The Capitalist Class. by Karl Kautsky

Specially translated for the Socialist Party of Great Britain and approved by the Author.


We have seen how the masses of the population in the countries where the mode of capitalist production prevails are more and more becoming proletarians, workers divorced from their means of production, so that they can produce nothing on their own account, and are there­fore compelled, if they are not to perish by starvation, to sell their only possession, viz., their labour-power. The majority of the peasants and small traders belong in reality to the proletariat already. What separates them from it in form, their property, is but a thin curtain, hiding, but not preventing, their exploitation and dependence, a curtain lifted and carried away by any strong gust of wind.

On the other side we see a small crowd of property-owners, capitalists and large land-owners, to whom alone belong the most important means of production, the most important sources of sustenance for the entire population, and to whom this exclusive possession gives the possibility and power to make the propertyless workers dependent, and to exploit them.

While the majority of the population is increasingly overwhelmed by want and misery, the small crowd of capitalists and large land-owners, together with their parasites, usurp all the enormous advantages arising from the achievements of modern civilisation, and, above all, from the progress made in natural science and its practical application.

Let us take stock of this small crowd of chosen people and inquire into the part they play in economic life and into the consequences for society arising from it.

We have already become acquainted with the three categories of capital, viz., merchants’ capital, usurers’ capital, and industrial capital. The last mentioned category of capital is the youngest, perhaps not so many hundreds as the other two categories are thousands of years old. But the youngest brother has grown more rapidly, much more rapidly, than the older two; he has become a giant who forces them into subjection and presses them into his service.

Commerce is not an absolute necessity for petty enterprise in its perfect (classical) form. The peasant, like the handicraftsman, can obtain the means of production, so far as he must purchase them, direct from the producer, and he can also sell his product direct to the consumer. Commerce is at this stage of economic development principally of service to luxury, but is on the whole, not indispensable to the continuance of production or to the preservation of society.

Capitalist production, however, is, as we have seen, dependent from the beginning upon commerce just as much as commerce at a certain stage needs capitalist production for its further development. The more this production expands, the more it becomes the prevailing mode of production, the more necessary does commerce become to the entire economic life. To-day it is not alone of service to superfluity, to luxury. The whole production, even the feeding of the population of a capitalist country, depends upon commerce proceeding undisturbed in its course. This is one of the reasons why a world-war at present would prove much more devastating than ever before. War leads to a paralysis of commerce, and that means to-day a paralysis of production, and of the, entire economic life ; it means economic ruin, which extends further, and is not less disastrous, than the devastation on the battlefield.

Quite as important as the development of commerce, has the development of usury become for the capitalist mode of production. Tho usurer during the domination of petty enterprise, was plainly a parasite, who took advantage of the difficulties or prodigality of others and drew their blood. The money he lent to others served, as a rule— as generally the producer already possessed the necessary means of production—for purposes of unproductive expenditure. When, for instance, an aristocrat borrowed money it was to squander it; when a peasant did so it was to pay money taxes or law costs. Lending money at interest was therefore considered immoral and condemned by everybody.

It is different in society with the capitalist mode of production. Money is now the means for fitting up a capitalist concern and for purchasing and exploiting labour-power. When a business man nowadays borrows money in order to establish a new concern or to extend an existing one, it docs not mean (providing, of course, his undertaking succeeds) that he reduces his income by the amount of the interest he pays for the borrowed money. On the contrary, that money is used by him to exploit labour-power, hence to increase his income, and always by a larger amount than the sum he has to pay away as interest. Usury now loses its original character. Its part as a means of taking advantage of financial difficulties and prodigality gradually gives way to the role of fertilising capitalist production, that is to say, of making possible a more rapid development than would take place, if it were to depend on the accumulation of capital based on the means of industrial capitalists alone. Abhorrence of the usurer ceases; he is whitewashed and receives a new, high-sounding name—creditor.

The main direction of the movement of interest-bearing capital has at the same time become a different one. The sums of money which the usurer-capitalists amassed in their coffers flowed in former times from the accumulating centres through thousands of channels to the non-capi­talists. But to-day the coffers of usury-capital, viz., of credit institutions, have become accumulating centres, to which through thousands of channels the money of the non-capitalists flows in order that it may from there find its way to the capitalists. Credit is to-day, as of old, a means of subjecting non-capitalists with or without property, to indebtedness to capital on the basis of interest. But it has now also become a powerful means of transforming into capital the possessions of the different sections of non-capitalists, from the enormous wealth of the Catholic church and the old aristocracy down to the few pence saved by servant girls and day-labourers, that is to say, credit has, by transforming these possessions into capital, changed them into a means of exploiting the one and decomposing the other of these sections. The credit arrangements of to-day, savings banks, etc., are lauded because, according to the supporters of the present system they transform the saved-up pence of the wage-workers, handi­craftsmen and peasants into capital and these persons into “capitalists.” But this accumulation of non-capitalists’ savings has no other purpose than to place fresh capital at the disposal of the capitalists and thereby hasten the development of the capitalist mode of production, and we have seen what that means to the wage-workers, peasants and craftsmen.

