European Socialism, Volume I: From the Industrial Revolution to the First World War and Its Aftermath

EUROPEAN SOCIALISM

EUROPEAN

SOCIALISM

A HISTORY OF IDEAS AND MOVEMENTS

FROM THE INDUSTRIAL REVOLUTION

TO HITLER’S SEIZURE OF POWER

VOLUME

I

FROM THE INDUSTRIAL REVOLUTION TO THE

FIRST WORLD WAR AND ITS AFTERMATH

By Carl Landauer

in collaboration with

Elizabeth Kridl Valkenier and Hilde Stein Landauer

UNIVERSITY OF CALIFORNIA PRESS

Berkeley and Los Angeles

1959

University of California Press

Berkeley and Los Angeles

California

Cambridge University Press

London, England

© 1959 the Regents of the University of California

Library of Congress Catalog Card Number: 59-5744

Printed in the United States of America

Designed by Adrian Wilson

Preface

The history of socialism on the European continent cannot be completely described in one book. The active life of no man would be long enough to permit him to study all relevant books and documents, and write up the complete story of the unfolding of socialist ideas and of the destinies of the socialist movement in every country between the Atlantic coast and the Black Sea and between the North Cape and the tip of Italy. Even if such a book could be written, it would either have to forego all aspirations to depth or become too voluminous for any reader’s patience.

A conceivable alternative would be a series of monographs, which could be written by different specialists and among which the reader could select those of greatest interest to him. But a history of socialism in Germany plus a history of socialism in France plus a history of socialism in Russia plus histories of socialism in each other European country would never add up to a history of European socialism, because such a book could not describe the cross fertilization of the several national movements, or present the common problems to which the different national movements sought different answers, or show how one tendency, originating in one country, clashed with tendencies born in another. These relationships can only be made clear when the developments of socialist ideas and movements in individual European countries are put side by side for each major period to make possible a comparative analysis and a revelation of the cross currents. Since every country in Europe has made some contributions to the development of socialism, an all-inclusive presentation would be desirable, but the essential purpose can be achieved even if the description is confined to the major continental European countries and some of the smaller ones. This was the course which limitations of time and space forced on me.

If only the importance of interrelationships and international comparisons had been considered, there would have been no reason to exclude Great Britain from the scope of the book. But there was a practical reason: the works of Sidney and Beatrice Webb, Max Beer, and G. D. H. Cole constitute a body of literature which is not only, for linguistic reasons, more accessible to the American reader than continental European sources but also supplies more complete information about British socialism than is easily available on that of any other country, at least for twentieth-century developments. Therefore, whenever events in Britain had to be mentioned because of their influence on developments in Continental socialism, it was possible to refer the reader to sources which he can obtain without difficulty, and thus the picture could be rounded out without including a full presentation of events in British socialism. This applies to the record of organizational and political action and not to the history of ideas; it would be impossible to describe the development of Utopian socialism without analyzing the system of Robert Owen, or the recent trend in socialist theory without discussing the ideas, for instance, of H. D. Dickinson.

The decision which of the smaller countries should be included was necessarily somewhat arbitrary. One of the criteria of selection was the occurrence of peculiar ideological tendencies or peculiar forms of organization within the socialist movement of the country; another was the degree of influence which socialism in a particular country exerted upon world socialism. By both these criteria Belgium, for instance, seemed more important than Holland, Sweden more important than Norway; the second criterion seemed to justify the choice of Denmark rather than Norway; moreover, a section on Norway would, to a large extent, have had to duplicate Walter Galenson’s work: Labor in Norway. If the author were confronted with the contention that it would have been better to include Switzerland rather than Denmark, he could only answer that his own preference for the latter cannot be based on any margin of importance great enough to be provable, but that anyone who wanted to justify the opposite choice would be in the same position.

One group of smaller countries, however, has been omitted for no better reason than that of linguistic difficulties: the Balkan nations. The development of socialism—and communism—in Bulgaria would have deserved a place in the book, and the same may well apply to socialism in Rumania and Yugoslavia, or at least Serbia. Hungary is probably a more doubtful case, in spite of its temporary importance immediately after the end of the First World War and of the interest in its history caused by its role in the post-Stalin period. In any event, the idea of drawing some or all of these countries into the scope of the book seemed impractical. Collaborators familiar with the languages and the social history of southeastern Europe might perhaps have been found, but to try to produce a book like the present through collaboration with others means to jeopardize its internal unity. I was aware of this danger when I had to find co-workers for two areas for which I had no linguistic equipment and which I felt must be included: two Scandinavian countries and (pre-1914) Russia. I was more fortunate than I had any right to expect in finding collaborators who enriched the presentation with their knowledge and ideas but permitted me to fit their contributions into this book with enough alterations to preserve the unity of the whole. The likelihood of such a happy solution, however, diminishes with every increase in the number of collaborators.

The size of the present book could have been kept within narrower limits if the subject had been confined to the development of ideas. Such histories of socialist thought exist and are useful, but I was interested in the interaction of ideas and movements, and therefore wanted to cover both. The history of socialist movements is, of course, intertwined with the general history of Europe in the past one and a half centuries. To write a history of socialist organizations and their policies as if they had been insulated from other historical forces would amount to distortion, but to make the impact of these other forces understandable requires their description. Thus a history of socialism can easily be expanded into virtually a history of the nineteenth and twentieth centuries without including anything that would not in some sense belong to the subject. The obvious way to avoid such overexpansion is to rely on the reader’s knowledge of the more important facts of general history and to refer him for relevant details to other literature. Unfortunately, the applicability of this device is limited: a writer of general political or economic history may not always sufficiently explain the ways in which the developments of national or international policy affected the development of socialism. An economic historian, for instance, in describing the great depression of the 1930’s might not consider it part of his topic to show the particular circumstances which were most responsible for the rise of fascism; an expert on the reparations question might quite justifiably lay more stress on the development of the diplomatic negotiations as such than on the effect of each phase upon the chances of German democracy in general and German social democracy in particular to remain in political power. These omissions force the historian of socialism to give at least an abbreviated version of some chapters of general history from the point of view of his own subject.

