The Extinction of Petty Enterprise. By Karl Kautsky

Translated from the German by H.J. NEUMANN and revised by the Author.


Some think they are talking wisdom when they tell us ”There is nothing new under the Sun,” ”as it is to-day it has always been and will always remain.” Nothing is more erroneous and stupid than such assertions. The newer development of science shows us that there is nowhere a standing still, that in Society, as in Nature, continual development is perceptible. We know to-day that originally man lived animal-like by gathering whatever Nature offered him spontaneously. But he invented one weapon after another, one tool after another, each more perfect than the other. He became fisherman, hunter, cattle-raiser, finally settling down to agriculture and handicraft. Ever more rapid was the course of development until to-day, in the age of steam and electricity, it has become so rapid that we are able to follow it with our eyes without comparing it with past ages.

The manner in which men gain their livelihood, in which they produce those things necessary for their sustenance depends upon the character of their tools, their raw material—in one word, upon the means at their disposal for the production] of such things, upon their means of production. But men have never carried on production isolated from each other, but, on the contrary, always in larger or smaller communities, whose form for the time being depends upon the then prevailing mode of production.

From the development of production consequently follows the social development. The form of society and the relations of its members to each other are, however, closely connected with the forms of property recognised and maintained. Hand in hand with the development of production proceeds also the development of property. An example, one relating to peasant farming, will make this clear. A complete peasant farm comprises two branches of production, cattle-breeding and agriculture. Until the eighteenth century there prevailed with us universally and prevails frequently to-day, pasture farming. This necessitates, however, the common ownership of the soil. It would be folly were each peasant to have his separate piece of grazing-land, to fence it in, to keep a shepherd of his own, and so on. Consequently the peasant clings, where pasture farming is in vogue, with the greatest tenacity to the common pasture and the common shepherd.

It is different in agriculture, if the same is carried on with the simple implements of the peasant farm, without machines. Common cultivation of the agricultural land of the peasant community by all the members of the community is, under such circumstances, neither necessary nor conducive to successful production. The implements of peasant farming demand that a single individual by himself or together with a few others (in a group as represented by the peasant family) shall cultivate a small piece of land. This cultivation, however, will be carried on carefully and will yield greater results the more freedom of control the cultivator is able to exercise over his property, and the more fully he enjoys the results of cultivating and improving his farm. Agriculture in its beginning forces into existence petty industry and this necessitates the private ownership of the means of production if it is to be developed fully.

For instance, with the ancient Teutons the common ownership of the soil which prevailed so long as pasture-farming (and hunting) remained the principal means of gaining their sustenance, disappeared more and more and made way for private ownership of the soil, in the measure in which petty peasant agriculture came to the fore. The substitution of cattle-raising in stables for pasture-farming was the death-blow to the common ownership of land. Thus, under the influence of economic development, in consequence of the progress made in farming, the peasant has developed, from a communist to a fanatic in private ownership.

What applies to the petty peasant holds good with the handicraftsman. Handicraft requires no associated labour of a large number of workmen. Each handicraftsman toils either alone or together with one or two assistants, who belong to his family or his household. As in peasant farming, so also in handicraft, the single workman or workman’s family maintains a separate establishment and therefore handicraft, like petty peasant farming, necessitates private ownership of the means of production which it uses, and of the products which it creates, in order to fully developed its competency, its power of productivity. In petty industry this product of the workman depends upon his individuality, his skill, his industry, his perseverance. He consequently claims it for himself as his individual property. He is, however, unable to develop his individuality in the production if individually he is not free and does not freely control his means of production, that is to say, if these are not his private property. This has been realised by the Socialists and specifically expressed in their programme by the words “the private ownership of the means of production is the basis of petty industry.” But they hold at the same time that the economic development of bourgeois society leads of necessity to the extinction of petty industry. Let us follow up this development,


The starting points of bourgeois society were peasant farming and handicraft.

The peasant family originally satisfied all their requirements. They produced all the articles of food they needed, all tools, all garments, built their own house, etc. They produced as much as they required, but no more. Gradually, however, owing to the progress of Agriculture, they reached a stage when they produced a surplus of things, which they did not want for their immediate use. They were thus placed in a position to exchange this surplus for products which they themselves did not produce or not in sufficient quantities, products which they welcomed, as, for example, a weapon, a tool, or jewels. By the means of exchange these products became commodities, that is, products intended not for use or consumption within the establishment, in which they were produced, but for the purpose of exchange for products of another establishment. The wheat produced by the peasant for his own use was not a commodity; the wheat he sold, however, was. To sell means nothing else than to exchange a certain commodity for such a one as is welcome to everybody and in this way becomes money, for instance, gold.

As we have seen, the peasant became, in the course of economic development, a producer of commodities. The handicraftsman in his independent petty enterprise was from the first a producer of commodities. And it was not only a surplus of products that he sold, but with him production for sale was the primary feature.

