Front Page Titles (by Subject) CHAPTER I: Bernstein and the Concentration of Capital and of Industry - Socialistic Fallacies
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CHAPTER I: Bernstein and the Concentration of Capital and of Industry - Yves Guyot, Socialistic Fallacies 
Socialistic Fallacies (London: Cope and Fenwick, 1910).
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Bernstein and the Concentration of Capital and of Industry
Increase in the number of capitalists in England and in Prussia—Increase of small industries in Germany.
Economists who have ventured to make a few timid observations upon the theory outlined in the last chapter, or upon the iron law of wages, have been declared to be the “enemies of the workman.” This was considered an all-sufficient argument, like Molière's tart and Molière's cream.
But a German Socialist, Bernstein, who, as executor of Engels' will, presented some guarantee of orthodoxy, had the misfortune to be exiled from Germany for complicity in an illegal agitation. He spent eleven years in Switzerland and eleven in England, and made a comparison in those countries between economic facts and the allegations of Marx and Engels—“a great misfortune,” as Bebel said at the Lübeck Congress. It was indeed a misfortune for those Socialists who accept Marx's fallacies as indisputable dogmas.
Bernstein, observing what went on before his eyes, formed the conviction that these fallacies were erroneous, and had the audacity to publish this discovery.1 While Karl Marx based his theory of the social revolution entirely upon the concentration of capital in an increasingly limited number of hands, and the increase of a progressively wretched number of the proletariat, Bernstein replies by showing that the number of capitalists, so far from diminishing, is increasing, and that the new capitalists disclaim the struggle between classes even while they remain supporters of it in theory. Consequently, the social revolution is not a fatal consequence of the historical law imagined by Karl Marx, and a policy based upon this struggle can only end in deception. The number of capitalists does not diminish, as the following facts will show1 :
The very form of limited companies is inconsistent with the centralisation of fortunes, by permitting a considerable subdivision of capital. Thus an English thread-spinning trust, which has only been in existence for a year, numbers no less than 12,300 shareholders. The fine spinners' trust has 5,454, the Manchester ship canal 40,000, and Lipton's 74,262. Messrs. Spiers and Pond's undertaking in London, which is cited by Socialists as an instance of the concentration of capital, has a total capital of £125,000, and numbers 4,650 shareholders, of whom 550 hold shares to an amount of more than £480. The total number of holders of shares in England is estimated at a great many more than a million, and this seems to be no exaggeration in view of the fact that in the year 1896 alone the number of limited companies in the United Kingdom was 21,223, with a capital of £1,069,920,000. These figures do not include the shares in foreign enterprises which are dealt in on the English market, Government stock, etc.
Therefore the number of owners of property in England does not diminish. Is it otherwise in Prussia?
In Prussia, as readers of Lassalle know, there were 44,407 individuals out of a population of 16,300,000 with an income of 1,000 thalers (£150). In the year 1894-5, out of a population of 32 millions, there were 321,296 in the enjoyment of an income of more than that amount. In 1897-8 their number was 347,328. While the population doubled, the number of individuals who enjoyed a small competency was multiplied by six. The proportion of persons in the easiest circumstances, as compared with the total population, increased in the proportion of more than two to one. And if we take a later period we find that in the fourteen years from 1876 to 1890, side by side with a total increase of 20.56 per cent. of persons liable to taxation, incomes between £100 and £1,000 (upper and lower middle class) increased by 3.52 per cent. (582,024 as against 42,534). The class of owners properly so-called (incomes of 2,000 thalers and upwards) increased during the same period by 58.47 per cent. (109,095 as against 66,319). Five-sixths of this increase falls upon the moderate incomes of from 500 to 6,500 thalers.