The difficulty of completing a book of this scope within the available time would have been compounded by an effort to go back to primary sources as regularly as one would when writing a monograph. No such effort was undertaken as a matter of routine, but in many instances gaps in the secondary sources or doubts as to their reliability made it necessary for me to examine original sources of information—an endeavor often impeded by the limited availability of many convention proceedings, pamphlets, and even books. Foreign sources have been quoted or cited from published English translations, when the latter were readily available and when the point at issue was brought out with sufficient clarity by the translator; otherwise reference to or ad hoc translations from the original were substituted. Translations I have made for the purpose of this book are marked as such only where confusion with other translated versions seemed possible. No systematic effort was made to discover existing translations of foreign-language originals or the bibliographical data of originals where English-language versions were readily available. In this as in other matters, the necessity of completing the book in a limited period of time had to be given precedence over bibliographical interest.

The book covers the period from the Industrial Revolution approximately to Hitler’s rise to power. The starting point needs no justification, and the impact of the terminal event upon the history of socialism is obvious. Some readers, however, may feel that it would have been better to carry the story to a point closer to the present. This seemed impossible, not only for compelling reasons of economy of time and space: the kind of analysis that has been attempted for the earlier periods could not have been continued into the later 1930’s and 1940’s because the meaning and even the course of many important events are still obscure. Years will lapse before we shall either be sufficiently enlightened from new sources—or be justified in the conclusion that new vital sources will not be opened and that for this more recent period we shall be permanently left with a regrettably large number of historical enigmas.

In writing a book, and especially a voluminous book, every author has to reconcile himself to the impossibility of taking publications—even important ones—into account if their time of appearance is too close to the date when the author’s own manuscript must go into print. A rigid deadline, however, cannot be set, because a few facts from a brief article can still be cited when it would be too late to do justice to a major work. Unfortunately, such a major work, A History of Socialist Thought by G. D. H. Cole, has appeared too late for careful study for the purpose of the present book. This is not the only but the most important example of the deadline difficulty which I encountered in dealing with literature. It should not be concluded from the paucity of references to Cole’s work that I underestimate its significance—or that I agree with all of Cole’s opinions.

Originally I had planned to add a classified bibliography which would have included publications on events and problems mentioned in the book, regardless of whether those publications appeared in the literature references. While the book was being written, however, two extensive bibliographical guides on socialist thought and socialist movements appeared: the second volume—by T. D. Seymour Bassett—of Donald Egbert and Stow Persons (ed.), Socialism and American Life (1952), and the bibliographical parts of Cole’s A History of Socialist Thought, These bibliographies, to be sure, do not include the fringe subjects of this book: the developments in general political and economic history which have had an impact on the destinies of socialism. But in this respect even a classified bibliography could not have given substantially more information than one can find in the footnote references, otherwise the list would have become too long to be useful. Under these circumstances, the addition of a classified bibliography did not seem worth the sacrifice of space and time, and therefore the bibliography was confined to publications cited or quoted, to serve as a practical convenience to the reader who may wish to consult the sources used in this book.

I was, of course, confronted with the age-old problem of objectivity: to what extent, if at all, are value judgments permissible in describing and analyzing events? Nothing, I believe, would have been gained by an attempt either to conceal my own fundamental preferences, or to refrain from applying to actions of groups or leaders the ethical standards which in their general form are the common property of mankind. Such judging, of course, must not degenerate into the kind of unhistoric moralism that would condemn the Greeks because they sacrificed Iphigenia, or the York and Lancaster pretenders for waging the War of the Roses rather than settling the issue by parliamentary procedures, or the people of the twelfth century for persecuting heretics. The often-quoted truism that everyone is a child of his age means that no one can escape from the limitations of knowledge and rationality which grow out of antecedents over which he has had no control, and that we can never expect more than a good use of the range of decision which these limitations leave to a person’s judgment and ethical sense. Where creeds fatal to ethical values have originated from contemporary conditions, there is no sense in condemning individuals as if they were responsible for those conditions. It is one thing to show the cruelties and demoralization caused by modern totalitarianism and to demonstrate that it enabled power-hungry and amoral leaders to gain control, and something very different to deny that the turn of large masses to fascism and communism was, under the circumstances, a normal reaction of human beings to disaster, distress, and confusion.

It is necessary to go one step further. A person is of course responsible for his philosophy, and a crime can not validly be defended on the grounds that it followed logically from the criminal’s principles; yet it is true that the consequences of fundamental tenets often unfold only in the course of action, and it is equally true that a firm believer will not easily realize that his faith will lead to condemnable acts. This reluctance, an expression of loyalty to one’s principles, is in itself a virtue and not a vice. Any course of action must be understood from the point of view of him who acts, and therefore must be compared with his basic articles of faith before it can be judged; in judging, we should not expect the man holding erroneous beliefs without realizing where they will lead him, to break away from them more easily than we would think proper to do with the elements of our own creed. All these are truisms, but they are so often disregarded as to bear repetition. In any event, I wish to make clear that in this sense, and in this sense only, I recognize objectivity as a scholarly obligation which I have been trying to fulfill.

I could easily fill a few pages with acknowledgements of my debts of gratitude, for my creditors are many. I am greatly indebted to my two collaborators, Elizabeth Kridl Valkenier and Hilde Stein Landauer, of whom the former wrote the section on pre-1914 Russia and the latter the sections on Scandinavia. But since they permitted me to make a number of changes in the original text of their contributions, the responsibility for the presentation in its present form is mine, though the credit is theirs. Aside from their immediate contributions, the two collaborators made a number of helpful suggestions in other parts of the manuscript.

