society, of savages, in an economic point of view. They had their own regulated order of production, aided too much perhaps by unjust compulsion, but still admitting comparatively kindly relations between master and servant, specially under the softening influences of religion. The day for theocracies and feudalism is gone by, but a remnant of their authority still lingers behind: of the latter in the state, and public authority acting in the common interest; of the former in the many religious institutions and benevolent societies forming so many organizations for the good of society. Thus the organization of the family, the state, and the church mutually complete one another, and help in reconciling, softening, and harmonizing the conflicting interests of society as now constituted. That constitution is founded on the hegemony of capital, and the ruling motive of capitalistic enterprise is profit, private interest. Throughout the world thousands of capital enterprises spread their ramifications, drawing towards themselves labour and unemployed money in agricultural, industrial, and mercantile pursuits. And all this exertion is set in motion by the one great spring, the ruling principle of political economy, i.e. the realization of profit. Competition regulates the general movement, and brings about the most economic process in production and the choice of proper objects which ought to be produced. Competition compels the speculators, or enterprising capitalists, to produce commodities of the best quality and at the lowest prices, for the benefit of society. Whatever "pays " will be manufactured, and such commodities only will pay which are produced at the lowest cost price, and contain the greatest value in the use. Self interest will lead thus to the best possible provisioning of society with every HEGEMONY OF CAPITAL, AND NATURE OF CAPITALISM. 59 variety of goods, in the most economical manner as to quality, quantity, and price. The more any capitalistic enterprise prospers, the more labour and capital will it employ. Hence, high interest for capital invested, and high wages for labour employed, depend on the profits of the enterprising capitalist. He turns into account the properties which otherwise would have been idle, whether in land, money, or buildings; he gives employment and with it the means of livelihood to dependent labourers. Every capitalistic enterprise may be compared to an independent productive body hovering in the social universe, attracted in its course by the highest profit, repelled by threatened losses, and attracting again in its movements money and labour by similar influences, drawing them away from other less remunerative spheres, or the contrary as the case may be; and thus the economic crystallization of all productive forces is brought about under the leadership of capital, and how this is done has next to be considered. Every enterprising capitalist is, so to speak, a dealer in the two commodities of money and labour. Either he pays immediately so much interest for money lent, and so much wages for labour performed; or he buys and sells at a profit goods, the results of formerly employed capital and labour, for a set sum of money. Capitalism then is nothing more or less than commerce in the commodities of money and labour. And not only the merchant, but the farmer and tradesman, are capitalists in this sense. Thus capitalism, as the ruling organization of the present system of political economy, regulates the whole economic process. Every member of the community contributes his part, and receives his equivalent in money from the general managers, who are the capitalists. And this amounts to the same thing as receiving for services rendered in money or labour a draft or cheque, entitling to the reception of other services or commodities required. The capitalist in conducting the process stakes his own invested capital; and as a premium for his risk, prudent foresight, and management, receives profit. He is spurred on by the hope of accumulating an independent fortune as the due reward of his labours. Money and price play an important part, therefore, in this mercantile process; conflicts ensue between capital and labour, profit and wages, and other antagonistic interests, which form the gordian knot of the modern social question. The final result of these struggles between conflicting interests makes itself felt in the distribution and redistribution of wealth, the amount of income of individuals, and consequently their social and moral condition. It thus brings about those class antagonisms which have become the burning question of the day; this forms the link of connection between capitalism and socialism. Externally the capitalistic process is a purely voluntary series of commercial exchanges between individuals; and legally it is a mere matter of contract between man and man, a mercantile transaction between the labourer and the employer, or between the invester of money and his client. Hence our capitalistic era is of necessity the era of liberalism, or free trade. Socialism, which tends rather to interference with individual liberty, has therefore many sympathisers among the higher classes, and is watched with suspicion by the "liberal" moneyed classes.* *The reader must draw a distinction between liberalism as understood here, and liberalism as generally understood in a political sense by English readers. By liberalism in this treatise we mean the principles of free trade carried out in capitalistic enter CAPITALISM IN RELATION TO THE STATE. 61 The question, however, is whether this vaunted liberty in capitalism, as distinguished from the more ancient and less free organizations under despotic, feudal, or clerical influence, be liberty in deed as well as in name, and also whether, even if this were the case, it would entirely exclude all further demands for social reforms. Suppose this liberty practically serves only capital, in extorting cheap labour from the classes depending on the employer for their daily bread; suppose all small trade of the lower middle classes to be swallowed up by the gigantic enterprises of the wealthy capitalist: then indeed this liberty amounts to a liberty of the rich to fleece the poor, and a subjection of proletarians by means of the all powerful money-bag. The liberal tendencies of capitalism are therefore by no means its strongest point, and to defend it on such grounds solely is by no means a prudent course. Besides, as we have shown already, competition itself serves as a very salutary pressure in the social organism, binding upon the capitalist and the labourer alike; and thus capitalism itself does not exclude interference with individual liberty or compulsion in practice. Moreover, it is impossible for liberal capitalism to become the only organization in the social system to the exclusion of all the rest, without destroying itself. The help of the state organization too is required in public institutions; the state not as policeman only to protect the sacred" person and still more sacred money-bag of the capitalist," to use the words of Lassalle, but the state as a positive organization for economic purposes, prise. It so happens that on account of more marked class differences in Germany the plutocracy, as a rule, is liberal also in politics, and opposed to the strictly feudal landed aristocracy. e.g. in establishing means of communication, docks, the post, etc., etc. Many institutions which could neither be founded nor superintended satisfactorily by private speculation require the state and the corporation for that purpose. The financial functions of the state too, for the performance of public services by means of the public revenue, the funds raised by authority, point out to capitalism that it only has a relative importance. State interference in favour of the labouring classes may be sometimes necessary. It provides an elementary education, and extends its protection over those who cannot help themselves. The alternative is not between state help or no help; but the question is rather where and when is such help feasible? where and when may the action of the state serve as a supplement of the capitalistic organization? And in answer to this it may be said, the function of the state is one of the component elements of the mechanism of society; they represent the organic force of law. The state secures suum cuique; it helps the various parts viribus unitis to support each other; fulfils thus the "architectonic" mission of society.* We shall presently show what is the special mission of the state, and how far its interference with capitalism is practical. The time has not yet arrived for a categorical answer to the question whether its organization is to supersede that of capitalism; but this much we may state in advance, the proof whereof will follow in the sequel. (1) The conversion of all existing private capital, and the * In the words of the German poet : "Gerechtigkeit, Gerechtigkeit, Ist der kunstvolle Bau der Welt; Wo mit dem Einen Alles stürzt, und fällt. |