The “Einkommensteuer,” a graduated income, was introduced in 1891: persons whose incomes fall short of 900 marks (£45) are exempt. It is fair to assume that a number of persons conceal part of their income in order to remain within this limit. Nevertheless the number of taxable incomes of more than 900 marks was 2,436,000 in 1892, and the total income was upwards of 5,961 millions of marks. In 1907 the number was 5,390,000, an increase of 120 per cent., while the income had increased from 5,704 millions of marks to 11,747 millions, an increase of 100 per cent. This difference of 14 per cent. between the increase of total income and the increase of taxable incomes demonstrates that wealth has been distributed and not concentrated. This improvement continues: in 1908, the number of taxable incomes was 5,880,000.
Taking the number of individuals, after deducting corporate bodies, we find:—
So that economic progress, far from producing an increasingly numerous and increasingly poor mass, adds to the number of those who possess a more or less considerable income. The molecule which is to-day put at the bottom rises to-morrow to the surface. Civilisation becomes more and more fluid. The boy who sells newspapers on an American railway car is the potential Carnegie or Edison of to-morrow. In France the bricklayer of Limoges is not only a bourgeois candidate, he is a successful bourgeois who, with a salary in Paris, is a capitalist in his own country.
Do the great industries destroy the small? Here is what has happened in Prussia, according to Bernstein, where the Government absolutely favours the former:—
In 1875 the greater industries occupied the same relative position, as regards production, as in England in 1891. In Prussia 38 per cent. of the workmen were engaged in them in 1875, so that these industries have developed in a sufficiently large proportion. None the less, the great majority of persons employed in industries in Germany was still employed in the moderate-sized and minor industries. Of 10¼ millions of workmen employed in industries in 1875, rather more than three millions were employed in the larger industries, 2½ millions in the moderate-sized industries (employing from 5 to 50 workmen), and 4¾ millions in the minor industries. There were only 1¼ millions carrying on their own small hand-trades.
From 1882 to 1895 the small undertakings (1 to 5 workmen) in Germany increased from 2,457,950 to 3,056,318, or 24.3 per cent.; the minor undertakings of moderate size (6 to 10 workmen) from 500,097 to 833,409, or 66 per cent.; the greater undertakings (11 to 52 workmen) from 891,623 to 1,620,848, or 81.8 per cent. During this period the population only increased by 13.5 per cent. “If,” says Herr Bernstein, “during the period in question the greater industries have increased in a larger proportion—88.7 per cent.—this increase has not coincided with an absorption of the minor industries, except in a few isolated cases.”
Percentages should be treated with caution, for it is important to know to what figures they are to be applied. If 1 becomes 2, the increase is 100 per cent. If 6 becomes 9, the increase is only 50 per cent., but the actual figure is much larger.
In Prussia, the number of persons employed in traffic and business (exclusive of those employed by the railways and the post office) increased from 1885 to 1895, in the case of undertakings employing more than two persons, from 411,509 to 467,636, an increase of 13.6 per cent.; in undertakings employing from 3 to 5 persons the increase was from 176,867 to 342,112, or 93.4 per cent.; and in undertakings employing from 6 to 50 persons the increase was from 157,328 to 303,078, or an increase of 142.2 per cent. The minor undertakings indicate the greatest increase, although the increase is the most considerable, in proportion, in the greater ones. But the latter do not represent more than 5 per cent. of the whole.
Herr Bernstein's conclusion, which we believe to be correct in all respects, is that “the larger industries do not continually absorb the minor and moderate-sized undertakings, but gather strength and increase side by side with them.”
The cries of rage with which Herr Bernstein's conclusions were received by Socialists are easily explained. From the moment when the law of the concentration of capital fails to be verified by the facts, Socialism loses its hopes.
But Van der Velde and Georges Sorel are obliged to state that no such concentration has come to pass. The greater industries have constantly shortened the hours of labour and increased the rates of wages, and wages are highest where the greater industries have attained the highest degree of development. The foremen in the rolling mills at Pittsburg draw 15 dollars a day. The bourgeois, or middle class, far from decreasing, constantly increases in numbers.
“Die Voraussetzungen des Socialismus und die Aufgaben der Social Demokratie.”
This summary is based upon a pamphlet by M. Abel, the editor of La Flandre Libérale.