The book could not have been written if I had not been able to study the operation and structure of one socialist party—the German Social Democratic party—at close range and by participating in its activities. Of the many persons within the party who have helped me to a deeper understanding I should like to mention three, all of them close personal friends and none of them, unfortunately, still among the living: Erhard Auer, during many years the outstanding leader of the Social Democratic party in Bavaria, who supplied an object lesson in party management; Hans Kohl, district secretary of the Fabrikarbeiter-Verband (General Worker’s Union), who taught me whatever I have learned about those trade-union problems which do not appear in books; and Hermann Maass, until 1933 general secretary of the Union of German Youth Associations, with whom in innumerable conversations I discussed and analyzed such problems as the position of intellectuals in the labor movement, the relationship of socialism to the nation state, and the roots of the Nazi movement. Hermann Maass became a victim of the Gestapo in 1944 after he had participated in the abortive attempt to overthrow the Nazi regime.

Of my colleagues at the University of California, many have helped me to clarify my thoughts during the years in which I wrote the book. Especially valuable were my many conversations with my friends Charles A. Gulick, the historian of the Austrian labor movement, and Robert A. Gordon, whose special field of work lies in a different area but whose reaction, perhaps just for this reason and because of the deep understanding which he brought to the purpose of the book, led to the elimination of many weaknesses.

The book was greatly benefited by the painstaking efforts of Mr. Max Knight, of the editorial department of the University of California Press, whose constructive criticism of the manuscript led to the correction of inaccuracies and to the addition of factual information, as well as to improvements in form and style. In regard to the latter, I also received valuable suggestions from Miss Helen Rosenberg to whom, moreover, I am indebted for technical assistance. Mr. Peter Merkl and Mr. George Marchi checked footnotes and supplied bibliographical information. Mrs. Mary Mahan very efficiently assisted the author in compiling the index. Gratitude for bibliographical advice and procurement of literature is due to the library staffs both at the University of California and at the Hoover Institute of War, Peace and Revolution at Stanford University; both collections were extensively used.

The work could not have been completed without the financial aid provided by the Institute of Social Sciences at the University of California, which through the years provided me with funds for assistance in research and in the technical preparation of the manuscript.

