Moissaye J. Olgin

Why Communism?
Plain Talks on Vital Problems


Chapter II — The Diagnosis

Two professors of Columbia University, Adolf A. Berle, Jr., and Gardiner C. Means, recently published a book called The Modern Corporation and Private Property. In it they tried to sum up the concentration of wealth in the U. S. A. These very conservative economists came to the conclusion that out of a total of 367 billion dollars that formed the national wealth of the U. S. A. in 1929, 200 big companies held assets amounting to 81 billion or, roughly, 22 per cent. How many persons controlled those 200 companies? Possibly no more than 2,000. An insignificant handful of people controlling over one-fifth of the wealth of a country with a population of over 120 million. The professors call it “concentration of economic power” and they point out that that concentration is proceeding at a very rapid pace.

“The actual extent to which the concentration of power has progressed is striking enough,” they say. “More striking still, however, is the pace at which it is proceeding. In 1909, the assets of the 200 then largest non-banking corporations amounted to only 26 billion dollars. By 1919 the assets of the 200 largest corporations had reached 43.7 billion dollars, an increase of 68 per cent in ten years. In the next ten years from 1919 to 1929 they increased to 81.1 billion dollars, an increase of 85 per cent” (p. 33).

According to the Report on National Wealth and Income published in 1926 by the Federal Trade Commission, the richest 1 per cent of the population in the U. S. A. owned at least 59 per cent of the wealth; the small capitalists, 12 per cent of the population, owned at least 31 per cent of the national wealth; the workers and workings farmers and small shopkeepers, 87 per cent of the population, owned barely 10 per cent of the national wealth. This is capitalism in its modern form.

Capitalism is a system of society where all means of production, factories, mines, railroads, are in the hands of private owners called capitalists, while labor power is a commodity which has to be sold to the owners of wealth for use in production in order that the worker may make a living. This class division into capitalists holding or controlling all the wealth, and workers owning nothing but their labor power which they are compelled to sell for a livelihood, is to be found in every phase of capitalist society; modern capitalism, however, is characterized, not only by this division, but by a staggering concentration of wealth. It is the corporation that now owns and operates industries in the U. S. A. The small owner, the individual manufacturer, is the exception, and even he is controlled by the big corporation. The rule is the large corporation. Eighty-three per cent of the total capital investment in the U. S. A. in 1928 was in the hands of the utility, manufacturing and finance corporations. From 1922 to 1928 inclusive, the stockholders in American corporations received over 36.5 billions in cash dividends and over 7.3 billions in stock dividends. This is sufficient proof that your employer is no more a free individual acting on his own accord; he is a member of a group, a corporation. This corporation is in actual control of the business of the U. S. A.

What is the result?

You are working for a boss. You are his “hands.” He uses you to make profit. How is this profit possible at all? Because he makes you work more than is necessary to defray your wages. In other words, when you work you are not only reproducing the value of your own up keep but you are also producing surplus value which goes to the owner. The longer the working day, the more surplus value you produce. The quicker the pace of your work, the more surplus value you produce within a given time.

The capitalist will sell the produced commodity in the market. He will sell it at the price fixed, not by himself individually, but by the corporation of which he is a part. If he can produce more cheaply than his neighbor, his profits will be larger. This is why he drives you on to work faster and faster. This is why he introduces labor saving machinery which results in what they call “technological unemployment”, which is another name for throwing out workers displaced by a machine. This is why he uses efficiency engineers and experts of every kind. He calls it industrial progress, but he doesn’t think of progress at all. He thinks of profits. Every other manufacturer thinks of profits. Every other manufacturer speeds his workers ever faster and introduces newer and better machines. The result is that ever greater numbers of workers are being displaced, while the production capacity of the plants is enormously increased.

And here we have arrived at the source of, the madness called capitalism. The numbers of actually employed workers grow smaller. The production capacity of the factories and plants grows bigger. The wages of the workers are being cut in order that the employers may get bigger profits, but together with this the purchasing power of the population decreases. Mass production goes on at breakneck speed, while the market shrinks. It seems inconceivable that anything like this should be carried on by reasonable human beings, yet this is actually what was happening between 1922 and 1929. Even at the very height of industrial “prosperity” this vicious discrepancy was noticed by sober observers. There was over-expansion of plant with no corresponding expansion of the home market due to the greater exploitation and impoverishment of large masses of workers and farmers. American automobile companies had a capacity of 7.7 millions per year; production was only 4.5 millions. The steel industry had a capacity of 65 million tons of ingots and castings; it produced only 56.4 million tons in 1929. Oil refineries were running at about three-fourths of their productive capacity. The bituminous coal mines had a capacity of 750 million tons but they produced in 1929 only 535 million tons. Cotton textiles used only about three-fourths of their mill capacity; the woolen and worsted industry ran about 6o per cent of capacity.

