§ II. Concentration of Industries

Another fundamental tenet of the Marxian system is the assertion that the present capitalist order of production necessarily leads to an increasing concentration of all industries, so that at last all industries on a small or medium scale are absorbed by a few industries on a colossal scale.

Marx evidently reached this conclusion by arbitrarily generalizing certain phenomena to be met with in industry properly so called.

1. In the industries carried on by machinery and on a large scale there seems to be a certain tendency toward centralization and toward the crowding out of establishments on a small or medium scale.

In the MINING INDUSTRY of Germany the number of establishments has decreased since 1872, whilst their size increased. The following table shows the average change:

The number, therefore, of establishments is decreasing, whilst the number of laborers and still more so the sum total of products is growing; only during the very latest years the number of establishments has been increased by new enterprises. Also in the SMELTING INDUSTRY the principal establishments have gone down from 241 in 1891 to 237 in 1895, but rose again to 241 in 1900, whilst the average number of wage-earners was 47,627 in 1891, 47,201 in 1895, and 59,664 in 1900, and the sum total of products rose from 4,148,000 tons in 1886 to 6,323,000 tons in 1895, and to 9,732,000 in 1900.¹

¹ Statistisches Jahrbuch für das Deutsche Reich, 1902, p. 32.

The number of active Breweries decreased from 12,535 in 1877 to 7847 in 1895, and to 6903 in 1900, whilst on the other hand the total output rose from 20,360 million hectolitres (1 hectolitre=about 24 gallons) in 1877 to 37,733 million in 1895, and to 44,734 million in 1900.²

² Ibid., p. 36.

If we compare the productive establishments in general, excluding agriculture and forestry, we learn from the statistics of the German Empire that industries on a small or medium scale are growing more numerous rather than the reverse, though not increasing at the same rate as industries on a large scale. Thus there are enumerated:

Therefore from 1882 to 1895 industries on a small scale increased 1.8%, those on a medium scale 69.7%, those on a large scale increased 90 per cent.¹

¹ Statistisches Jahrbuch für das Deutsche Reich, 1902, p. 24.

From the statistics thus far available we cannot, indeed, as yet arrive at any final and conclusive judgment regarding industries. It is evidently still open to question whether this tendency toward centralization is altogether general and unlimited, though the great trusts in the United States are a mighty step in that direction. In any case it is unwarranted to conclude from the centralization of industries to the centralization of property, because industries on a large scale are owned for the most part by joint-stock companies. Very often, therefore, the amalgamation of several establishments into one or the expansion of one which is now owned by a stock company, implies the transfer of property from a few persons to a great many.

2. In industrial establishments therefore a certain centralizing tendency cannot be denied, but in AGRICULTURE there is noticeable a marked tendency favoring the growth of establishments on a small or medium scale.

In the German Empire the census of 1882 and that of 1895 show the following figures:²

² Statistik des Deutschen Reiches, Neue Folge, cxii. p. 11*.

• ha. = 2.47 acres.

If we classify holdings of an area less than 5 acres as dwarf farms, those from 5 to 12.5 acres as small farms, those from 12.5 to 50 acres as medium, those from 50 to 250 acres as large farms and the rest as latifundia, then we find

Therefore, the number of latifundia and large farms remained practically unchanged, whilst the medium farms increased by 72,100, the small farms by 34,832, and the dwarf farms by 173,338.

The distribution of the total agricultural area among the different classes of holdings is shown by the following table:

This shows that from 1882 to 1895 “the intermediate farms have grown in number and size at the expense of the dwarf farms and the latifundia.”¹

¹ Statistik des Deutschen Reiches, Neue Folge, cxii. p. 11*.

In France the agricultural holdings classified according to size were as follows:

If we compare the number of holdings and the area occupied by them in 1882 and 1892, excluding the area contained in the state forests, we get the following results:

In 1882.

In 1892.

There were therefore but slight changes during the period from 1882 to 1892. The holdings exceeding 40 ha decreased by 3,417, but the area occupied by them increased by 197,288 ha or merely 0.60% of the total agricultural area. The dwarf farms increased by 67,738 and their area by 243,420 ha. The holdings between 1 and 40 ha decreased by 33,632 and their total area by 653,807 ha. Unlike Germany, France shows a tendency of increasing the number of dwarf farms. But even according to the statistics of 1892 the small farms (3-100 acres) make up more than half the number (58.37%) of all the holdings and occupy more than half the total area (51.76%). The total number of agricultural holdings in France in 1892—excluding Algiers and the colonies—was 5,702,752.¹

¹ Ibid., pp. 58*–59*.

The state of agricultural holdings in the United States is shown by the following tables:²

² Twelfth Census, vol. v. pp. 688–690.

