Front Cover
 Facism made in USA
 The dynamics of war and revolu...
 The workers' fight against...
 The war for a better world
 Book reviews
 Back Cover

Title: Living Marxism
Full Citation
Permanent Link: http://ufdc.ufl.edu/UF00089429/00003
 Material Information
Title: Living Marxism
Physical Description: v. : ; 24 cm.
Language: English
Publisher: International Council Correspondence,
International Council Correspondence
Place of Publication: Chicago Ill
Publication Date: Winter 1941
Frequency: quarterly
Subject: Communism -- Periodicals   ( lcsh )
Socialism -- Periodicals   ( lcsh )
Genre: periodical   ( marcgt )
Dates or Sequential Designation: Vol. 4 (Feb. 1938)-v. 6, no. 1 (Fall 1941).
 Record Information
Bibliographic ID: UF00089429
Volume ID: VID00003
Source Institution: University of Florida
Holding Location: University of Florida
Rights Management: All rights reserved by the source institution and holding location.
Resource Identifier: oclc - 24493886
alephbibnum - 001586476
 Related Items
Preceded by: International Council correspondence
Succeeded by: New essays

Table of Contents
    Front Cover
        Front Cover
    Facism made in USA
        Page 1
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
        Page 18
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
        Page 27
        Page 28
        Page 29
    The dynamics of war and revolution
        Page 30
        Page 31
        Page 32
        Page 33
        Page 34
        Page 35
    The workers' fight against fascism
        Page 36
        Page 37
        Page 38
        Page 39
        Page 40
        Page 41
        Page 42
        Page 43
        Page 44
        Page 45
        Page 46
        Page 47
        Page 48
        Page 49
    The war for a better world
        Page 50
        Page 51
        Page 52
        Page 53
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
        Page 60
    Book reviews
        Page 61
        Page 62
        Page 63
        Page 64
    Back Cover
        Page 65
Full Text





31S -40o
N 32 Z

VOL. V No. 3 Winter 1941

I I L I~ I I I

- 25c A COPY


Vol. V. Winter 1941 No. 3
P. O. Box 5343 Chicago, Illinois

This magazine consciously opposes all forms of sectarianism. The sectarian confuses
the interest of his group, whether it is a party or a union, with the interest of the
class. It is our purpose to discover the actual proletarian tendencies in their backward
organizational and theoretical forms; to effect a discussion of them beyond the boun-
daries of their organizations and the current dogmatics; to facilitate their fusion into
unified action; and thus to help them achieve real significance.


In Germany, shortly before fascism came to power, a group of reaction-
ary writers began to attack the capitalistic system of production and its social
organizations even more vehemently than had previously been done by the
exponents of the radical labor movement. An outstanding contributor to
this group was Ferdinand Fried, whose book The End of Capitalism, publish-
ed in 1931, announced the close of the liberalistic-capitalistic epoch and the
ascendency of state capitalism, brought about by the collapse of the old
world-economy and the rise of fascism and planning.
Lawrence Dennis's new book The Dynamics of War and Revolu-
tion1) belongs in the same literary category.. It predicts for America what
Fried once declared was Germany's inevitable fate. Neither writer, how-
ever, has much in common with the actual fascistic political movement, nor
with the pseudo-fascism preceding it. Just as Fried was exiled and his book
forgotten, so will Dennis and his work find little appreciation among fascists
or "anti-fascists". The reason for this may be found in the illusions of
these writers, who actually believe that the present fascistic movement has
the character of a genuine revolution able to transform the world basically
enough to guarantee further progressive development. Though they are
right in predicting the success of fascism over bougeois democracy, they are
wrong in assuming that fascism can, even temporarily, break that economic
stagnation which is at the bottom of all social upheavals of the present epoch.
Because Dennis, Fried, etc., expect much more from fascism than it
is able to deliver, their theories do not fit very well into the vague ideologic-

1) The Weekly Foreign Letter, 515 Madison Ave., New York, N. Y. (259 pp.; $3.00)

al structure of fascism; nor dot these theories suit the changing requirements
of the victorious fascist class. Not that they are considered dangerous;
rather fascism is not "dangerous" enough to find those theories usable for
any length of time. As a matter of fact, fascism is not at all in need of
new social theories. What it wants are political and economic methods to
secure its rule over existing society. "If one makes dogmas out of methods",
Hitler once said, "he takes away from human effort and intelligence those
elastic attitudes which make it possible to operate with different means at
different situations in order to master them."
The idea of "social development as a permanent revolution" the
motif in Dennis's writings can by itself suit fascism only in its struggle
for power. In a modified form, it may even serve as a part of the war
ideology justifying imperialistic aspirations. But fascism wants to rule for
"a thousand years". It comes with the intention of staying and all talk of
a "Second Revolution", let alone a permanent one, is answered with exile
and murder. Even if Dennis is far from "defending all revolutions and
everything done in each of them", he still holds revolutions to be inevitable
and thinks "that any revolution that is big enough will end stagnation". But
it is the self-appointed job of fascism to prevent a revolution that is big
enough to end stagnation. It is fascism's attempt to reform not to revolu-
tionize, the capitalistic system of production and distribution which excludes
adherence to any social theory that sees all development in terms of revo-

On Definitions
Dennis challenges not only the "defenders" of bourgeois democracy but
also the Marxists. "As the world swaps revolutions and imperialism", he
writes, "it is time for Americans to take new bearings. For doing this
they will find little guidance in Herbert Spencer or Karl Marx... The
latter-day liberals hoped to stabilize the dynamism of the industrial revolu-
tion and the frontier which are now over. The Marxists caught the equally
chimerical vision of a classless society of workers from which the state
would have withered away, leaving the ideas of laissez-faire to flourish in
the garden of liberty completely rid of the noxious weeds of private capital-
ism." In the present revolution, however, the old capitalist merchant-class
elite is pushed aside by a new non-commercial elite, to whom Dennis's book
is addressed. This new elite is bent on realizing socialism. And for Dennis
"Russia and Germany are examples setting the present standards of so-
Dennis justifies presenting Russia and Germany as socialistic societies
with the argument that "if most of the one hundred and eighty million
Russians or eighty million Germans call what they have socialism, this fact
is more important for purposes of definition than the opinion of a handful
of American or British idealists who are politically insignificant, but who
believe theirs to be the only genuine variety of socialism". In other words,
Dennis accepts the name the "Germans" and "Russians" have given their

societies. We, however, regard these nations as having state-capitalistic sy-
stems, which contain larger or smaller "private-capitalist sectors". We
prefer to call these systems state-capitalistic because we can conceive of a
still different economic and social form from those existing in Russia and
Germany. Dennis, not interested in things to come, willingly accepts as
socialism that which calls itself such. We will then not argue about defi-
nitions, but accept as "socialism" what at other times we describe as fascism
and state capitalism. In short, if Russia and Germany are "socialistic",
our opposition to those countries may then be seen by Dennis as opposition
to "socialism".
There is one more question of definition to be settled before we can
proceed. Dennis states that "The only consistent feature of the capitalist
revolution of the past hundred and fifty years has been continuous change,
which is the only law of any and every revolution". For him "the nature
of change does not matter". His permanent revolution first meant con-
tinuous change of capitalism; it now means continuous change of "social-
ism". "The deviations of German socialism from Mein Kampf or of Rus-
sian socialism from Das Kapital", he writes, "are as natural as the devia-
tions of modern capitalism from the theory of Adam Smith's Wealth of
Nations". Aside from the fact that neither of the theories he mentions
really formed the basis of social developments ascribed thereto, and that
consequently these developments could not "deviate" from a basis they did
not have, we do not think it particularly fruitful to assume that "the na-
ture of change does not matter".
We are used to making distinctions between "essential" and "non-
essential" social changes. To express the difference we speak of evolution-
ary and revolutionary phases of social development. Though evolution
is part of revolution and the latter part of the first, still not to distinguish
between them means not to understand social development. To us changes
in capitalism which do not disturb the specific capitalistic production-rela-
tions (wage-labor exploitation and the divorce of the workers from the means
of production) are something other than the revolutionary overthrow of
those production-relations.
When Dennis speaks of the capitalist revolution, he means not only
that revolutionary change from feudalism to capitalism, but the whole of
capitalist development up to the present. He means the growth of capital,
which changed a lot of things, but not that fundamental social relationship
which consists of exploiting capitalists and exploited workers. When we
then accept Dennis's term "capitalist revolution", we understand the accu-
mulation process of capital and its social results. We fail to see, however,
how on the basis of his concept of revolution, Dennis can speak, when deal-
ing with the changes from private to collective exploitative methods in Russia
and Germany, of a new social revolution. For us capitalism has not been
overthrown so long as the basic capital-labor relations remain intact. While
the latter exist, all other changes, however important, still indicate no more

than the further evolution, or as Dennis would say, "revolution" of
If we, however, speak of fascistic or state-capitalistic "revolutions", we
mean thereby that the further evolution of capitalism had to be brought
about by new political and direct means, which appear "revolutionary" in
comparison with the traditional indirect economic and political methods
which accompanied previous capitalistic development.
Moreover, if we speak of fascism and state capitalism as varieties of
capitalism, we do not mean to say that these new variations represent pro-
gress. Change does not necessarily imply progress. (Progress is here defined
as increased exploitation, the growth of capital, and the territorial expan-
sion of the capitalist mode of production). Progress as such is furthermore, as
Dennis also points out, not important to capitalism. Only accelerated pro-
gress may solve its problems. The rate of capital accumulation, not a mere
increase in profits, is here the determining factor. A relative stagnation of
capital might be sufficient to produce crisis conditions.
In addition, the fact that capitalism is a world-wide system of produc-
tion and distribution allows for changes in the creation and distribution of
profits which are important, but which do not alter anything of significance
in the conditions of capitalism as a whole. These later conditions are de-
cisive, however, for the trends of capitalistic development. Mere shifts
of economic activity from one place to another, changes in the distribution
of world-created profits, may change nothing in an existing downward trend
because of capitalism's inability to expand as a whole. Less unemployment
in Russia and Germany, for instance, may mean more unemployment in other
countries. More surplus labor and profits in America may mean less of
both in Europe.
The general crisis of capitalism, for example, has now forced the cap-
italistically weaker nations, in order to safeguard their very existence, to
other than traditional methods of combatting depressions. This, in turn,
has forced the stronger nations in defense of their profits to react in a way
that, though assuring an increased economic activity all over world, will
obviously lead to a still fruther decrease of capitalism's profitability. Sur-
pluses, instead of being capitalized, are now destroyed to an extend that the
"new dynamism" thus created cannot indicate the coming of a new society,
but only the more rapid destruction of the present one.

The End of the Capitalist Revolution
It will first be necessary to investigate Dennis's statement, on which
he bases his claim that "socialism" is inevitable, that capitalism is declining.
In his opinion, "capitalism by itself" was never dynamic. Its "expansion
in geometrical progression and its development of monopolies in the course
of the industrial evolution" he finds explicable only through the profits ob-
tained from non-capitalistic territories (the British empire and the American
frontier), which provided opportunities, incentives, and escapes for individ-
uals. Capitalistic, or private enterprise, Dennis points out, has always need-

ed subsidies something for nothing, like free lands and a perpetual land-
boom to stimulate it to a necessary amount of activity. Capitalism was
able to develop because of cheap labor, because of a series of easy wars of
conquest and exploitation, and through rapid population growth, which also
expanded the markets. Only under such conditions were private enterprise,
democracy, and liberal freedom possible. However, the end of the frontier,
of imperialism of the English brand, of rapid population growth and easy
wars indicate the end of democracy as well as the end of capitalism itself.
The familiar notion that not socialism, but only capitalism, through
its private property form and the market mechanism, allows for political
democracy, re-appears here by Dennis in a somewhat modified form. To
him the disappearance of democracy is also the end of capitalism, and vice
versa. Though it is true that capitalism seemed to flourish best under con-
ditions of democracy, it also existed under other circumstances, as for in-
stance in Russia and Japan before the ascendency of bolshevism and fascism.
There is no reason why capitalism should not be able to continue to exist
under any form of government. The fact that its growth in a number of
countries coincided with the rise of democracy does not prove that this is
the only manner in which it can develop and exist.
That there is a direct connection between laissez-faire economy and
bourgeois democracy is not to be doubted; but then there never was a pure
laissez-faire economy during capitalism's development. The term laissez-
faire economy is used to emphasize only one of the many characteristics of
capitalistic expansion. "Democracy", too, existed only when it did not inter-
fere with the needs of the various capitalistic groups which ruled in their
own exclusive interests over the whole of society. "Laissez-faire" contained
in itself and led to monopoly; the growth of capital transformed monopoly
into monopolistic laissez- faire. Democracy, once the dictatorship of capital-
ists, became the dictatorship of monopolists.
This process of concentration and centralization of economic and polit-
ical power was at the same time the expansion of capital in size and exten-
sion. As capitalists came and went, governments were installed and dis-
solved, institutions were developed and discarded, monopolies were formed
and broken up. But during this whole process no end of capitalism could
be discerned because of the disappearance of the frontier, of easy wars and
rapid population growth. It seems to us that capitalism loses its dynamic
long before the barriers enumerated by Dennis are really reached.

Population and Profits
How is it possible, for instance, in a world that produced 25 millions
of unemployed in the 1929 depression, toi say that capitalism declines because
the population decreases? The decline of capitalism cannot be explained
by that of population; the latter has to be explained by the former. There
is no absolute law of population; each society has a law peculiar to itself.
It cannot be denied that the development of capitalism was accompanied

by an enormous population increase. If capitalism can both increase and
decrease population, then neither tendency can explain anything essential
as regards the possibilities or limitations of capitalism. Furthermore, a
population increase, brought about either by greater birth rates or by im-
migration, does not necessarily mean greater economic activity; nor must
an opposite trend lead to contraction in production. Economic activity in
capitalism depends on investments. If not enough are forthcoming, popula-
tion tends to decline. For Dennis, however, result is cause. And though
it is true that, once capitalism has started to decline, result becomes cause
and cause result, nevertheless the question of primacy must be raised if one
wants to inquire into the reasons for capitalism's decay.
On the basis of his wrong assumption that population trends determine
capital expansion, Dennis then says specifically that "During the days of
heavy immigration, rapid population growth and a scarcity of food and
shelter, labor could not have enforced its present real wage demands,
which, to the extent that they must be met at the expense of profits, are
deterrents to new investment and enterprise". Aside from the fact that no
serious economist any longer holds the position that the pressure upon wages,
because of the larger supply of labor, could increase the rate of profits to
such an extent that entrepreneurial initiative for new investments of any
significance would be forthcoming, it should be quite difficult to maintain
this assertion in the face of the existing large-scale unemployment, which,
in Dennis's own words, is "capitalism's only enduring creation since the
war". Besides, the wages Dennis refers to are the privilege of only a re-
latively small body of workers brought about by capitalistic trade-union
policies at the expense of the large majority of the laboring population,
which is hardly capable of re-producing its labor power, some workers even
living on the verge of actual starvation not only in the world at large but
in America as well. Aside from all this, it is still more difficult to see
the point of Dennis's assertion in view of the fact that he himself has so
greatly emphasized the importance of the frontier. If the latter gave many
opportunities to capitalism, it also provided the workers with the chance
to refuse low wages and go westward.
It seems to us rather that the social and economic position of the work-
ers in relation to that of capital has not been improved, and that, from this
point of view, it should be far easier now than before to force the will of
capital upon the workers and to make them sacrifice in favor of new invest-
ments. Not a shortage of labor and an "abundance of food and shelter"
stands in the way of further capital expansion, but capitalism's inability to
use the existing surplus of labor and to employ the prevailing wide-spread
misery for its own purposes. The increases in real wages, Dennis may be
able to point out, were not due to a population decline, but to the greater
productivity of labor, necessitating the betterment of living conditions. That
this has been bought about by way of struggle, in which a real or produced
temporary labor shortage served the workers, does not alter the fact that

a higher productivity demands a better standard of living. However, as
wage statistics will show, there was never in history a situation where the
workers could enforce wages that hampered capital expansion. If such a
chance ever existed, it has certainly been missed.
It is true that the individual capitalists, and now even the collective-
state enterprisers, see in the cutting of wages their next necessary step when-
ever profits become too small, or when larger profits are needed at once.
Nevertheless, capitalism has never solved its real problems by the simple meth-
od of lowering wages. Wage reduction at one time are compensated for by
wage increases at another. In the long run, and for capitalism as a whole,
expansion of capital is not determined by high or low real wages.
At no time during capitalism's history have wages been decisively de-
termined by the number of workers asking for one job, that is, by rapid po-
pulation growth. With regard to the commodity labor power, the law of
supply and demand does not work so well as it seems to work'" for other
commodities. Dennis himself knows that generally in production "Produ-
cer demand, not consumer demand is sovereign", which means that the law
of supply and demand can explain nothing essential, but is itself in need of
explanation. Not the increase or decrease in the number of workers, but the
fact that labor must sell its labor power in order to live, and sell it to cap-
italists who, in order to be able to buy it, must buy it at a price which gives
them sufficient profits to exist and expand, explains the existence of certain
wages. The workers may be able to bring the whole capitalist society to an
end. But, regardless of the labor supply, they will never be able to raise
their wages high enough to hinder on their part further capital formation.
However great the unemployed army, capitalism cannot reduce wages be-
low re-production costs for a considerable length of time without reducing
its own profits. Despite wage struggles of all sorts, the decision as to
what kind of wages will prevail is made neither by the capitalists nor by
the workers, but only through them, by the needs of the economic system to
which both adhere.
The increase in real wages of which Dennis speaks was, furthermore,
only made possible by and was only brought about through a much faster
increase of exploitation. The part of the social product falling to the work-
ers decreased continuously with the growth of capital. This is a tautology,
because the latter implies the first; it is one and the same process. Lower
real wages meant lower profits, higher real wages higher profits, but lab-
or was less exploited by lower real wages than it was by higher ones. It
was less exploited during the frontier period, during rapid population in-
crease, during the period of easy wars, and during the era of expanding
markets than it is today. Capitalism's problem consists not, as Dennis sees
it, in its inability to raise sufficient profits for further development because
of real wages hindering this process wages to be explained by a relative
lack of population growth. The question rather is, why, despite an ex-
ploitation greater than ever in capitalism's history, despite large-scale un-

employment, serving now as before as an additional element to suppress
wages, is it still not possible for capitalism to expand further? In short,
why was it possible for capitalism to expand under less favorable condi-
tions, and why can it not expand under the best possible conditions?
In his arguments Dennis included another familiar statement, namely,
that capitalism "cannot raise living standards without reducing profits
and the incentives to new investment and enterprise, (and) at the same time
cannot maintain the necessary market for full production and employment
without raising living standards or real wages at the expense of profits".
This "dilemma" which, in Dennis's opinion, "capitalism never faced be-
fore", and did not need to face "as long as it had a frontier, rapid growth,
migration and a flourishing industrial revolution", is not a new "dilemma",
but no dilemma at all. When raising living standards capitalism never
reduced but increased profits, frontier or no frontier. As long as it in-
creased profits sufficiently it had a market for full production, for capital-
ism is its own best customer. The trouble now is that, regardless of frontiers
and living standards, there are not enough profits, because the question is
not one of how to realize surplus value in the face of lacking markets, but
how to produce sufficient surplus value (profits) to create new capitalist

