Karl Kautsky

The Labour Revolution

III. The Economic Revolution


WHAT is decisive for Socialism is not the fixing of a special formula of just distribution, but the abolition of the exploitation of labour, or the abolition of unearned incomes. The abolition of rent, interest, and profit. This is only possible through the abolition of private property in the means of production.

Marxists have been aware for a long time that the above, and not the measure of distribution, is the essential thing for us Socialists. Yet we used to present the problem in a simpler form than it now appears to assume. The difficulty in the way of the transformation of private into social or State undertakings seemed to us to reside in the fact that the owner of an undertaking was also its manager, so that the undertaking could hardly continue to exist without its owner. This difficulty, however, was gradually vanishing through the economic development. The larger the undertaking, the more of its functions the capitalist was obliged to delegate to salaried officials, until eventually all its functions could be fulfilled in this manner. Once the undertaking reached this stage, the formal separation between ownership and management was a short step, and this is most strikingly exemplified in the form of joint stock companies. With these, the last pretence is abandoned that the person of the capitalist is necessary for the undertaking.

This is made plainer still when various undertakings in the same branch of industry are formed into an association which gives them a monopoly in this branch, at the same time abolishing the independence of the separate undertakings and removing their “private initiative” from an important sphere.

Once matters have gone so far, it seemed that the transition to socialist ownership and management was merely a question of power. Were Labour to capture political power, nothing seemed simpler than to transfer the ownership of shares to the State, and to place the management of the syndicated undertakings under its control.

But the experiences of the last few years have shown us that the problem is not so simple, although we have been brought right to its threshold, for the Russian experiment does not count. It is an attempt with unsuitable means, directed to an unsuitable object.

When Marx and Engels published the second edition of the Communist Manifesto in 1872, they declared that in some passages it had become obsolete

“The Commune has particularly shown that the working class cannot take over the ready-made State machinery and set it in motion for its own purposes.”

What is here said about the State machinery may also be said about the capitalist mechanism of production, which the workers find ready to hand. They cannot simply take it over and set it in motion for their own purposes. They must first adapt it to their ends, as in the case of the State machine.

Capitalist industry is based on large-scale production and the division of labour which it involves. The individual undertaking is an enormous organism with numerous organs, animate and inanimate, each of which develops its special activity, all of which harmoniously co-operate, without friction, without loss of time, in order to produce in common the final product. To have developed this organization in the undertaking is the signal merit of capitalism. To establish such an organization requires to an increasing extent not only extraordinary organizing capabilities and practical experience in all the departments of the complicated labour process, but also a solid, scientific education.

This is the organization that Socialism will take over from capitalism. It forms one of the prerequisites of Socialism. But it is moulded not upon the needs of production as such, but upon those of capitalist production, that is, the supreme rule, the autocracy, the dictatorship of the capitalist, or his representative in the undertaking. Like every other dictatorship or despotism, it presupposes the existence of subjects incapable of offering resistance.

The mechanism of industry, like the State machinery, must be adapted to the aims of Labour; in both cases autocracy must be replaced by democracy.

With this difference, that in 1872, when Marx and Engels wrote the passage quoted above, there were still in existence the great military monarchies, whose State apparatus could not simply be made subservient to Labour ends. Since then, however, apart from the military dictatorship in Russia and among many of her neighbours, these military monarchies had been replaced by democracy before the workers had proceeded to capture political power. It remains, therefore, to perfect the political machine, not to create it de novo.

On the other hand, the organization of the capitalist undertaking is still moulded entirely on the lines of the “master in the house.” Trade unions have succeeded in restricting this power to a slight extent. The works committees constitute a further restriction. But all this is only a beginning. Almost everywhere a really democratic works constitution, which will make an end of capitalist autocracy without lessening the productivity and adaptability of the undertaking, has yet to be created.

But this process of reorganization does not exhaust the economic task of Socialism.

Industrial capitalism has exhibited qualities of genius in the organization of the process of production within the single large undertaking. Now the process of circulation, buying and selling, as well as the act of producing, is a part of the whole economic process. Primitive peasant economy, which produces and consumes all that it needs, may exist without a system of circulating the products among the undertakings. Not so a society in which a division of labour among the various branches of production has been introduced. The factory must buy raw materials and coal, as well as acquire labour-power, if it is to produce. And its production would soon come to an end if its product did not find a market.

While production in the capitalist undertaking is strictly and often ingeniously organized, the process of circulation was for long unorganized and anarchical and given over to the free play of forces. And it is still badly neglected. It is in this sphere that the greatest economic waste and impediments occur, and here above all it is possible, through the introduction of systematic organization, to render socialist economy more productive than capitalist economy.