C. L.

Contents

Preface

Contents

Introduction: The Origins of Modern Socialism

1 The Three Anticapitalistic Movements

THE SOCIAL-MINDED CONSERVATIVES

EARLY MODERN SOCIALISTS

THE SOCIALISTS OF THE ENLIGHTENMENT

THE FRENCH UTOPIANS

ROBERT OWEN

PROUDHON

SISMONDI

RICARDIAN SOCIALISTS AND EARLY GERMAN ADVOCATES OF SOCIALISM

2 The Beginnings of the Modern Labor Movement

THE FRENCH REVOLUTION AND ITS EFFECT ON LABOR

THE FEBRUARY REVOLUTION AND THE SECOND FRENCH REPUBLIC

THE ANTECEDENTS

A COALITION OF LABOR AND MIDDLE CLASS DETHRONES THE KING

TOWARD CLASS WAR

THE JUNE BATTLE AND THE RUIN OF THE REPUBLIC

THE SIGNIFICANCE OF THE FEBRUARY REVOLUTION

SOCIAL CONDITIONS IN GERMANY BEFORE 1850

3 The Life of Karl Marx

THE FORMATIVE YEARS

THE INTERNATIONAL WORKINGMEN’S ASSOCIATION

THE FRANCO-GERMAN WAR AND THE COMMUNE

THE STRUGGLE WITH THE ANARCHISTS AND THE END OF THE INTERNATIONAL

THE OLDER MARX

4 The Marxian System of Thought

THE ELEMENTS OF THE MARXIAN PHILOSOPHY OF HISTORY DETERMINISM

THE ECONOMIC INTERPRETATION OF HISTORY

HISTORICAL MATERIALISM AND PHILOSOPHICAL MATERIALISM

THE THEORY OF THE INEVITABLE COLLAPSE OF CAPITALISM

THE SOCIOLOGICAL ARGUMENT

THE ECONOMIC ARGUMENT

KARL MARX’s THEORY OF THE BUSINESS CYCLE

SOME OBSERVATIONS ON THE GENERAL CHARACTEROF THE MARXIAN THEORY

ETERNAL TRUTHS AND SUPER-CLASS ETHICS

MARx’s CONTRIBUTION TO THE MERGER OF THE SOCIALIST AND LABOR MOVEMENTS

DETERMINISM VERSUS ACTIVISM

5 French Socialism: Revival and New Crisis

FRENCH SOCIALISM AND THE SECOND EMPIRE

THE WAR WITH GERMANY AND THE COMMUNE

6 The Origins of German Social Democracy

FERDINAND LASSALLE AND HIS WORK

THE FOUNDING OF THE UNIVERSAL GERMAN WORKINGMEN’S ASSOCIATION

LASSALLE, THE LIBERALS, AND BISMARCK

LASSALLEANS AND MARXIANS

7 The German Antisocialist Law

BISMARCK AND THE SOCIALISTS

THE ADJUSTMENT OF THE SOCIALIST PARTY TO THE LOSS OF LEGALITY

THE CARROT BESIDE THE WHIP: SOCIAL INSURANCE

REVOLT AGAINST LAISSEZ FAIRE IN THE MIDDLE CLASS

THE SOCIALISTS OF THE CHAIR

THE STÖCKER MOVEMENT

8 Socialist Recovery in France

LIVING DOWN THE COMMUNE

THE SOCIALIST SECTS

9 German Social Democracy in the Post-Bismarckian Period

FREEDOM BRINGS CONTROVERSY

THE JUNGEN

REVISIONISM

THE NEO-KANTIANS

SOCIALISM AS A POWER IN GERMAN SOCIETY

I. THE SOCIOLOGICAL CHARACTER OF THE PARTY

THE GERMAN TRADE UNIONS

OTHER WORKERS’ ORGANIZATIONS

10 The Problem of Ministerialism in France

ANTECEDENTS: THE DREYFUS CASE

THE CONSEQUENCE OF THE REPUBLICAN VICTORY: THE SOCIALISTS FACE A DILEMMA

SOCIALIST UNITY DELAYED BY BITTER DISSENT

MINISTERIALISM REPUDIATED, UNIFICATION ACHIEVED

JAURES’S INTELLECTUAL LEADERSHIP

11 Revolutionary Syndicalism

12 German Social Democracy in the Early Twentieth Century

THE CLIMAX OF THE CONFLICT BETWEEN MARXISTS AND REVISIONISTS

THE COUNTERATTACK OF THE MARXISTS

COOPERATION WITH NONSOCIALIST PARTIES

THE ELECTORAL TRIUMPH OF 1912 AND THE QUESTION OF PRUSSIAN FRANCHISE

THE TRIUMPH OF GRADUALISM

THE FIGHT AGAINST WAR

THE WEAKNESSES IN THE SOCIAL DEMOCRATIC POSITION

13 The Rise of Italian Socialism

14 The Socialist Movement in Russia

INTRODUCTION

THE BEGINNINGS

THE DECEMBRISTS

SLAVOPHILES AND WESTERNIZERS

PETRASHEVSKY

HERZEN

THE COURSE OF RUSSIAN POPULISM

EMANCIPATION

IDEAS OF CHERNYSHEVSKY, BAKUNIN, LAVROV, AND TKACHEV

TWO TRENDS IN THE NARODNIK MOVEMENT: PROPAGANDA AND TERROR

GROWTH OF THE INDUSTRIAL PROLETARIAT

THE POPULISTS’ REACTION TO THE GROWTH OF CAPITALISM

APPEARANCE OF SOCIAL DEMOCRATIC GROUPS

THE SOCIAL-REVOLUTIONARY PARTY AND THE RUSSIAN SOCIAL DEMOCRATIC LABOR PARTY

REVIVAL OF POPULISM

LENIN AND THE R.S.D.L.P.

THE REVOLUTION OF 1905

THE BOLSHEVIKS SEIZE POWER WITHIN THE R.S.D.L.P.

15 Scandinavian Socialism

SWEDEN

DENMARK

16 The Socialist Movement in Belgium

THE ORIGINS

THE STRUCTURE OF THE BELGIAN LABOR PARTY

THE FIRST SUFFRAGE REFORM

THE PARLIAMENTARY SITUATION

PROGRAM AND POLICIES OF THE LABOR PARTY

LABOR’S DEFEAT IN 1902

THE FINAL BATTLE FOR SUFFRAGE

EFFECTS AND LESSONS OF THE STRIKE

17 The Socialist Movement on the Eve of the First World War

TRADE UNIONS AND SOCIALIST PARTIES

MASSES AND LEADERS

THE PROBLEM OF THE INTELLECTUALS

THE INTERNATIONAL

18 The Causes of the War and the Socialist Position

19 The Outbreak of War

LAST EFFORTS FOR PEACE

THE FOURTH OF AUGUST IN GERMANY

THE FRENCH AND BELGIAN SOCIALISTS FOR NATIONAL DEFENSE

HESITATIONS IN BRITAIN

ANTIWAR MAJORITY AMONG RUSSIAN SOCIALISTS

THE DILEMMA OF THE AUSTRIAN SOCIALISTS

SOCIALISM IN THE NEUTRAL COUNTRIES

THE DEFENSIST POSITION—A POLICY OF OPPORTUNISM?

20 The Emergence of an Opposition

PACIFISTS AND REVOLUTIONARIES

RIGHT-WING EFFORTS TO REVITALIZE THE INTERNATIONAL

THE OPPOSITION BECOMES A POWER

THE GERMAN MAJORITY SOCIALISTS IN A TWO-FRONT STRUGGLE

ZIMMERWALD AND KIENTHAL

GROWING INTRAPARTY CONFLICTS

21 Futile Peace Efforts of 1917

THE GERMAN PEACE RESOLUTION AND THE FALL OF BETHMANN-HOLLWEG

THE PAPAL MEDIATION EFFORT

WHY WAS THERE NO NEGOTIATED PEACE?

22 The Russian Revolution

THE FALL OF TSARISM

DUAL GOVERNMENT

THE BOLSHEVIKS RETURN TO RUSSIA

THE ISSUES OF PEACE AND LAND

BOLSHEVIK PROGRESS AND SET-BACK

THE DISASTROUS JULY OFFENSIVE

THE KORNILOV REVOLT

BOLSHEVIK VICTORY

23 The Stockholm-Conference Plan

THE ECHO OF THE RUSSIAN MARCH REVOLUTION

THE BIRTH OF THE CONFERENCE PLAN

THE BOLSHEVIKS AND STOCKHOLM

THE POTENTIAL SIGNIFICANCE OF THE STOCKHOLM PROJECT

24 The Beginnings of the Bolshevik Regime

THE PROGRAM BEFORE THE SEIZURE OF POWER

PEACE POLICY

TRANQUILIZING THE PEASANT

PARTIAL NATIONALIZATION AND WORKERS’ CONTROL

25 Socialism in the Last Phase of the War

THE MINORITY BECOMES THE MAJORITY IN FRANCE

AN INTERALLIED SOCIALIST DECLARATION

THE GERMAN SOCIAL DEMOCRATS AND LUDENDORFF’S SEMIDICTATORSHIP

26 The German Revolution

MILITARY PRELUDE

LUDENDORFF’S ARMISTICE DEMAND AND THE CABINET OF PRINCE MAX

THE SAILORS’ UPHEAVAL

REVOLUTION IN BAVARIA

THE ABDICATION ISSUE AND THE REVOLUTION IN BERLIN

THE GOVERNMENT OF THE PEOPLE’S COMMISSARS

REVOLUTION IN AUSTRIA

27 THE RUSSIAN CIVIL WAR

MILITARY AND POLITICAL STRUGGLES BETWEEN RED AND WHITE

THE FIRST ANTI-BOLSHEVIK MOVEMENTS

THE BEGINNINGS OF ALLIED INTERVENTION

WHITE ATTACKS AND BOLSHEVIK DEFENSE

RED TERROR

BOLSHEVISM UNDER SIEGE

UNSUCCESSFUL WHITE OFFENSIVES

COLLAPSE OF THE WHITE ARMIES

THE LAST PHASE OF THE STRUGGLE: WRANGEL AND POLAND

A TRAGIC SIDESHOW: MURMANSK AND ARCHANGEL

WHY DID COUNTERREVOLUTION FAIL?

