Karl Kautsky

The Capitalist Class

Chapter II
Division of Labor and Competition

While, on the one hand, the industrial development draws commerce and credit in ever closer relation with industry, it brings about, on the other hand, the result that, by reason of the increased division of labor, the various functions which the capitalist has to fulfil in the body politic split up ever more and more and become separate undertakings and institutions. Formerly, it was the merchant’s function not only to buy and to sell goods, but also to carry them often to very distant markets. He had to assort his goods, display and render them accessible to the individual purchaser. To-day, there is a division of labor not between wholesale and retail trade only; we also find large undertakings for the transportation and for the storing of goods. In those large central markets called exchanges, buying and selling have to such an extent become separate pursuits and freed themselves from the other functions commonly appertaining to the merchant, that, not only are goods located in distant regions or not yet even produced, bought and sold there, but goods are bought without the purchaser intending to take possession of them, and others are sold without the seller ever having had them in his possession.

Division of Labor in the Ranks of the Capitalist Class

In former days a capitalist could not be conceived without accompanying the thought with a large safe in which money was collected, and out of which he took the funds which he needed to make payments. To-day the treasury of the capitalist has become the subject or a separate occupation in all industrially advanced countries, especially England and America. The bank has sprung up. Payments are no longer made to the capitalist, but to his bank; and from his bank, not from him, are his debts collected. And so it happens that a few central concerns perform to-day the functions of treasury for the whole capitalist class in the country.

But, although the several functions of the capitalists thus become the functions of separate undertakings, they do not become independent of each other except in appearance and legal form; economically, they remain as closely bound to and dependent upon each other as ever. The functions of any of these undertakings could not continue if those of any of the others with which they are connected in business were to be interrupted.

The more commerce, credit, and industry become interdependent, and the more the several functions of the capitalist class are assumed by separate undertakings, the greater is the dependence of one capitalist upon another. Capitalist production becomes, accordingly, more and more a gigantic body, whose various limbs stand in the closest relation to each others. Thus, while the masses of the people are ever more dependent upon the capitalists, the capitalists themselves become ever more dependent upon one another.

The economic machinery of the modern system of production constitutes a more and more delicate and complicated mechanism, the correct action of which depends ever more upon the exact fitness of its innumerable wheels, and the exact fulfilment of their respective roles. Never yet did any system of production stand in such need of planful regulation as does the present one. While the several industries become, in point of fact, more and more dependent upon one another, in point of law they remain wholly independent.

The means of production of every single industry are private property; their owner can do with them as he pleases.

Free Competition in the Ranks of the Capitalist Class

The more completely large production develops, the larger every single industry becomes, the greater is the order to which the economic activity of each is reduced, and the more accurate and well considered is the plan upon which each is carried on, down to the smallest details. Outside of that, however, the joint operation of the various industries is left to the impulse of free competition; and it is at the expense of a prodigious waste of power and of matter, and across economic shocks called crises, which up to a certain time increase in violence, but which subsequently become so chronic as to cease to call much attention, that free competition keeps the economic mechanism in motion. It moves with fits and starts. The process goes on, not by putting every one in his proper place, but by crushing every one who stands in the way. This is what is called “the selection of the fittest in the struggle for existence.” The fact is, however, that competition crushes, not so much the truly unfit, as those who happen to stand in the wrong place, and who lack either the special qualifications, or, what is more important, the necessary capital to survive. But competition is no longer satisfied with crushing those who are unequal to the “struggle for existence.” The destruction of every one of these draws in its wake the ruin of numberless other beings who stood in economic connection with the bankrupt concern-wage-workers, creditors, etc.

“Every man is the architect of his own fortune,” so runs the favorite proverb. This proverb is an heirloom from the days of small production, when the fate of every single breadwinner, at worst, that of his family also, depended upon his own personal qualities. Today the fate of every member of a capitalist community depends less and less upon his own individuality, and more and more upon a thousand circumstances that are wholly beyond his control. Competition no longer brings about the survival of the fittest.


Last updated on 25.12.2003