August Bebel. Woman and Socialism
The State and Society

Chapter XVIII.
Crisis and Competition.

1. – Causes and Effects of the. Crises.

The crisis arises because no standard exists whereby the real demand for a commodity may at any time be measured and ascertained. There is no power in bourgeois society that is enabled to regulate the entire production. In the first place, the consumers of a commodity are scattered over a wide area, and the purchasing ability of the consumers, who determine the consumption, is influenced by a number of causes that no individual producer is able to control. Moreover, every individual producer must compete with a number of other producers whose productive abilities are unknown to him. Each one seeks to defeat his competitors by every means at his command: by a reduction in prices, by advertising, by giving credit for prolonged periods, by sending out drummers, and even by cunningly and insiduously disparaging the products of his competitors, the latter means being especially frequently resorted to during critical times. The entire realm of production accordingly depends upon the., subjective discretion of the individual. Every manufacturer must dispose of a certain quantity of goods in order to subsist. But he seeks to sell a far larger quantity, for this increased sale determines not only his larger income, but also the probability of his triumphing over his competitors. For a while sales are insured, they even increase; this leads to more extensive enterprises and to increased production. But good times and favorable conditions tempt not only one but all manufacturers to multiply their efforts. Production by far exceeds the demand. Suddenly it becomes manifest that the market is overstocked with goods. The sales slacken, the prices fall, production is limited. To limit production in any branch means to decrease the number of workers employed in this branch, and a reduction in wages, whereby the workers in turn are compelled to limit their consumption. The inevitable result is, that, production and consumption in other branches slacken likewise. Small dealers of all kinds, shopkeepers, bakers, butchers, etc. whose chief customers are workingmen fail to dispose of their goods and also suffer want.

The effects of such a crisis may be seen from the statistics of the unemployed that were compiled by the trade-unions of Berlin at the close of January, 1902. In Berlin and suburban towns there where over 70,000 persons who were entirely unemployed, and over 60,000 who, were partly unemployed. On February 13, 1909, the trade-unions of Berlin took another census of the unemployed and found that there were 106,722 unemployed persons (92,655 men and 14,067 women).[1] In England there were 750,000 unemployed persons during September 1905. These figures represent workingmen and women who were willing and eager to work but unable to find work. The deplorable social conditions of these human beings may be easily imagined!

Since one industry furnishes the raw material to another and one depends upon the other, the ills that befall one must affect the others. The circle of those affected widens. Many obligations that had been entered upon in the hope of prolonged favorable conditions cannot be met, and heighten the crisis that grows worse from month to month. A heap of accumulated goods, tools and machines becomes almost worthless. The goods are frequently sold underprice and this often leads to the ruin of the owners of such goods as well as to the ruin of dozens of others who in turn are compelled to sell their goods underprice also. But even during the crisis the methods of production are constantly improved in order to meet the increased competition, and this means again forms a cause for new crises. After a crisis has lasted for years and over-production has gradually been removed by selling the products underprice, by limiting production and by the ruin of smaller manufacturers, society slowly begins to recuperate. The demand increases again, and promptly the production increases also, slowly and carefully at first, but more rapidly with the prolonged duration of favorable conditions. People seek to reimburse themselves for what they have lost and seek to secure their portions before a new crisis sets in. But as all manufacturers are guided by the same impulse, as they all seek to improve the means of production in order to excel the others, a new catastrophe is ushered in more rapidly and with still more disastrous results. Countless lives rise and fall like bubbles, and this constant reciprocal action causes the awful conditions that we experience during every crisis. The crises become more frequent as production and competition increase, not only among individuals, but among entire nations. The small battle for customers, and the great battle for markets becomes increasingly severe and is bound to end with enormous losses. Meanwhile goods and supplies are stored away in masses, but countless human beings who wish to consume but are unable to buy, stiffer hunger and privation.

The years 1901 and 1907-08 have proven the correctness of this representation. After years of business depression, during which capitalistic development nevertheless continued to progress uninterruptedly, the upward course set in, stimulated to no slight extent by the changes and new equipments that the army and navy required. During this period a tremendous number of new industrial enterprises sprang up, and a great many others were increased and expanded to attain the development made possible by their technical means and to heighten their productivity. But in the same way the number of enterprises increased hat were transferred from the hands of individual capitalists to capitalistic associations (stock companies), a transformation that is always accompanied by an enlargement of the manufactory. Many thousands of millions of marks represent the newly formed stock companies. Moreover, the capitalists of all countries seek to form national and international agreements. Trusts spring up like mushrooms from the ground. These endeavour to determine the prices and to regulate production on the basis of exact statistical research to avoid over-production and reduction in prices. Entire branches of industry have been monopolized in this way to the advantage of the manufacturers and to the disadvantage of the workers and the consumers. Many believed that thereby capital had obtained the means that would enable it to dominate the market in all directions. But appearances are deceiving. The laws of capitalistic production prove stronger than the most cunning representatives of the system, who believed to have regulated it. The crisis came, nevertheless, and it was seen again that the wisest calculation proved faulty and that bourgeois society cannot escape its fate.