Frontiers and Easy Wars
What did the frontier and imperialistic expansion mean in economic
terms? Markets and extra-profits, Dennis answers. But, though it is
true that these extra-profits and markets were of considerable importance
to capitalism, they do not explain the success of capitalism but are the re-
sult of that success. Is it not a fact that trade between highly developed
industrial countries, not to mention their internal economic activity, was
and is about ten times as important for their welfare as is their trade with
frontier territories? The great bulk of the profits is created in the highly
developed nations; only a small percentage of their riches is derived from
colonial exploitation. Though it is true that the appropriation of other
people's property without an adequate equivalent has been of great import-
ance for the development of the countries initiating the capitalist expansion
process, still it only accelerated a movement whose success was already gua-
ranteed through the capitalistic form of exploitation itself. And though
it is true that the actual lack of profitability in recent history has raised
the interest in additional profits from abroad, regardless of their size, still
present-day imperialism, as well as the whole previous territorial expansion
of capital, is and was only possible because of the increase in exploitation
in the original and the now-existing capitalistic nations.
Obviously Dennis has things standing on their head. For example,
he explains the success of American capitalism by the fact that American
farmers and speculators could buy land cheaply and sell it dearly. With
little effort and expense they could acquire vast land holdings either by

governmental land grants or simply by being firstcomers. The westward
movement and the increasing industrialization allowed these lucky ones to
sell all or part of their land at ever-increasing prices. The continuous land
boom thus created made a considerable number of people rich. But one
should not only inquire about the lucky sellers. Who were the buyers
who paid the prices, and where did they get the money to do so? Either
this money represented the savings of European immigrants, that is, came
from past labor or past exploitation of labor, or the land, if given on cred-
it, was paid for with the labor applied to it, or with profits raised in in-
dustry. Without increasing industrialization and the capitalist increase
in exploitation, this whole process would not have been possible. The Am-
erican frontier was a "frontier" because of the capitalist expansion process.
The statistical material available shows, for instance, that during the nine-
teenth century the large waves of immigration followed, not preceded, up-
ward waves in business. The dynamic of capitalism made the frontier
what it was; the frontier did not give capitalism its dynamic.
The "enrichment" by way of the perpetual land boom did not involve
the creation but only the distribution of profits. The first comers merely
exploited their advantage and appropriated for themselves profits created
either by others or for others. In different words, during the frontier period
farmers and prospectors were able to participate in the exploitation of labor.
Today the picture is reversed. Now it is industry that appropriates parts
of the surpluses of agricultural production for itself, either by way of better
price control or through the industrialization of agriculture. The capital
concentration also affects the division of surplus value; rent and interest
disappear in order to bolster industrial profits. But both situations, ex-
ploitation by land monopoly or industrial monopoly, do not enlarge the
surplus value (labor) socially created. They only indicate what social group
is able to sell above value, and what other group has to sell below value.
Both situations change nothing of the fact that it is always labor, agricul-
tural and industrial, that determines the amount of surplus value on hand,
over the division of which the fight may then issue.
If the frontier had actually meant what Dennis thinks it meant, it should
have frustrated, not fostered, capital development, because it diminished the
profitability of industry and thus hampered rapid expansion. Though it
is true that parts of industrial profits wandering into the pockets of the land-
owners and speculators found, via the banking system, their way back into
industry, yet even for those parts interest had to be paid, so that industry
could only feel itself doubly "cheated". It was capitalism's job to do away
with the frontier. Only thus could it serve its real interests.
Just the same, the frontier was a godsend for capitalism. Not because
of the perpetual land boom connected therewith nor because it subsidized
capitalism, but because, though it robbed capitalism of parts of the surplus
value sweat out of the workers, it provided the space and material needed for
capitalistic expansion. Without an abundance and a variety of raw mater-

ials capitalist production is unthinkable. Capitalism presupposes the inter-
national division of labor, it is the creation of a world economy. The more
the world is capitalized, the better capitalism will flourish. The more non-
capitalistic exploitation is transformed into capitalistic exploitation, the more
profits are at capitalism's disposal. Only with the end of the frontier did
America become the powerful country it is today. Only then it changed from
a raw-material-producing and capital-importing country into a nation selling
all sorts of produce and exporting capital in great quantities. Only with
the disappearance of the frontier did America cease to be a mere appendix
to European capital.
Only the successful transformation of non-capitalistic into capitalistic
territory is of real importance to capitalism. But each nation, expanding
its capital, is opposed to capital expansion elsewhere. Though "theoretic-
ally" the capitalistic world would flourish best if it were completely capital-
ized, in reality each capitalistic country tries at the same time to prevent
the realization of this "theoretical" necessity. Though "theoretically" the
end of all frontiers should be most favorable to capitalist society, in practice
the diverse, historically-conditioned, and nationally-orientated vested inter-
ests preclude the removal of these frontiers. Capitalism is not doomed because
it removed the frontiers too rapidly; if the argument of the frontier is used
at all, one can only say that the continued existence of frontiers demonstrates
the limitations of capitalism, which has to disappear because of its inability
to continue to increase the productive forces of mankind.
It should be obvious that the world at large is far from being capital-
ized. Even though the American frontier has disappeared, why not make
use of the frontiers in South America, South-East Europe, Asia, Africa,
Australia? Dennis answers that the new "social revolution" which has
started in Russia and Germany excludes the utilization of the remaining
non-capitalistic or backward territories for private capitalistic purposes. Why
was it then that long before this "new revolution" started capitalistic ex-
pansion into non-capitalistic territory had either found its end or had begun
to stagnate? Why is India as backward as it is, despite England's long rule?
And why aren't the "400 Million Customers" in China properly exploited?
One may point to the existing imperialistic rivalries checkmating each
other. But such a situation still allows both for a general rush of invest-
ments and for a general reluctance to invest because of lack of security.
Behind the failure to capitalize the backward nations stands far more than
the fear among capital-exporting countries of losing their investments in
case of war.
It is true that in order to open the "virgin" territories to capitalistic
exploitation wars, less easy than those which created the British empire, or
which led to the present form of the United States, will have to be fought.
But then the ability to fight has grown with the difficulties of warfare. A
strong combination of capitalistic nations will still be able to defeat a weak-

er combination of capitalist nations and take, as its price, control over the
backward countries. War is not only now, but always was, "unprofitable".
It was not fighting which brought additional profits to the ascending cap-
italist regime, but more and greater exploitation of labor after the fighting
was over. The difficulties of war cannot explain the end of capital expan-
sion; less so, since the end of capital expansion led to the last and to the
present world war.

The Decline of Capitalism
For all the reasons so far discussed, that is, the end of the frontier,
of easy wars, and of rapid population growth, Dennis thinks that "as a con-
structive force for private capitalism, the industrial revolution is now over".
The "socialistic countries", Russia, Germany and Japan, will continue where
capitalism has left off. However, what he assumes to be reasons for the
decline of capitalism are not the real reasons, and the real reasons, that is
the capitalistic mode of production which stands opposed to the social needs
of today, he does not even recognize. By denying capitalism's inner dynamic
he fails to understand its present decay, and thus has to limit himself to
favoring the fascist "reform" of capitalism which, whatever it might change,
will not change anything in the further disintegration of the capitalist pro-
duction process.
What then is at the basis of the present economic and social stagnation?
Throughout his book Dennis talks extensively about many forms of capitalist
exploitation. He neglects, however, to investigate thoroughly that of labor
by capital. Though he realizes that expansion depends on profits, and
though he knows where profits come from, still he does not grasp the whole
significance of the relationship between profit and expansion. Much as he
tries to, he does not concern himself with fundamental contradictions of
capitalism, but is concerned only with question of profit distribution. Only
thus can he remain in the superficial spheres of population growth, frontiers,
and easy wars. All he needs is a few good arguments to say why hd thinks
that the state-capitalistic, or "socialistic" form of profit distribution is super-
ior to that of private capitalism. As the German fascists, a la Fried, were
opposed only to "interest slavery", and that at a time when the end of bank-
ing capital was already at hand, so Dennis too, though more embracing, op-
poses no more than private profit appropriations. He also demands this
at an hour when it has already become actual practice. Today even the
victims begin to realize that their days are over. Though Dennis believes
he is opposing capitalism, he really favors the continuation of its mode of
production if it can only be modified in such manner as to be able to with-
stand the possible onslaught of the dissatisfied masses. In view of rising
fascism, many of his predictions as to the features of the immediate future
seem to be quite realistic; however, his belief that the problems he thinks
in need of solution will thereby be solved is certainly illusory.
Since for Dennis the permanent revolution, that is, social change, never
consists in more than the exchange of one elite for another and a change

of institutions and functions within the otherwise unchanged exploitation-
relations, it is understandable why he did not bother himself too much with
the basic problems of capitalist society. To safeguard his position, he has
to insist that capitalism must receive "something for nothing" in order to
live and prosper. But the whole of capital is "something for nothing" that
is, it consists of surplus labor past and present. Imperialism itself is finally
reducible to the appropriation of surplus labor from other countries. The
trouble then, to repeat, is not that capital geographically reaches its barriers,
but that it is no longer able to increase its profitability sufficiently at home
to continue capital expansion abroad. Not because it is no longer possible
to get "something for nothing", but because it is not possible to raise the
exploitability of the existing number of workers to provide for the capital
needed for expansion does capitalism find it difficult to get everything for
Not the frontier, population growth and easy wars gave capitalism its
dynamic, but the possibility of appropriating by capitalistic exploitation meth-
ods ever greater numbers of workers, necessitating, as well as making pos-
sible, territorial expansion. The increase in the laboring population was
accompanied by a still more rapid increase in capital. The decline of the
laboring population relative to that of capital this fundamental capitalistic
contradiction, which though not the only one is still the only one through
which all other reasons for capitalism's decline become understandable
Dennis does not even mention.
The question previously raised as to why it is that capitalism stagnates
despite high exploitation contains its own answer. Because exploitation is
so great that its increase through lowering living standards or through ex-
ploitation from abroad ceases to be of importance as regards capital for-
mation, it must be increased by additional exploitation of additional workers.
That means, not by any number of additional workers, but by a number
great enough to produce profits sufficient for still further capital expansion.
However, every additional worker necessitates an additional capital outlay.
This capital outlay increases with the growth of capital. The question is
then: is it possible for the existing number of workers to create sufficient
surplus value to produce that capital necessary to employ profitably the need-
ed number of additional workers? How big must this capital be, and if
it is created, are there enough workers on hand to make it possible for ex-
pansion to occur?
As long as capital was relatively small and its expansive needs limited,
profits were relatively high. Profits are what is left over from production
after wages, rent, interest, distribution and reproduction costs, etc., are
accounted for. Capital expansion means that part of the profits, and un-
used part of other incomes ready for industrial investments, are not hoarded
but are used to construct additional means of production. However, the
growth of capital implies the relative decline of labor power. The wage
bill becomes smaller the higher capital mounts, though the wage bill (vari-

able capital) may also increase, and in case of accumulation, must increase
in absolute terms. Profits are derived from labor. As long as the exploita-
tion of labor can be sufficiently increased, the decline of labor relative to
that of capital means nothing. The tendency of a declining rate of profit
inherent in the disproportional growth between labor and capital (variable
and constant capital) cannot assert itself so long as exploitation increases
faster than the rate of profit declines, that is, so long as capital accumulates
The smaller profits of smaller capital are something other than the
larger profits of large capital. A capital relation where, say half of the
existing capital is invested in wages, and the other half in means of produc-
tion, yields less profit than a capital relation where 9/10ths consist of means
of production and only 1/10th represents wage capital. But in relation to
the total capital, that is, constant and variable combined, the absolute greater
sum of profit has become relatively smaller, because the profit, though won
only by labor, has to be measured in relation to the whole of capital invest-
ments. Furthermore, in the case of an equal relationship of the two com-
ponents of capital, a greater number of workers have to re-produce the
existing capital and create its additions than in the other case. A relatively
slight increase in exploitation, made possible by technological development
and productive re-organizations, or even by a mere increase in the intensity
of labor, or by lengthening the working day, may assure prosperity in the
first case. To have prosperity in the second case means that a very small
number of workers must reproduce the existing capital and create its ad-
ditions. Here a greater intensity of labor may no longer mean anything,
as the high productivity already reached by reason of the large capital in-
vested in means of production may preclude sufficient increase in labor in-
tensity. Neither would the lengthening of the working day help because,
under such conditions, after a certain number of hours, the workers' pro-
ductivity declines rapidly. What would be of help here is further tech-
nological development and better organization of production. If, however,
the existing, already enormous, capital is unprofitable, technological develop-
ment implies a still greater capital than that in existence. That does not
necessarily mean greater enterprises, but additional enterprises, or the re-
placement of less with more productive enterprises. Capital must be suf-
ficiently enlarged to restore profitability despite the furthering of the dis-
crepancies between the two components of capital, constant and variable.
If this, at any given time, is not possible, stagnation sets in and capital
destruction takes the place of expansion.
What is "healthy" in capital is not its "prosperities", but its depressions.
Those people who think that depressions are bad for capitalism, and who
long for the return of prosperity, are only longing for the final capitalistic
collapse. All periods of prosperity have hitherto only accelerated the de-
velopment of that unfortunate disproportional development between con-
stant and variable capital, which gave capitalism a "dynamic" otherwise

possessed only by people suffering under galloping tuberculosis. Able to
"prosper" only by accumulation, capital has always increased its momentary
profitability by making smaller the basis on which it rests. The more it
actually expanded, the more it contradicted its own "interests".
If capitalism could prosper by a development which increased the num-
ber of exploited workers simultaneously and proportionately to the growth
of capital, it would find its end with the end of natural resources and avail-
able labor power. If it could prosper by a more rapid development of pop-
ulation than that of capital, it would end in starvation. If it has prospered
by the more rapid increase of constant capital over the variable part, it now
finds its end in the inability of the relatively fewer workers to maintain
and increase that capital.
Assuming the relation between constant and variable capital today ap-
proximates the 10 to 1 relationship used for illustrative purposes above,
and if the existing capital has to be totally reproduced within a span of 10
years, this would mean that every employed worker today must yearly cre-
ate, besides the money equivalent for his and his family's livelihood, an
equal sum for capital replacements, plus the per capital distribution costs,
plus taxes, plus the livelihood of the capitalists and that of the non-working
population not accounted for in the previous categories, plus, finally, addi-
tional capital for expansion. If the workers are not able to create all that,
capitalist society stagnates until it becomes possible to increase the produc-
tivity of the existing working population to a point where further expansion
becomes possible. If capital expansion is not successful, all the items in
which surplus value is divided increase, making it less and less possible to
raise the capital needed for expansion. Under such conditions a forceful
destruction of capital becomes necessary; that is, the ending of a relation-
ship in production which excludes further expansion, for instance, through
a change in the proportional relationship between capital and labor from
10 to 1 to, say, 8 to 1. If crisis and depression destroy capital in sufficient
quantities, and thus enable a rise of profits for the enterprises capable of
living through the depression, the continuation of technical advancement
and the consequent increase in productivity re-establishes a level of produc-
tion which allows for further accumulation.
This has been the case so far. Each previous capitalistic depression
destroyed enough capital to raise the profitability of the remaining capital
sufficiently to guarantee another period of "prosperity". If one is interested
in the maintenance of capitalism, one should pray for better and bigger de-
pressions. As a matter of fact, every capitalist does so. He always means,
however, that the benefits shall be visited upon his fellow-capitalists. After
all, this is a Christian civilization. The present depression unfortunately
finds too many non-believers in the ranks of capital; the trouble with the
present depression so far is not that it is so big, but that it is not big enough.
Monopolization, capital concentration, trustification, cartellization, and mar-
ket controls of all sorts hinder capital destruction in necessary quantities.

However, if individual capitalists and concerns have turned into heathens,
not so the rest of the population which, by its own movement, brings about
and enforces governmental policies which serve to an ever greater extent
the destruction of capital in order to safeguard capitalist society.
The question as to whether capital will be able once more to overcome
its present stagnation and decline by simultaneously destroying capital and
raising profits is not an economic question. There does not exist a purely
economic problem at all. However, by taking economic phenomena out
of the social setting of which they are a part, it becomes possible to shed
some light on the developmental tendencies of the latter. By knowing what
it takes to re-establish profitability and progressive accumulation, one be-
comes aware of the character and intensity of the ensuing class struggles.
From a "purely economic" point of view there is indeed no reason why
capitalism should not be able to overcome its present difficulties. Though
the workers are extremely exploited, though they may already work seven
hours for capital during an eight-hour day, is there any reason why they
should not work 7% hours for capital; is there any reason why the num-
ber of workers should not increase by 10 or 20 per cent, or even more?
If it should prove possible to destroy sufficient capital in order to distribute
the social profits into still fewer hands, and to polarize society so that it
really corresponds to what Marx thought would be the result of accumula-
tion, capital may be able to exceed what appears to us already to be its limits.
It is true that there are more reasons against such a possibility than there
are in its favor, but then one never really knows where the limits of human
endurance are.
To prove strictly scientifically the inevitability of capitalism's collapse
will always remain a futile attempt. Not even the assembly of data needed
for such an undertaking is possible. Dennis is right in not wasting his time
"to prove to doubting optimists that it is impossible to restore the necessary
conditions for the successful functioning of private capitalism. Those who
take my view", he says, "do not have to prove their case. They need only
challenge the optimists to prove their theses by achievement". But he not
only has no reason to prove his case, he could not prove it even if he were
to try. All that can be pointed out are the reasons why the growth of
capital implies the growth of the contradictions inherent in its productive
system. If the empirical data corresponds with this, one can, without fear
of being utopian, prepare and help support a social movement that attempts
to end capitalism.
That one may also, by considering the consequences of capital ac-
cumulation, justifiably say that there is an objective end to capitalism, that
its final collapse is assured, changes nothing of the fact that capitalism must
be abolished through human actions in order to cease. The argument about
the objective end, however correct, finally amounts to no more than the
recognition of the obvious, that all things and all institutions come to an
end in time.

Independent of the question as to whether or not the present crisis of
capitalism is its last crisis, it should be clear from the rough outline of our
own crisis theory as given here that Dennis is still far away from a real
understanding of the problems of capitalism. It is his idea that a "capital
shortage" makes for capital prosperity; but exactly the opposite is true.
Capital shortage excludes expansion. If expansion fails, even those insuf-
ficient capital funds earmarked for accumulaiton cannot profitably be in-
vested, and are not invested. Thus they lie idle, creating the illusion of
the existence of capital surpluses. But there is a big difference between
appearance and reality. How misleading it is to take the first for the latter
Dennis demonstrates with numerous examples throughout his book. Even
the element of truth contained in his assertion that the decline of capitalism
is partly due to population decline was neither seen by him, nor would it
fit, in case he had recognized it, into his exposition of capitalism's difficul-
ties. Just as an actual capital shortage, a shortage in regard to the needed
capital expansion, appears to the superficial onlooker as a surplus of capital,
so the present surplus population, compared with the expansive needs of
capital, would really represent a shortage of labor, if accumulation could be
continued with accelerated speed.

The Industrial Revolution of "Socialism"
Although we disagree with Dennis as to the reason for capitalism's
decline, we agree that private-property capitalism's days are numbered. As
stated before, however, we do not believe that Dennis's "socialism" will be
able to solve any of the problems which it inherited from private-property
capitalism and which caused the decline of the latter. We have dealt with
Dennis's theory of capital, and opposed it with our own, because in our
opinion it is his wrong conception of capitalism and its developmental laws
which explains his failure to understand the character and the possibilities
of the system he calls "socialism".
Neither Russia nor Germany has ended the capitalist system of pro-
duction. They have changed individual appropriations of the socially cre-
ated surplus value into "collective" appropriation by way of the state. This
involved the partial or total destruction of the old bourgeois class of private
entrepreneurs and the remnants of feudalism in favor of a new ruling class
- the state bureaucracy and its privileged supporters. There was also
necessary a certain degree of re-organization and "planning" within given
territories, which practically, however, turned out to be planning for the
present war, that is, "planning" against real planning. For real planning
can be done only on an international scale. Such planning Dennis holds
to be impossible and unnecessary; he is satisfied with a national-socialist
America defending its own interests by way of struggle against the rest
of the world. The solution of the unemployed question and the continu-
ation of the industrial revolution is all he demands, and he thinks that this
would be possible within the framework of his "socialism".

