The Extinction of Petty Enterprise. By Karl Kautsky (continued)

Continued from Feb. issue

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


In the course of the Middle Ages handicraft developed more and more in Europe; division of labour in society increased, weaving for instance being split up into wool weaving, linen weaving and flannel weaving, and several processes connected with weaving, such as cloth trimming, became separate trades. Skill increased and the methods and tools of production were considerably improved. At that time commerce developed, mainly in consequence of improvements in the means of transit, particularly the advance of shipbuilding.

Four hundred years ago handicraft was at its height. This was also an eventful time for commerce. The over-sea route to India, this fairyland full of immeasurable treasure, was found, and America with its inexhaustible store of gold and silver was discovered. A flood of wealth which European adventurers had amassed in the newly discovered countries by commerce, fraud and robbery, was poured out over Europe. The lion’s share of this wealth fell to the merchants, who were in a position to equip ships and man them with a numerous, powerful crew, whose members were as daring as they were unscrupulous.

At the same time also developed the modern state, the centralised state of officialdom and militarism, first of all in the form of absolute monarchy. This state met the requirements of the expanding capitalist class, just as it needed their support. The modern state, the state of the developed production of commodities, does not obtain its strength from personal services but from its financial income. The monarchs had, therefore, every reason to protect and to favour those who brought money into the country, viz., the merchants, the capitalists. In return for this protection the capitalists lent money to the monarchs, to the states, made them their debtors, subjected them to dependence on them and thus forced the state, in order to serve capitalist interests, to safeguard and extend traffic routes, acquire and retain colonies abroad, make wars against rival commercial states, and so on.

Our elementary economic primers tell us that the origin of capital lies in thrift, but we have just now observed altogether different sources of capital. The vast amount of wealth of the capitalist nations can be traced back to their colonial policy, that is to their plundering of foreign countries; it can be traced back to piracy, smuggling, slave traffic and commercial wars. Up to the present century, the history of these nations furnishes us with sufficient examples of such methods of obtaining capital by” thrift,” and the assistance of the state proved a powerful means of enhancing this” thrift.”

But the new discoveries and roads of commerce did not only yield great wealth to the merchants—they also rapidly extended the markets for the products of industry of the seafaring nations in Europe, particularly of the industry of England, which became the ruler of the sea. Handicraft was unable to satisfy the rapidly and extensively growing demand of the markets. Sales on a large scale demanded production on a large scale. The large market demanded production which entirely answered to its requirements, that is to say, a scale of production which could be undertaken only by the merchants.

The merchants were greatly interested in establishing production on a large scale to meet the extension of the markets; moreover, they were possessed of the financial means required to purchase in necessary quantities everything needed for production, raw material, tools, workshops, labour power. But whence was the latter obtained? Slaves that one could purchase no longer existed in Europe. A workman who possessed his own means of production or belonged to a family possessing the necessary means of production, would not sell his labour power. He preferred working for himself and his family so that the whole product of his labour should be his or that of his family. He sold the product of his labour, but not his labour power. Here it must be pointed out that one should beware of the expression” selling one’s labour.” Labour, an activity, cannot be sold. The word labour, however, is commonly not only used for the purpose of signifying an activity, but also for the purpose of designating the result of this activity, the labour product, and for describing labour power the expression of which is the activity in production. This application of the word labour enables all those economists who wish to leave the workers and the petty bourgeoisie in ignorance as to their condition, to mix up things and make them very much alike. This means that we have to watch these gentlemen very closely.

But let us return to the merchant whom we left in search of workers. The owners of petty industrial concerns and their families were of no use. The merchants had to look for workers who did not possess means of production, who possessed nothing but their labour power so that they were compelled to sell this in order to live. The development of the production of commodities and of private property had already brought into existence such men without property, as we have seen. There were, however, but few of them in the beginning, and most of them, unless they belonged to the family circle of a petty concern, were either unfit for work, cripples, invalids, old men, or men afraid of work, sharpers, and tramps. The number of workers without property and free to sell themselves was very small.