But even that section or that percentage of the plants which were in operation produced vastly more than the market could absorb. America was producing goods it could not sell either at home or abroad; competition among the producing units therefore increased. Every unit was trying to produce cheaper than the other, which meant on the one hand greater exploitation of the workers, and on the other hand introduction of more and better machinery with a greater production capacity. Wall Street at the same time was doing its bit. Wall Street is the popular name for the greatest combination of financial manipulators, and it was boosting stock prices sky high. The price of stocks is based upon the estimated earning capacity of the unit that issues the stocks. This earning capacity was declared by the advocates of Wall Street to be unlimited. Prosperity was to go up and up in an unending spiral. The big sharks of the stock exchange were making billions. The volume of trading on the New York Stock Exchange rose from 173,000,000 shares in 1921 to 1,125,000,000 shares in 1929. The average price of leading industrial stocks rose from $79 in 1921 to $366 a share in 1929. The fat boys of Wall Street were having the time of their lives. Everybody praised the glory of mass production under the modern industrial system.

The structure was built on sand. The crash came. It was inevitable. Stocks tumbled down. Capitalist propagandists asserted that it was only a violent “downward readjustment.” It was more than that. It was a disaster. Production, which lagged even before the crash, began to decrease more rapidly. By 1932 the steel industry was working at 15 per cent capacity, the automobile industry decreased over 50 per cent, coal production decreased 55 per cent, freight car loadings were down 50 per cent; the index of business activity was around 50. Factory employment decreased 40 per cent, and the total earnings of the workers decreased about 60 per cent. The loss in wages in 1932 amounted to over 20 billion dollars.

We are still in the grip of the crisis and all the stunts and displays of President Roosevelt with his National Industrial Recovery Act are of little avail.

Let us now cast a critical glance at the whole situation. They call it depression and they wish to make you believe it is sheer accident. But it isn’t. It is rooted in the very nature of capitalism. Think of this: while you were speeding your life out of yourself in a Ford plant or a Rockefeller mine, the big heads of the business corporations were garnering the profits. When 17 million workers had been dismissed to face the hazards and miseries of unemployment, the big heads of corporations were still reaping profits. True, they complained of hard times. But these hard tunes have not made a single chairman of the board of directors of the large corporations go begging in the streets for a nickel to buy a cup of coffee. The “captains of industry and finance,” as they call themselves, are well off, depression or no depression, whereas the wages of the employed workers were cut mercilessly and the unemployed were left to shift for themselves with the beggarly Home Relief hardly sufficient to keep body and soul together. Big business is still prosperous while the working class is suffering the greatest hardships. Must that be?

And it is not the workers alone who suffer, either. The small and poorest farmers, millions of them, are not much better off. They, too, feel the crushing hand of the big industrialists and bankers. As producers of agricultural goods they have to sell; as consumers of manufactured goods they have to buy. When they sell, they are confronted with the food trusts, milk trusts and tobacco trusts which pay them a small fraction of what they charge to the ultimate consumer. When they buy, they are confronted with the agricultural machinery trusts, the automobile trusts, the fertilizer trust and all other big corporations which charge high prices for their goods. When they need money they are at the mercy of the banks; when they transport their goods, they are at the mercy of the railroad magnates. In either case, they suffer.

The rich farmer, himself an exploiter, can stand his ground. The small and poor farmers succumb. During the crisis, millions of farmers have sunk to the level of actual poverty and near-starvation. Sturdy workers of the soil, often equipped with the best machinery and tools, living on fertile land that is capable of feeding multitudes of men — unable to feed themselves! Must that be?

Under the New Deal, the prices of agricultural products have been raised, but the farmer has to pay higher prices for manufactured goods. The farmers’ mortgages were guaranteed by the government, but the farmers’ debts have not decreased. The richest farmers may be benefited by some of the provisions of the Roosevelt administration; the small and poorest farmers, millions of them on the verge of ruin, are left without actual aid.

