Anton Pannekoek 1919
Version: Originally published as 'Die Sozialisierung' in Die Internationale, vol. one, nos 13-14, September 1919, pp. 254-259. French translation published in Le Phare (The Beacon) No. 7, 1st March 1920. This French translation reprinted in (Dis)continuté Issue 7 July 1999, from which this translation has been made. A slightly different translation is also available;
Transcription/HTML Markup: Greg Adargo.
Le Phare Introduction: Anton Pannekoek is one of the best theorists of international socialism. He belongs to the Dutch Communist Party. We are publishing a translation of one of his most recent and topical articles which appeared in German in the Marxist journal Die Internationale, founded by Rosa Luxemburg and Franz Mehring. The plans for socialization of Bauer and the Austrian Socialists having, in their time, received enthusiastic admiration in the leading spheres of the French socialist movement, we consider it useful to publish the penetrating critique which Pannekoek made of them.
In the first months following the German revolution in November 1918 there arose the cry of "socialization"! It was an expression of the masses' will to give the revolution a social content and not just remain a change of persons or a mere transformation of the political system. Kautsky warned against too rapid a socialization for which society was not yet ready. The miners put forward socialization as a demand in their strike – as the English miners had recently done. A commission of inquiry into socialization was formed, but secret influence and the government sabotaged its decisions. For the majority socialist government, socialization is only a phrase, a means of misleading the workers; everyone knows that it has already abandoned the former goals and principles of socialism. But the Independents remained faithful guardians of the former socialist doctrine; they sincerely believe in it with regard to the programme of socialization. Thus it is interesting to study this programme in order to characterise that radical tendency which exists within the social democracy of all countries whether alongside the government socialists or in opposition to them.
When workers demand socialization they undoubtedly think of socialism, of a socialist society and of the suppression of capitalist exploitation. We will see whether it has the same meaning for present day socialist leaders. Marx never spoke of socialization; he spoke of the expropriation of the expropriators.
Of the two principal transformations brought about within production by socialism: the suppression of exploitation and the organisation of the economic system, the first is the principal and most important one for the proletariat. One could conceive of an organisation of production on a capitalist basis, it would then lead to state socialism, a more complete slavery and exploitation of the proletariat by the centralised force of the state. The suppression of exploitation with dispersed production was the ideal of the old cooperators and anarchists, but where the suppression of exploitation is achieved, as in communist Russia, one must immediately deal with the organisation of production.
It is where the social-democrats launch general slogans in order to prepare for practical legislation that we can most clearly see what socialization means for them. This was the case in Vienna where the "Marxists", Renner and Otto Bauer were in charge. From a lecture given on the 24th of April by Bauer at an assembly of union leaders, we can draw out the arguments with which he sought to make these workers' delegates grasp his plans. In order to completely socialise big industry, he stated, and in order to remove the capitalists, firstly expropriation is necessary. "We take from them their enterprises," and the organisation of the new administration must follow. Expropriation should not be done without compensation, for then one would be obliged to confiscate all capital, including war bonds. Savings banks would then go bankrupt, small farmers and employees would lose their savings and some international difficulties would emerge from this. It is thus "impossible to achieve a straightforward confiscation of capitalist property". The capitalists will thus be compensated; a tribunal will set the amount of compensation which "should be fixed according to durable value, in which war profits should not be counted". Compensation will be paid in government bonds which will receive an annual interest of 4% from the state.
Certainly, he recognises in conclusion, this is still not complete socialization, because the former capitalist will always receive the interest from his enterprise as a rentier. "Gradually suppressing this is a problem of fiscal legislation and perhaps of the transformation of the right of inheritance"; after several generations incomes not produced from labour will be able to disappear completely.
To clarify the principles which form the basis of the socialization plans of the social-democrats, it is necessary to consider more closely the essence of capitalist property and economic expropriation.
Money, like capital, has the ability to continually multiply through surplus value. Anyone who transforms their money into capital and places it into production receives their share of the total surplus value produced by the world proletariat.