SEQUELS TO THE CIVIL WAR

INTERNAL DEVELOPMENTS IN THE SOVIET REPUBLIC DURING THE WAR AGAINST THE WHITES

WAR COMMUNISM

FACTIONALISM AND RESTRICTION OF INTRAPARTY DEMOCRACY

THE LAST PHASE OF WAR COMMUNISM

THE KRONSTADT REBELLION AND THE NEW ECONOMIC POLICY

THE GREAT FAMINE

28 The Internationals

THE BERNE CONFERENCE

THE FOUNDING OF THE THIRD INTERNATIONAL

EFFORTS FOR INTERNATIONAL PROLETARIAN UNITY

RECOVERY OF THE SECOND INTERNATIONAL

SOVIET ATTACK ON COLONIALISM

29 The Weimar Republic

ARMED CONFLICT BETWEEN SOCIALISTS AND COMMUNISTS DEMOCRACY OR PROLETARIAN DICTATORSHIP?

THE MENACE OF CIVIL WAR

THE ORIGIN OF THE REICHSWEHR

NOSKE SUCCEEDS AT HIGH COST

THE NATIONAL ASSEMBLY ELECTED

NEW COMMUNIST ATTACKS

CONSOLIDATION

THE ACCEPTANCE OF THE VERSAILLES TREATY

THE WEIMAR CONSTITUTION AND ITS PROBLEMS

THE FIRST COUNTERREVOLUTION

UNREST ON THE RIGHT

DISGRUNTLED SOLDIERS

MUTINEERS CONQUER BERLIN

GENERAL STRIKE AND A HELPLESS DICTATOR

DEMOCRATIC VICTORY SPOILED BY STRIFE AND CONFUSION

SOCIALIST DEFEAT AT THE POLLS

30 The Rise of Fascism in Italy

BACKGROUND

POSTWAR RADICALISM

THE ROOTS OF FASCISM

MUSSOLINI ORGANIZES THE MOVEMENT FASCISM OF THE FIRST HOUR

FASCIST TERROR IN THE SERVICE OF THE EMPLOYERS

THE PROTECTORS OF FASCISM

THE SPLIT IN THE ITALIAN SOCIALIST PARTY

PRELUDE TO FASCIST VICTORY

THE PEACE AGREEMENT

THE FASCIST ORGANIZATION CONSOLIDATED

CLASS STRUGGLE DIVIDES THE ANTIFASCISTS

FASCISM TRIUMPHANT

THE MARCH ON ROME

IL DUCE

31 German Socialism in the Inflation Period

DIVISIONS ON THE LEFT

THE HALLE CONVENTION OF THE INDEPENDENTS

INSURRECTION SPLITS THE COMMUNISTS

THE SOCIAL DEMOCRATS RETURN TO THE GOVERNMENT

A REVERSE IN PRUSSIA

REPARATIONS CRISIS! THE CATHOLICS NEED THE SOCIALISTS

THE WEIMER COALITION AND THE STRUGGLE AGAINST NATIONALISM

NATIONAL ACTIVIST FIGHTING GROUPS

ADOLF HITLER

THE ERZBERGER MURDER AND WIRTH’S CONFLICT WITH BAVARIA

NEW TROUBLES AND NEW HOPES

THE DIFFICULTIES OF FULFILLMENT

THE DARING EXPERIMENT: RAPALLO

RATHENAU’s ASSASSINATION AND THE END OF THE WIRTH CABINET

UNIFICATION OF GERMAN SOCIALISM

THE RUHR INVASION AND ITS CONSEQUENCES

THE PERIOD OF PASSIVE RESISTANCE

THE LIQUIDATION OF THE RUHR STRUGGLE

32 Return to Normalcy

PRELIMINARY STABILIZATION

THE DAWES PLAN

THE TURN TO CONSERVATISM

ELECTORAL TRIUMPH OF THE RIGHT

THE GOVERNMENT OF THE BURGERBLOCK

FROM EBERT TO HINDENBURG

CONSOLIDATION OF THE REPUBLIC—WITH LOOPHOLES

33 French Fejormism Wins Its Two-front Strube

THE RED MIRAGE

REFORMISTS LEAD THE TRADE UNIONS

THE GREAT STRIKES

THE SPLITTING OF FRENCH LABOR

THE COMMUNIST WAVE RECEDES

THE SOCIALISTS AND THE PROBLEM OF ALLIANCES

Notes

Introduction: The Origins of Modern Socialism

Since the beginning of history, the desire to abolish, or at least to diminish, economic inequality has been widespread and recurrent. In ordinary times the underprivileged usually accepted their inferior status as customary, rooted in powerful traditions and protected by moral, hierarchical, and legal sanctions. But whenever grievances became particularly grave, or when a crisis weakened the traditional bond, existing inequalities appeared unjustified and the masses revolted. It seems natural enough that a person superior in qualities of leadership, or in other abilities useful to the community, should be rewarded by a greater share of wealth. But even if special economic advantages have originated from unusually great services to the community, the question remains, to what extent the heirs deserve to be rewarded for the merits of their ancestors. Moreover, service to the community, at least during the greater part of history, has been a far less important source of economic privilege than physical violence and arbitrary interpretation of law and custom by the powerful.

