hot possess any, but it has not even that love of economic independence and individual enterprise which is the characteristic of the true bourgeois. It has no veneration for property or property-rights, no love of economic independence, and consequently no constitutional abhorrence of “paternalism” or of socialism. All this “class” cares for is its income, and that is why its ideologists, the social reformers of all grades and shades, put so much stock in the question of income and always push it to the foreground. To the old bourgeois, in control of his property, it was a question of freedom and independence; he looked upon socialism as upon the coming slavery, he abhorred it for its very comforts which everybody shared alike. Not so with the new middle class. Any one of them is ready at any moment to change his windy existence for a governmental job, service of some corporation or any other occupation, provided his income will not be diminished, or even if it is diminished to a certain extent, provided it is assured to him for any length of time. For it must be remembered that this new middle class suffers just as much from insecurity of income as the working class, if not more, to which must be added insecurity of position. It is very natural that a “class” so all up in the air should not form any firmly rooted ideology of its own, that it should be drifting all the time, and should, therefore, be almost worthless as a social force either for or against the introduction of a new order. But, on the other hand, it is, because of the very nature of its social existence, extremely restless, ever ready to change, and ever longing for a change which would finally do away, or at least alleviate, its unsettledness, give it a rest. “Governmental interference” has no terrors for it. It feels the need of a stronger hand than that of the individual in arranging the field of battle for the struggle for existence. If such a makeshift may be dignified into an ideology, its ideology is State Socialism.

But it is not only the property-less, only-in-name, middle class that has lost its old bourgeois ideology. The remnants of the old middle class, the stockholding small capitalists, have lost their ideology with the control of their property. For it was that control, the individual enterprise, that was at the basis of it. Furthermore, with this class as with the “new” middle class, it has become merely a question of income. For property without control is again a contradiction in terms. These people really have no property, although they and others think they do. What they have is a right to a certain income. They are nothing but rentiers, annuitants, either of public or private corporations. They are ready at any time to, and do, exchange their supposed property for more formal annuities and other rentes.

Robbed of its economic independence, deprived of the control of its property and of the opportunity of individual enterprise, it has no other aspirations except to preserve its comforts, its incomes. If it has any ideals at all, its ideals may be said to be just the reverse of the old bourgeois middle class. By the very nature of its way of managing its affairs the propriety, effectiveness, and, above all, the necessity of socialization, is brought home to it. Furthermore, being minority stockholders, the members of this class naturally look upon the general government, the social organization as a whole, as the protector of its rights against the unscrupulous methods and the rapaciousness of the big capitalistic sharks. It is true their ideas in this respect are not those of the revolutionary proletariat, it is not the social organization of work that they dream of, but the social organization of the distribution of gain. By a curious mental process they fill the old forms of their ideology, according to which the State was merely a policeman, with an entirely new substance by extending the police powers to fields which would have horrified their fathers had they lived to see the thing. The ideology of this class, like that of the new middle class, is a curious mixture of old and new ideas, but one thing is clear in the midst of all this confusion, that its antagonism to socialism is not a matter of principle but of convenience.

Hence the “breaking up of ideals,” the great changes in the ideology of capitalistic society which we have already noted. Hence, also, the so many different forms of “socialism” with which we are blessed. Hence, lastly, the “social unrest” in capitalistic quarters.

For it is a mistake to think that the “social unrest” comes wholly, or even mostly, from below. Of course there are moments of unrest in the working-class. But it will be found, upon close examination, that a good deal of it is merely the reflection of the unrest of the higher layers of society. Furthermore, it will be found that the more the working-class emancipates itself from the mental and moral tutelage of the upper class, the more it develops an ideology of its own, as we shall see in the next chapter, and the less the “unrest” in its midst: the more steady its thoughts and actions become. Before the working-class ideology is full-grown, however, and while it is yet under the tutelage of the middle classes, the changes in the ideology of those classes which we have described are of great importance, and even the very restlessness of that ideology and psychology is of importance. For it first creates restlessness below, thus calling out nervous activity, and when that nervous activity has resulted in a firm and clear ideology it cannot offer any effective resistance.

Whatever, therefore, has been saved of the middle class by the corporation with regard to numbers, has been destroyed, and very largely by this very agency, as to character. What was saved from the fire has been destroyed by water. The result is the same: the middle class, that middle class which Marx had in view, the middle class which was a factor obstructing the way towards socialism, is doomed.

This is not all, however. The corporation has not merely failed to save the middle class. It is performing a positive and great service in the work of transformation of our society from capitalism to socialism. That work is nothing less than the abolition of private property and the substitution of collective property in the means of production; the demolition of the basis of capitalism and the rearing of the ground work of a socialist system of society. It is hard to think of our capitalists as doing this work, but that is what they are doing nevertheless. In their frantic efforts to save themselves, the capitalist class is doing nothing less than undermining its very existence, cutting out the ground from under its own feet, abolishing, not only the basis of capitalism, but the basis of all class-society— private property. This fact has not been noticed hitherto and given the attention which it deserves, because, again, of the question of income which has obstructed our vision. Because our big capitalists get the benefits, the income, of our corporations, it has not been noticed that they don't own the property from which these incomes and benefits are derived. In looking with rapturous gaze or hateful abhorrence at the enormous fortunes of our kings, barons, and lesser gentry, the startling fact has been lost sight of that these fortunes are mere titles to revenue and not to property. The law recognizes this fact clearly. The great John D. Rockefeller, ruler of the great Standard Oil and all its domain, has no more title to any part of the property of the great corporation of which he is the master than the poorest elevator boy employed in one of its buildings, and should he attempt to appropriate a dollar's worth of it by using it for himself, the law will treat it as a case of conversion, or larceny, of somebody else's property.

And let no one say that this is mere legal formality. Legal forms always express economic realities. Sometimes they survive their substance and become mere empty forms. In such cases they are records of past economic realities. When they are not records of the past they always express present reality. In this case the form is full of substance. It not only expresses a present reality, but, as it happens, presages the future. As yet the collective form substituted by the capitalists is crude and undeveloped as to form, and the collective bodies are still “private,” that is, the benefits derived therefrom are enjoyed by private individuals. The proper distribution of the benefits, that distribution which is suited to the new form of ownership, which in itself is only an expression of the new form of production, will follow as surely as harvest follows the planting of the seed. This work of readjustment of the mode of distribution to the new mode of production and ownership, and the full development of all the three processes to the limit of their capacities for the benefit of all members of society, will remain for the fully developed, organized and educated working class. But in the preparatory work of transition, particularly in the ruthless destruction of all the elements of the old social system, our friends the enemy have rendered, and are rendering, signal service. In their mad effort to escape their fate the capitalists are only cheating the gallows by committing suicide.