The Capitalist Class. By Karl Kautsky (continued)

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


Besides the competitive struggle between handicraft and capitalist industry there is the struggle between large and small capitalist concerns. Each day brings a new invention, a new discovery, the application of which enhances considerably the productivity of labour.

Each step in such progress causes a smaller or greater depreciation of existing industrial machinery or plant, necessitating replacement of them and often extension of the particular industrial concern ; and anyone lacking the capital necessary for that purpose becomes sooner or later incapable of competing and goes under, or is compelled to turn with his capital to some trade in which the smaller concern is still in a position to compete against the larger ones. Thus competition in industry on a large scale causes overcrowding in petty industry, with the result that ultimately, handicraft is ruined even in the few trades in which petty enterprise was hitherto able to meet competition to some extent.

The large industrial undertakings become ever more extensive and enormous. From moderately large concerns, employing hundreds of workers, they develop into gigantic establishments employing thousands (spinning-mills, breweries, sugar factories, iron works, etc.) The smaller undertakings tend to disappear: industrial development leads, from a certain point, not to an increase but to a continual decrease in the number of undertakings on a large scale.

But that is not all. The economic development leads also to the concentration of an ever greater number of undertakings into the hands of a few—either as the property of one capitalist or that of a capitalist association, which economically is only one person (a juridical person).

Several ways lead to that concentration.

One way is the endeavour of the capitalists to exclude competition. In the previous pages we have learnt that competition is the moving force of the present system of production; it is in fact the moving force of the production and exchange of commodities. But although competition is necessary for the entire society of commodity production, each single owner of commodities would like to see his commodities in the market without competition. If he happens to be a possessor of commodities in great demand or of a monopoly, then he is able to raise the prices above the value of his goods ; then those requiring his commodities are entirely dependent upon him for a supply of the same. Where several sellers appear in the same market with commodities of a similar kind, they can artificially create a monopoly by amalgamating and practically forming one single seller. Such an amalgamation—a combine, ring, trust, syndicate, etc., is naturally the sooner possible the smaller is the number of competitors whose opposing interests have to be reconciled.

In so far as the capitalist mode of production causes the extension of the market and the number of the competitors on the same, it makes the creation of monopolies in commerce and industry more difficult. But in every capitalist branch of industry there arrives, as already mentioned, sooner or later the moment, from which its further development leads to the diminution of the number of undertakings in that branch. From that moment the branch of industry developes more and more towards trustification. The time of maturity can be hastened in any given country through safeguarding its internal market against foreign competition by protective tariffs. The number of competitors for this market is thereby diminished and the amalgamation of home producers takes place, thus enabling them to create a monopoly and to obtain a greater share of the wealth produced in consequence of “protection.”

Within the last twenty years the number of combines, by which the production and prices of certain commodities are “regulated,” has, as we know, increased, particularly in the countries of protective tariffs—United States, Germany and France. Wherever it comes to combination the various concerns, which are amalgamated, form practically a concern under one management, they being very often in reality brought under one unified management.

It is indeed, the most important, and from the standpoint of carrying on industries, the most indispensable commodities, namely, coal and iron, whose production, sooner than that of other commodities, falls under the control of combines. Most combines extend their influence far beyond the branches of industry monopolised ; they make, in fact, all the conditions of production dependent upon a few monopolists.

Simultaneously with the endeavour to combine the various undertakings in a certain branch of industry into one, the endeavour grows to amalgamate into one also, various undertakings in different branches of industry, because in some of these concerns tools or raw materials are produced which are required for the carrying on of production in one or other of these various undertakings. Many railway companies possess their own coal mines and engineering works ; sugar factories endeavour to grow a portion of the beet-roots used by them ; potato growers establish their own distilleries, and so on. And there is a third way : that of combining several undertakings into one, the simplest of them all.

We have seen that the capitalist has had to fulfil very important functions under the present system of production. However superfluous these may be under a different organisation of production, yet under the domination of commodity production and private property in the means of living, producing on a large scale is now possible only on capitalist lines. And for that purpose it is necessary, if production is to proceed and the products are to reach the consumers, that the capitalist step in with his capital and apply it advantageously. Although the capitalist does not produce, does not create any value, he plays an mportant part in the present economic relations.

But the larger a capitalist undertaking grows, the more necessarv it becomes for the capitalist to transfer part of his increasing business functions either to the other capitalist undertakings or to his own paid officials whom he employs to carry out some of his duties. It matters nothing from the economic standpoint whether these functions are fulfilled by a wage-worker or a capitalist: they do not become of a value-creating character by the fact that the capitalist has them attended to by someone else, that is to say, that as far as they do not create value, the capitalist has to pay for them from surplus-value. We here get to know a new way of drawing upon surplus-value tending to the diminution of profit.

[To be continued]

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