• Includes farms operated by owners, part owners and tenants, and managers. † Not including farms with an area less than 3 acres.

The total number of farms increased therefore by 555,734 from 1880 to 1890, and by 1,172,731 from 1890 to 1900. With regard to the size of the farms there were in

From this table it is evident that all classes of farms increased in absolute numbers, most of all those from 10 to 500 acres. In the percentage of total number of farms those above 1000 acres rose from 0.7% in 1880 to 0.8% in 1900, whilst those from 10 to 20 acres rose from 6.3% in 1880 to 7.1% in 1900, and those from 20 to 50 acres rose from 19.5% in 1880 to 21.9% in 1900; farms of other areas have slightly decreased in percentage.

If we turn our attention to Holland we find also there an increase in the number of agricultural holdings, as is proved by the following statistics:¹

¹ Statistik des Deutschen Reiches, cxii. p. 61*.

In the classes ranging from 1 to 50 ha the holdings have increased in number, in those ranging above 50 ha they have decreased. The decrease is most striking in the latifundia. It is to be regretted that in the above statistics the holdings under 1 ha (garden-plots) have not been considered. In any case the above numbers prove that Holland possesses a goodly number of small farmers owning from 5 to 10 ha each.

Great Britain, the classic land of industrial enterprises, deserves our special attention. If anywhere, it was here that capitalism ought to produce the fruits prophesied by Marx. But what do we learn from the official statistics?² The agricultural holdings were as follows:

² Cf. ibid., pp. 62*–63*.

The totals of 1885 and 1895 cannot be compared, since in 1895 the holdings under one acre were not counted. But a comparison of the holdings exceeding one acre will show results similar to those noticed in Germany. Also in Great Britain the areas of 1885 and 1895 prove that the intermediate farms have increased, whilst the latifundia have gone back somewhat.

That there is no danger of the gradual absorption of small establishments by production on a large scale—especially not in agriculture—is evident from what political economists call the law of increasing and diminishing returns. In certain kinds of business the returns increase in proportion to their magnitude, i.e., in proportion to the capital and labor expended. The increasing size of the business reduces the relative cost of many items, as raw materials, machines, transportation, management, etc. This is the case, however, only in certain purely industrial enterprises. But there are other branches of business where the extension of production beyond a certain limit is attended by more loss than profit, and where, therefore, the rate of profit diminishes in proportion to the size. Experience so far seems to point to the fact that agricultural production is subject to this law of diminishing returns, at least on estates which go beyond a certain area. The reason for this is the fact that the growth of population renders necessary a more intensive cultivation of the soil, a thing which is possible only in establishments on a small or intermediate scale. Only perfect knowledge and mastery of the soil will enable the owner of land to use it to the best advantage. Only the small or medium farmer will give equally to every part of his property the greatest amount of care, and will employ on it even his leisure hours, if perchance he should have some other occupation. Also in the matter of fertilizing and irrigation he can achieve much more than the owner of extensive tracts of land.

A Schäffle remarks very correctly:¹ “The denser the population, the more its sustenance is to be secured by production on a small or medium scale, which may be aided, not supplanted, by co-operative institutions. The results of Bernhardi’s classical work on ‘Landed Estates, Great and Small,’ concerning gross and net returns, will not be shaken by the trumpet-blasts of socialist world-reformers.” In the same strain A. Wagner avers with regard to agricultural production: “Where no special causes of a political or legal nature are at work, there can be no question of an economic and technical superiority of production on a large over production on a small scale, at least not of a general superiority. The inference that production and property on a small scale will necessarily be supplanted by large estates is just as false as that other one, that for the sake of better cultivation the change into large estates is desirable in the interests of agricultural production and the labor forces engaged in it; . . . but least of all is the prognostication so generally unfavorable to production and property on a small scale, as modern socialism would have it. Rather the reverse is the case, if we consider the law of intensive cultivation which is developing in proportion to the increase in numbers and wealth of the population, in proportion to the growing size of cities, and the wider market open to agricultural products.”² Buchenberger is of exactly the same opinion.³ Sering⁴ remarks: “All the latest investigations go to prove that public opinion prevalent heretofore has largely undervalued the technical productive capacity of the small farmer. The net profits of large landed estates no longer surpass those of intermediate farms.”

¹ Die Aussichtslosigkeit der Sozialdemokratie (1885), p. 26.

² Grundlegung der polit. Oekonomie, 3d ed., II. § 169.

³ Agrarwesen und Agrarpolitik, I. § 40, n. 4.

⁴ Die innere Kolonisation im östlichen Deutschland (1893).