It is true that in the struggle between the "old" and the "new" capital-
ism the initiative and the success have so far been on the side of the "new"
capitalism. Its "dynamism" is based on poverty, a fact which gave Dennis
the idea that only a "capital shortage" provides capitalism with the neces-
sary dynamism. If necessity is the mother of invention, not all inventions
need mothers. That nations act because they have to does not prove that
"dynamism" presupposes misery. What the fascists are now doing with
old and new methods has always been done by the old capitalistic states,
whether they were poor or rich. The "dynamism" of the fascist states
springs not from their own peculiarities, but finds its reason in the deadly
general stagnation of the capitalist world. It is still an expression of the
same dynamic that was the driving force of capitalism until it reached
stagnation. As did private capitalism previously, so also does Dennis's
"socialism" expand in order to prevent expansion. His new "industrial
revolution", like the old capitalist revolution, is out to prevent the indus-
trialization of the world. It wants to strengthen itself with the weakness
of other nations. This continued "industrial revolution" means no more
than the destruction of some in favor of other capital; a struggle demanding
additional weapons, because the destruction of capital by way of the market
mechanism is no longer sufficient.
The functioning of the automatismm" of the market was based on a
rapid capital accumulation. As long as the latter was possible the destruc-
tion of primitive industry involved the construction of advanced industry;
the destruction of primitive agriculture, the development of modern agri-
culture; the end of limited and backward markets, the opening of world-
trade. As long as capitalism expanded by reason of a sufficient profitability,
its "anarchy", that is, private interests opposed to social needs, was a sort
of "regulator" which provided for both frictions and their elimination. Over-
production in one or another field of production was punished by lower
prices and profit losses, which re-established some sort of "equilibrium"
between supply and demand. Extraordinary unemployment found its com-
pensation in temporary booms and in the spreading of capitalism. Under-
developed fields of production, yielding high profits, were soon invaded by
additional capital reducing the extra-profits to "normal". Obsolete indus-
tries became the first victims of crises and depressions when the market
mechanism re-established a lost equilibrium, that is, a situation which gran-
ted capitalist society sufficient stability to feel itself secure. In short, com-
petition provided for a kind of trial and error method able to bring "order"
into the capitalist system.
Nevertheless, from its very inception, the capitalist system was never a
system of "perfect competition". It favored from the beginning those nations
and industries within nations endowed with social and natural advantages.
The growth and spread of capitalism increasingly weakened and destroyed
the element of control provided for in the competitive mechanism. Laissez-
faire was never more than a convenient philosophy for successful capitalists

or capitalistic nations. The less fortunate nations could see in it, if they
could see at all, no more than a shrewd device against their own progress.
But history is more than economics; if it were impossible to gain competitive
strength under the "rules" of laissez-faire, other means could be and were
tried. The protectionists ruled, and if their endeavors proved to be success-
ful, they too could then become adherents of the laissez-faire ideology. The
changing needs of the capitalist system and the changing policies and for-
tunes of the different capitalistic nations explain the different economic
theories developed during capitalism's history.
Throughout every shift in political and economic power, through peace
and war, booms and depressions, capitalism advanced. The possibility of
increasing exploitation and thus accumulation with accelerated speed in-
dicated from another point of view insufficient capital concentration
and lack of political centralization. This "weakness" gave to wars, de-
pressions, and bankrupties the "strength" to re-establish lost equilibriumss".
In other words, "life" was still stronger than capital; the needs of the whole
of society, however violated by capitalism, were not as yet totally subordin-
ated to the specific interests of the capitalist class.
Because capitalism failed to master the world, it could declare
itself master of the world. Its "success" was due to an unsearched-for
strength and an unpreventable weakness. No group of capitalists nor any
capitalist nation can possibly be engrossed in more than its own advancement
and is thus always vitally interested in the frustration of its competitors.
That the "original" capitalist nations did not succeed in keeping the rest
of the world primitive is certainly not their fault. That in attempting to
do so they actually advanced the capitalization of the world does not show
the guidance of an "invisible hand" nor Hegel's"cunning of reason", but
only that the real needs of the social world are always stronger than the
limited interests of one or another class which finds itself in power.
It is capitalism's dilemma never to be able to advance withont simul-
taneously putting new obstacles in the way of further "progress". It has
"two souls in its breast". One wants to restrict, the other to extend ex-
pansion. But though capitalistic interests are restricted, the needs of society
are limitless. Because individual capitalists have to work against each other,
they hamper their common conspiracy against society. For this reason cap-
italism's struggle against society brings forth the quest for capitalistic "solid-
arity", which must however be achieved through the elimination of capital-
ists and the continuous weakening of all other social classes. This concen-
tration process is materialized in commandeering masses of constant capital,
achieved by greater exploitation. The never-ending need for more exploita-
tion finally defeats itself. The rule of capital becomes no longer compat-
ible with the basic needs of society.
The one-sided and therefore wrong assumption that crises and depres-
sions point to the limitations and end of capitalism leads to other misunder-

standings, namely, that fascism is already "socialism", or that it represents
a new form of capitalism with better chances of survival. For Marx, crises
and depressions were "healing processes"; his theory of accumulation ends
in the revolution. If anything, the success of fascism, or "socialism", could
promise only the further sharpening of the conflict between capitalistic and
social needs. The present world struggle in all its various forms is only
another gigantic crisis of capitalism, a new, all-embracing, terrible attempt
to reach that degree of capitalistic "solidarity" now needed to control the
labor of the world. That this crisis has such an out-spokenly political char-
acter is also not new; it only reflects the degree of capital concentration
already reached. The struggle between fascism and democracy is in its
essentials a repetition of the struggles between protectionists and free-trad-
ers in times past. Today, however, the scope of the struggle is enlarged,
the intensity greater, because of the greater pressure resulting from more
polarized class relations. The economic aspects of the crisis are driven into
the background because of increased monopolization. The old business cycle
has already been replaced by a virtually permanent stagnation. Monopol-
ization and the stagnation connected with it can be broken only by powers
stronger than capitalistic monopolies. State-capitalism is such a power; it
is the opposition of a more perfect to a less perfect monopolistic society.
The "new dynamism" displayed by the fascist powers is then only a
new version of the old crisis dynamism. Both have the same cause and can
lead only to essentially identical results, unless other factors, such as a rev-
olution ending all capitalistic relations and problems, intervene. If the
crisis should fail in its political aspects that is, as war and "revolution"
- as it has failed since 1914 in its economic aspects, to re-establish a socio-
economic relationship which guarantees the further accumulation of capital,
the crisis itself will become the basis of new social struggles and must be
ended in a non-capitalistic manner. But if this crisis should have sufficient
force to re-establish a profitable capital accumulation on a world-wide scale,
it would demonstrate only that the old capitalistic dynamism is still at work.
The crisis would not have "solved" any of the capitalistic problems; it would
once more have postponed the downfall of capital. As the problems of so-
ciety would remain the same, so also would the task of the workers be
However, we are still in the midst of the crisis and there is nothing
visible which could suggest its early end and a new prosperity. In one sense
the present crisis is only the deepening of the capitalistic depression which
came into being long before the first world war. With the beginning of
the twentieth century, industry and agriculture began their relative stag-
nation, surplus populations arose in village and city, a lack of capital for
expansion was felt everywhere. Life went on just the same. People travel
other roads if the traditional ones become impassible. The necessary re-
orientation may be a slow and painful process, but history proves that it
has never failed. If capital is lacking to safeguard and expand vested in-
terests, whether private or national interests for whose defense some sort

of social stability is needed production will be maintained with less regard
for those vested interests or with none at all. If production is carried on
via the market mechanism, where money must yield more money before
economic activity is possible, and if this mechanism begins to fail, production
must be carried on without consideration for private profit needs. Produc-
tion must then be ordered, partially or totally. The ordering implies eco-
nomic authority and hence control over all phases of social life. The ques-
tion as to who is going to do the ordering is settled by political struggles
involving shifts in class positions.
That political group which secures for itself the control over the means
of production, coercion, and integration will do the ordering. In what
manner this control is reached, whether by legal or "revolutionary" means,
depends on historically-conditioned, specific circumstances, which vary for
different countries and different times. To order or "plan" what pre-
viously had not been "planned" because it was thought that the "automat-
ism" of the capitalist market would take care of it, that is, continuing and
regulating production on the basis of labor exploitation in the interest of
a ruling class, is then celebrated as a new social advance.
Whatever ordering or "planning" is done in Dennis's "socialism", for
instance, is done in order to reach the same results that is, more surplus
labor and profits which private property capitalism achieved without that
much bother. As always before, so also in Dennis's "socialism" property
and control go together. The ruling classes in Germany and Russia have
control over both the means of production and the means of destruction.
For labor there remains the necessity of selling its labor power in order to
live, and selling it at a price that satisfies the needs and desires of the ruling
class. The power of this ruling class is now strengthened by more direct
methods of coercion which are supposed to compensate for the loss of the
automatic control measures that operate under private property conditions.
At a "higher" stage of "socialism" artificial market control may be re-in-
troduced for the convenience of the "planners". The various theories of
"market socialism" now in vogue are supposed to supplement and make
easier organized exploitation in state capitalism.
The Russian collectivization, that is, the realization of the old capital-
istic dream to abolish once and for all the tributes paid landowners, and the
transformation of the agricultural population into wage workers was carried
out by the bolsheviks. However, this was possible only through the simul-
taneous destruction of the whole of the old ruling classes. Yet nothing has
changed in the essential social arrangements, though in industry and agri-
culture private enterprise and incentive for private investments have been
ended. Private incentives are only detoured; they are now directed toward
political and social positions which determine the degree to which one may
participate in the enjoyment of surplus value. It is true that there are no
capitalists in Russia, but there are rich and poor, exploited and exploiters,
rulers and ruled. Private enrichment is now based on the possession of jobs.

The social struggle for positions in "socialism" was already foreshadowed
in the increasing discrepancies between ownership and management and in
the growth of trade unions in old-style capitalism. There are now as many
varieties of rich people in Dennis's "socialism" as there are wage scales for
workers, or degrees of impoverishment.
In order to escape exploitation in "socialism" one must become an ex-
ploiter. All aspirants for exploitative positions and those in the lower ranks
of the exploiting group must continuously strive to better their positions.
To escape the lowest class one must have his eyes on the highest. Those
who occupy the best positions must defend them against the rest of society
beneath them. In order to rule they must also, like all other rulers, divide.
Their own needs and security enforce the establishment, re-creation, or main-
tenance of class relations. Increased social productivity on the basis of
class relations increases all the frictions in all layers and between all layers
of society. To weaken those who are seemingly powerless in order to secure
the rule of the "strong", the weak must be kept impoverished. If they are
continually impoverished, they are not only weak but also dangerous. To
cope with this danger the forces of coercion must be strengthened and kept
intact. They have to be maintained with the profits sweat out of the workers.
Newly arising social groups have to be "bribed" to remain loyal. To get
the profits needed for the security of this hierarchical arrangement on the
basis of an expanding economy, exploitation must be increased. To make
this possible, capital must be accumulated. If the expansion process starts
on such a basis, accumulation in the interest of the ruling class becomes of
necessity accumulation for the sake of accumulation.
Responsible for this fatal trend are the continued class relations on the
basis of a developing social division of labor. The necessity for each group
to secure its own restricted interests atomizes the whole of society and fos-
ters the struggle of all against all. Social solidarity is here excluded. Such
a situation does not allow for the elimination of those blind forces which
operated through the market mechanism throughout capitalistic development.
For it was not the market but the class relations behind that market which
were responsible for the unseen forces back of the capitalist accumulation
process. The end of market relations does not indicate the beginning of a
consciously regulated social production and distribution so long as the class
relations which were behind the market relations continue to determine
social production and distribution. All planning turns out to be planning
in the interest of a class and can only deepen the contradiction between spe-
cial and social interests which is at the bottom of all present-day
troubles. As long as there are buyers and sellers of labor power, all the
planning of the buyers is planning against the sellers. The enlarged re-
production process under such conditions deepens the reproduced class fric-
tions and leaves unsatisfied the objective need for real social planning. Such
a system cannot exceed the social accomplishments of private property cap-
italism, but if it secures further expansion, can only increase the prevailing

chaos because it adds another irritating element this very same planning
- to the already thousandfold-disturbed economy. Just as the growth of
monopolies increased the capitalistic disorder with the increase of produc-
tion, state-capitalistic "planning" is making more chaotic what seems already
to be completely crazy. It is an illusion to conclude from the fact that state
capitalistic planning has been able to expand production at a time when
the rest of the world was unable to overcome its stagnation that this kind
of "planning" can solve the social problems of today. It can expand pro-
duction, yes, but at the price which had to be paid for all unplanned cap-
italistic expansion: greater chaos. Furthermore, as there is no longer a
"national economy", the element of planning in each nation only further
disturbing the economic and social relationships helps to create a greater
chaos in the world economy. The ascendency of "planning" occurred sim-
ultaneously with the increased difficulties of world-capitalism. The fur-
ther disruption of the old world economy brought about by national plan-
ning in turn reacts quite unfavorably upon the different nationally planned
economies. Planning meets counter-planning, finally war. This whole con-
tradictory trend is no more than a further expression of the still declining
capitalistic system.
The accelerated atomization of society comes to light also in feverish
attempts to overcome its objective destructive element by strengthening its
subjective control element. Attempts are now made to create the perfectly
controllable human being, because social and economic conditions which
would allow for both social order and class rule cannot be established. The
"old" capitalism has been able to do both foster its specific interest, a fact
expressed in the growth of monopolies, and without much effort to guarantee
some sort of regulation securing social stability and allowing, as a by-pro-
duct, illusions of democracy and liberty. Dennis's "socialism", however,
functions exclusively and most directly in the interest of the ruling class.
That it cannot help leaving parts of the social product to the workers, this
regrettable necessity it shares with all other ruling classes of all other socie-
ties. But where the "old" capitalism, because of the absence of "planning".
because of market fluctuations, crisis conditions, and other uncontrollable
phenomena often could not prevent the rise of situations which granted the
workers moments of respite, this kind of unearned "social justice" has now
been planned away in "socialism".
Within certain limits workers have been able to take advantage of
capitalistic anarchy for instance, during depressions, when prices fell
faster than wages, or during strikes, which gave them an otherwise unob-
tainable leisure period. And though these "lucky breaks" for some of the
workers could not influence the course of capitalist development or the
general situation of the workers, nevertheless they represented openings in
the otherwise watertight capitalistic exploitation system. This kind of
waste" is now eliminated in the "socialist" planning system. The more
asteful the exploitation system becomes by reasons of its unreconcilable

enmity to the social needs of the world, the more it tries to restrict that
"waste" which, though in a very paradoxical manner, somehow favors the
workers. "Socialism" is thus the replacement of a less perfect by a more
perfect exploitative mechanism.
A greater need for profits is expressed in this kind of "planning". To
achieve it, the changes from private property economy to Dennis's "social-
ism" are necessary. But nothing of importance in regard to social needs
has here occurred. The need for ever greater profits is capitalism's perma-
nent need. Heretofore it has always been satisfied by more intensive exploit-
ation and by the exploitation of additional laborers. Capital grew with the
growth of productivity, its concentration progressed, and thus society became
polarized into two essential classes. "Socialism" changed nothing in this
respect. With additional political means it only accelerated that very same
process. The greater need for surplus value and there is a greater need
in capital poor countries such as Japan, Russia, Italy and Germany -
forced those nations to go farther with capital concentration than richer
nations had to do, because of their so-called more "organic" development.
It became necessary for capital-poor nations to approach the extreme in con-
centration and centralization because of world-wide depression and general
capital stagnation.
It is a known fact that in Germany long before the first world war
cartellization in industry and state interference in economic life were much
more advanced than in other countries. It is known that Russia was char-
acterized not only by its backward agriculture but also by the existence of
large industrial trusts, partly under governmental control. A similar situ-
ation existed in Japan. These nations had to do in advance what became
with the "richer" nations only the result of a long development. Politics
had to play a greater part in the poorer countries that tried to industrialize
themselves. "Planning" had to compensate for economic disadvantages. In
the case of Russia a whole state-capitalistic revolution was necessary to
break an economic stagnation which was slowly strangling the country. That
the "stronger" nations now have to follow suit indicates only that their
strength is also waning. The general dearth of capital also forces the richer
nations to reorganize their exploitative mechanism.
No new industrial revolution or continuation of the old through "social-
ism" is here involved as Dennis wants to believe, but, to repeat, only an-
other forceful attempt by present-day capitalism to fight its way out of
world-wide depression. Those nations most pressed by the crisis fight the
hardest. Whatever Dennis may read out of the books of the apologists
for Russian and German "socialism" he cannot prove that "socialistic"
countries have carried on the industrial revolution where "old" capitalism
left off. The single continuous strip-mill for steel production in Germany,
for instance, was imported from the United States. Manchukuo was open-
ed by England and Japan on a fifty-fifty basis. German rationalization
was made possible by American loans. Machinery imported from capitalistic

nations made possible Russian expansion of industrial production. The
tempo of Russian development is no greater than that of other capitalistic
countries that profited from the experiences of older capitalistic nations,
sometimes under even less favorable conditions for instance, Japan. What
distinguishes these countries from the so-called democratic nations is not
their furthering of the industrial revolution, but their early direction of
production toward a war economy designated to reach by warfare and polit-
ical pressure what they could not reach by any other means. This kind of
"socialistic" advancement of the industrial revolution can also be achieved
by the democratic nations, as they are at present trying to prove.
To support his view of the matter Dennis points out that, in contrast
to the "democratic" nations, there is no unemployment in Russia and Ger-
many. However, in the first place, socialism would not be socialism if it
could not increase unemployment, that is, reduce working hours and give
people a chance to enjoy life. Socialists may oppose the insane distribution
of the social labor in capitalism which forces some workers to work until
their tongues hang out of their mouths and others to dream about the great
privilege of being exploited. But socialism cannot oppose unemployment.
In one sense, socialism is finally nothing else but the triumph of unemploy-
ment. Secondly, it is not true that Germany and Russia have solved the
unemployment question.
Capitalistic unemployment means suffering. Workers will demand
jobs in order to better their conditions. Full employment appears to be
a real service to the workers. But even this paradoxical solution, able to
satisfy an immediate demand on the part of the workers, has not been ful-
filled in "socialism". Unemployment may exist even where it is no longer
recorded. The English and rather pro-Russian economist Colin Clark,
only recently pointed out in his book "A Critique of Russian Statistics" that
the Russian countryside is very much overpopulated. He showed, for in-
stance, that the 1928 output of Russian agriculture could have been handled
by 40 or 50 million workers, but that 74 million were thus occupied at that
date. He puts the surplus population of the Russian country-side at 40
to 50 millions, workers and dependents together, and calls it "disguised
unemployment on a gigantic scale" which overshadows the whole economic
life of Russia. As regards the industrial revolution in Russia, he shows that
there was virtual stagnation in the years from 1928 to 1934, accompanied
by a decline in agricultural production. The greater influence exerted upon
the whole economy by the increased armaments since that time and the re-
percussions of the world-wide economic depression upon Russian economy
have not improved the situation. No, Russia has not as yet demonstrated
that its societal form is a better medium for the industrial revolution than
private property capitalism.
Neither can Germany's war economy be given as a proof of her suc-
cess in doing away with the problem of unemployment. In economic terms
German war socialism implies the opposite it proves an increase in un-

employment. Beyond a certain number of jobless, that which is called
"normal", needed to fill the fluctuating demands of capitalistic production
and to serve as an additional weapon to keep wages down and workers in
their place, unemployment fills the hearts of capitalists with deep sorrow;
the loss of exploitable labor power demonstrates to them lost opportunities
to get rich. The war economy, however, employs all hands. It raises an
enormous amount of surplus labor, but fails to transform that labor into
profits able to be capitalized. What should be profits leading to industrial
expansion and still more profits is only another form of waste. There is
no difference if profits are not produced at all, or if their basis, surplus labor,
after it has taken the form of "use values", disappears as costs of war. The
destruction of the potential capital here involved and the deterioration of
the capital on hand are only the accelerated form of capital destruction
experienced in former crises. The unemployed soldiers are merely the uni-
formed version of the unemployed armies of former depressions. Their
feeding and fattening before the slaughter is only another variation of relief
in addition to all the others enforced in previous crises. This, too, is a
disguised form of unemployment and demonstrates "socialism's" inability
to solve that problem which was one important reason for the change from
capitalism to "socialism".