But the exchange of commodities presupposed two conditions, firstly, that every single concern produced a different class of goods and that division of labour had entered Society, and secondly, that those who exchanged were free to dispose of their products, that the latter were their private property.

The more that, in the course of economic development, division of labour in various trades progressed, and private property increased in extent and significance, the more generally was production for own consumption superseded by production of commodities.

Division of labour finally resulted in buying and selling becoming a separate business, which was pursued exclusively by one class, the merchants. These derived their incomes from buying cheaply and selling dearly. This does not mean, however, that they were able to fix the price of commodities at their own discretion, for the price depends ultimately upon the exchange value. The value of a commodity is determined by the average amount of labour expended in its production. Its price scarcely ever coincides exactly with its value. The former is determined not only by the conditions of its production, as is its value, but also by the conditions of the market, primarily, by its supply and demand, in what quantity the commodity is placed on the market or is in demand. But the price is also subject to certain laws. It varies with different times and places. If then, the merchant wishes to obtain a margin between the buying and the selling prices of the commodity, as profit, he must, as a rule, buy his commodities when and where they are cheap and sell them when and where they are dear.

When the peasant or handicraftsman bought commodities he did so because he required them for himself or his family as means of production or subsistence. The merchant bought commodities, not for his own use, but to utilise them so that they might yield him a profit. Commodities and sums of money used for such a purpose are capital. It cannot always be said of a commodity or a sum of money that it is capital. Tobacco bought by a merchant for the purpose of being sold at a profit is to him capital. Tobacco bought for his own smoking is not capital.

The original form of capital was that of merchants’ capital. Nearly as old is the usurers’ capital, the profit of which consists of interest pocketed by the capitalist for commodities or sums of money lent.

Capital was produced at a certain stage in the production of commodities, of course upon the basis of private property, which, as we know, forms the basis of the entire production of commodities. But under the influence of capital private property assumed a new feature, in fact, an additional feature. Besides the petty bourgeois feature, which was in accord with the conditions of petty enterprise, it displayed also a capitalist ‘feature. The defenders of present private property point only to its’ petty bourgeois feature, and yet it would be blindness to overlook to-day the capitalist feature of private property.

At the stage of economic development with which we are now dealing, when capital was only merchants’ and usurers’ capital, there were but few features of that capitalist physiognomy visible, but these are worthy of remark.

The income of the peasant or petty handicraftsman under the reign of petty enterprise depended primarily upon his individuality and that of the other members of his family, upon his industry, skill, etc. On the other hand, the amount of the merchant’s profit depended upon the money he had for purchasing commodities and the commodities he possessed for sale. If one sells £10,000 worth of tobacco, one’s profit, other things being equal, will be 100 times larger than if one sells only £100 worth. The same applies to the usurer. Hence the income of the capitalist, as a capitalist, depends mainly upon the amount of capital he possesses.

The labour power and capacity of the individual are limited, as is also the amount of products a workman is able to create under certain circumstances. It cannot exceed to any degree a certain average. Money, however, can be accumulated to any amount, to that there is no measurable limit. The more money one has, the more accumulates when it is used as capital. Thus the possibility of acquiring immeasurable riches exists.

But private property produced yet another possibility. Private property in the means of production implies the lawful possibility for everybody to acquire such and also the possibility of losing it, that is to say, of losing the source of their existence, and thus sinking into abject poverty. Usurers’ capital already presupposes want. He who possesses what he requires will not borrow. By exploiting the helpless position of the necessitous, usurers’ capital becomes the means of precipitating want.

The acquisition of wealth in idleness, the immeasurable riches of some, the abject poverty of others, are features perceptible in the capitalist physiognomy of private property. But they were hidden as long as merchants’ and usurers’ capital were in the first stage of development. The worst feature—poverty—became apparent to but a small degree, the lack of property remaining the exception and not the condition of large numbers of the people.

There were other exploiters, besides the merchant and usurer, as for instance, the feudal lord in the middle ages with whom we cannot deal here without diverting too far from our subject. And all those exploiters, the merchant and usurer included, were dependent upon the existence and success of petty enterprise in town and country. The proverb, that if the peasant had money, everybody had money, still held good. Commerce did not destroy petty enterprise, but sometimes even extended it. The usurer whilst draining his debtor of his resources, had no interest in absolutely ruining him. Poverty—the loss of the means of production —did not appear as a regular social phenomenon, but as a particular misfortune caused by an exceptional calamity or exceptional incapacity. Poverty in such cases was regarded as a divine trial, or as the punishment for laziness, carelessness, and so on. This conception still prevails largely in petty bourgeois circles, though now dispossession has become an occurrence of an altogether different character to what it was formerly.

(To be continued)

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