This state of the case is so evident that even a number of socialists have been constrained to admit it. As early as the socialdemocratic convention at Frankfort in 1894, Vollmar declared in his report on the agrarian question: “In modern agriculture production on a large scale proves to be not at all so very superior in competition—unless under very special conditions— despite the many advantages it enjoys to the detriment of the community. This is the case not only in the raising of cereals, but much more so in the rearing of cattle, which latter is naturally on the increase since the world’s market is open to it, whilst grain-raising has become unprofitable. Against this contention examples have been adduced from North America—monster ranches, hog-raising by steam, etc. But such scattered instances, the results of which are not altogether beyond doubt, must be viewed rather sceptically, and least of all can they be generalized. It may be stated as a general rule that if cattle-raising is carried on intensively and if there is a true care of cattle, the herds should not exceed a certain number; 60 to 70 head is about the limit. In this manner cattle-raising is best adapted to establishments on a small or medium scale. The same may be said in general concerning the growing of fruit, grapes, vegetables, and other commercial plants. In the explanation of these circumstances so much at variance with our experiences in the field of industry we must consider in the first place that the tiller of the soil is not merely producing merchandise, but uses much of his produce for his own consumption. . . . From all this not a few agrarians draw the conclusion that in agriculture production on a large scale is superior only as long as cultivation is extensive, and that the economic development with its increasing intensity of production tends toward smaller establishments.”¹

¹ Cf. the Transactions of the Social Democratic Party Convention

(1894), p. 147.

Bernstein,² referring to a vast mass of statistics, remarks: “It is, therefore, beyond a doubt that in western Europe as well as in the eastern United States the small and intermediate agricultural establishments are increasing, whilst the large or monster farms are going back.” And in the Vorwärts (1899, n. 60) David writes: “After looking at the statistics of 1895 no one can seriously maintain that the farming class is tending toward economic ruin.”

² Die Voraussetzungen des Sozialismus, p. 65.

3. The middle classes find a safe refuge not only in agriculture, but also in the mechanical trades if they are afforded the proper protection. Recent investigations¹ have proved to our mind that manual trades are not doomed to destruction—at least not in the near future. The one fact alone that, in spite of unlimited competition and great industrial development, German artisans and their families number more than six millions is sufficient to prove that the mechanical trades are as yet firmly established.

¹ Untersuchungen über die Lage des Handwerks, published by the “Verein für Sozialpolitik” (Leipsic, 1895 sqq.).

Certain lines of production, of course, have been monopolized by factories; this fact cannot be controverted. People will never forego the great reduction in point of cost and time of production afforded by nail-factories, in order to resuscitate the defunct trade of nailer. Not only the nailer’s trade, also those of the cutler, dyer, weaver, spinner, have practically disappeared. Also the shoemakers, joiners, tinsmiths, and locksmiths, at least in the larger cities, barely maintain their ground and eke out a scanty living. On the other hand those engaged in certain portions of the building trades—in roofing, painting, decorating, paper-hanging, etc.—and also the bakers, butchers, upholsterers, have not only held their own, but have even gained considerably. Besides, a great number of artisans have started production on a somewhat larger scale by the employment of journeymen helpers. These trades will hardly ever be supplanted by factories. In fact, in many trades factory work is out of the question in so far as they require the material to be fitted and fastened in place. Such is the case in brick-laying, painting, paper-hanging, roofing, plumbing, etc. Moreover, a good deal of new territory has been opened to the artisan, as in gas and electric fixtures, in bicycle and automobile repairs, in photographic work, and the like.

It should also not be overlooked that artisans heretofore were unorganized and totally void of protection against unfair competition. And if they weathered the storm under such adverse circumstances, they will do still better if they are protected by organization. Then, again, the distribution of the population over the entire territory contributes to maintain the small trades. If the people were massed together in large cities, there would be danger of an increasing concentration of production. But in reality a great many people are scattered throughout the country in small towns, villages, and hamlets. All these localities need their own establishments to provide their local needs. This applies especially to the production of foodstuffs required in daily use—as bread and meat, which cannot easily be transported and preserved without danger of spoiling.

But above all in the artistic trades the handicraftsman will not easily be superseded. Production by machinery and on a large scale provides for the general market: it cannot take regard of individual needs, desires, and tastes. And yet individual needs and desires will always assert themselves. There is even reason enough to assume that the development of culture and education will intensify individual needs and tastes in matters of clothing, nourishment, upholstering, and decoration, and will consequently enhance the importance of the corresponding trades.

Among the middle classes whose permanency is assured must finally be numbered those who are engaged in the liberal arts, in science, and literature. Society will always stand in need of physicians, druggists, surgeons, teachers, professors, editors, librarians, artists (painters, architects, sculptors, musicians, actors, etc.), engineers, judges, public functionaries in state and commune. And yet none of these can be regarded as proletarians; the same must be said of commercial establishments on a small or medium scale which will not disappear—at least not in the country districts.