A'he Blessings of Fascism
Though it would be quite difficult for Dennis to prove that the indus-
trial revolution would actually continue under fascistic auspices, it must
be granted that there is far more activity and noise in fascism than in yester-
day's democracy. To justify the fascist transformation of capitalist society,
celebrated as the return of "dynamism", Dennis rightly asks: "Why should
a political regime enjoying a monopoly of propaganda and guns take orders
from men who have nothing but money ?" Indeed there is no reason why they
should, as "property rights derive from guns and propaganda, not guns
and propaganda from property rights". However, though it is true that
guns and propaganda were and are pre-requisites to property, the fact that
Dennis's "socialism" arrived at a certain stage of capitalistic development
shows, at the very least, that guns and propaganda cannot always be directly
identified with the power to control complex societies.
Guns and propaganda control society when they are fused with the
productive apparatus, which presupposes that the productive apparatus lends
itself to such a fusion. Capitalism's development was such that fascism -
that is, the fusion of guns, propaganda and property could only be the
result of a long process of economic and political centralization. Even the
fact that it became possible to shorten with political means the period of
monopolistic development, as in the case of Russian state-capitalism, can
be explained only through the concentration of capital previously carried
through in other nations. When Lenin, for instance, pointed out that the
Russian Revolution was a bourgeois revolution against the bourgeoisie, he

practically said that because of the actual world situation created by pre-
vious capitalistic development there could be no Russian repetition of the
process of capital development such as other countries experienced. Russia
had to do rapidly what in other nations occurred slowly. The Russian Rev-
olution was furthermore a state capitalistic revolution against world cap-
italism, because it attempted to stop the latter's exploitation of Russian labor.
There is undoubtedly a direct connection between the present-day fusion of
guns, propaganda, and property in the "socialistic" nations and the general
development of world capitalism.
Capitalist society evolved out of feudalism, that is, out of a society of
numerous relatively independent units of force and property. The modern na-
tion-state created by capitalistic elements, developed a new unity of force and
property operating on a larger scale. At first, however, there arose what was
apparently a separation of property, guns, and propaganda. The variety of
classes and interests, fostered by the rapid extension of the division of labor,
specialization in economic activity, and growth of capital production, de-
manded a state with limited powers. Such a state was sufficient to guaran-
tee "order" because of the expansion of capital, by which, seemingly, all
classes, and even parts of the working class, profited. The dissatisfied
elements in society, even if in the majority, could not seriously challenge the
prevailing optimism which could speak of the existence of "civilization"
because "one could walk unarmed among his enemies". No particular class
or group needed to usurp all state power for itself nor found it possible to do.
Even Napoleon did not dare to interfere, nor did he wish to interfere, with
the interests of French commerce and industry. Even he had to leave
intact the division of property and guns, which slowly turned the state
into the direct servant of capital.
A relative "balance of power" between the various exploiting groups
precluded for a long time the fusion of state and capital. But the divorce
between state and property was of concern only to the exploiting classes; it
never existed for the exploited. Despite all the frictions among the ruling
classes with regard to the exploited part of the population their interests
were identical. For themselves the ruling classes favored as the "best govern-
ment, no government". Government was thought of as no more than the
instrument of class rule. But after the concentration-of-capital process had
been completed, the instruments necessary for centralized control by coercion
and integration of tle whole of society with a sufficient polarization in
a relatively small group of actual rulers and a large majority of ruled -
had been created, and after the state had already become the direct instru-
ment of capital, it then became possible once more to fuse completely guns,
propaganda and property.
When the Marxists pointed out that the state could never be more than
a class organ of capitalism (and they pointed it out at a time when govern-
ments controlled by landowners were occasionally willing to "cooperate"
with the workers against capitalists, and other governments were willing

to "cooperate" with capital and labor against agrarian interests), they did
so because, as far as the workers were concerned, there always existed the
unity of propaganda, guns, and property. What was true for the workers
at any particular time during capitalism's development became true for the
whole of society with the further concentration of capital and its political
To speak of a difference between property and state was only another
way of saying that the division of surplus value was still largely determined
by market laws, that the monopolistic destruction of competition was only
in its infancy. However, commodity production is only competitive because
it is also monopolistic. Commodity production, however competitive, is al-
ways production for monopolists, that is, for profit in the interest of those
who own or control the means of production. The existence of commodity
labor power implies the monopolistic character of production and distribu-
tion. If a socio-economic development starts out on such a basis, and if it
is not interrupted by a real social revolution which destroys the commodity
character of labor power, it can end only in the completion of monopolistic
rule, in state capitalism. State capitalism thus finds its cause not in the
concentration process of capital, not in an organizing principle, but in the
commodity character of the workers' labor power. The concentration pro-
cess is only one phase of this general development. For this reason it is
inconceivable for Marxists that capitalism could be abolished except through
the abolition of commodity production, wage labor, and value relations.
The new fascistic unity of guns, propaganda, and property rests also
on commodity production, on the existence of a proletariat which sells its
labor power to those who have a monopoly over the means of production.
This being the case, Lenin was forced to forget in post-revolutionary Russia
the Marxian demand to end the wage system. He had to satisfy himself
with adopting the prevailing capitalistic organizing principle which could
effect, not the exploitative character of society, Lut only the division of
surplus value. "Socialism", he said, "is nothing but the next step forward
from State Capitalistic monopoly. Socialism is nothing but State Capital-
istic monopoly. It is nothing but State Capitalistic monopoly made to
benefit the whole people; by this token it ceases to be capitalistic monopoly".
The "dynamic" of "socialism" consists then of no more than the act-
ivity necessary to change the form of distribution. It leaves untouched the
fundamental class relations that it takes over from the "old" capitalism, and
thus excludes the change in distribution so much desired. Unhampered
by a socialist past, not committed to a Marxian ideology, profiting from the
experiences of the last twenty years, Dennis does not speak of a state cap-
italistic monopoly "made to benefit the whole people". Where Lenin thought
he could turn his state into a paternalistic institution of the finest sort, lead-
ing over to the communist society, Dennis restricts himself to the sober
statement that all that can now be expected is "a new' pattern of inequality,
emerging from the current revolt of the have-nots and the world triumph
of national socialism". But, he continues, "for some time to come, it will

correspond better than the present pattern of distribution to the actual and
new force pattern, all of which amounts to saying that it will constitute
social justice". He fails, however, to offer one serious argument which
could support even this kind of meager optimism with regard to the im-
mediate future. All he is able to suggest is an enlarged and somewhat
unessentially modified public works program, executed by a new set of po-
liticians. In other words, he argues in favor of what already exists. But
continuing "pyramid-building" in peace and war that is, production for
the sake of production, discipline and sacrifice for the sake of discipline and
sacrifice, autarchism and hemispheric reorganization to guarantee more wars
and an uninterruptedly Spartan life means only prolonging and intensi-
fying the present-day miserable reality.
Some interesting speculation would have been possible if Dennis had
entered into a discussion on the economic opportunities of state capitalism
on the basis of a hypothetical unified world economy. There would even
be some sense in discussing the economic and social aspects of national-so-
cialism on the basis of its possible evolution into a perfect state-capitalist
entity. But all that Dennis "forecasts" is the emergence of an American
"mixed economy" where private incentive and private enterprise exist side
by side with state-controlled enterprises, where the state takes over where-
ver private economy fails. But such proposals are only descriptions of a
situation which has already arisen, and which is already delivering proof
that it does not bring forth a new pattern of distribution favoring the poor-
er classes, but only drives the poorer classes from the relief stations to the
battle field.
However, Dennis is less interested in the distributive side of his "so-
cialism" than in the spiritual values connected thereto. In his opinion
"the social problem of the world crisis today is one of finding sufficient
dynamism, not of finding enough food." He thinks that there exists in
men a real desire for war and danger, that sadistic and masochistic drives
are important social forces, that people possess an inner compulsion to suf-
fer, a need for discipline, heroism, sacrifice, and community feeling based on a
sense of duty. The ideological noise accompanying the further concentra-
tion of capital in fascism appears to him as a revival song of the real hu-
man spirit on which society thrives. But all this grand phraseology, mere
ideological weapons employed by the exploiting class to secure its position,
has no more meaning than all those other sayings which the poor have al-
ways been forced to listen to such sayings as "Dry bread brings color
to the cheeks", "Hunger is the best cook", that one grows best if one eats
little, or even if one walks in the rain. Dennis's other prerequisites for the
recreation of a social dynamism, such as the "will to power", the desire to
rule, which makes history no more than theever-recurring struggle between
the "ins" and the "outs", the changing of the world by the changing of
seats all this, too, is old stuff, as meaningless as it is popular. The un-
social character of society, increasing insecurity, and wide-spread misery have
at all times provided more than enough of that kind of "dynamism".

The "desire for war and danger" in capitalism is none other than the
desire for peace and security. People go to war and seem to like it, just as
they seem to go happily to work. But they have no choice, and where
there is no choice the question of desire cannot arise. Desire can determine
action only in situations that offer alternatives; the "desire" to find work is
not a desire but compulsion through outside forces. The "desire" to go
to war results from the recognition that there is no escape. What one has
to do, one "desires", because to "desire" what has to be done anyway makes
the compulsion more bearable. But this kind of "desire" has nothing to do
with "human nature". It is an "artificial desire" growing out of socially-
created wide-spread fear and loneliness. The renaissance of spiritual val-
ues attributed to war and danger indicates no more than the general growth
of fear due to further social disintegration. The "accidental" character of
each one's existence, the decreasing opportunities to integrate one's life
into the social process, prepare people to accept a life of "accidents", espe-
cially when such an attitude is fostered and supported by the enormous
propaganda apparatus at the disposal of the ruling classes interested in war
interested in war not because they are human beings, but because they
have to make others fight if they want to maintain class rule and exploita-
tion. That there is a real desire on the part of some people to see others
go to war springs from the quite ordinary desire to make some money or
get a job.
Dennis's "idealistic" position with regard to the psychological motiva-
tions of men interests us least of all. It brings to light only his own perfect
capitalistic mentality, which makes out of "socialism" in his mouth exactly
what "democracy" is in the mouth of a capitalist. Despite all his insight
into the brutal relations of contemporary society, despite the fact that his
sharp eyes have spotted so many details in the ugly social panorama of to-
day, and that his pen has put them down masterfully, still, his book is only
another contribution to that bitter family feud now being waged between
the supporters of state capitalism and the supporters of capitalism pure and
simple. In this feud all the advantages are on the side of Dennis, not only
actually, but also theoretically, as his book bears witness. A liberal demo-
crat could not possibly oppose his arguments with any measure of success.
And in fighting Dennis's "socialism" the laugh will be on Dennis's side,
because his enemies will certainly in the process of fighting fascism have
turned themselves into fascists.
The liberal democrat as well as Dennis has, however, nothing to say
to nor offer the working class. According to circumstances both will have
the workers' support for some time to come, but the societal forms defended
or proposed by both are and remain in opposition to the real social needs
of today, and thus in opposition to the working population. Dennis is right
in believing that the workers have no reason whatever to prefer democracy
as they know it to the fascism of today, but they have also no reason to
prefer fascism to the democracy of yesterday, as they soon will be forced

to find out. To thinking workers who have escaped the capitalistic ideo-
logy of yesterday and today Dennis's book has nothing to say that they do
not already know. Those workers who find themselves opposed to capital-
ism, not because the latter can no longer exploit them efficiently enough, but
because they do not want to be exploited at all, can learn from Dennis's
book just one thing, namely, that it is their job to start where he has left
off, that what he sets as the temporary end-point of social development must
be regarded as the starting point for new investigations and new actions
directed against the new fascist reality.
Paul Mattick


As a criticism of a criticism would necessarily get pretty fai afield from
the original subject of both and tend to degenerate into a rather sterile exer-
cise in dialectics, I shall try only to summarize the main points of disagree-
ment between my thesis and that of orthodox Marxism, the first thesis being
that developed in my book and the second being that most ably presented
in Mr. Mattick's criticism of the book. Both these are essentially explana-
tions of the crisis of capitalism and of what may be the successor system.
My thesis: Capitalism is a culture which, like all cultures, is doomed
by the iron law of change to decay and disappear. In the case of the cap-
italist culture, the specific changes explaining the actual phase of capitalist
decline are(l) the end of the frontier; (2) the end of the industrial revolu-
tion in the capitalist countries; and (3) the end of rapid population
The Marxist thesis: Capitalism is doomed by reason of its inherent
contradictions, the chiefest of which is the mechanics of the profit system,
and, also, by reason of the progress of human enlightenment which will cause
the workers of the world to set up and operate, in place of capitalism, a
workers' socialist society.
My Rejoinder: The so-called contradictions in the capitalist system
are operative factors only after the end or slowing down of the expansive
factors of the frontier, industrialization and population growth. Capitalism
worked like a charm as long as it had possibilities of continuous expansion
in geometric progression. There is no contradiction in the rate of growth
or proliferation in a colony of bacteria or living things. There is no con-
tradiction in growth. But it is impossible for anything to keep on growing.
Marxists cannot accept this thesis because they believe in progress and, also,
in a future millennium. They could not entertain a hypothesis which would

doom the workers' paradise to decline and fall just like every preceding
My thesis: Every culture or social order tends, or has tended to be
either fairly static or more or less revolutionary. An Egyptian civilization
lasted for thirteen hundred years. Capitalist civilization is more revolu-
tionary and shorter lived. By revolution is simply meant rapid change.
Evolution refers to a slower rate of change. Modern inventions and tech-
nology make rapid social change a necessity. Capitalism was a pattern of
rapid change. present day collectivism, to work, has to be equally revolu-
A culture requiring continuous revolution, i. e., rapid change, needs a
dynamism to sustain the necessary tempo of change. The great dynamisms
of all societies have been religion and war. This remains today as true as
ever. War is providing the dynamism for the inauguration of the successor
system,-socialism-to capitalism. Quite possibly, within a few centuries or
even, within a few decades, the conditions of modern technology and con-
gested population may have so changed that mankind can revert to the
simpler and more static cultures of the distant past. Certainly the tempo
of either the capitalist revolution of the 19th Century or the socialist revolu-
tion of the 20th Century cannot be indefinitely maintained. This consider-
ation, however, need not concern us greatly today since there is an evident
possibility of running the socialist revolution at high speed for a longer period
than most of us can possibly live.
The Marxist thesis: The Marxist cannot use the term revolution in
this sense. Nor can he take this view of the dynamics of social change.
Marxists have a teleology. They believe in social evolution as a process of
progressive change towords a millenarian social order. Revolution for them
is either a phase involving a shift from one scheme of "exploitation" as
they call it to another or else a phase of change from exploitation to a non-
exploitative order.
My thesis: Every culture has to be run by an elite. The more complex
and the more revolutionary, the more essential the function of the directing
elite. This is more _r less Michel's "iron law of oligarchy".
The Marxist thesis: Past civilizations and the present capitalist cul-
ture have been based on exploitation of the workers by virtue of the mono-
poly enjoyed by a small class over the whole of production. In a worker's
socialism such exploitation would cease. Inasmuch as there is exploitation
in Soviet Russia by a ruling class today, true Marxists have to deny that
Russia has true socialism and to call what Russia has state capitalism. It
is, of course, impossible to prove that the socialist heaven on earth cannot
be attained or that the Christian millennium is not going to be realized. It
is possible only to point out that the socialist heaven and the Christian
millennium are matters of faith rather than probability based on experience.

Pursuant to the Marxist tenet, Mr. Mattick attacks my analysis for
failing to take account of the exploitation of labor by capital. The reason
is quite simple: In the Marxist sense, every working society past or present
has been or is characterized by exploitation and, it would seem to the realist
who has not a millenarian vision of the future, must always be so charac-
terized. In the Marxist sense, the exploitation of labor by capital merely\
means that capitalists retain a part of the product of labor for profits, in-
terest or rent. In Russia, the ruling class retains a larger part of the pro-
duct of labor for the general purpose of state capitalism there, one of these
purposes being war and another being the enjoyment by the ruling class
of a higher standard of living than that attainable by the mass of the workers.
My reply is that the ruling class must always retain a part of the pro-
duct of labor for new capital investment, for governmental purposes, for
preparation for war, a form of state investment, and for giving the ruling
class a higher standard of living than that enjoyed by the masses. Else, there
would be insufficient investment and insufficient incentives tt: management.
To say that the masses will democratically order the right amount and types
of investment is, in my opinion, to beg the question. Management is a
specialized function. To say that the masses can manage their industries
or their government is arrant nonsense. To say that those to whom they
may delegate the functions of management will exercise these functions for
the same rewards as those enjoyed by the masses of the workers is to tall:
contrary to all experience. In the capitalist countries the workers are not,
anywhere or at any time, in revolt against the facts of management by the
elite or of unequal rewards for the elite. What the masses revolt against
is the break-down of a system and the failure on an elite.
lMy idea of a desirable socialist society for the near future is one in
which there would be greater equality in distribution, greater stability in
production, greater security and less liberty for the individual. The drive
towards a new order is generated by frustration and hate rather than by
aspiration and love. The leaders in any social revolt are those having vision
and qualities of leadership. They are apt to be found mainly among the
members of the managing class of the old order, though individual leader;
may emerge from any social class. Our immediate problem is the next
step. This will probably be a war, followed by general break-down. As a
result of these experiences, the people will demand new leaders a new
elite to give them greater stability and security of income. To command
the loyalty of the masses, the new leaders must have an appropriate folk-
myth and social dynamic. These will be found quite easily in the give
social situation. Aspiration for a millenarian utopia has no dynamism.
People won't fight and die for such an ideal, that is not in significant num-
bers. They will, however, fight and die to avenge themselves against lead-
ers who have failed them or against foreign foes. They will accept dis-
cipline as a means to order. They especially demand of their social order
and their leaders to be integrated into the social scheme. This sense and

reality of community is what I understand by the word demo 'racy in an:
ideal context. The role of the el:te cannot be capricious, irresponsible, in-
competent or inconsiderate of the demands of public welfare, as such role
tends now to be in a declining capitalism. The masses now are growing
dissatisfied, not with capitalism, but with the way it is working.
Lawrence Dennis


