variable element, and the purchasing power of him who desires to possess it, and upon one subjective element, the demand for such commodity. The market rate is fixed, not by the net cost, but by the purchase price. Value is the ratio between the utility possessed by an individual or group of individuals and the demand as well as the purchasing power of one or of several other individuals. Price is the expression in money of this ratio. The vendor in offering a commodity for sale looks upon labour as an element representing 20, 30, 40, or 60 per cent. of the net cost, but he adds to this the cost of raw materials, interest, and the redemption of his capital, all of them objective elements which are no less indispensable than the element of labour. He fixes his price according to the strength of the demand for which he has to provide, and to the purchasing power exhibited by those who furnish that demand. If the price he asks be greater than this purchasing power, the contemplated purchasers abstain from buying, and if the vendor be obliged to sell, he first makes a reduction in that portion of the profit which he had proposed to reserve for himself, and subsequently draws upon his total net cost, in which case he sells at a loss. But this loss falls upon the other elements in the net cost of production as well as upon the element of labour, indeed labour is only affected in the last resort. II. There remains Marx' other great discovery, that of "surplus-value" or or surplus-labour," which Engels calls "the key of capitalist production." It is not less completely belied by facts than the "iron law of wages." If all the profits of the employer were derived from surplus-labour, he would have to devote himself to two operations: (1) to increase the hours of labour and lower wages; (2) to increase the number of his workmen and repress all improvements in plant. According to these propositions, if the hours of labour decrease and wages rise, the individual employer must lose his profits and fall into difficulties. Now in England, to take an example, wages have risen and the hours of labour decreased, and yet English industry has made enormous progress and earned enormous profits during the last half century. The same thing has happened in all countries, from which the conclusion follows that Karl Marx' theory of surplus-value is belied by facts. If the employer's profit be derived from the surplus labour of the workmen, the employer should increase their number, and should decline to employ machinery, the effect of which is to decrease it. How comes it then that employers attempt, on the contrary, to decrease the number of their workmen and to supplant them by machinery? They do not seek to increase their profits by adding to the number of their employees, but by perfecting their plant. What remains, then, of Marx' theory of surplusvalue? What becomes of the sonorous word 'surplus-labour" and the denunciations of the exploitation of man by man? Are the socialists who continue to proclaim it entitled to protest against science when the most cursory observation so clearly gives them the lie? III. Karl Marx is so complete an adept in the "iron law" as to believe that the rate of wages is regulated by the rate of the means of subsistence, and that, therefore, the dearer the means of subsistence, the smaller the amount of surplus labour of which the capitalist has to dispose. A fall in prices can, therefore, only provide surplus labour for the capitalist. This was written by Karl Marx twenty 1 "Das Kapital," vol. i., chap. xii. I years after the abolition of the Corn Laws in England, and this example alone will suffice to show his contempt for facts. Although he lived in England, he remained an opponent of free trade at a time when he was able to perceive its consequences at first hand. But when the agrarian party in Germany proposed to increase the duties on meat and on cereals, Bebel and other German followers of Marx, who laid claims to orthodoxy and repudiated Bernstein, did not hesitate to abandon their master's doctrine and to oppose it, thereby showing that, if they still professed a belief in surplus value, their faith had become sufficiently attenuated to permit of the heresy of demanding to live cheaply instead of dearly. As for the assertion of formula C, that "profits decrease in proportion as wages increase," the facts establish that an employer can raise the rate of wages almost indefinitely if he can increase his market. A committee of the Manchester Chamber of Commerce has compared the net cost of cotton spun in India and in Lancashire; in spite of the high wages and the short hours of labour, the English "hand" is cheaper than the Hindoo.1 1 Chapman. Report on the Cotton Trade, submitted to the Manchester Chamber of Commerce. CHAPTER VIII THE TWO CLASSES ALL the followers of Marx, including MM. Werner Sombart and Georges Sorel, consider the "Communist Manifesto" of 1847, which was drawn up by Marx and Engels, as "the starting point of a new era." The The "Manifesto" begins by asserting that "the whole history of human society to the present day is the history of the struggle of classes." Karl Marx, Engels, and their disciple Paul Lafargue make the history of human decadence begin with the introduction of private property. Historians have, generally speaking, overlooked the claims of the Terra del Fuegans, Australian aborigines and other people who still enjoy the benefits of communistic anarchy. If Marx, Engels, and Paul Lafargue have written that they considered themselves as in a state of decadence by comparison with them, they have failed to accommodate their conduct to their theories. Thirty-six years after the "Communist Manifesto," Engels still asserts that, "Since the abolition of the ancient common ownership of the soil, the whole of history has been a struggle of classes." M. Werner Sombart recognises that all these struggles, far from being struggles of classes, have most frequently been conflicts between ethnic groups or between populations who inhabited different countries, but if he condemns Karl Marx' definition of history as false as applied to the past, he adjudges it to be true as regards the future. The Communist Manifesto" said::- " Our age, the age of the bourgeoisie, has simplified class antagonisms. Society more and more divides itself into two great hostile camps, into two great classes in direct opposition to one another, the bourgeoisie and the proletariat (§3). The mass of labour to provide for increases in proportion to the development of machinery and of division of labour; the number of hours of labour is increased, as well as the labour required to be performed in a particular time (§15). The middle classes of former times, the small tradesmen, the merchants, and the people of independent means, the artisans and peasants are all in their turn being absorbed in the proletariat. Thus the proletariat recruits from among all classes of the population (§18). In 1847 Karl Marx used the present indicative tense, but he was prophesying, basing the future upon the abolition of ethnic struggles and of all national and religious wars. He set up two classes in our increasingly complex society. I call this simplex system social dichotomy. "But," says M. Werner Sombart, "modern society presents itself to us as a complex concatenation of numerous social classes, country squires, middle class, lower middle class, proletariat, officials, men of learning, artists, etc.' So that there must be more than two of them, in which case the process which Marx foresaw, in virtue of which actual society must forcibly end in communism, has no real existence. Karl Marx' theory is summarised in Victor Modeste's formula, "the rich grow richer and the poor poorer. Karl Marx substitutes "the few" for "the rich" and "the many" for "the poor." He sets up an antithesis between two groups, the bourgeois group, consisting of an increasingly restricted number of individuals, each of whom is increasingly inflated by capitalism, and the proletariat group who are increasingly numerous and indigent. All the rich are not equally rich, all the bourgeois are not capitalists on the same level. Consequently they are not all inflated to the same degree with what Karl Marx calls "surplus value" : they are not all magnitudes of the same order. To bring the rest of mankind into alignment with the same symmetry, as though they too are magnitudes of the same order, prepared to march with auto |