Section II: Application of the Material Conception of History as the Basis of Socialism

The general theory discussed in the preceding section forms the foundation upon which Marx and Engels have reared their socialistic edifice. Their theory of history was intended to show why and how the modern capitalist order of society must needs develop into socialism.

At the outset of the argumentation we find the doctrine of surplus-value. Surplus-value is said to be the labor of others appropriated free of expense. Urged on by an insatiable desire of gain the capitalist strives to increase the surplus-value in every possible manner. The first means to this end is to multiply the hours of work to a maximum, whilst reducing wages to a minimum, the second means is to render labor more productive by the perfection of technical appliances. Thus the contrast between “socialized production and capitalist appropriation”¹ becomes more and more accentuated. Industries on a large scale, in which there is a concentration of forces according to a uniform plan, are gradually ousting the industries on a small scale. At the same time the means of production are monopolized more and more in the hands of a few capitalists. “The antagonism between socialized production and capitalist appropriation becomes manifest in the form of an opposition between proletariat and bourgeoisie.”²

¹ Engels, Entwicklung des Sozialismus, p. 31.

² Ibid.

But whilst within the single factories production approaches more and more to socialized organization, society without is in a state of complete anarchy.³ A fierce anarchistic struggle for existence is raging among capitalists, every one of whom is manufacturing ahead for dear life regardless of the state of the market. This senseless struggle culminates “on the average every tenth year in an economic crisis which convulses society to its very foundation.” Over-production, business embarrassments and failures, bankruptcies and compulsory sales, cause general disorder. The consequence of these crises is on the one hand the growing accumulation of capital in the hands of a few, and on the other the growing number of proletarian laborers and their increasing misery. There is formed an industrial reserve army, i.e., “a number of wage-earners at the disposal of capital, but in excess of its average demand, . . . to be called into activity when industry is working at high pressure, to be bundled out on the street after the inevitable catastrophe has set in, at all times like an iron ball chained to the feet of the laboring classes in their life-struggle against capital.”

³ Ibid., p. 33.

But, whilst on the one hand the proletariat is growing and its misery is heightened, the number of capitalists on the other is diminishing and their property swells to an alarming size. Finally, the antagonism between the small coterie of capitalists and the immense number of proletarians becomes so acute that “the state is forced to assume the direction of production.”¹ “Instead of anarchy in social production there will then be production according to a uniform plan to meet the requirements of the community as well as of individuals. The proletariat takes the reins of government and first of all transforms the means of production into state property.” But this first act, in which the state is the representative of society at large, will also be its last; the state is abrogated, class differences are abolished.² The socialist order of society reigns supreme.

¹ Engels, Entwicklung des Sozialismus, p. 37.

² Ibid., pp. 40, 41.

This whole argumentation consists, therefore, of four essential points: 1. The doctrine of surplus-value based on Marx’s theory of value; 2. The assertion concerning the concentration of industries and the accumulation of capital; 3. The doctrine of the increasing number and destructiveness of industrial crises; 4. The assumption that with the accumulation of capital an increasing number of wage-earners are thrown out of work, thus forming an army of superfluous laborers who are plunged deeper and deeper in misery (pauperization theory). These four points are now to be discussed in turn.