Having expected from Lawrence Dennis an elaboration and strengthen-
ing of his ow position, we feel rather disappointed by his reply to our cri-
tique. His re-statement of the theses we challenged has the value of all
repetitions, but nothing of interest is added to the controversy. We could
leave it at that had Dennis's formulation of the Marxist theses actually
expressed our own position. Since this was not the case, we have to deal
with the matter once more.
First we should like to say that Dennis's reference to the Marxist
tbhc.is with regard to one or another problem is more than unfortunate. A
Marxist position is taken with respect to historically-conditioned, specific
situations. The Marxist thesis on the question of the capitalist market some
eighty years ago, for instance, would not be the Marxist thesis on the same
question in 1940. The Marxists' themes produced by Dennis are as dead
as the capitalist period during which they arose. Though some Marxists
did, Marxists never had to accept, nor do they any longer accept the thesis
that the realization of socialism depends on "the progress of human en-
li rtenment", nor do they believe in a "future millennium nor do they
shrink from the hypothesis that "the worker's paradise is doomed to decline
and fall just like every preceding society." Dennis is undoubtedly able to
point to a great number of statements proving the validity of his formulation
of the Marxist theses. However, these belong to history, and one mam
safely predict that the last remnants of the capitalized labor movement, ap-
parently adhering to a "Marxism" of the kind refuted by Dennis, will i,1
the near future disappear completely.
Dennis's "iron law of change and decay" which will also affect socialist
societyy only repeats once more the commonplace statement that nothing will
endure forever. The decline of capitalism, for instance, means in social
terms the decline of living opportunities for the non-capitalist layers of
soc-ietv. These layers are thus forced into opposition to the ruling elements
that profit from this situation by virtue of their being in possession and
control of the socio-economic power sources. In one sense, therefore, the
"decline" of capitalism is also its further "rise." Capitalism is the livelier
the more death stalks around; it is the "truer" to itself the more it is en-
dangered by its willing and unwilling enemies; it is the richer the more it
impoverishes. Expansion and contraction of its economic activity serve equal-
ly the profit and power needs of the ruling capitalistic groups. There is

then no such thing as the "decline" of capitalism, unless forces arise which
make it decline by struggling against it to the finish. The conditions which
create those oppositional forces show a decline only in so far as those forces
will really struggle against capitalism. Otherwise one may speak of many
things, such as mass starvation, unemployment, misery, war, but not of the
decline of capitalism. As long as capitalist expansion means the growth of
its contradictions, the end of expansion alone cannot be called the decline
of capitalism. One may as well celebrate the end of expansion as the be-
ginning of capitalism's eternal life as is actually done by some of the
modern advocates of free-trade.
Nor, like Dennis, can one get around the question by saying that "in
growth there is no contradiction; it is only impossible to keep on growing",
which, as regards social phenomena, means to "deny" a statement by repeat-
ing it. Chinese society, for instance, did not decline despite the absence
of expansion and the existence of conditions of misery and want. This situ-
ation, transferred to the capitalist scene, would induce people to speak of
the decline of capitalism. The decline of feudalistic China now in progress,
as well as her previous "expansion" by way of emigration, cannot be brought
"in line" with capitalistic expansion and capitalistic decline. The difference
between the decline of feudalism and that of capitalism cannot be adequately
expressed by stating the obvious: that one society was more static than the
other both in its ascendency and in its decline. Why was the one more
static and the other more "dynamic"? Such an inquiry cannot be satisfied
with the statement that "modern inventions and technology make rapid
social change a necessity". Why did this technology not arise in China
;ind force a rapid change upon her? These question can be answered, but
not by naming the facts which gave rise to the questions, not by an empty
.reneralization such as "the iron law of change and decay", but only by a
ti'orough investigation of the concrete differences between various societal
forms an undertaking which reveals at once that it is not possible to
speak of forms and reasons of decline that hold good for all societies.
The "decline" of capitalism makes sense only if it finds expression in
the action of the masses. It is neither stagnation nor the increase of misery
which gives validity to revolutionary expectations, but the fact that together
with those conditions there arise an industrial proletariat, the wide-spread
division of labor, the dominance of commodity production, large scale in-
dustry and a capitalized agriculture, the urbanization and break-down of
the gap between city and village, the internationalization of economy, the
mechanization of warfare, the industrial character of the armies, etc. The
specific capitalistic character of society gives a specific meaning to its rise
and decline. The reasons for revolutionary change, as well as the forces
brngiing it about, are particular ones and make sense only in so far as they
are particular. Finally, that they must also be regarded as parts of the
general development of mankind is as true as it is unimportant. With or
without variations in the tempo of development, the "decline" of socialism will
certainly not be a repetition of that of capitalism any more than the decline

of capitalism was a repetition of that of feudalism. The changes in
socialist society will have their specific reasons and their particular forms,
quite unlike the reasons and the kinds of change in previous societies. What
they will actually be like the Marxists leave to the future to decide, not
because they lack curiosity, but because they do not try to know the as
yet unknowable.
It is interesting, however, that the same Dennis who overflows with
terms like change, dynamism, permanent revolution, etc., has such a static
outlook with regard to change and revolution that all past and future social
changes are to him only copies of those experienced in the bourgeois revolu-
tion and within the capitalistic development, that the "dynamism" that
changes capitalist society is to him the unchangeable dynamism of the past
and the conceivable future. For him the necessary partition of the social
product for different social purposes and needs remains for all time to come,
and was determined throughout history by the specific production and dis-
tribution requirements of capitalist society and this to such an extent
that he even uses specific capitalistic terms such as "capital investment" when
he speaks of the increase of production in socialism. He mistakes capitalistic
formulas, such as profit incentives and profit motives, for necessary and un-
alterable requirements of the division of labor, although they are nothing
but false "psychological" explanations for the curious character the division
of labor, surplus value, of workers and management assume under capital-
istic relations. All that is specifically capitalistic is eternalized by Dennis,
who, despite the professed "dynamic" outlook, restricts himself everywhere
to the static and sterile demand of maintaining the present by making the
capitalistic more capitalistic.
But what, besides being the most unfortunate term one could select
in speaking of social development, is this "dynamism" anyway? For Dennis
it is, as far as private-property capitalism is concerned, the "frontier, rapid
industrialization, and population growth". As far as all previous develop-
ment is concerned "religion and war" provided the "dynamism". War also
provides "the dynamism for the inauguration of socialism", which will then
derive its further dynamic from the continued industrial revolution. All
this is finally "generated by frustration and hate", which moves people to
"demand new leaders a new elite to give them greater stability and
security of income". It is, however, difficult to see why frustration and
hate must work in the interest of a new elite, why only a new elite can
turn the war into the medium for further industrialization, and just why
this new elite cannot afford to be "capricious, irresponsible, incompetent
or inconsiderate of the demands of public welfare". Frustration and hate may
just as well serve the class in power, war may be waged and the "demands
of public welfare" somehow fulfilled by it, especially when, as Dennis
wants us to believe, the "problem of the world crisis today is one of finding
sufficient dynamism, not of finding enough food" that is, one of finding
more frustration and hate, engaging more frequently in war, and creating
greater demands for the changing of elites.

All this would be quite ridiculous if Dennis were really out to explain
social development. But his peculiar theory of social change is no more
than a description of the present political situation from the viewpoint of
a conscious fascist, for whom all and everything leads to and ends in the
replacement of one set of leaders by another.
To continue from this point would only lead us back to a repetition
of our original critique of Dennis's work. A re-statement, however, in
view of the utter sterility of his reply, might easily be somewhat less appre-
ciative of his positive attempts to find a new social theory. P. M.


"Democracy" a self-styled name for the traditional set-up of present-
day capitalist society is fighting a losing battle against the attacking forces
of Fascism (Nazism, Falangism, Iron Guardism, and so forth). The work-
ers stand by. They seem to say again what their predecessors, the revolu-
tionary workers of Paris in 1849, said in regard to the final struggle between
the leaders of a self-defeated liberal democracy and the quasi-fascist chief
of a new Napoleonic imperialism, Louis Bonaparte. They said (as inter-
preted by Marx and Engels) "C'est une affaire pour Messieurs les bour-
geois." (This time it's a matter to be settled among the bosses).
The "secret" underlying the verbal battles between"totalitarianism"
and "anti-totalitarianism" and the more important diplomatic and military
struggle between the Axis and the Anglo-American group of imperialist pow-
ers is the historical fact that the worst, and the most intimate foe of demo-
cracy today is not Herr Hitler, but "democracy" itself.
Yet this is not a problem of "split personality" nor can it be explained
as an "inferiority complex", or a "father complex", or any of the other lofty
creations of Freudian psychology. It is not even a conflict between old age
and youth, or, as Mrs. Lindbergh puts it, between "the forces of the past
and the forces of the future".
The real facts underlying all these high-sounding phrases are to be
sought nowhere else but -- re-enter Marx in the material basis of all
ideological conflicts, that is, in the economic structure of contemporary so-
ciety or in the impasse that modern capitalism has reached in the present
phase of its historical development.

Ambiguities of Democracy
We must not, however, jump to conclusions. Before we explain the
basic reasons for the ambiguities of "Democracy" in its present "fight"
against the fascist challenge, we must deal somewhat more closely with the
phenomenon itself. We must show that the assumed split, though it does
not exist in any psychological, anthropological or cosmical sense, does vet

exist as a very real split in what, for want of a better term, we shall continue
to call the "class consciousness" of the ruling strata of present-day society.
We shall not waste our time with a discussion of the more conspicuous
forms in which this condition manifests itself a world-wide war between
two equally capitalistic parts of that one big capitalistic power that rules
the world today, and the open division of each of the fighting parties into
mutually opposed factions. In spite of the fact that in our truly "Chinese"
age every party and every faction endeavors above all to "save face" by
hiding its own and borrowing its opponents' slogans and by pretending "not
to offer any solution", it is sufficiently clear today that the same divisions
that became visible in the collapse of Norway, Holland, Belgium and France
exist and develop in various forms both in the actually fighting, and the
so-called neutral, "democracies". This alone is sufficient to prove that the
present "war" is fundamentally a "civil war", and will be decided in the
future, just as it has been up to now, not by the relative military, or even
the economic, strength of the fighting countries, but by the help that the
attacking force of fascism will get from its allies within the "democratic"
countries. The main task of the following paragraphs is to deal with the
less conspicuous manner in which this internal strife pervades the "con-
science" of every group, of every institution, and, as it were, of every single
member of present-day "democratic" society.
The American public today hates and fears the growing threat of fas-
cism. It takes a fervent interest in the various official and non-official
forms of the search for "Trojan horses" and "fifth columnists". It girds
itself for the defense of the democratic traditions against the attack that
is brought nearer our shores by the progress of the Nazi war in Europe,
Africa, and Asia. At the same time, an increasing part of this American
public is secretly convinced of the several material benefits that could be
derived for the so-called "elite" and, to a lesser extent, for the mass of
the people as well, from an acceptance of fascist methods in the field of
economics, politics, and, maybe, even for the promotion of the so-called
"higher" cultural and ideological interests. It is apt to regard the very
institutions and ideals for which it is prepared to "fight" as a kind of "faux
frais" of production, of conducting the business of an efficient modern ad-
ministration, and of fighting a modern war. It never seriously considered
"democratic" methods as an adequate means of running an important pri-
vate business, or, for that matter, a business-like trade union. It would
prefer, on the whole, to have its cake and eat it too, that is, to apply those
amazingly successful new methods to the fullest advantage, and yet at the
same time, somehow retain a workable "maximum" of the traditional "de-
mocratic" amenities.
It is easy to see that this more or less platonic attachment to the great
democratic tradition, in spite of the assumedly greater material advantages
of the fascist methods, offers small comfort for the real prospects of demo-
cracy in times of a serious and hitherto unconquerable crisis. In fact, an
increasing number of the foremost spokesmen, the most vociferous "experts",

and the truest friends of democracy begin to express some grave doubts as
to whether their unyielding allegiance to the "underlying values of the de-
mocratic American tradition" has not already degenerated into a costly hob-
by that the nation may, or, in the long run, may not be able to afford.
(This sentiment became most evident in the all too-ready response of the
greater part of the American "democratic" public to Anne Lindbergh's re-
cent booklet).
There are some definite fields in which even the most fervent opposers
of the ruthlessness of the fascist principles admit an undeniable superiority
of totalitarian achievements. There is, for example, universal admiration
for the splendid work done by the Nazi propaganda. There is widespread
belief in the full success of the Nazi attack against the most in c u r a b le
plagues of modern democratic society. Fascism is supposed to have abo-
lished permanent mass unemployment and, by one bold stroke, to have re-
leased the brakes put on free enterprise by wages disputes and labor un-
rest. There is a tacit agreement that an all-round adoption of fascist methods
will be necessary in time of war.

An Economic Pythia
The most striking testimony to present-day democracy's implicit belief
in an overwhelming superiority of fascist methods is to be found in an of-
ficial document published in June, 1939, by the National Resources Com-
mittee, that deals with the basic characteristics of The Structure of the
American Economy.') We shall make ample use of this Report when we
approach the main question of our present investigation. For the moment,
however, we shall disregard the momentous discoveries made by Dr. Gar-
diner C. Means and his staff with regard to the present state of American
economy. We shall deal exclusively with the forecast of the chances for
a survival of the democratic principle that is revealed in the general state-
ments contained in the Introduction and Conclusion.2)
The authors of the Report start from an impressive description of the
well-known "failure" of the present economic system to use its gigantic
resources effectively:
"Resources are wasted or used ineffectively as parts of the organization get out of
adjustment with each other, or as the organization fails to adjust to new conditions;
as individuals fail to find, or are prevented from finding, the most useful field of
activity; as material resources are unused, or as their effective use is impeded by
human barriers; and as the most effective technology is not used or its use is pre-
They attempt to estimate and picture the "magnitude of wastes" that
resulted from this failure both during the depression and the preceding
non-depression years. According to this estimate the depression loss in na-
tional income due to the idleness of men and machines from 1929 to 1937

1.) For sale by the Superintendent of Documents, Washington, D. C.: vii: 396 pp.; $1.00.
2.) Cf. pp. 1-5, 171. All quotations in the following paragraphs, if not otherwise marked,
are taken from these pages. Emphases by K. K.

was "in the magnitude of 200 billion dollars worth of goods and services".
This extra income would have been enough to provide a new $6,000 house
for every family in the country". At this cost "the entire railroad system
of the country could have been scrapped and rebuilt five times over". It
is equivalent to the cost of rebuilding the whole of the existing "agricultural
and industrial plant" of the nation.3, Even in the peak pre-depression year,
1929, both production and national income could have been increased 19%
by merely putting to work the men and machines that were idle in that
year, even without the introduction of improved techniques of production.4)
The authors then go on to deal with the "impact" of this waste upon
the community as reflected in the development of a "sense of social frustra-
tion" and in "justified social unrest and unavoidable friction". They begin,
however to show a wavering in their democratic convictions when they
proceed, in the following paragraph, to discuss the "tremendous opportunity"
and the "great challenge" that this very waste of resources and manpower
presents for the American nation today. The "great challenge" for demo-
cracy assumes at once the sinister features of an impending tragedy:
"How long this opportunity will be open to the American democracy involves a ser-
ious question. The opportunity for a higher standard of living is so great, the social
frustration from the failure to obtain it is so real, that other means will undoubtedly)
be sought if a democratic solution is not worked out. The time for finding such a
solution is not unlimited."
And they reveal their inmost sentiment as to the probabilities of a "demo-
cratic solution" of that tremendous task by the very language in which they
finally "state the problem" arising from the results of their investigation:
"This problem, the basic problem facing economic statesmanship today, can be stated
as follows: How can we get effective use of our resources, YET, AT THE SAME TIME
preserve the underlying values in our tradition of liberty and democracy? How can
we employ our unemployed, how can we use our plant and equipment to the full,
how can we take advantage of the modern technology, YET IN ALL THIS make the
individual the source of value and individual fulfillment in society the basic objective?
How can we obtain effective organization of resources YET AT THE SAME TIME
retain the maximum freedom of individual action?
This same defeatistic sentiment pervades, as it were, the whole of this
otherwise most valuable official document. There is nowhere an unam-
biguous attempt to claim for the democratic principles any material value
or usefulness for restoring the good old days of capitalism or for bringing
about an even greater expansion for the productive forces of the American
economic community. There is nothing but a sentimental craving for a
policy that would not be altogether incompatible with a more or less verbal
allegiance to a few remnants of the "democratic" and "liberal" traditions
and that might yet work as well as the fascist methods, which they never
question. Thus the whole of the proud attempt to conquer a new world of
prosperity and of full use of resources and manpower for American demo-
cracy boils down to a pronoucement about the result of the impending strug-
gle between democracy and fascism that in its sinister ambiguity rivals the

3.) Cf. pp. 27
4.) Cf. America's Capacity to Produce, Brookings Institution, p. 422 Quoted p. 3

well-known oracle of the priestess of Delphi. "If Croesus sets out to con-
quer the country beyond the Halys, he will destroy a great empire," said
the oracle of ancient Greece. "If the present government of the U.S.A.
sets out to conquer the problems of unused resources and mass unemploy-
ment, it will destroy an important form of government," echoes the economic
oracle of our time.

A New Fighting Ground
It appears from the preceding observations that the workers are quite
right if they think twice before they listen to the generous invitations ex-
tended to them from every quarter, including most of their former leaders,
to forget for the time being about their own complaints against capital
and to join wholeheartedly the fight against the common enemy. The
workers cannot participate in "democracy's fight against fascism" for the
simple reason that there is no such fight. To fight against fascism means
for the workers in the hitherto democratic countries to fight first of all
against the democratic branch of fascism within their own countries. To
begin their own fight against the new and more oppressive form of capital-
ism that is concealed in the various forms of pseudo-socialism offered to
them today, they have first to free themselves from the idea that it might
still be possible for present-day capitalism to "turn the clock back" and
to return to traditional pre-fascist capitalism. They must learn to fight
fascism on its own ground which, as we have said before, is entirely different
from the very popular, but in fact self-destructive, advice that the anti-
fascists should learn to fight fascism by adopting fascist methods.
To step from the ground on which the workers' class struggle against
capitalism was waged in the preceding epoch to the ground on which it
must be continued tcday presupposes full insight into a historical fact that
is not less a fact because it has served as a theoretical basis for the claims of
fascism. This historical fact that has finally arrived today can be described,
as a first approach, either negatively or positively, in any of the following
terms: End of the Market, End of Competitive Capitalism, "End of Eco-
nomic Man"; Triumph of Bureaucracy, of Administrative Rule, of Mono-
poly Capitalism; Era of Russian Four Year Plans, Italian Wheat Battles,
German "Wehrwirtschaft"; Triumph of State Capitalism over Private
Property and Individual Enterprise.
The tendency toward this transformation was first envisaged by the
early socialists in their criticism of the millenial hopes of the bourgeois
apostles of free trade. It was later more and more neglected by the socialist
writers in their attempt to adopt their theories to the needs of the progressive
fractions of the bourgeoisie. When it was finally revived, around the turn
of the present century, it was already destined as we can see today -
to serve not the purposes of the socialist revolution, but rather the aims
of the imperceptibly-growing counter-revolution. We shall presently see
that today any further denial of the accomplished fact has become impossible

even for hard-boiled defenders of the traditional dreams of bourgeois

The Corporate Community
For a more detailed description and factual confirmation of this general
statement we turn again to the above discussed document which contains,
as far as the writer can see, by far the most comprehensive, the most re-
liable and, at the same time, the most dramatically presented information
on the subject. When this government report on The Structure of the
American Economy first became known to the American public, the chiet
sensation was created by its careful statistical proof that even the boldest
estimates previously made were far below the degree of monopolistic con-
centration actually reached by American Economy. According to the statis-
tics given and explained in Chapters VII and IX and Appendices 9-13 of
the Report that bring up-to-date the figures published in 1930 by Berle
and Means in The Modern Corporation and Private Property the 100
largest manufacturing companies of this country in 1935 employed 20.7%
of all the manpower engaged in manufacturing; accounted for 32.4% ot
the value of products reported by all manufacturing plants; and contributed
24.7% of all the value added in manufacturing activity.
Although there are some cases in which these large corporations com-
prise almost the whole of a particular industry (steel, petroleum refining,
rubber and cigarette manufacturing), manufacturing industries on the aver-
age cannot compete with the much higher degree of concentration that has
been reached by the railroads and public utilities. Of the total number of
the 200 "largest non-financial corporations" that are listed in the Report
approximately half are railroads and utilities; the railroads included in this
list in 1935 operated over 90% of the railroad mileage of the country, while
the electric utilities accounted for 80% of the electric power production,
for most of the telephone and telegraph services of the U.S.A., and a large
part of the rapid transit facilities of New York, Chicago, Philadelphia,
Boston, and Baltimore. No less striking are the figures relating to the 50
"largest financial corporations" including 30 banks, 17 life-insurance com-
panies, and 3 investment trusts, each with assets of over 200 million dollars.
The 30 banks together hold 34.3% of the banking assets of the country
outside of the Federal Reserve Banks, while the 17 life-insurrance companies
account for over 81.5% of the assets of all life-insurance companies. There
is an equally high degree of concentration in the field of government activ-
ities. The 20 "largest government units" together employ 46% of all the
manpower employed in government, excluding work-relief programs. The
largest of these, the Federal Government, is by far the largest single "corpo-
ration" in the country; the post office alone employed in 1935 nearly as
many persons as the largest corporate employer.
All these figures, however, do not tell half the story of American
business concentration. Much more is shown by a breakdown of the total