Nor is this all. We mentioned above the engineers, the draftsmen, the chemists, and all those scientifically trained men and women who actually manage a modern industrial establishment. They did splendid work in helping to build up American industry. When the crisis came many of them were dismissed without much ado. Those who did not know how to manage industries dismissed those who knew. Engineers who designed the Eighth Avenue subway in New York are known to be selling shoe-laces for a living. Architects with years of experience sleep in parks. The capitalists did not need them any longer. They were “dismissed,” thrown out like old rags. Dismissals became general throughout the entire educational and cultural field. Writers and artists, professors and research men, inventors and teachers — all had to go. The plight of hundreds of thousands of intellectuals is aggravated by the fact that for years they were wont to thins: of themselves as part of the ruling class. They are now “fired” by the ruling class because they were no more needed — for the owners of wealth.

Is this an accident? It is not. It is the outcome of an insane system where wealth is owned, not by those who produce it, but by those who do not produce anything, who have amassed it out of the work of others under the protection of the law; a system where production is directed, not towards satisfying human wants, but towards making profits for the owners of wealth; a system where productive capacity increases vastly while the purchasing power of the people is being slashed through cuts in wages and through the exploitation of the working farmers by the large corporations; a system where the primary purpose of labor — to satisfy the basic needs of humanity — is completely lost sight of in the scramble for bigger fortunes, for fatter stock exchange slices and more ruthless “cleaning out” of the small fellow. Where there exist all these contradictions of capitalism, a situation like the present is inevitable.

One outstanding feature of this situation is war. Economic rivalries are extended from the home market to the world market. Economic rivalries on an international scale lead to economic wars, and economic wars lead to a clash of arms. This is a truth that cannot be denied. Even Professor Raymond Mosey, Roosevelt’s former chief adviser, recently admitted this. But not many realize that this is a basic law of capitalism. The war of 1914-1918 was nothing but the clash of two coalitions of, big powers, one led by Germany and the other by Great Britain, for the economic domination of the world. Great Britain was an old capitalist power with colonies all over the world. Germany was a powerful newcomer in the world of big industry and its colonial possessions were small. On the eve of 1914, capitalism was being strangled within its own frontiers by the contradictions between grass production and insufficient purchasing power, as pointed out above. World expansion had become imperative for the capitalism of every country. Since there were no more free territories left on the globe for the big industrial states to take possession of, the clash came. It was a clash for the re-division of the earth.

This clash is now vastly more imminent than it was before 1914. Capitalism is literally choking within the borders of each state. Capitalism is seeking to dominate the markets of the world. This cannot be done peaceful means. The London Economic Conference, which was supposed to facilitate a peaceful cooperation of the capitalists on an international scale, failed. The result is a sharpening of the economic warfare. In this warfare the front line is occupied by the duel between the pound and the dollar. But other rivalries are not eliminated, like the growing intensity of struggle between the U.S.A. and Japan for the domination of the Pacific. Hence the increase in armaments that is going on everywhere. Hence the frantic efforts of the Roosevelt administration to build up the American navy to “treaty limits”, to make the American navy second to none, to reorganize the army, to build new naval bases, to increase military aviation. Hence the appropriation of nearly a billion dollars for the army and navy in the current fiscal year.

Capitalism breeds war. Capitalism cannot solve its contradictions without war. But this solution is the solution of ruin. War is devastation. It destroys not only precious human lives, but large amounts of goods. It is an orgy of destruction. The brunt of a capitalist war, however, is borne by those who work. Such wars are imperialist wars because they are waged for the purpose of dominating other countries to be used as markets, sources of raw materials and investment grounds. Where capitalism is organized in big corporations to control the markets, we have monopoly capitalism; the states that are dominating oppressed nations and are driving towards war to control foreign markets, are imperialist powers.

This is capitalism in its modern form. This is capitalist civilization. A palace built on crushed human bones. Glittering glory for a few at the price of oceans of blood and tears of the many. Progress running amuck at every step. Prosperity devouring itself and devouring untold human lives. Expansion made possible by killing and maiming huge masses of innocent people. Scientific advance made to serve the purpose of destruction. Security for the non-producers; starvation for the producers. The drones in great esteem; the workers downtrodden and despised.

Must that be?

The Communists say it must not. The Communists say this huge waste of human energy and human resources, this colossal amount of human suffering, this humiliation of starving in the midst of plenty, this living in Hoovervilles and Rooseveltburgs on the dumping grounds of big cities at a time when humanity knows already how to build Empire States towers, this debacle which is worse than war and pestilence, can be avoided. Life can be made livable. Life can be made a continuous and uninterrupted stream of work and cultural growth. This can be achieved only by the working class arising to take over and organize society on a new basis. This basis is to be Communism.


Next: III. The Cure