But the problem is enormous, and becomes increasingly difficult as world communication develops, and as the circulation process for a single big undertaking tends to embrace the whole world, whence it draws its raw and auxiliary materials and tools, and whither it must seek for purchasers of its products.

Capitalism itself has done very little preliminary work for the organization of the circulation process. Many people saw in the syndicates and trusts the indications of such an organization, but each of these associations only comprises a single branch of industry, and merely establishes uniformity in market conditions or the division of the markets into districts for the separate members of the association. The problem of the organization of circulation consists, however, in the systematic introduction of regulated conditions among the various branches of industry, and in the maintenance of equitable relations between them.

The problem is further complicated by the fact that hitherto the driving force and regulative factor of the circulation process has been profit. Capital flows to branches of production and countries which yield a higher rate of profit, and increases production there. Capital flows away from places where the rate of profit is low, which leads to a restriction of production. Without this regulative influence of profit, capitalist economy would quickly relapse into anarchy.

Now the efforts of Labour, and therefore of Socialism, are directed to the abolition of exploitation, and consequently of profit. But this brings with it the task, not only of organizing the circulation process, but of doing so in such a way as to dispense with what has hitherto been the regulative factor: profit.

To create these new organizations, alike within the separate undertaking as within the whole social economy, is the proper economic task of the victorious Labour movement. Closely connected with it is the transformation of property in the means of production, which can only be accomplished in the measure that this process of organization becomes possible. Compared with this, the regulation of distribution is quite a secondary question.

The task is one of the most colossal and most difficult that world history has ever imposed upon a victorious class.

To solve the problem with one stroke is in the nature of the case impossible. It is equally impossible to solve the problem according to the indications of a single dictator, however ingenious and erudite he might be. It demands organizing capabilities, practical experience, and scientific knowledge in a measure which the greatest of mortals could never combine in his own person. It requires the zealous and devoted co-operation of the best representatives of economics in theory and practice, if we are ever to grapple with and progressively approach the solution of the problem.

Nothing could be more disastrous than to under-estimate the magnitude of the problem, and to approach it in a careless and light-hearted manner.

Here again Lenin offers us a warning example in the book from which we have so frequently quoted. We have seen how simple the problems of the modern State seemed to him. With the same simplicity he visualizes the organization of production. He speaks of the conditions in capitalist States which prepare the entire population for participation in the direction of the State, such as general literacy, “the education and discipline implanted into millions of workers by the huge, complex, and socialized apparatus of the post railways, big factories, large-scale commerce, banking, and so on.”

If he did not believe that Russia had reached this advanced stage in 1917, at any rate he acted as if he believed it. He continues:

“With such an economic ground-work it is quite possible, immediately, within twenty-four hours, to pass to the overthrow of the capitalists and bureaucrats, and to replace them, in the control of production and distribution, in the business of apportioning labour and products, by the armed workers, or the people in arms. The question of control and book-keeping must not be confused with the question of the scientifically trained staff of engineers, agriculturists, and so on. These gentlemen work to-day owing allegiance to the capitalists: they will work even better to-morrow, owing it to the armed workers. Bookkeeping and control – these are the chief things necessary for the smooth and correct functioning of the first phase of communist society. All the citizens are here transformed into the hired employees of the State, which then is the armed workers. All the citizens become the employees and workers of one national State ‘syndicate.’ It simply resolves itself into a question of all working to an equal extent, of all carrying out regularly the measure of work apportioned to them and of all receiving equal pay.

“The book-keeping and control necessary for this have been simplified by capitalism to the utmost, till they have become the extraordinarily simple operations of watching, recording, and issuing receipts, within the reach of anybody who can read and write and knows the four arithmetical rules.

“The whole of society will have become one office and one factory, with equal work and equal pay.” (The State and Revolution, pp.103-4)

No, a social apparatus of production which is of so simple a nature that anybody who can read and write can organize and direct it, and in which the manager has nothing to do except supervise work and pay everybody an equal wage – that is a prison, not a factory. Even the simplest factory places greater demands upon its manager, to say nothing of the collective social work.

As crude as this were the economic ideas of the most eminent of the Bolshevists at the time they were contemplating the seizure of power. In a certain sense, this fabulous ignorance was a stroke of luck for Bolshevism. It imparted to it the requisite boldness to make Bolshevism the ruler of the most powerful State in Europe. For Russia and for Communism the luck was not so obvious.

It is not blind, impetuous daring, with complete disregard of all the difficulties that beset our problem, which should inspire the economic revolution of the workers. Upon us Socialists is rather imposed the most conscientious verification of every step that we take. However useful a revolutionary temperament which refuses to be hampered by the chains of tradition may be, it becomes dangerous when it is not directed and controlled by scientific thoroughness.


Last updated on 27.1.2004