But capitalism continues in the same manner since it cannot change its substance. By the way in which it is bound to act, it upsets all laws of bourgeois economics. Unrestricted competition – the alpha and omega of bourgeois society – is supposed to place those most capable at the helm of all enterprises. But experience shows that as a rule it places these at the helm who are most shrewd and cunning and least troubled by a conscience. Moreover, stock companies set aside all individuality. The trust goes further still. Here not only does the individual manufacturer cease to be an independent person, the stock company too becomes a mere link in a chain that is controlled by a board of capitalists whose main purpose is to plunder the public. A hand full of monopolists become the masters of society; these dictate the prices to be paid by the consumers for commodities, and to the workers their wages and standard of living.

This development shows how superfluous private enterprise has become, and that production conducted on a national and international scale is the goal toward which society is bent. The only difference will ultimately be that organized production and distribution will benefit the entire community instead of benefiting the capitalistic class only, as is the case to-day.

The economic revolution above described, which is rapidly driving bourgeois society to the heights of its development, is constantly intensified by new, important events. While Europe is being more threatened each year, both in its foreign and domestic markets, by the rapidly growing North American competition, new enemies are arising in the far East who make the economic conditions of the entire world still more critical.

Competition drives the capitalist around the globe, as the “Communist Manifesto” expresses it. He is constantly seeking new markets, that is, countries and nations where he can dispose of his goods and create new demands. One side of this endeavour maybe seen from the fact that since a few decades the various states are eagerly engaged in colonization. Germany was foremost among these and succeeded in taking possession of large tracts of land, but these possessions are chiefly occupied by people of a very primitive degree of civilization who have no demand worth speaking of for European products. The other side of this endeavour is directed toward carrying capitalistic civilization to nations who have already attained a higher degree of civilization, but who until recently were rigorously opposed to modern development. Such are the East Indians, the Japanese, and especially the Chinese. These are nations that comprise more than one third of the entire population of the earth. When once given an impetus they are well able – as the Japanese have already demonstrated during the war with Russia – to develop the capitalistic method of production quite independently, and to do so, moreover, under conditions that will be accompanied by disastrous results to the more advanced nations. The ability and skill of these nations is well known, but it is equally well known that their wants are few – due to a great extent to the warm climate – and that, when compelled to do so, they rapidly adapt themselves to changed conditions. Here the old world, including the United States, is being confronted by a new competitor who will demonstrate to the whole world that the capitalistic system is untenable. In the meanwhile, the competing nations, especially the United States, England and Germany, seek to outdo one another, and all means are resorted to in order to obtain the largest possible share in the control of the world’s market. This leads to international politics, to interference in all international events of importance, and in order to interfere successfully, the navies especially are developed and increased as never before, whereby the danger of great political catastrophes is heightened anew. Thus the political realm grows with the realm of economic competition. The contradictions grow on an international scale, and in all countries that have undergone a capitalistic development they bring forth similar phenomena and similar struggles. Not only the method of production but also the manner of distribution is responsible for these unbearable conditions.

2. – Intermediate Trade and the Increased Cost of Living.

In human society all individuals are linked to one another by a thousand threads that become more complicated and interwoven with increasing civilization. When disturbances occur they are felt by all members. Disturbances in production affect distribution and consumption and vice versa. A marked characteristic of capitalistic production is the concentration of the means of production in increasingly large factories. In distribution the opposite trait becomes manifest. Whoever has been driven by competition out of the ranks of independent producers, in nine cases out of ten seeks to win a place as dealer between producer and consumer to obtain a living.[2] This accounts for the surprising increase of persons engaged in intermediate trade, dealers, small shopkeepers, hucksters, agents, jobbers, etc. as has been statistically proven in a previous chapter. Most of these persons, among whom we find many women independently engaged in business, lead a precarious existence. Many, in order to subsist, must cater to the basest fashions of their fellow-men. This accounts for the tremendous prevalence of advertising especially in regard to everything in connection with the gratification of the love of luxury.

Now it cannot be denied that in modern society the desire for the enjoyment of life is very noticeable, and viewed from a higher standard this fact is gratifying. People begin to understand that in order to be human they must lead lives worthy of human beings, and they seek to gratify this desire in the manner in which they conceive the enjoyment of life. In the display of wealth society has become much more aristocratic than in any former period. The contrast between the richest and the poorest is greater than ever. On the other band, society has become more democratic in its ideas and laws.[3] The masses demand greater equality, and since in their ignorance, they do not yet recognize the means to achieve true equality, they seek it in trying to ape those in superior social positions and to obtain every enjoyment within their reach. Various stimulants serve to gratify this desire and the results are frequently detrimental. A desire that is justified in itself leads to devious paths in many cases; it even leads to crimes, and society punishes the perpetrators without changing matters in the least.