Thus economic inequality can rarely be defended by arguments based on its origin. Its case is much stronger if based on considerations of expediency. There is no doubt that the progress of civilization would have been much slower if wealth had been equally distributed. The desires and often the fancies of kings and nobles were starting points for an expansion of needs; concentration of productive wealth was often an indispensable condition for an improved technique of production which made the satisfaction of more wants possible. In England and some other countries, the great technical reforms in agriculture, which began in the sixteenth century, would not have been possible without the formation of large estates under superior management at the expense of the peasantry, and therefore without an intensification of the economic inequality which the modern age had inherited from the feudal order. The rise of the factory system in the eighteenth and nineteenth centuries was preceded by a great concentration of wealth in commercial enterprises, and without that concentration not enough capital would have been supplied for the construction and operation of the new production plants. There have been situations, to be sure, in which economic inequality was not a promotor of, but an obstacle to, economic progress. Toward the end of the Roman Empire, for example, the latifundia had to be broken up because they were then a less efficient form of cultivation of the soil than farming in smaller units which required a more equal distribution of agricultural wealth. But the instances in which the acceptance of more inequality was the price which the nations had to pay for their material betterment have been more frequent in the course of history than the instances in which equalitarian policies were favorable to production. As a rule, the improved methods of production not only required inequality but also increased it, by enriching some persons on a hitherto unheard-of scale. This was emphatically true of the factory system.

The arguments of expediency which could be brought forth in favor of inequality have often convinced kings, statesmen, and economists, but they never have convinced the victims. The peasants who were driven from the land by the landlords of England and Eastern Germany accepted this fate only because they lacked the power to change it. The guildmasters whose existence was crushed by the competition of manufactories or machine-equipped plants could not be persuaded to believe that large-scale industrial enterprise was a blessing. Their natural desire was to undo the changes which had harmed them. In most instances the resentment against newly established inequalities produced the desire to return to the old conditions. However, after the new system had existed for some time, this desire was up against the fact that the new methods had become indispensable. No statesman, for instance, whatever his motives, could decide to undo the work of the industrial and agricultural revolutions in England after the Napoleonic wars, or even in 1800, because the old system would have been unable to feed the population which had increased in the meantime.

The hopelessness of the attempt to turn the wheel back became more definite, or at any rate more visible, in the period which followed the beginnings of modern industry. This is one of the principal reasons why, from about 1800 on, the opposition to inequality developed into a new form. The masses turned more and more away from the idea that one could remove the new sources of inequality by returning to a more primitive organization of production; instead, the lower classes began to adopt the idea that new forms of economic life were possible and necessary to reconcile the use of modern methods of production with a greater degree of social equality.

What should these new forms be? The reason why the new industrialism required concentration of wealth lay in the fact that it required concentrated management of wealth as represented by instruments of production. Later, the growth of the joint-stock company separated management and ownership and made it possible to have the latter more diffused than the former; but even in the diffusion of wealth, not to speak of its control, the joint-stock company has been no more than moderately effective. If the factories were to be retained, and if inequality was to be abolished or even greatly reduced, then only one way seemed possible: the factories, or the instruments of production in general, had to be made communal property. This was the conclusion at which a number of thinkers arrived about the turn of the eighteenth century, and soon they found followers among the masses. It was in the same period that a name was found for the new idea—socialism.

Later we shall say more about that term, but we shall not find a more satisfactory definition than this: Socialism is a system of communal (or social) ownership of the means of production, established for the purpose of making (or keeping) the distribution of income, wealth, opportunity, and economic power as nearly equal as possible. When we speak of socialism in this sense, we mean socialism as an economic order, that is, as a body of institutions. We may also use the term in the sense signifying a trend of thought which leads to the conclusion that an economic order, such as described in the first definition, is feasible or desirable or both; and, finally, the term socialism may signify a social movement which strives to establish that type of economic order.

If we use the term in the last sense, we encounter an important difficulty in keeping its meaning clear. Socialism as a movement has embodied a number of ideas which have historical and psychological, but not strictly logical connections with the proposition that means of production should be socially owned. Some people speak of socialist education, meaning education in a spirit which is related to the motives for a socialist economic order; for similar reasons a pacifist foreign policy is sometimes called socialistic. Generally, these usages are enlightening rather than confusing, though they may annoy a purist logician. But one of the usages is conducive to serious misunderstandings, the phrase a socialist form of government. Socialism, as defined above, is an economic, not a political, order; its existence is imaginable under a dictatorship and under a democracy, under a limited and under an absolute monarchy, or under a republic. No reasonable person will deny that there are important connections between the economic system and the political system. Some socialists believe that democracy will eventually lead to socialism, and that sound socialism is only possible in a democracy. Others think that a dictatorship is necessary to establish socialism. Some socially progressive conservatives have developed the theory that the only political form under which an economic system approximating socialism could exist was a limited or even an absolute monarchy. These theories may stimulate thought in many ways; but their importance only emphasizes the necessity of keeping clear the distinction between an economic and a political order, for their relations cannot be fruitfully discussed if the definitions confuse the characteristics of the objects.

Socialism, as an important movement, is a modern phenomenon. This is not to say that the idea, or even the institution of communal property has never existed before. The institution of communal property in land was frequent in primitive agricultural and pastoral societies, where it was an almost indispensable means of securing the necessary cooperation in the use of the soil, and also in its defense. Remains of this common ownership of land have been preserved, even in the nineteenth century, in the form of the mir in Russia and of the village pasture known as common throughout Europe.

Except for the disappearance of the common and the mirf which occurred in relatively recent times, we know little about the ways in which individual property superseded the institutions of tribal or village communism. It is quite likely that there were many social struggles like the disputes between the Roman plebs and the patricians over the public land. But whatever struggles may have occurred in those earlier phases of civilization, they could have little in common with the modern disputes between socialists and their opponents. As far as there have been groups which stood for the preservation of communal property, they defended a system which was not in the line of technical progress, while today socialism is proposed as an order which would facilitate and promote increased efficiency of production. Moreover, it seems that in those ancient conflicts the replacement of communal by private property in the arable soil was often regarded as inevitable, and that therefore at most times and in most places the struggle was not between the defenders and the opponents of primitive agrarian communism, but between the aristocrats who claimed the soil as their own private property and the masses of the people who demanded a more equal distribution. As long as the main form of wealth is land, social equality can be secured by dividing up the land in equal lots; therefore, in an agricultural civilization, and especially when the advantages of modern large-scale agriculture are unknown, the desire for equality will lead to a demand for equal shares of private property rather than for public ownership. A great socialist movement can only emerge when factories, being indivisible economic units, have become a major part of the national wealth.