number into major industrial categories and by an investigation into the
growth of the relative importance of the large corporations from one-third
of the assets of all non-financial corporations in 1909 to over 54% in 1933.
And the whole picture begins to reveal its true significance when the report
endeavors to show the tremendous degree of inter-relationships through which
"the managements of most of the larger corporations are brought together
in what might be called the corporate community." (emphasis by K. K.)
This is indeed a picture that might cure the illusions of the most innocent
believers in that "spirit of free enterprise" that must be protected by "all
means short of war" from the sinister threat of "totalitarianism." There
is very little difference between that economic "co-ordination" that is achiev-
ed, and sometimes not achieved, by the political decrees of victorious Nazism,
Fascism, and Bolshevism, and this new "corporate community" that has
been created by a slow but relentless process in this country through the
system of "interlocking directorates", through the activities of the major
financial institutions, through particular interest groupings, through firms
rendering legal, accounting, and similar services to the larger corporations,
through "intercorporate stockholdings", and a number of other devices.
After a careful study of the working of all these different devices,
the Report reaches its climax by disclosing that no less than 106 of the
aforesaid 250 largest industrial and financial corporations and nearly two-
thirds of their combined assets are controlled by only "eight more or less
clearly defined interest groups". (Even this estimate, as pointed out by the
authors themselves, falls far short of reality: "No attempt is made to in-
clude the assets of smaller corporations falling within the same sphere of
influence, though many such could be named." Other and more important
shortcomings will be discussed below.) To give an idea of the significance
of this fact, we must restrict ourselves to a few data concerning each of
those eight mammoth groups.
1) Morgan-First National Includes 13 industrial corporations, 12
utilities, 11 major railroads or railroad systems (controlling 26% of the
railroad mileage of the country), and 5 banks. Total assets:
(Millions of dollars)
Industrials 3,920
Utilities 12,191
Rails 9,678
Banks 4,421
Total 30,210
2) Rockefeller Controls six oil companies (successors to the dis-
solved Standard Oil Co.) representing 4,262 million dollars, or more than
half of the total assets of the oil industry, and one bank (Chase National,
the country's largest bank; assets: 2,351 million).
3) Kuhn, Loeb Controls 13 major railroads or railroad systems
(22% of the railroad mileage of the country), one utility, and one bank.
Total assets: 10,853 million dollars.

4) Mellon Controls about 9 industrial corporations, one railroad,
two utilities, two banks. Total assets: 3,332 million dollars.
5) Chicago group Controls on the basis of interlocking directorates
4 industrial corporations, 3 utilities, 4 banks. Total assets: 4,266 million
6) Du Pont Comprises 3 top rank industrial corporations and one
bank. Total assets: 2,628 million dollars.
7) Cleveland group The Mather interests control through the
Cleveland-Cliffs Iron Co. the four so-called independent steel companies;
control two other industrial corporations and one bank. Total assets:
1,404 million dollars.
8) Boston group includes 4 industrial corporations, 2 utilities, one
bank Total assets: 1,719 million dollars.
In interpreting this list, the reader should have in mind that it is far
from complete. As we have seen, the authors, on principle, have only con-
sidered interconnections between the 250 largest Pon-financial and fi-
nancial corporations. Even within these limits, many corporations that are
"fairly closely related with one or another of these groups" have been left
out for technical reasons. For example, the giant International Paper and
Power Corporation that is equally closely related to Boston and Rockefeller
was therefore assigned to neither the Boston nor the Rockefeller
groups. Ten equally important links between the eight big interest groups
are considered in the Appendix but are only slightly touched upon in the
body of the Report.
Even with these restrictions, the corporate community as described in
this report appears as a momentous concentration of economic and thus also
of political power. The Report does not deny the importance of the con-
trols that the corporate community "exercises over the policies of the larger
corporations, through them affecting the whole American economy." It is
equally aware of their political significance. Just as the controls exercised
by the organized interest groups the big associations of capital and labor,
the organizations of farmers and of consumers operate through govern-
ment, so also do "some of the controls exercised by the corporate community
operate through government." Yet, says the Report: "it is not intended
to imply that these aggregations of capital ever act as a unit under the rule
of individual or oligarchic dictatorships. The social and economic content
of the relationships which bind them together is far more subtle and varied
than this." It would not be easy to determine just what degree of subtlety
and variety separates a democratic from a dictatorial exercise of an uncon-
trolled power. We have to trust, instead, the judgment of our experts
when they tell us that the corporate community as existing in the U.S.A.
today is not a dictatorship; it is only a "concentration of economic leader-
ship in the hands of a few."

The End of the Market
The fore-going description of the degree of concentration reached by
American capitalism does not by itself answer the crucial question as to
whether the present structure of this economy still conforms to the tradi-
tional principles of "democratic" capitalism, or whether it already assumes
the characteristic features of present-day Nazi, Fascist, and Bolshevik eco-
nomies. Recent history has shown that a "totalitarian" form of government
could just as well be imposed upon the comparatively backward economies
of Russia, Italy, Spain, etc., as upon that most highly concentrated type of
capitalist economy which existed in Germany. On the other hand it would
be "theoretically" possible to imagine a development by which a highly
concentrated capitalist economy would still retain, in an unaltered form
the whole of the internal structure of nineteenth century capitalism.
The actual truth that is revealed in another and, to the writer, most
significant part of Dr. Means' report is that this miracle has not happened
and that, on the contrary, the external change of the structure of the Am-
erican economy has been accompanied by an even more incisive transformation
in its internal structure and operating policies.
American economy today no longer receives its decisive impulses from
the competition of individual enterprises in an uncontrolled ("free") mar-
ket, but has become, by and large, a manipulated system. Goods are still
produced as commodities. There is still something that is called "prices",
and there are still the three capitalist "markets" goods, labor, and secur-
ities. There even remain some sizable areas in which "the price of an article
can still act, after a fashion, as a regulator of production." "The propor-
tion of cotton and corn planted on Arkansas farms varies from year to year
with changing relationships in the prices of those crops and reflects the
operation of the markets as an organizing influence." Yet outside of those
increasingly restricted areas agricultural products and listed securities
- the bulk of "prices", including labor rates, are no longer established in
free markets. They are manipulated by administrative decisions that are
influenced to a varying extent, but no longer as of old strictly and
directly determined by market conditions. This appears, for example, in
the wholesale price of automobiles and agricultural implements that are set
and changed from time to time by the respective manufacturers, and thus
result from "administrative" decisions.
The reader should be careful here to distinguish between those elements
within the "administrative" organization of production that have long ex-
isted and have changed in degree of importance only, and that other aspect
that is entirely new and is still widely ignored by traditionally-minded
The mere fact that administrative rule replaces the mechanism of the
market in the coordination of economic activities within the limits of a

single enterprise has no novelty for the Marxist. It is true that even this
fact assumes a new importance under conditions of modern concentration
when, as in the case of America's largest enterprise, the A.T. & T., the
activities of over 450,000 persons are coordinated within one administrative
system. It is also true that there has been a great increase in the proportion
in which the economic activities of the producing community are adminis-
tratively coordinated (within single enterprises) as against that in which
they are still coordinated through the shifting of prices and the interaction
of a large number of independent sellers and buyers in the market.
The decisive problem, however, that has to be investigated if one wants
to grasp the process that has recently undermined the traditional democratic
character of American society is contained in the question of how far that
change of proportion reflects itself in the whole structure and operation
of present-day American economy. It is the great merit of the authors of
this Report that they have investigated that decisive problem to the full
and that they are absolutely unambiguous and outspoken about the results
of their investigation. According to them American economy as a whole
has been transformed "from one regulated by impersonal competition to one
in which politics are administratively determined."
They never tire of repeating this most important result and of describ-
ing in most impressive terms the "significance of the extensive role of ad-
ministrative prices" that appears to be "inherent in the modern economy"
and forms "an integral part of the structure of economic activity." They
insist again and again that "however much of a role price-administration
may have played in the earlier years of this century, there can be little
question that it plays a dominant role today."5)
There is no space here to describe in detail the one-hundred-and-one
methods and devices by which prices, apparently settled by the law of supply
and demand in an open market, are in fact manipulated and controlled by
very definite "price policies" of the decisive strata of the "corporate com-
munity." These controls may originate from one or from different foci
of control. "The threads of control over labor policy may be divided bet-
ween the corporation and a labor union, some threads focusing in the cor-
porate management and some in the union officials; threads of control over
some aspects of policy may rest with the government bodies, as in the case
of minimum working standards or public utility regulations; still other
threads may rest with some dominant buyer, or a supplier of raw materials
or of services, etc." They may, furthermore, be direct and immediate or
indirect and intangible. "They may operate simply through establishing
a climate of opinion within which policies are developed."
They may be entirely informal or may be accomplished by a formal
setting, and in many cases the formal and the actual lines of control will
differ. They arise from three main sources: possession of one or more of
the "factors of production", possession of liquid assets, and most important,
position in relation to a functioning organization.
5) Cf. pp. 116, 145, 155, 333, etc.

The main thing to understand is that the new "structure of controls"
that emerges from these various forms of non-market control 1) is entirely
a child of modern times, and 2) it has come to stay for a very long time.
The controls thus exercised over prices and markets on a nation-wide
scale by the leading members of the industrial community far surpass in
importance the well-known non-market controls heretofore exercised by fin-
ancial institutions through the handling of investment funds the so-called
supremacy of finance capital. In fact, as shown by recent investigations
not yet included in this report, most of the largest business firms are today
"self-financing" and no longer depend on the aid of the money-lender and
his organizations. The strictly "private" controls exercised by the admin-
istrative acts of the members of the corporate community are even more
important than the old and new forms of non-market controls which are
exercised by government (federal, state, and local) through its fiscal poli-
cies, trough the protection of property and enforcement of contracts, and
so forth.
Nor can the influence exerted on the market by the action of some
powerful pressure groups any longer be regarded as a transitory and un-
"normal" encroachment on the normal activities of trade any more than
the influences exerted on the U.S. Congress by political pressure groups in
Washington can be considered an anomaly. The constitution of the cor-
porate community has become the real constitution of the U.S.
There remains the question of the working of this new system. How
can "administration-dominated prices" that are changed from time to time
replace the practically unlimited flexibility of market prices both in their
reaction to the different phases of the industrial cycle (prosperity and de-
pression) and to the technologically-conditioned structural changes? Dr.
Means and his straf *e inclined to take a very optimistic attitude toward
the working of the new type of administration-dominated prices. They
calerly see certain violentt distortions" that arose during the years of the
last depression and the succeeding "recovery" from the differential behavior
of the two kinds of prices co-existing in American economy:- "Between
1929 and 1932 there was a considerable drop in the wholesale price index,
but this drop was made up of a violent drop in the prices of market-domin-
a.ed ccrnmodities, and there was only a very small drop or no drop at all
for the bulk of the prices which are subject to extensive administrative con-
trol. In the recovery period from 1932 to 1937, much of this distortion
was eliminated (perhaps new distortions were created?-K.K.) by the large
ii creases in the market-dominated prices and the relatively small increase
in the bulk of administration-dominated prices."
Yet they do not blame this disturbance on the new phenomenon of
S::ini..tratikn-control of prices. They rather take it for granted that the
;-.kct, tlough "theoretically" still able to act as an organizing influence,
dces in fact no longer act in that beneficial manner. On the 't r '
they have proved to their own satisfaction that the degree of flexibility which

results from the administrative regulation of the bulk of the prices of goods,
labor and securities "appears sufficient to allow the gradual readjustment
of price relationships to reflect the gradual changes in wants, in resources,
and in techniques of production, if the level of economic activity were
reasonably well maintained." (emphasis by K.K.) Thus to the authors of
this Report, "the serious distortions in the price structure resulting from
the differential sensitivity of prices to depression influences reflect a disor-
ganizing rather than an organizing role that the market can play" (p.152)
This statement might be acceptable to us who are equally convinced
- though from an altogether opposite viewpoint of the impossibility of
retaining or restoring the traditional forms of capitalist economy. It seems,
however, that they take a lot for granted if they assume that the level of
economic activity could be reasonably well maintained under existing con-
ditions of the "democratic"society. They do not tell us in what way they
think that this condition will be better fulfilled in the near future than it
has been during the recent past. It is quite possible that this omission be-
trays on the part of the authors an unconscious anticipation of a future
dictator who will fill this apparent gap in the structure of the American
economy. The only hint of a solution of this crucial problem that we were
able to discover in the Report is its pathetic appeal to "an increased under-
standing of the problem on the part of leaders of business, labor leaders,
farm leaders, political leaders, and other leaders of public thinking."

The Viewpoint of the Workers
We do not propose to discuss the "task" of the workers. The work-
ers have already too long done other people's tasks, imposed on them under
the high-sounding names of humanity, of human progress, of justice, and
freedom, and what not. It is one of the redeeming features of a bad situa-
tion that some of the illusions, hitherto surviving among the working class
from their past participation in the revolutionary fight of the bourgeoisie
against feudal society, have finally been exploded. The only "task" for
the workers, as for every other class, is to look out for themselves.
The first thing then that the workers can do is to make absolutely
clear to themselves that the old system of "free trade", "free competition",
and "democracy" has actually come to an end. It does not matter so much
whether we describe the new system that has replaced it in terms of "mono-
poly capitalism", "state capitalism", or "a corporate state". The last term
seems most appropriate to the writer for the reason that it recalls at once
the name that was given to the new totalitarian form of society after the
rise of fascism in Italy twenty years ago. There is, however, a difference.
The corporate community of the U.S. represents as yet only the "economic
basis" of a fullfle'dged totalitarian system, and not its political and ideological
super-structure. On the other hand, one might say that in backward coun-
tries like Italy and Spain there exists as yet only the totalitarian super-
structure, without a fully developed economic basis.

As to "monopoly", there is no doubt that every increasing concentra-
tion of capital is tantamount to an increase in monopoly. The term itself,
however, has changed its meaning since a predominantly competitive economy
has been superseded by a predominantly monopolistic system. As long as
"monopoly" was regarded as an exception, if not an abuse, the emphasis
was on the "excessive" and "unfair" profits derived from a monopolistic
position within an otherwise competitive economy. An observation made
by Marx at an early time in his critique of Proudhon has recently been un-
consciously accepted by an increasing number of bourgeois economists.
"Competition," said Marx, "implies monopoly, and monopoly implies com-
petition." Thus the terms "monopoly" and "competition" have recently
been re-defined to refer to the "elements of a situation" rather than to the
situation itself, which as a v hole is neither entirely monopolistic nor entirely
competitive. In a sense it can be said today that all (or most) profits are
essentially monopolistic profits, just as the bulk of prices have become mono-
polistic prices. Monopoly has become not an exceptional but general con-
dition of present-day economy.
Thus it is quite correct to describe the historical process here discussed
as a transition from competitive to monopolistic capitalism; but the term
monopoly has, by the very generalization of the condition to which it refers,
become an entirely descriptive term, no longer fit to arouse any particular
moral indignation.
Similarly there is no serious harm in describing American economy as
a system of "state capitalism." Yet this description does not fit American
conditions so well as it does the general pattern of German and other Euro-
pean societies. In spite of the special powers of coercion invested in the
political authorities alone, the administrative decisions emanating from var-
ious economic enterprises controlled by the government have become the
most important influences exerted by the government on the functioning
of the U.S. economy. They are co-ordinated with all other forms of non-
market controls which, together with the still-existing remainders of market
controls, constitute the essential features of the "control structure" of the
present economic system. The authors of the Report use the terms "ad-
ministratic.n", "administrative rules", etc., indifferently with reference
to all kinds of non-market controls whether they originate from governmental
agencies, from different kinds of organizations based on business interests,
(or for that matter on labor, farmer, consumer interests) or from private
firms and combines. There is no doubt that the position of the government
will be considerably strengthened in case of war. But even this would not
be a decisive reason to call the existing system of American economy a "state
capitalism" as the same condition will occur in all countries at war whether
they are backward or fully developed, "competitive" or "monopolistic",
whether they are based on a scattered or a concentrated system of capitalist
The second thing the workers may be expected to do, once the import-
ance of the change in the basic conditions of capitalist economy has been

fully experienced and grasped by them, is to reshuffle their hitherto most
cherished revolutionary and class ideas. When Marx described capitalist
society as being fundamentally a "production of commodities" this term in-
cluded for him and was meant to include for all those who would be able
to understand the peculiar "dialectical" slang of the old Hegelian philosophy
- the whole of the suppression and exploitation of the workers in a fully
developed capitalist society, the class struggle and its increasingly stronger
forms, up to the revolutionary overthrow of capitalism and its replacement
by a socialist society. This is all right as far as it goes, except that today
it should be translated into a less mysterious and much more distinct and
outspoken language. But Marx's emphasis on "commodity production" in-
cluded something else and, this time, something that may well have become
inadequate for the workers' fight against the two species of the "corporate
state" that exist in the fascist and the so-called democratic countries today.
The emphasis on the principle of commodity production, that is, pro-
duction for exchange, for an anonymous and ever-extended market was at
the same time an emphasis on the positive and progressive functions that
capitalism was to fulfill by expanding modern "civilized" society all over
the world and, as Marx said, "transforming the whole world into one gi-
gantic market for capitalist production." All kinds of illusions were in-
evitably bound up with that great enterprise that was conducted, as it were,
by humanity itself. All problems seemed to be solvable, all contradictions
and conflicts transitory, and the greatest happiness for the greatest number
ultimately obtainable.
The workers, in all their divisions, had a big share in those illusions
of commodity production and their political expression, the illusions of demo-
cracy. They shared them with all other suppressed minorities and progres-
sive strata of capitalist society Jews, Negroes, pacifists. All reformismm"
and "revisionism" that distracted the workers' energies from their revolu-
tionary aims have been based on those illusions. The very advent of fas-
cism in the world and its intrusion into the inner sanctums of traditional
democracy has at last destroyed the strength of those illusions. We shall
attempt in a later article to trace the positive features of a new program
for the workers in their fight against the class enemy in his new and more
oppressive form which, at the same time, is more transparent and more ex-
posed to their attack. Karl Korsch