The growing number of persons engaged in intermediate trade has led to many evils. Though the persons thus engaged work hard and are frequently burdened with care, most of them form a class of parasites who are unproductive and live on the products of the labor of others as well as the employing class. An increased cost of living is the inevitable result of intermediate trade. The price of provisions is thereby raised to such extent that they sometimes cost twice and three times as much as is obtained by the producer.[4] But if provisions can not be raised in price any more, because a further raise would limit the consumption, they are diminished in quantity and quality, adulteration of food and the use of incorrect weights and measures is resorted to. The chemist Chevalier reports that among various articles of food he found the following number of methods of adulteration: coffee, 32; wine, 30; chocolate, 28; flour, 24; whiskey, 23; bread, 20; milk, 19; butter, 10; olive oil, 9; sugar, 6, etc. A great deal of fraud is practiced in the grocery stores with goods that have been previously measured or weighed and packed. Frequently only 12 or 14 ounces are sold for a pound, and in this way the lower price is made up for. Workingmen and other persons of small means suffer most from these fraudulent methods, because they are obliged to buy on credit and must therefore hold their peace even where the fraud is perfectly evident. In the bakery trade also incorrect weight is frequently resorted to. Swindle and fraud are inevitably linked with our social conditions, and certain institutions of the state, for instance high indirect taxes and duties, favor swindle and fraud. The laws enacted against the adultery of food accomplish but little. The struggle for existence compels the swindlers to resort to more cunning methods, and a thoroughgoing and severe control rarely exists. Serious control is also made impossible because it is claimed that in order to detect every adultery, an expensive and extensive organization would be required and that legitimate business would also be damaged thereby. But wherever the control does interfere successfully, a considerable increase in prices ensues, because the low prices were possible only by means of adulteration.

In order to diminish these evils from which the masses always and everywhere suffer most, cooperative stores have been established. In Germany especially army and navy stores and civil service stores have been developed to such an extent, that many commercial enterprises were ruined by them. But the workingmen’s cooperative stores have also developed tremendously during the last decade and have partly even undertaken the manufacture of certain commodities. The cooperative stores in Hamburg, Leipsic, Dresden, Stuttgart, Breslau, Vienna, etc., have become model establishments and the annual sales of the German cooperative stores amount to hundreds of millions of marks. Since a few years the German cooperative stores have central establishments in Hamburg where the goods are purchased wholesale on the largest scale; this enables the various branch stores to obtain these goods at the lowest possible price. These cooperative stores prove that the scattering methods of intermediate trade are superfluous. That is their greatest advantage beside the other advantage that they furnish reliable goods. The material advantages to their members are not very great nor do they suffice to bring about any marked improvement in their social status. But the establishment of these cooperative stores proves the existence of a widespread recognition that intermediate trade is superfluous. Society will ultimately achieve an organization that will do away with commerce, since the products will be turned over to the consumers without the aid of other intermediate agents than are required by transportation from one place to another and by distribution. When the common purchase of food has been achieved, the common preparation of food on a large scale appears to be the next logical step. This again would lead to a tremendous saving in labor power, space, material and many other expenses.


1. “Unemployment and Statistics of the Unemployed in the Winter of 1908 to 1909.” Berlin, 1909.

2. “The decline of ancient handicraft is not the only cause that accounts for the great increase in the small retail trade. The growing industrialization and commercialization of the country notwithstanding its tendency toward manufacture on a large scale always furnishes new ground for small businesses. Inventions that create new branches of industry also cause the rise of new small establishments for the distribution of these products. But the main cause of the great increase in retail trade is, – as expressed in a report submitted to the government of Saxony by the Dresden chamber of commerce, – that trade on a small scale has become the rallying place of many persons who despair of making their living in any other way.” Paul Lange – “Retail Trade and Middle Class Politics.” “New Era.”

3. In his first adaption of Raus’s “Text Book of Political Economy,” Professor Adolf Wagner expresses a similar thought. He says: “The social struggle is the conscious contradiction between the economic development and the social ideal of freedom and equality as expressed in political life.”

4. In his book on “Domestic Industry in Thuringia,” Dr. E. Sax tells us that in 1869 the production of 244½ million slate pencils had yielded 122,000 to 200,000 florins in wages to the workingmen, but their final sale had yielded 1,200,000 florins, at least six times as much as the producers had received. During the summer of 1888, 5 marks were paid for 5 hundred-weights of haddock by the wholesaler. But the retailer paid 15 marks to the wholesaler, and the public paid the latter 125 marks. Large quantities of food moreover are destroyed because the prices do not make their transportation worth while. For instance, during years when the catch of herrings has been an over abundant one, loads of them have been used as manure, while there were thousands of persons in the interior who could not afford to buy herrings. The same occurred in California in 1892 when the crop of potatoes was too abundant. When in 1901 the price of sugar was very low, a trade paper seriously suggested to destroy a greater part of the supplies so that the price could be raised. It is well known that Charles Fourier was inspired to his ideas of a social system because while he served as apprentice in a commercial house in Toulon, he had been ordered to throw a load of rice over board to raise the prices. Be reasoned that a society which resorts to such barbarous and irrational methods must be founded on a false basis, and so he became a socialist.