Whereas previous institutions of a socialist or communist character have relatively little significance for modern socialism, its intellectual antecedents are important. A number of thinkers found virtues in a system of collective property long before the inequalities which were both cause and effect of modern industrialism became significant enough to supply the motives for a great intellectual effort in favor of socialism and subsequently for a socialist mass movement. Those early Utopians like Thomas More or Campanella would not have obtained any importance through their writings on the ideal state—except so far as this ideal state served as a cloak for the criticisms of the existing state, and therefore as a tool for practical politics in the authors’ own days—if the great socialist movement of the nineteenth century had not come to life. Since it did emerge, the fact that the trail was already blazed undoubtedly facilitated and accelerated the building of the road on which intellectual leaders and soon an army of followers were to travel.

The emergence of socialism was also facilitated by the fact that during the period of mercantilism people had become familiar with the idea that the government should, through systematic efforts, secure the wellbeing of the masses. To be sure, this idea has never been entirely absent; in the Middle Ages there were a few great kings, like Edward I of England, and a number of territorial lords who tried to develop a comprehensive policy of promoting the economic welfare of their subjects. In some degree this has always been the concern of intelligent rulers, since hungry people can neither work hard, nor pay high taxes, nor successfully fight in battles. But in the sixteenth and seventeenth centuries economic action for the sake of the country became more generally emphasized as a responsibility of government than ever before. It is true that the conception of what should be considered the economic interest of the country was not always favorable to the lowly; but several mercantilist rulers, such as Elizabeth of England and Frederick II of Prussia, firmly established the idea that the king was the protector of the weak, and that he should so regulate economic life as to give his subjects a decent living. In its beginning phase, however, modern socialism did not directly take up this line of thought; witness the fact that the first socialist thinkers, with a few notable exceptions, did not conceive of their own ideas as a plan to be immediately realized on a national scale, or even to involve fundamentally new economic responsibilities of the national government; they rather considered their doctrines a body of devices for the organization of local self-governing communities, and this conception did not at all fit into the mercantilistic philosophy of government which so strongly favored centralization. It was only in its second phase that socialism became a scheme for the national guidance of an economy. But the emphasis which mercantilism laid on the economic responsibilities of government still appears as preparatory work for socialism.

The great democratic movement of the eighteenth century is certainly one of the most important roots of socialism; though the economic philosophy of the founders of the American and French republics was anything but socialistic, a wing among the American as well as the French revolutionaries recognized that the idea of equality, cherished by the revolution, had inescapable economic implications.

It is impossible to establish a complete pedigree of a great intellectual and political movement. Thus it would be futile to attempt to enumerate, let alone describe, the philosophies and movements which form the ancestry of modern socialism. Proudhon and Karl Marx would not have been possible without Plato, nor the British Labour party without the medieval guilds. The attempt, made in the preceding paragraphs, to uncover some of the more direct roots of socialism should not be taken to imply that the enumeration is complete. All previous civilization has contributed to the emergence of nineteenth-century socialism, just as it has to the evolution of other contemporary systems of thought; and while we cannot trace all the many streams back to their sources, it is interesting and illuminating to go back part of the way toward the origin of a few of the larger ones.

Modern socialism is a reaction to industrialism. Therefore, in order to explain the origin of modern socialism it is necessary to show some of the roots from which modern industry grew. The modern industrial system could originate only under definite technical, institutional, and social conditions. There had to be inventions. There had to be a market on which specialized products could be sold, and money had to be in general use, not only because it facilitated exchange, but also because money made it possible to survey quickly the value of a number of cost elements and to compare them with the value of the product. Finally, there had to be entrepreneurs, equipped with wealth available for investment; and workers, legally entitled to move from place to place and to sell their labor—that is, not in a state of serfdom—and economically forced to sell their labor, having no means to produce on their own account.

We will not endeavor to explain the miracle that within the past century and a half a comparatively small part of mankind, the Western nations, has contributed more to the perfection of man’s control of nature than all the races of the world, including the Westerners themselves, had done previously in many thousands of years. Why did not the Chinese, whose civilization is so much older, discover the use of steam and electricity long before the so-called Caucasians? Although this question is not fully answerable, we may point out the most important intellectual tools which served the West in building up modern technical civilization.

The period of inventions became possible only through a combination of two intellectual trends. The Western mind in the modern age combines an interest in observation by experiment with an interest in philosophy—the latter serving not only as a guide to action, but as a search for knowledge about the structure of the universe and the nature of knowledge itself. Experiment gave man the facts, but philosophy, especially in its mathematical expressions, enabled him to discover their interrelations. It is probably true that those two interests have at no other time and in no other part of the world, been coexistent as strong intellectual forces. Ancient Greece had essentially the same philosophical interests which we have, but its interest in empirical science was underdeveloped and did not lead to an efficient experimental technique. Chinese philosophy was essentially pragmatic, humanitarian wisdom rather than an exploration of the conditions which make the existence of men and things possible, and therefore of no great help to the progress of technics. Scholasticism limited rather than promoted research. Of course, all this does not mean that empirical research, together with an urge to find the basic laws which govern natural phenomena, can be found only in the modern Western world, and that consequently other nations and other ages could not have had technical progress. Man has been improving his production technique everywhere and all the time throughout his whole history. Nowhere would such an improvement have been possible without men being curious about natural phenomena and their basic relationships. What gave the modern age of European civilization its outstanding importance for the perfection of man’s command over nature is the strength of that curiosity and the ensuing magnitude of its effects.