The source of surplus value is the exploitation of the proletariat; labour power is paid less than the value produced by it.
Money and property thus not only acquire a new meaning within the capitalist regime, but they also become a new standard. In the petty bourgeois world, money is the measure of the value of the labour-time necessary for the making of a product. Like capital, money is the measure of surplus value, of the profit that can be realised by means of production. Although it costs no labour, one will pay for a plot of land the price corresponding to the capitalised ground rent. It is the same with a big company. If its formation costs, say 100,000 francs (a hundred shares of one thousand francs each), and if it makes a 10% return, a share will not sell for 1000 francs, but approximately 2000 francs, because 2000 francs at 5% returns the same income, and the capitalist value of the entire enterprise is then 200,000 francs, although it only cost 100,000 francs.
We know that at the formation of new companies, the big banks place this difference into their pockets in advance as "founders profit" while launching it on the market (in the example cited) for 200,000 francs worth of shares.
On the other hand, if the profit of this company falls – for example, through the victorious competition of much bigger businesses – ever further, until it can no longer produce more than a 1% dividend, its capitalist value falls to 20,000 francs. If profit – an abstraction made in the hope of future prosperity, which can be deducted in advance for a certain sum – completely disappears, the capitalist value of the enterprise falls to zero, and only the material value of the inventory can still be realised.
Capitalist property thus initially means, not the right to dispose of objects, but the right to an income without labour, to surplus-value. Its form is the share, the paper on which this right is written. The company and the factory are only the instrument through which one produces surplus value; property itself is the right to surplus-value. The suppression of exploitation, the suppression of this right is therefore the suppression of capitalist value, the confiscation of capital. We can thus understand Otto Bauer's method: it is to mix up in the same pot this capital and the small amounts of savings of small savers – who primarily think of safeguarding their property and not of receiving an income without labour – in order to make the trade union functionaries tremble, through identification, in the face of an attack against exploitation.
The suppression of capitalist property and the suppression of exploitation are thus not cause and effect, means and end, they are one and the same thing. Capitalist property only exists through exploitation, its value is fixed by surplus-value. If surplus-value disappears in some unspecified manner, if the worker receives the full product of his labour, capitalist property will disappear at the same time. If the proletariat improves its working conditions so much that companies no longer return a profit on capital, their capitalist value will fall to zero; the factories may be useful to society, but they will have lost their value for capitalists. Money then loses the ability to produce more money, more surplus-value, because the workers no longer allow themselves to be exploited. This is the expropriation which Marx envisaged. Capitalist property will be suppressed because capital will be without value, without profit. This economic expropriation through which property loses its value and is consequently destroyed, even though the right of free disposal remains, is the opposite of the legal expropriation often applied in the capitalist world, through which the right of free disposal is removed, while allowing the property to remain through compensation. It goes without saying that legal expropriations will also occur in passing over to socialism. The political power of the proletariat will take all measures which are useful for the suppression of exploitation. It will not be satisfied just to limit the former employers' right of free exploitation, through the regularisation of wages, working hours and prices, it will suppress it completely. The economic basis of these measures is laid down by what precedes them; it is not confiscation of all property as the frightened petitbourgeois thinks, but the suppression of any right to surplus-value, to an income not produced by labour. It is the legal expression of the political fact that the proletariat is master and that it will no longer allow itself to be exploited.
Socialization according to Bauer's recipe is legal expropriation without economic expropriation, it is what any bourgeois government might propose. The capitalist value of enterprises will be paid to the employers in compensation and henceforth they will receive in interest on bonds what they formerly received in profit. The remark that war profits will not be taken into consideration proves that normal profit will be taken as the norm. This socialization replaces private capitalism with State capitalism; the State takes on the task of sweating profits from the workers and giving it to capitalists. For the workers little will change, as before they will have to create an income without labour for the capitalists. Exploitation remains exactly as before.