At that time, however, when there was a great demand for workers without property, kind Providence played its part by causing a large number of workers to be expropriated and turned into the streets, there to be readily picked up by the wealthy merchants. This was also the consequence of the development in the production of commodities. The extension of the markets for urban industry had a reflex upon agriculture. In the towns a demand for articles of food, raw material, timber, wool, flax, dye stuffs, etc., increased, hence agricultural production too became more and more production of commodities, production for the purpose of selling.

The peasant got money into his hands, but that proved his misfortune, for it roused the avarice of his exploiters, the landlords and rulers. So long as his surplus had consisted only of natural product they had not taken therefrom more than they needed for their own consumption. Money, however, they could always make use of, the more the better. The more the market extended for the peasant and the more money he obtained for his goods, the more he was skinned by his landlords and rulers and the higher rose his taxes and duties. Soon his masters were no longer satisfied with the surplus over and above the cost of the peasant’s subsistence, they filched even his necessaries. No wonder that the peasants were seized with despair and that many of them, especially after all attempts at resistance in the Peasant Wars had been crushed, left hearth and home and sought refuge in the towns.

Then another circumstance often arose. As in the towns through the extension of the market the necessity for industrial production on a large scale made itself felt, so developed the need for agricultural production on a large scale. What the merchants endeavoured to do in the towns, the landowners sought in the country. The landowner, who until then had been as a rule only a peasant in a large way, tried to extend his farm, and as he knew how to force the peasants to enter his service, he did not lack an ample supply of labourers; often he did not need fresh workers. The production of wool or timber, pasture farming or forestry required far less workers than agriculture. Where the landowners gave up agriculture in favour of pasture farming or forestry they made agricultural labourers superfluous. But what the landowner was now above all in need of was more land than he had possessed until then, and this he could secure only at the expense of the peasants in his immediate vicinity. He had to drive them off their farms if he wished to extend his own, and he suffered no pangs of conscience in pursuing such a course. The hunting down of peasants began and continued on a large scale until a century ago. Whilst the merchants enriched themselves by the exploitation of the colonies, the aristocracy and the rulers amassed wealth by exploiting their own subjects. And the feudal lords showed as little reluctance as the capitalists in using fraud and physical force, robbery and incendiarism whenever they seemed necessary for gaining their ends. History thus teaches us most peculiar methods of “thrift.”

What were the crowds of agriculturists without property to do, after having fled to escape taxes or duties or having been driven from hearth and home by fraud and violence! They were no longer able to produce for themselves, as they were lacking the means of production from which they had been driven and divorced. Being no longer in a position to take commodities to the market, nothing remained for them but to take themselves there, to sell the only thing of value that had been left to them, their labour power, for a short or long period, that is to say, their services were hired for wages. Some took employment as agricultural labourers, sometimes with the same master that had driven them out of their homes. Others joined the army to assist in the robbing expeditions of their masters who had plundered them. Others became submerged in beggary or crime. But many, and probably not the worst of them, turned to industrial enterprise for employment. The handicraftsmen endeavoured to stave off the deluge of additional labour, of fresh competitors, by restricting the entry into their trade Guilds. This course of action, however, more readily forced the crowds of men deprived of every shred of property into the arms of the merchants who were seeking wage workers for their industrial undertakings. Thus was created the basis of capitalist industry, of capitalist production, by expropriation, by a revolution unparalleled in history for its bloodshed and cruelty. But, of course, it was a revolution of the rich and mighty against the weak and poor, and for that reason the period of that revolution is cherished as the era of humanitarianism and intellectual freedom, and to-day, strange to say, most of all by those who are loudest in proclaiming their horror at the revolutionary intentions of Socialism.

The divorcement of large masses of workers from their means of production, their being deprived of all property and thus becoming proletarians was essentially a presupposed condition of capitalist production on a large scale. The economic development demanded it. But as always, the ruling classes were also in this instance not content with calmly watching the self-created effect of this development, but they resorted to physical force to safeguard their interests and thereby hasten the course of development, and it was physical force in its most brutal and most cruel form which assisted in the birth of capitalist society.