The belated war declaration contained in the President's last "fireside
chat" indicated the continuation of the war on an enlarged scale. That Mr.
Roosevelt did not consider his "talk on national security" a "chat on war"
probably refers to the term "chat" which would be a truly surrealistic ex-
pression for a declaration of war. In other respects too his reluctance to call
a spade a spade was in keeping with the spirit of the time. Actual war de-
clarations are as now outdated as Mr. Churchill's hats.
The President insisted, in proof of a continued "short of war" policy,
that "There is no demand for sending an American expeditionary force
outside our own borders". To understand this statement better it is
only necessary to remember that not so long ago it was declared that "Am-
erica's frontier is on the Rhine". There might be some quibble as to
the difference between "frontier" and "border", a quibble unbefitting
a nation which proudly proclaims that on her territory also the sun never
sets. Borders are variable anyway, almost as variable as the speeches and
intentions of statesmen. We may trust in God that a reason will be found
to "demand" the inclusion of an expeditionary force in the "short of war"
policy. The appetite of the adventurous is already whetted with descrip-
tions of the daring exploits of "khaki-uniformed figures stealing with ma-
chine-gun-bearing motor cycles" into Nazi-occupied territory to "terrorize
and harras the German forces thinly strung out to a point of great vulner-
:bility over a thousand-mile coastline".1) The war department announced
that it would ask Congress to appropriate a supplemental 3 billion dollars
to buy arms for 2 million men at once and provide manufacturing facilities
to supply an army of 4 million. Experts believe that, in addition to the
British forces, 2 million soldiers will be needed for a successful invasion
of Germany.
America has been in this war since its inception and will stay in as
long as it lasts.2) "Neutrality" is only a specific form of warfare.3) The
President is quite right in saying "It is no more unneutral for us to supply
England than it is for Sweden, Russia, and other nations near Germany
to send steel and ore and oil and other war materials into Germany
every day". And though one may say that some of the nations supplying
Germany have no choice in the matter, from the viewpoint of capitalistic
interests America is equally forced to deliver. It is also inconsequential
what is sent into the belligerent countries raw materials or finished war
products. That has something to do with the established international
1) W. M'Gaffin in The Chicago Daily News (1/4-41)
2) See "Long Live the War" in Living Marxism, Vol. V, No. 2.
3)) See "The War is Permanent" in Living Marxism, Vol. V, No. 1.

division of labor, but not with morals or international law. Whose ships,
whether America's or England's, are used for the transportation of planes,
tanks and munitions is simply a question of power. Thus far it suits Am-
erica better to sacrifice English tonnage instead of her own including the
neutral and axis ships in American harbors. Britain cannot as yet back
up a demand for parity in losses. Thus an American Navy and Merchant
Marine "second to none" is in the process of realization. And progress is
made not only at sea, but also at home. At a time when factories, docks,
and mines are being blown to pieces in England and on the conti-
nent, when raw materials are disappearing into the reddened skies, when
laborers are shaking in the knees and becoming less productive, America
strengthens her industrial base, builds up a powerful army, and gets her
people drunk with expectations of an enormous war boom with profits for
Why declare war? America will win anyway with or without par-
ticipation in the bloody part of the business. As long as the fighting lasts
in Europe and the longer the better America has a chance to make
her second important step in the direction of world supremacy. The last
world war made America independent of European capital; the new world
war is to make Europe dependent on America,- that is, if all goes well.
There are however some doubts as to the outcome of the European war
and thus there are differences of opinion as to what course America should
pursue. Those differences find expression .in organizations such as the
"Committee to Defend America by Aiding the Allies" and its apparent
counterpart the "America First Committee". At first glance this is some-
what bewildering since it seems to be clear that a policy that helps Britain
short of war would be exactly the one that serves America first. The in-
terventionists, however, though still insisting with their leader Roosevelt
that they do not mean to send troops and warships to Europe, are neverthe-
less organized for that very purpose. The isolationists, though quite willing
to support Britain, think the time inopportune for decisive intervention.
A more cautious policy is set against a more adventurous. But both groups.
are interested neither in Britain's success, nor in that of Germany. Both
represent finally no more than American imperialism. As soon as "unity"
becomes essential to the interests of imperialism, they will be united.
Of course mere tactical considerations do not fully explain existing
differences on the question of war. The "riddle" of pacifistically inclined
capitalists may be solved in many ways. There are some who fear that
actual participation in war will bring fascism to the United States. They
insist that we should first put "our own house in order" before meddling
in European affairs. Though opposed to fascism, they are looked upon
as fascist because, being good capitalists, they are not opposed to a fascistic
policy against the workers, but wish it carried through in their own ex-
clusive interests. They oppose the increasing national debt, rising taxes,
"pampering" of workers by social legislation, and they insist that the tradi-

tional policy in respect to both internal and external questions is best. In
short, though being suspect of harboring fascistic ideas, they are merely
old-fashioned, conservative, and possessed by fears that the government -
all powerful in the event of war will drive them out of business. It
must be a queer world for the men of yesterday. Though opposed to
fascism at home, they are forced to foster it abroad by refusing to fight
against it.
But times are also bad for the men of tomorrow, the appeaserss" of
the Lindbergh variety. They do not want to enter the war and thus
hasten the fascization of America because they see the war as a superfluous
undertaking, an unnecessarily expensive way of carrying through needed
fascistic reforms. They are forced to lengthen the life of "democracy",
while trying to shorten it, by refusing to fight in its name. They think
that a German defeat would only interfere with, and stupidly set back,
the natural course of development toward the fascization of the world. For
them an old world goes under with the fall of democracy and a new one
is born with the conquests of fascism; and they hold with Nietzsche that
one should help to destroy what is already crumbling.
Then there are those engaged in anti-interventionist work for the money
there is in it; those who have greater business interest in Germany than
in Britain; those emotional types working for their "mother countries"
which happen in this case to be the axis powers; those whose concepts of
imperialistic expansion find more opposition in England than in Germany;
those who simply admire Hitler too much; and finally, those who actually
are against the war because it hurts.
There is not in America, however, evidence of an open cleavage such
as exists in the ruling classes of England. In Britain there are, besides
the aspirants for governmental and administrative positions in a Hitler dom-
inated fascist England, large and quite powerful capitalistic groups more
interested in the maintenance of their relations with the European continent
than with safeguarding the far-flung Empire; forces more interested in strik-
ing a bargain with Hitler at the expense of America, France, and Italy,
than of putting the Empire, the maintenance of which becomes more and
more questionable, under the "protection" of America. Though these "Fifth
Columnists" are submerged at present, they have not disappeared.
The American appeaserss" may or may not be in love with fascism.
They are certainly not in love with German fascism. When Roosevelt
spoke of them as "citizens who are aiding and abetting the work of evil
forces, and do exactly the kind of work that the dictators want done in
the United States", he only betrayed a petty sensitivity to criticism, and
foreshadowed the government's attitude in the coming American Gleich-
schaltungs-process; but he did not do justice to his "fellow-citizens" who
are not so fond of "sacrificing American boys on the altar of European
quarrels". The American appeaserss" are skeptical as to England's chance
of winning the war, or of even lasting trough it despite all the help that

America could possibly give. They do not think it wise to be on the side
of the losers, and, being aware of the cleavage in England, they ask them-
selves the question: How secure is Churchill? What will become of Brit-
ish "national unity" when American help forces Hitler to invade England
immediately? What if Hitler is not beaten back? What if, with the
dwindling of English "morale" through incessant bombings and the des-
truction of tonnage, the English appeaserss" once more gain the upper hand
and come to terms with Hitler? They do not trust England any mere
than they trust Germany.4) And if America, entering the war openly,
should not be able to prevent the invasion of England and bring about a
German defeat, will she then be strong enough to successfully opose Japan
in Asia, a Japan now also acting in behalf of Germany? Will America
be able to oppose Nazi-European and Asiatic interests in South America?
Could she enforce her will in the Western hemisphere, a will possibly sab-
otaged by South American interests closely allied to Europe and encouraged
by the German success. Is boldness advisable in face of the possible threat
of fighting engagements in two oceans? How long will it take to destroy
Europe in such a measure and to militarize America to such a degree that
what her imperialists desire can really be gained and kept? What if the
Nazis act and succeed before the military plans of America can be carried
out? To enter the war now is too great a risk to take, though it is a risk
only if Hitler takes the still greater risk of trying to knock out England
with one bold and hazardous stroke. But why tempt Hitler? Is it not
wiser to restrict the world conflagration, to win time, until, in a possibly
further-changed world situation, the American forces are really strong en-
ough to insure victory. Otherwsie, and for a long time to come, the real-
ization of the "American Dream" in Asia and South America may be shat-
tered altogether.
The worst that could happen anyway in case Germany wins is to
resume business with her under probably less favorable terms than here-
tofore. But if a war-tired Germany requires a lengthy peace, it may even
be possible that great concessions will be made to the United States. Besides,
participation in a lengthy war might mean conscription of all the "national
wealth", and what would be the use of gaining the whole world and losing
one's capital? What, furthermore, would a defeat of Hitler mean? English
dominance in Europe? Revolutions on the continent and in the colonies.
Transformation of the imperialist wars into full-fledged civil wars? There

4) When it was re-ently disclosed in the English parliament that Britain continues to
supply Japan's army with war goods, that is (under pretense of being forced to do
so in order to obtain foreign currency) continues to play the old imperialistic game
of hampering American ambitions in Asia by fostering those of Japan (a policy that
came also to light in the reluctance with which England bowed to the American demand
to open the Burma Road) the "appeasing" CHICAGO DAILY TRIBUNE (1/6-41) wrote
bitterly: "Some Americans certainly will think it is a bit thick for the British to urge
a willing American government to put all American war supplies at their disposal
and then use some of their own to strengthen an axis partner who is threatening to
turn his guns on America". England, however, counting on the possibility of winning(
the war, also counts on the possible resumption of her old Asiatic policy and thus
will not give up easily to America what she considers her interests.

are a thousand questions and not one single assuring answer. Let us then
play safe. Maybe England will hold out, maybe a compromise solution
will be found. We might end the war by having no part in it, thus forcing
England to make concessions to Hitler. His terms might be harsh, but it
might still be the lesser evil for both England and America.
Thus run the arguments of the isolationists. But their "cause" is
already defeated. There will be no need to suppress them. They will soon
silence themselves in order that they too may profit from an undesired war
situation. It is much too late to avoid intervention. Only the complete
and immediate success of Germany could possibly keep America out of the
military war at this time. England will for this reason do her utmost to
prevent an immediate German success. Besides this, she is already in a
position to "blackmail" America into ever greater commitments. The threat
that England may quit the war at a time when America alone could not
possibly oppose successfully the world policy of a Nazi-dominated Europe,
the threat that in case of Churchill's fall following a German-English peace
move, England might copy the French example, co-operate with Germany
and hand over her fleet to Hitler, makes the increasing support of Churchill
an American necessity unless she forfeits all her imperialistic ambitions for
years to come years that may be decisive. America's staying out of the
war would be equal to a major American defeat. In a third world war
she might face, not an atomized Europe, but one consolidated into a mighty
power bloc with enormous influence in the Western hemisphere, Asia and
Africa. She might have lost her chance for world supremacy by missing
her cue in World War No. 2.
Both the American and English imperialists will see to it that the cue
is not missed. They recognize quite well that those English interests more
akin to Hitler than to Roosevelt may end the Churchill government as
scun as defeat gives them enough public support to overthrow the "imper-
ialists" willing to incorporate the Empire into the United States of America.
The "revolution" which might end the Churchill government might be able
to prevent deliverence of the fleet. It will try to do so anyway in order
to secure better peace terms for the new regime. Thus, considering even
the event of an English defeat, America must support Churchill. The sup-
port must be the greater the more precarious his position becomes in order
to save enough of the fleet and of the empire to make worthwhile the new
Anglo-American Empire of pooled resources and interests. As long as suf-
ficient American help reaches England shores, Churchill is secure. As long
as he is secure quite a lot of damage can be done to the axis partners. But
to keep him secure, more and still more help is needed. Finally, only the
declaration of war on the part of America will strengthen English "morale",
that is, Churchill's policy. If even this fails because of a few million of
additional German bombs, American troops will be needed to bolster
"morale". Besides all this, what English newspapers5) wrote in response

5) Quoted from the liberal NEWS CHRONICLE and the Laborite DAILY HERALD in.
the CHICAGO DAILY NEWS (1/3-41).

to Roosevelt's speech is true, namely, that though Roosevelt urged his coun-
try to give speedy help to Britain, yet
"no country has, in fact, been able to mobilize its whole industrial potential without
going to war. It wacs not until Britain was fully and formally at war, and was feel-
ing the force of the imminent dangers that beset her, that her war production reached
anything like a war tempo. America is no more likely than was Britain to put her
giant industrial machine on a war footing and to turn out the avalanche of supplies of
which she is capable unless the American people have staked their all on victory
and the United States administration is equipped with war emergency powers to
organize production for a single end."
If England should win, nothing is lost for America. Though the priv-
ilege of swallowing parts of the empire and units of the fleet will be lost,
Europe will be disunited and her imperialistic forces shattered and tired.
America will be able to take advantage of her relative strength, to become
the absolute master of the Western hemisphere and the most forceful in-
fluence in Asia. Whatever may be in the offing for England defeat
or victory America's support for Britain cannot thereby be influenced
for this support is no "aid for the allies", and in so far as it constitutes
such aid does so only incidentally. It is the necessary action for American
imperialism. To stop the trend towards actual participation in the more
bloody aspects of the war means to put an end to American imperialistic
aspirations which, in turn, would mean the end of American capitalism.
Short of this there is no escape, and mothers might as well start crying
right away.
Of course the war will not be fought in the name of American capital-
ism, but in the name of "democracy". "Three powerful nations, two in
Europe and one in Asia", said Roosevelt during his chat,
"joined themselves together in the threat that if the United States interferred with or
blocked the expansion program of these three nations a program aimed at world
control they would unite in ultimate action against the United States. The Nazi
masters of Germany have made it clear that they intend not only to dominate all
life and though in heir own country, but also to enslave the whole of Europe, and
then to use the resources of Europe to dominate the rest of the world".
Thus the defense of America is at the same time the defense or reestablish-
ment of world democracy whether the world likes it or not. In his annual
message to Congress, Roosevelt pointed out "four essential human freedoms"
for which America is going to fight.
"The first is freedom of speech and expression everywhere in the world. The
second is freedom of every person to woilship God in his own way everywhere
in the world. The third is freedom from want which translated into world terms,
means economic understandings which will secure to every nation a healthy peace-
time life for its inhabitants everywhere in the world. The fourth is freedom from
fear which, translated into world terms, means a world-wide reduction of arma-
ments to such a point and in such a thorough fashion that no nation will be in a
position to commit an act of physical aggression against any neighbor anywhere
in the world".
But first the war must be fought because "No realistic American can expect
from a dictator's peace international generosity, or return of true independ-
ence, or world disarmament, or freedom of expression, or freedom of religion
- or even good business". And as every "realistic" American is undoubt-

edly interested in good business he will rush to its defense and will not even
mind listening to those more lofty human freedoms being thrown into the
bargain. If they really would be realistic they might start laughing instead
of fighting.
Democracy versus Fascism really? Were not Austria, Poland,
Abyssinia, and Albania dictatorships? And were they not attacked by the
dictatorships of Germany and Italy? Are Greece and China democracies,
"galantly waging war for democratic existence" as Roosevelt claims? No;
the fronts are not marked by democracy and dictatorship. Hitler will not
hesitate to ally himself in this war with any democracy willing, to do so.
Roosevelt and Churchill will kiss any dictator rallying to the defense of
"democracy". The issue is not dictatorship versus democracy, but for Am-
erica, as Roosevelt also explained in his fireside chat, "it is a matter of most
vital concern that European and Asiatic war-makers should not gain control
of the oceans which lead to this hemisphere",-and thus be able to muscle
in on the "good business".
The defeat of Germany, Italy, and Japan will not usher into existence
that kind of world so beautifully described by Roosevelt as "the very anti-
thesis of the so-called new order of tyranny which the dictators seek to
create with the crash of a bomb". The President's "kind of world" demands
for its realization 50,000 airplanes, 4 million troops and countless people
"who value their freedom more highly than they value their lives". But
those who value their lives highest because without them there can be no
values at all, those "slackers or trouble makers in our midst", the President
wants first "to shame by patriotic example, and if that fails, to use the
sovereignty of government to save government". Thus charity does not
begin at home, First, democracy must be saved "anywhere" before it
can be realized in America.
The President is quite right; the capitalist world of today precludes
democracy, save as a war cry for imperialistic purpose. Only recently a
group of the most democratically-inclined professors and instructors pointed
out6) to those people who propose some sort of selfgovernment in industry
to prevent totalitarian methods and loss of democracy arising from govern-
mental control that in America also, or especially in America, "governmen-
tal control is preferable to self-government in industry", because "industrial
associations would be monopolists... and as monopolists they would greatly
reduce freedom in the market".. (thus)..., more, rather than less, govern-
ment administrative control would be required if government were not to
allow these cartels (of monopolists) to set their own prices". But this is
only to jump out of the frying-pan into the fire, because governments, just
like monopolies, set their prices only to fit their own purposes. Furthermore,
such industrial associations do not have to be formed; the have been in
existence for a long time; they are monopolistic and set their own prices.7,

6) Economic Mobilization. By P. H. Douglas, H. Si Bloch, O. Lange, F. H. Harbinson,
and H. G. Lewis. American Council on Public Affairs; p. 42.
7) See the article "The Workers' Fight Against Fascism" in this issue.

Thus "democracy" already depends on government administrative control,
a control which, when exercised in Italy and Germany, is called fascism.
This is indeed a cruel world where even democracy in business, and thus
democracy in other fields, has to be safeguarded by fascistic practices.
The war will neither save American democracy nor will it restore
democracy in the rest of the world. The program of further domestic
reform and better social legislation outlined in the President's message to
Congress, more advanced than the war-promises of English labor leaders
dared be, will remain on paper, because "we must all prepare to make sac-
rifices that the emergency demands". The more produced the less consumed.
The working-day will be lengthened in the armaments industries because
all industries will become defense industries. "Let us work and work
harder" is the slogan issued by Defense Commissioner William Knudsen
to fight a barbarism "that drives women and children to live in cold wet
holes in the ground".8) Let us build more bombers to make sure that they
stay in the holes in the ground for another five or ten years. The ruling
class of America is neither willing nor able to end the growing barbarism.
It can enlarge the battlefield, throw in more men and more machines, but
it cannot end the slaughter nor can it realize any of its promises.
If Hitler wins, it is true, there will be no peace, no socialism, no
civilization, but only the preparation for greater battles to come, for future
destruction. But if the "democracies" win, the situation will not be dif-
ferent. They will have ceased to be democracies even in their advertise-
ments; they will do exactly the opposite of what they promised. There
will be no peace, no socialism, no civilization, but only more brutal attempts
to destroy for generations to come the possibility of establishing a social,
economic, and international order capable of satisfying the needs of men.
The world will be devided differently for different sets of exploiters but
that is all that can happen. Already now a dozen "governments in exile"
and all that goes with them, sit over maps excitedly marking new borders
and re-shuffling populations, waiting to be returned to rule as of old, pos-
sibly on a larger territory. People who "retaliate" for night-flights over
Berlin by destroying whole communities in enemy territory are not capable
of conceiving or carrying out a new social order beneficial to the powerless
in society. But neither can this be done by people who cry, "Save London
by bombing Berlin".
What is needed today is to end a social and economic system divided
in classes, groups, nations, and power blocs a job which can only be done
by those who do not profit from the existence of power blocs, nations, priv-
ileged groups, or class positions. The rule of naked power can be broken
effectively only by those who are today still powerless. If the German
fascists were really out to change the world into a better place for human
beings to live in, they would first of all have to abolish exploitation, priv-
ilege, and national aspirations in their own country. If Roosevelt was really

8) Knudsen as quoted in the CHICAGO DAILY TRIBUNE (12/14-40).

out to make true what he declaimed in his congressional message he would
first of all have to advocate the end of capitalist exploitation, privelege, and
imperialistic desire in America. But neither the fighters for fascism, nor
those for democracy as much as mention the basis for all the present-day
misery in the world: the capitalist system of exploitation. If Hitler speaks
against the "capitalistic democracies" and in favor of National Socialism,
he speaks only of the fight between somewhat differently organized capital-
istic exploitation systems. The democracies promise "reform" of the existing
society, but no more; what this "reform" can possibly be is demonstrated
precisely by Hitler's fascism.
This then is the problem of today: How can the powerless in society
abolish power in society, that is, class power over other classes, national
power over other nations. To state the problem does not solve it. To change
society it is not enough to assert revolutionary aims. What should be done?
There are a number of proposals. Some say, let Hitler win, he will do
away with small nations in Europe, co-ordinate European economy, abolish
in this very process more and more of the capitalistic mechanism and pro-
vide a greater and better stage for coming revolutionary struggles. Others
say it would be better to defeat Hitler by supporting the democracies be-
cause in the latter there remain opportunities to organize and develop the
revolutionary forces needed to some day bring socialism into existence. Fur-
thermore, in the very struggle against fascism the democratic nations might
be transformed into socialistic societies, or will thus be transformed at the
end of the war. The victory of Hitler, however, would enslave the whole
world, would lead to fascism everywhere and destroy probably forever all
chances for a socialist society.
Mr. Ernest Bevin, the great labor leader and now Labor Minister,
who only recently was authorized to carry through the most undemocratic
of all measures of war, that of drafting labor so despised when it was
done in Germany promised his followers the acceptance after the war
of "social security as a main motive of all our national life. That does
not mean", he rushed on to say, however, "that all profits and surpluses
would be wiped out, but it does mean that the whole of our economy, fin-
ance, organization, science, and everything, would be directed together to
social security not for a small middle class or for those who may be merely
possessors of property but for the community as a whole". Though hardly
necessary, he nevertheless made it clear that this national attempt at security
must not be mistaken for a real revolution, but regarded as a means of
coping with the aftermath of war, and as an instrument against a possible
revolution. He continued:9)
"The greatest social implication arising out of this war is the effort to get rid of
that horrible queue outside the labor exchanges... I am afraid that unles the com-
munity is seized with the importance of this you may slip into revolutionary action.
What I am horrified at is the thought of a blind revolution of starving men that is
undirected and that ends in disaster for the whole community."
9) Quoted by 7. B. Reston in the NEW YORK TIMES (12/8-40).