If such a proposal had been made in times of capitalist prosperity, it would have been acceptable to the proletariat; the share of the momentary surplus-value returned on capital being fixed, any new increase in productivity through organisation and technical progress would benefit the proletariat. But the bourgeoisie did not consider it then because it claimed these advantages for itself.
Now conditions are different, surplus-value is in danger. Economic chaos, the loss of markets and of raw materials, the heavy tribute due to the capital of the Entente powers [war reparations - translators note], allow us to foresee a reduction in capitalist profit. The revolt of the masses of workers and the start of the proletarian revolution which will call into question all exploitation, only add to this situation. Socialization now comes at the right time to assure capital its profit in the form of State interest. A communist government, such as that in Russia, immediately ensures the results of the new proletarian power and liberty by refusing capital any right of exploitation. A social democrat government ensures the old proletarian slavery by perpetuating the old tribute that it pays to capital at the very moment in which it has to disappear. Socialization is nothing more than the legal expression of the political fact that the proletariat is only master in name and is ready to quietly allow itself to continue to be exploited. Just as the "socialist" government is only the continuation of the old bourgeois domination under the socialist banner, "socialization" is only the continuation of the old bourgeois exploitation under the socialist banner.
If people ask how intelligent politicians and former marxists can be led to thinking this way, the well known political character of this tendency which has taken form in the independent socialist party gives us the answer. It was radical in name, it paid lip service to class struggle, but feared any powerful struggle. This was already the case before the war, when, as a "Marxist centre", Kautsky, Haase and their friends opposed the radical ultra-left. It is still the same today. They wish to bring socialism to the workers, yet they fear the struggle against the bourgeoisie. They see very well that a genuine suppression of all capitalist profit, a confiscation of capital as was achieved in Russia, would involve the bourgeoisie in a violent struggle, for it would be a matter of its existence, of its life or death as a class. They consider the proletariat too weak and consequently seek to achieve the goal by detours, while rendering it palatable to the bourgeoisie. Politically the plans for socialization are an attempt to lead the proletariat to the socialist goal without touching the bourgeoisie on a vital nerve, without provoking its violent anger, and thus through avoiding violent class struggle.
The intention would be laudable if it were feasible. But if we consider everything that would be necessary for the capitalist tribute: the interest due to the former capitalist proprietors of the means of production, the interest due on war loans, the tribute due to the capital of the Entente powers, we can see that it cannot all be realised, even through more intensive work and a poorer life for the proletariat. In the current destruction of the economic life and bodily strength of the masses, the immediate suppression of all parasitism is a pressing need for the rebuilding of society. But even if we disregard this special state of misery, and if we don't consider socialization as a measure of the beginning of the proletarian revolution, or as the first step towards socialism, its impossibility becomes apparent as long as the proletariat has still not acquired all of its strength. When the workers awake and rise towards liberty and independence, they will put forward demands for the improvement of their lives and working conditions.
These improvements will immediately decrease profits. The socialist state may be able to shout at them to work with greater intensity, the opposite will happen however.
When capitalist obligation no longer rules with an iron fist, the inhuman tension of appalling exploitation will relax, work will slow down, and will become more human. The relation and the profit of enterprises will fall. Without socialization, private capitalists would bear the loss, but with the state now having to pay them the former interest, it is the socialist state which despite the beginnings of the workers' revolution assures them their profit, and which will bear the loss. It will then retain a choice, either to oppose demands, suppress strikes and become a government violent on behalf of capital and against the proletariat, or else to fall into inevitable state bankruptcy. The bourgeoisie will then once again shout aloud its triumph, for the impossibility of "socializing " will have been demonstrated in practice.
This will be the result of a crafty attempt to lead to a kind of socialism while avoiding class struggle. A socialization which wants to spare the profits of the bourgeoisie cannot be a way towards socialism. There is no other way than to suppress exploitation and to that end conduct an implacable class struggle.
Le Phare No 7, 1st March 1920.