Externally, the new method of production differed at first but very slightly from the old. Its original form was that the capitalist supplied the workers whom he had hired, his wage workers, with raw material, for instance, with yarn in the case of weavers, which they worked up at home in order to deliver up the product to the capitalist. Of course, already in this form, which was the nearest approach to handicraft, capitalist production marked a vast difference between the handicraftsman on his own account and the wage worker producing in his home. We intend to consider later the change in the position of the worker caused by the new method of production, and shall, therefore, here deal only with the development of the latter.

The capitalist next ceased to allow the workers to perform the work in their own homes. He made them work in his workshops where he was better able to watch and drive them. This first of all created the basis of the real industrial capitalist enterprise on a large scale, and also the basis for that evolution of methods of production which has since been going forward with ever more rapid pace. Only by many working together in the workshop was division of labour made possible in production. Under the reign of petty enterprise division of labour had caused an increase in the number of trades and a decrease in the variety of articles which each producer made. But each one produced an entire article. Division of labour in bakeries for instance meant that each baker no longer produced every kind of bread. Some produced only white bread, others only brown bread. But everyone produced whole loaves of bread. Division of labour in large concerns, however, has the effect of distributing the various processes necessary to the production of an article amongst certain workers who are working into each other’s hands. The individual worker is more and more limited to a few single processes, which he repeats continually. A large concern where production is carried on in this way is a manufactory. The productivity of the labour of each individual worker is thereby increased. But another effect has proved to be of still greater importance. The division of labour in a particular trade having progressed so far as to divide the production of one article into its simplest processes and to reduce the worker to a mere machine, the replacing of the worker by a machine was only a small step.

And this step was taken. It was favoured by the development of natural science, above all, by the discovery of the motive power of steam, which for the first time provided a power quite independent of the elements and entirely subservient to man.

The introduction of the machine into industry signified an economic revolution. Through it the large capitalist concern obtained its highest and most perfect form, the factory. In the machine capitalist production was given its mightiest weapon, which easily conquered all resistance and made the course of economic development a great triumph of capital.

In the seventies of the Eighteenth Century the first practical machines were invented. They were introduced into the textile industry in England. From that period also dates the invention of the steam engine. Thenceforth the machine conquered one industry after another. Up to the forties of the last century capitalist industrialism outside England was insignificant. In the fifties it developed extensively in France; in the sixties and particularly in the seventies it conquered the United States, Germany and Austria. In the course of the last decades it has seized even upon barbaric Russia, East India and Australia. It already begins to spread to Eastern Asia, South Africa and South America. What are the great world empires of past centuries compared with this gigantic empire which capitalist industrialism has succeeded in subjecting to its domination?

In 1837 there were in Prussia for industrial purposes 423 steam engines, with 7,500 horsepower. In 1901, however, there were 70,832 such machines alone permanently installed, and the horsepower in industry and agriculture in Prussia comprised over 4,000,000.

The work performed by the steam power of all the steam engines in the world was more than ten years ago estimated to be equal to that of 200 million horses and 1000 million men.

By the use of the steam engine, the entire mode of production has undergone constant evolution. One invention, one discovery superseded another. On the one hand, the machine conquered new fields which hitherto had remained reserved for handicraft. On the other hand, in branches of industry already subjected to the factory system, old machines are every day becoming superfluous owing to the introduction of new and more capable appliances; indeed, by new inventions, new trades are quite suddenly created and old ones doomed to extinction! Already thirty years ago a worker on a spinning machine produced a hundred times the amount of a woman’s product by hand, and according to the statistics of the Department of Labour in Washington, the capacity of the machine in the textile industry had in 1898 become 163 times greater than that of hand work. The machine was already then producing in l9 hours and 7 minutes as much yarn (l cwt.) as a woman could produce by hand in 3,117 hours and 30 minutes.

Of what significance can be the petty enterprise of the craftsman placed beside the industry aided by machines?