If the credit arrangements of to-day have more and more the effect of transforming the entire possessions of the different sections of non-capitalists into capital, which is placed at the disposal of the capitalist class, they have on the other hand the effect of turning the capital of the capitalist class to better account. They become the accumulating centres of all the money of- the individual capitalists, which these have no opportunity of using for the time being, and make such sums of money, which would otherwise lie idle, accessible to other capitalists in want of them. They also make it possible to transform commodities into money before these have been sold and to lessen thereby the period of circulation, and also the amount of capital which, for the time being, is required for the carrying on of a concern.

Hence it is that the amount and power of the capital at the disposal of the capitalist class increases enormously. Credit has to-day, therefore, become one of the most powerful stinmlants of capitalist production. Apart from the intense development of machinery and the expansion of the army of unemployed, it is one of the main causes of that power of the present method of production which enables industry upon the slightest impetus to rapidly expand.

But credit is far more susceptible to disturbances than is commerce; and each shock it experiences tells upon the entire economic life.

Some economists have considered credit to be the possible means of turning propertyless persons and those owning little property into capitalists. But, as indicated by its name, credit depends upon the confidence reposed by the giver of it in the recepient. The more the latter possesses and the greater the security he offers, the greater is the credit he enjoys. The credit system is hence only the means of obtaining for the capitalists more capital than they possess, the means of increasing the predomination of the capitalists and of accentuating the social contrasts, not of lessening them. The credit system is accordingly not only a means of developing capitalist production more rapidly and of enabling it to utilise favourable fluctuations ; it is also a means of hastening the ruin of petty enterprise, and it is finally a means of making the present mode of production more complicated and more susceptible to disturbances, of also carrying into the midst of tho capitalists the feeling of insecurity and of causing the ground on which they stand to vibrate ever more strongly.



While the economic development leads on the one hand to ever closer relations between commerce as well as credit and industry, it has, owing to the increasing division of labour on the other hand, the effect of more and more consigning the various manipulations, for which the capitalist has to arrange in economic life, to separate concerns and undertakings. In times gone by the merchant had not only to buy and sell commodities, but also to collect, stock and take them to frequently very distant markets; he had also to sort and display the goods, so as to make them accessible to the individual buyers. To-day we have not only the division of labour between small and large trading, but also separate large concerns for the transport and the warehousing of goods (storehouses and elevators); further, at the largest central markets, the exchanges, buying and selling has so much become an occupation in itself, so completely severed from the other functions of the merchant, that not only are goods bought and sold which are still at some remote place, or have not yet been produced, but goods are bought without the intention of being taken into posses­sion, and goods are sold which the seller does not own.

In times gone by a capitalist could not be imagined without a big iron safe, in which he deposited the money coming in and from which he took the money required for making payments. To-day the financial arrangements of the capitalists in the industrially developed countries, especially in England and America, have become the business of separate undertakings—of banks. Payments are no longer made to the capitalist, but to his bank, and are not received from him, but from his bank. And hence a few central concerns deal with the financial transactions of the entire capitalist class of a country.

But if in this way the various functions of the capitalists are consigned to different independent undertakings, they become thereby only outwardly, juridically, independent of each other ; economically they remain as before, closely connected with and dependent upon one another. The functions of any one of the concerns cannot proceed with regularity, if the functions of any one of the other concerns, with whom it stands in business relations, are in any way disturbed.

The more commerce, credit and industry become mutually dependent upon each other, and the more the various functions of the capitalist class fall to separate undertakings, the greater becomes the dependence of the individual capitalists upon the others. The capitalist business of a country—indeed, in certain directions already, of the entire world-market—becomes ever more one tremendous body, whose organs are most closely connected with each other. While the great mass of the population becomes ever more dependent upon the capitalists, the latter themselves become continually more dependent upon each other.

The economic factors of the present mode of production become to an ever larger degree so complicated and sensitive a mechanism that its undisturbed working depends to a continually greater extent upon all the innumerable small cogs of its wheels catching exactly into each other and performing their functions with precision. Never before was there a method of production that so needed regulation according to a plan as the present one. But private property makes it impossible to bring design and order into this system. While the single concerns become economically more dependent upon each other, they remain juridically —from a point of law—independent of one another. The means of production of each single concern are private property, their owner being able to dispose of them as he may think fit.

As production on a large scale develops, and the larger the single concerns grow, so the economic efforts inside each concern become systematised in accordance with a certain precisely thought out plan in every detail. But the working together of the single concerns is left to the blind forces of free competition. By an enormous waste of energy and means, and by increasingly serious upheavals, this competition manages to keep production going, not by putting everybody in the right place, but by demolishing everybody who stands in its way. That is called “the selection of the fittest in the struggle for existence.” In reality free competition annihilates less the incompetent ones than those who are in false places who are unable to maintain their positions through lack of special ability or perhaps for want of capital. But competition is not satisfied to-day with crushing merely those “unfit for the struggle for existence.” The fall of every such “unfit” one causes the ruin or paralysis of many, who stood in economic relations to the bankrupt concern, such as wage-workers, creditors, contractors, etc. Yet to-day it is said that everyone can shape his own destiny. That notion is derived from the time of petty enterprise, when a work­man’s prosperity depended upon his own personal qualities—but only his prosperity and that of his family. To-day the destiny of each member of capitalist Society depends less and less upon his personality and continually more upon many and various circumstances, over which he himself has no control. It is no longer a selection of the best which is accomplished to-day by competition.

(To be continued.)

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