SNo; the defenders of democracy a'la Bevin will not assist in changing
society in such a way as to transform the present war into one that ends
all wars, ends national rivalries and the exploitation of men. They fight
for the preservation of democratic institutions "because they realize that
victory for Hitlerism would mean the destruction of working-class freedom
and the theft of union funds, as was the case in Germany when Hitler
usurped power".'0) The kind of controlled capitalism they propose is not
so much one that secures working-class freedom as one that "prevents the
theft of union funds". But even this is possible only because it is in England
and America still "an enormous asset that men whom labor trusts should
now be lending their aid in invoking a ready response to the call for longer
hours, fewer, if any, holidays, and unaccustomed restrictions".11) They
will have to go after their services are no longer needed and in case they
do present the bill of social reforms to their masters. Though in justified
fear of their own future they feebly attempt some changes in the social
structure today, and feel inclined, as Harold J. Laski has said, to "expect
to see large-scale social reforms during the war"121 they must feel quite
uneasy just the same. Did not Laski point out1") only three years ago
that Chamberlain was correct in saying "that the result of the arms pro-
gramme of Great Britain is the necessary postponement of social reform
for a generation". If that programme postponed social reform for one
generation, what will the war itself do to social reform?
The Bevins and Laskis and their American counterparts may seriously
believe that they are fighting for the maintenance of democratic institutions,
but their beliefs have no countenance whatever. Even if they thought dif-
ferently, they would act exactly as they do. The luxury in which they can
still indulge that is, of having an interpretation of the war, which, in
the last analysis, is only slightly different from that of their capitalist masters,
and which expects not only to save democracy, but to bring about some sort
of democratic socialism remains their meaningless private affair, for they
have no power of any kind outside of that granted to them by their cap-
italist masters. If today they proclaim with great gusto that to win social-
ism Hitler must first be fought, their good counsel to the English and
American workers is not really important, for these workers would have
to fight even if what their leaders proclaim to be true were not true, be-
cause as little as their organizations could the workers afford to disagree
with their governments.
Finally, in defending the position that democracy as against fascism
should be supported, it is pointed out14) that, though it is true that in this

10) Editorial in "Labour" (London) Sept. 1940, p. 580.
11) Britain's Reasons for Fighting. By Brig. Gen. G. Cockerill, C. B: in the NEW YORK
TIMES (9/8-40).
12) Laski in THE NATION (New York) 5/25-40.
13) "Liberty in the Modern State", Pelican Edition, p. 24.
141 Oscar Lange "The Socialist Attitude toward the War" in THE MODERN QUAR.
TERLY. Vol. XI, No. 6, p. 12.

war imperialists oppose each other, still, differences between the adversaries
must be recognized. British imperialism is saturated and disintegrating
while German imperialism is vigorous and aggressive, making it more ad-
visable to oppose the fascist imperialism, though it would mean to defending
democratic imperialism. However, what could be said of the German can
also be said of the American imperialism, young, vigorous, and aggressive
as it is, if it were not altogether senseless to indulge in such comparisons.
But on the basis of the comparisons it is then argued that later, after the
war, it will be easier to get rid of democratic imperialism if only the fas-
cistic kind is out of the way. Oscar Lange says:
"The imperialism of liberal capitalist nations is based on export capital and leads
to the industrialization of the colonies, thus preparing the social forces leading to
emancipation; whereas, fascist imperialism is not moved by the quest for private
profit but is part of the totalitarian state economy. It, therefore, does no aid he
economic development of the subject people but merely exploits their natural and
agricultural resources".
By this reasoning and by looking at the results of liberal imperialism, es-
pecially in India and China, imperialism must always have been "fascistic"
despite its liberal promoters. If it were true, furthermore, that a German
victory would establish "the rule of a young and vigorous imperialism much
more oppressive and stable than the old one", this could only be true in case
it would do better what liberal imperialism did so badly, for greater stability
and greater exploitation depends on additional capital investments even for
the exploitation of only natural and agricultural resources.
Anyway it is too early to worry about that. The colonies are still
securely in the hands of liberal imperialism, and it might be better to ask
the colonies their opinion before arriving at a judgement as to what
masters they would like to have. But this argument of Lange's is car-
ried over to the European scene. He thinks that for international socialism
it would be better if Hitler were defeated than that the democracies should
suffer such a fate, because, if there should be a chance at all, the chances for
a socialist revolution would be greater in the first than in the second case.
But though it is true that in a defeated England there would be no social
revolution, as there was none in France, because German fascism would
prevent it, it is not less true that a German revolution in the wake of a
defeat would also be crushed by the bayonets of the allies. One case can
be argued as well as the other.
If Germany, having experienced years of fascism, should be defeated,
it is quite possible that the revolution would be carried through in the name
and spirit of proletarian socialism since a return to bourgeois democracy is
precluded. The existence of social institutions created by monopoly cap-
italism and fascism hinders such a return. The proletarian element would
once more be in the forefront of social change and thus induce the capital-
ist victors to wage a relentless war against the new and really revolutionary
threat, much more feared than Hitler was ever feared. This German
revolution will be crushed in blood, unless this is prevented by simultaneous

revolutions in the victorious countries. But revolutions hardly break out
in victorious nations; it is difficult for solidarity to arise in the ruins of
London and Liverpool. On the other hand, if Germany wins, it will bring
fascism to the whole of Europe. It will prepare itself for the waging of the
hemispheric war and thus increase a hundredfold all the difficulties already
experienced. It will drive forward the change of the world by negative
measures and submerge for years to come all possible positive attempts of
a proletarian socialism to end the prevailing chaos.
The question as to what the "labor movement" should do in regard
to the war and in order to safeguard its own vital interests is an artificial
question, for there is no labor movement which could raise it in actuality.
The question is only whether there will arise in the course of the war
a labor movement, or rather a social movement, determined to end war,
which is possible only by ending capitalism. Where will it start first, how
often will it be defeated, and when, under what conditions, may it succeed?
And to these questions there is no satisfying answer. Not being able to
answer it is only to share with the rest of the world the fearful inability
to do more than the next best thing. But under no circumstances, is it
the next best thing to accept once more the great swindles of our time,
namely, that the struggles of capitalism, democratic or fascistic, could have
any values for the proletarian class, that out-worn slogans such as that
of national independence could serve more than imperialistic purpose, that
the workers could ever improve their lot by simply choosing among their
enemies. Rather, the next best thing to do is not to be fooled by current
slogans, promises, rationalizations, and often ordinary lies; not to fall victim
to the machinations of the present rulers of the world, hidden behind all
possible and impossible phrases, uniforms, and programs. It is to keep
one's head clear as to what is really going on in the world, and to watch
out for the first true signs of a rising opposition to the prevailing barbarism.

Third International. By Olga Hess Gankin and H. H. Fisher. The Hoover
Library on War, Revolution, and Peace. Publication No. 15. Stanford
University Press. Stanford, California 1940. (856 pp.; $6.00)
This work makes available in En- yan and H. H. Fisher, this series
glish and in some cases for the constitutes one of the most import-
first time a collection of docu- ant reference works on the Russian
ments on the origin of the Commu- Revolution.
nist International. It will be fol- The present volume begins with
lowed by another book entitled The the correspondence between Bebel
Bolsheviks and World Revolution: and Lenin in 1905 dealing with the
The Founding of the Third Interna- Bolshevik-Menshevik conflict in the
tional. Together with the already Russian Social Democracy, and ends
published volume The Bolshevik with the results of the Stockholm
Revolution, 1917-1918, by J. Bun- Conference of 1917, the last docu-

ment (an appeal of the Zimmer-
wald Committee to the working
masses of all countries) being dated
September 1, 1918. It is accompa-
nied by a very careful chronology,
bibliography, and by biographical
notes of the many personalities in-
volved. The unavoidable gaps bet-
ween the different documents are
filled in with editorial notes which
carry on the narrative of events and
give the work the character of a
comprehensive history.
A review of the relations between
Bolsheviks and Mensheviks in the
Second International and of the re-
lItions of both fractions to the
"Revisionists", "Centrists", and the
Left within the International intro-
duces the problems which were dis-
cussed in the labor movement short-
ly before and during the world war.
Of special interest here are the re-
latively unknown but by now far
more important differences of o-
pinion between the Russian Left, e.
g., the Bolsheviks, and the Left of
Western Europe, that is, the groups
with which such names as Luxem-
burg, Liebknecht, Gorter, and Pan-
nekoek were associated. The posi-
tion which the Second International
took during the war could already
have been predicted from the pro-
ceedings at t h e conferences before
the war, from the character and the
speeches of its leading elements. The
different national units of the Sec-
ond International obviously shared
the imperialistic ambitions of their
countries. For this reason the anti-
war policy of the Left was also dir-
ected against the organization in
which it functioned. Actually only
the Bolsheviks. however, split the or-
ganization and thus became the nuc-
leus for the re-formation of the In-
torn'-tional after 1914.
Much space is given to the pro-
ceedings, resolutions, speeches and
articles related to the socialist con-
ferences in Stuttgart, 1907, Copen-
hagen 1910, and Basel 1912; espe-
cially in regard to the conflict within
the Russian Social Democracy, to at-
tempts at unification, and the role

of the Bolsheviks in the formulation
of policy. In these discussions there
was often forshadowed what, after
the Bolshevik Revolution, became an
actuality, that is, the attempt on the
part of the Bolsheviks to make the
specific evolutionary conditions of
Russia the criterion of the methods
of struggle for the entire European
The activities of the Bolsheviks
abroad from 1914 to 1917 are best
revealed in Lenin's work during this
period. His theses on war, the dis-
cussions around them, and the pre-
paration of anti-war conferences re-
sulting in the Zimmerwald movement
fill up an important section of the
work. The conference in Berne,
that of the Socialist Women and the
Youth Internationale in the same
city, the conferences in Zimmerwald,
Kienthal, and the last conference in
Stockholm which terminated the
Zimmerwald movement lead into the
first Congress of the Communist In-
ternational in Moscow in March
The content of the whole move-
ment, a movement in which frictions
and dissensions continued to exist,
may best be summed up in the Bol-
shevik proclamation that "It is the
task of the proletariat in Russia to
complete the bourgeois democratic
revolution in Russia in order to kin-
dle the social revolution in Europe".
But the emphasis on the Russian Re-
volution, determining Lenin's posi-
tion on the question of the "self-de-
termination of nations", led to differ-
ences among the Bolsheviks themsel-
ves, as well as to dissensions between
the Bolsheviks and the Left of West-
ern Europe. The Bukharin-Piatakov
group allied itself on this point with
Luxemburg, Gorter, Pannekoek ra-
ther than with Lenin. The arguments
offered by Lenin in defense of
the "self-determination of nations"
as well as his controversial view on
the role of the state in the proleta-
rian revolution are, in connection
with the views of the Left of West-
ern Europe. given at length in
this important reference work, which
cannot be too highly recommended.

THE DEFENDERS. By Franz Hoellering. Little, Brown and Company,
Boston 1940. 484 pp.; $2.75)

Franz Hoellering's novel of the
Austria of 1934 is of considerable
political significance. He accom-
plishes the difficult task of success-
fully merging fictionalized individual
experience with an important histor-
ical situation. Not only are history
and social life revealed as one, but
the relationship between the individ-
ual and society is shown as an in-
escapable and inseparable unity,
which by reason of its existence
- allows for both hope and despair,
defeatism and the assurance of vic-
It is very fortunate that Hoeller-
ing did not attempt to write what
has come to be known as the "pro-
letarian" or "revolutionary" novel.
lie might have failed, as may be
guessed from his treatment of the
proletarian characters appearing in
the book. They are less real than
those who seem to be nearer the
author's own way of life the in-
tellectuals and the petty-bourgeoisie.
Not that his proletarian characters
are false, far from it; it is rather
astonishing how close Hoellering
comes to their true characterization.
But aside from a few deeply moving
scenes revealing the qualities of the
"unspoiled" working people (un-
spoiled by the prevailing ideology
because of the great cleavage be-
tween this ideology and their real
life, and because of an intelligence
already too advanced through their
industrial and urban existence), his
workers are still only like the super-
r-imeraries of a great drama in
which the main roles are played by
those who have names and positions
that give them at least the appear-
ance of being personalities in the old
bourgeois sense.
Because of the lack of self-ini-
tiative on the part of the workers
it seems closer to reality to des-
cribe the Heimwehr Putsch through
the eyes of non-working-class ele-
ments. This is also quite useful, as
it brings to life the fact that the
destiny of the petty-bourgeoisie is
not to educate and to rule but to
despair and decay. The critical and
somehow "revolutionary" situation
is experienced by cafe literati, so-
cialist parliamentarians, bureaucrats,
students, advanced workers, priests,

politicians, officers, scientists and the
The book is not impartial, but it
is not limited by the narrowness of
a party point of view. Hoellering
deals with the social needs of today.
But he knows that these needs can
be solved neither by those who claim-
ed only yesterday to be in possession
of a solution, nor by a new resolute
elite, a new group of leaders and
exploiters. He knows that the wider
view-point of the industrial proletar-
iat is no longer sufficient to formul-
ate the concepts needed today, be-
cause what so far has been only a
propaganda slogan, is now obvious,
namely, that social needs and the
needs of the workers are truly iden-
tical. He knows, too, that this "party
of humanity", this contradiction in
terms, expresses a real contradiction
which can be solved only by way of
further struggles. He does not hail
or bewail this situation but only re-
cognizes it in order to do away with
The book propagandizes nothing.
It does not need to. It explains why
the cause was lost in 1934, and why
it will not always be lost. It does so
merely by recognizing facts. Though
it does not moralize, it is moving,
pleading, encouraging, exciting and
very much alive, simply because
it sticks to the factual truth. There
are no great ideas behind the work-
ing people in this book. There is a
way of life, a world of facts which
moves them, and which m ov e s the
oppressed in the right direction
whenever they act in accordance
with the needs of their existence.
Nothing is left out of this book.
Not only that which was wonderful
and undying in the uprising of the
Austrian workers, but also the ne-
gative side is shown with all its ugli-
ness, its insufficiency, its betrayals,
hypocracy and cowardness which
played their part a n d probably
the greater part. It becomes clear
also that the defenders of the rights
guaranteed by the Republic were
fighting against much more than the
Heimwehr and the police. The indi-
vidual cannot isolate himself; nei-
ther could the City of Vienna, nor
the State of Austria go their o n

way. Austria's politics were not de-
termined in Vienna. "The Germans
and Italians were in open revolt a-
gainst the Anglo-French majority
bondholders. The small states were
carried along on one side or the o-
ther, they had no choice." The con-
nection between internal class strug-
gles and external politics is revealed
as being complementary.

Much more should be said about
this excellent book, but nothing
could replace reading it. It is more
than just a book. It is a monument
to the Austrian fighters of 1934
which reaches up to their level and
thus gives not only understanding
and a positive attitude towards the
future, but also a recognition of the
worth of death if its cause is life.

T. H. Reynolds. George Peabody College. Nashville, Tennessee. (194 pp.)
AS OUR NEIGHBORS SEE US. Readings in the Relations of the
United States and Latin America 1820-1940. (314 pp.)

The second world war and the vast
changes accompanying it find the
United States once more defending
her policies in the name of the Mon-
roe Doctrine. But as always before
discussions about the Doctrine are
vague and misleading. Dr. Rey-
nolds' book is of great help in un-
derstanding the present situation. It
offers a sober interpretation of the
economic aspect of the Doctrine, al-
most exclusively neglected in pre-
vious literature, and approaches the
problem from the Spanish-American
point of view, which is also presented
in selection from a wide variety of
South American sources in the com-
panion volume "As Our Neighbors
See Us".
Dr. Reynolds goes back to the ear-
liest interests of the United States
and Great Britain in Hispanic Am-
erica, the relations of Spain and
France to Latin America, and the
American and English reactions to
the aspirations of these countries. He
deals with the expansionist policies
of North America before and after
the Civil War and ends with the
present-day relations between South
and North America.
England and the United States
needed an independent South Am-
erica to foster their own trade which
was hampered by the Spanish colon-
ial monopoly. The Monroe Doctrine,
supported by Britain, at first found
the approval of South American na-
tions because it helped them in their
struggle for independence and gave
them some sort of security against
new European imperialistic adven-
tures. The Doctrine was from the

very beginning, however, promulgat-
ed to serve specifically the particular
interest of the United States, and
to serve those of Hispanic America
only in case the latter did not con-
tradict the peculiar inclinations of
North America.
The Monroe Doctrine has no gen-
eral principle; it never corresponded
to a definite plan; interpretations of
it vary according to time-condition-
ed, political and economic needs and
desires. There are however three
major ideas behind the Doctrine: de-
fense, non-colonization in South Am-
erica, and two separate hemispheres.
This idea of two hemispheres, though
fostered by the United States, did
not prevent the U. S. from inter-
fering in European affairs. The Doc-
trine, however, was invented to in-
sure the supremacy of the United
States on' the American continent. It
is essentially anti-European and ag-
gressive in character, though always
interpreted as a mere defense meas-
The Monroe Doctrine began with
economic interests and developed
with them. It became an instru-
ment for imperialistic purposes, and
has been regarded as such by South
America. Up to now, American im-
perialism has aroused antagonism in
South America, and an entirely dif-
ferent interpretation of the Doc-
trine one favoring South Am-
erican interest rather than those of
the United States will be neces-
sary in order to change this situa-
tion .
The book contains an excellent

Coming in Early Issues of Living Marxism

Dialectical Materialism in Thought and Society
Economics of State Capitalism
The Problems of the Pacific
Marxism and its Recent Critics
The Monroe Doctrine Today
The Situation in Mexico
Revolutionary Tendencies in the Present World Situation

M. EASTMAN'S "Marxism: Is It Science"
S. HOOK'S "Reason, Social Myths, and Democracy"
E. WILSON'S "To the Finland Station"
H. B. PARKES' "Marxism an Autopsy"
P. A. SCHLIPP'S "The Philosophy of John Dewey"
KARL MANNHEIM'S "Man and Society in an Age of Reconstruction"
...and other articles and reviews.

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Paul Froehlich'3 ROSA LUXEMBURG is not only an historically accurate and
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