Even in its lowest stage, that of the industry carried on at home and exploited by the capitalist, capitalist enterprise is proved superior to the handicraft enterprise. We do not here take into consideration the fact that the former leads to specialisation, which naturally enhances the productivity of labour. Far more important is the advantage which the capitalist as merchant has over the handicraftsman. He buys his raw material and other means of production on a large scale, he surveys the market far more perfectly than the handicraftsman, understands far better how to take advantage of the moment to buy cheaply and sell dearly, and he also possesses the means to wait for this psychological moment, and thus the advantage of the capitalist over the handicraftsman becomes so great that the latter cannot maintain the competition, even in the industries carried on at home, when production on a large scale, production for commercial purposes, comes into question. Even in those branches of industry in which handicraft performed in the home of the worker is the only prevailing method of production, the independence of the worker ceases when these become export industries. To change handicraft into an export industry’ meams to destroy handicraft, to change it into home industry exploited by the capitalist. One can see how” artful” those social reformers are who wish to save a threatened industry by extending the markets for its products.

Thus, from its beginning, capitalist production, although quite simple, has proved in the case of production on a large-scale superior to handicraft. The machine makes this superiority completely crushing.

Handicraft survives only in those industries where it is not yet a question of production on a large scale, but one of petty production for a market still limited.

But the machine has not only changed industry but also the means of transit. Steamers and railways reduce more and more the freights on goods, establish further communication between the remotest and most secluded places and the centres of industry, and extend from day to day the markets for each of these centres. Only in this way is the full development of the machine in industry possible. The tremendous increase of production caused by the introduction of machinery demands also a proportionate increase in the disposal of the products.

In the same measure in which the means of transit are extended and perfected, in the same measure in which the market for particular industries is widened, by that same degree is the scope of handicraft getting limited. The number of trades and places where handicraft is still able to exist is already inconsiderable and diminishing perceptibly. The factory prevails and the days of handicraft are passing away.

But what holds good with handicraft applies also, if not in equal measure, to peasant farming. Wherever agriculture, whether on a small or large scale, has become production of commodities, production for sale, not for use, the large enterprise even if not more capable possesses from the beginning the same advantage over the petty enterprise which the capitalist has over the handicraftsman, namely, a better understanding and control of the market. The large landowner or his tenant possessed of capital is able to make the enterprise more fruitful than the peasant, and is also in the position to use better implements and tools, better breeding and working cattle, better manure, better corn for sowing, etc. The technical and commercial supremacy of agriculture on a large scale in Europe has during the last two decades been somewhat restricted owing to the agricultural competition from abroad, which proved a greater hardship to European agriculture on a large scale than to petty agricultural enterprise, firstly because it expressed itself principally in the raising of corn, a branch of agriculture in which the technical supremacy of the large enterprise over petty agriculture is most pronounced. In the large enterprise corn growing prevails, and this suffers most through the competition of the bonanza farms of America. Secondly, the large enterprise suffers more through foreign competition because it produces more with a view to the market, whilst the petty enterprise consumes a great portion of its own product and is thus less dependent upon the market than the large enterprise.

But these favourable conditions for petty enterprise can be only temporary. Foreign competition does not remain restricted to corn growing; it extends also to the development of cattle raising, and production for self consumption with the peasant declines and becomes absorbed by the production of commodities, the production for sale.

It is principally the development of the railway and taxation system, which favours the extension of the production of commodities in agriculture. Through the railways the peasant obtains communication with the markets of the world. The taxes force him to go to the market, as he is unable to pay them without selling a certain quantity of his products. The higher the taxes, the more the peasant depends upon the market, the more his production becomes production of commodities, and the more he is affected by the competition of the large enterprise. To no class of our population is the increase of the taxes so disastrous as to the petty peasant.

Militarism constitutes to-day by far the most important cause for the increase of the taxes. Yet the same people, the large landowners, who pose as the best friends of the peasant, are the most active supporters of militarism. To the large landowners militarism offers only advantages. It necessitates enormous deliveries of victuals for men and horses, gigantic deliveries which can be best effected by the large enterprises, and to the sons of the large landowners militarism offers numerous highly paid positions as officers. Militarism deprives the peasant of his best worker, his son, and in his stead it burdens him with heavy taxes and drives him on the market, where he is oppressed by the competition of the large enterprises at home and by the bonanza farming of foreign countries.

The ruling classes see in the peasantry and the military the only safe pillars of the present social system. They fail to see that one of these pillars rests upon the other and crushes it by its increasing weight.

(To be continued)

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