Among the characteristics of the continuous process which leads to an ever greater power of man over natural forces there is one which deserves particular attention, for reasons which will become clear in the discussion of Marxian socialism. The development of production technique, with the exception of its earliest phases, is very nearly a movement along a oneway road. In the course of improvement of technical methods, it was inevitable that the technique of the preservation of knowledge should be improved along with other techniques. When knowledge can be well preserved, even the less productive periods are likely to add more to the stock of knowledge than they will lose. To be sure, setbacks are not entirely impossible; if the organization of the political community is destroyed, life may become so difficult for the individual that he has no time to get the education necessary for the understanding of what his forebears have written, and may therefore become indifferent to the preservation of the documents themselves. This is what happened to Western civilization after the dissolution of the Roman Empire. But since then, book production and library technique have greatly reduced the probability of serious loss in our stock of knowledge during periods in which men’s interest is distracted from the progress of science; and even if physical destruction were added to lack of interest, it would have to be almost universal to do a damage comparable to that inflicted upon civilization in the Dark Ages. Since technical progress was bound to grow almost incessantly, mankind was probably destined to live in an industrial age some day; but that this age came as suddenly as it did a few generations ago, in other words that the Industrial Revolution was a revolution, was the result of a unique coincidence of intellectual elements.

Moreover, the fertility of the inventive spirit would not have revolutionized the productive methods if there had not been the institutional presuppositions for large-scale, specialized production. Business technique and market organization, including credit facilities, were developed by commercial capitalism, by capitalist agricultural enterprise, and by the pioneer enterprisers of the big manufactories who assembled many workers under one roof, taking advantage of the division of labor, several centuries before machines were invented. It is evident that these earlier changes were real pacemakers for modern industrialism. Capitalism, however we may define it, did not originate with the factory system.

Of equal importance with the emergence of capitalist rationality and business technique was the emergence of social conditions required for modern industry. There had to be people in a position to become entrepreneurs, and other people who were able and forced to become workers. A good deal has been written about the origin of the entrepreneurs, and it is certainly interesting to discuss whether they came primarily from the landowning class, from the merchant princes of the commercial cities, or from among the master artisans with more than average cleverness and initiative. However, it is clear enough that the feudal system, as well as the policy of the government in the period when it tried to disintegrate the feudal system, offered a number of possibilities to various people to grow rich. Thus the necessary accumulation of wealth may have been effected in many ways and by many groups more or less simultaneously, although commercial enterprise was probably the greatest single source of industrial capital. Nor is there any reason to doubt that many people in all strata of life had acquired the psychological propensities necessary for entrepreneurs.

But from where did the workers come? We know how difficult it is, as a rule, to introduce industry in an agricultural country, as long as people are not accustomed to the use of much money in their daily lives and do their farming along traditional lines. Under such conditions it usually takes a long time before masses of people appreciate money wages and are willing to submit to the stringencies of factory life. How could millions of the European peasant population be turned into factory workers in a comparatively few decades?

The answer is clear enough for England, where the Industrial Revolution began: there it was partly preceded by, and partly coincided with, that great change in agriculture to which we have already referred. Under the feudal system, the English lords and knights had been too busy with fighting and military training and with their duties of public administration to keep a large acreage under their own management; they had been glad to give out land to serfs. When the king’s mercenaries had taken the place of feudal levies in keeping the peace internally and fighting the foreign wars, the majority of the nobles and the gentry became free to devote their time to agriculture and interested in making money by introducing more rational methods of production; now they wanted to enlarge their own holdings and to cultivate them, or use them as pasture, with the aid of hired laborers; or to lease their enlarged holdings to a few tenants selected for their efficiency, employing modern methods and therefore able to pay high rents. To this end the peasants had to be driven from the land. As Karl Marx and many later historians have stated, much of the labor force that modern industry needed was created by the process called enclosures—because the fencing in of the land, symbol and instrument of the abolition of the ancient pasture rights of all villagers, was one of the foremost means to force the peasants out. The British country folk did not flock to the factories because they were attracted by conditions there; they accepted factory employment because they had been expelled from agriculture. Recent research, it is true, makes it doubtful whether the connection between enclosures and the labor supply for the early factories was as direct as historians assumed in the nineteenth century, and it is now sometimes argued that the accelerated population increase, rather than the enclosures, was the primary source of industrial labor. But the steep rise of the population curve from 1750 to 1830 can more plausibly be regarded as an effect than as a cause of industrialization. In any event, the occupational structure of the British population in the preindustrial age makes it inevitable that the majority of the new generations entering the British labor market after 1750 consisted of former peasants’ sons who would have sought a living on the land if they had not found agricultural opportunities barred to them by the enclosures. It was the latter that created the great labor force which was one of the most important causes of England’s rapid and early industrial development.

The process which gave the land to the nobility and squirearchy in England was a part of a European process of differentiation between large- estate countries and peasant countries. The feudal system had established a symbiosis between the peasant and the large owner, but when that system had disintegrated, the two classes could no longer live side by side. Sociologists and historians have hardly done enough to explain the reasons for this impossibility, but there is no question about the fact; in every country of Western and Central Europe one of two things happened between 1500 and 1850: Either the large estate owners disappeared and their land was divided up among the peasants, as in France, Southern and Western Germany, and Austria, or the large estate owners remained and most peasants were driven out, as in England and Eastern Germany. Russia was the one great land in which the countryside retained the feudal aspect of villages situated closely to the large estates, the former manors, and this was due to the long survival of Russian feudalism which even in its most extreme form—the serf-landowner relationship— disappeared only as late as 1861. This Russian peculiarity became very important in 1917, in the two Russian revolutions of that year, for it gave the problem of land reform in Russia an aspect entirely different from that in any other European state.

The former peasants who had lost their places formed the first army of recruits for the rising industry; a second supply of manpower was opened up by the development of large-scale industrial production itself. In many fields mechanized industry forced the small artisan out of business; nothing was left to him but to seek employment as an industrial worker. This second source was of particular importance in countries where, unlike England, the peasants had been the victors in their struggle with their former feudal lords. However, even in these countries the labor force of industry received additional recruits from the agricultural sector, as soon as general improvement of health conditions increased the agricultural population so much that despite the development of intensive agricultural methods, the younger sons and daughters of farmers could no longer draw their livelihood from the land but had to find employment elsewhere.

The great misery of the dispossessed crowd of former peasants has been a determinant of English social history for centuries; it greatly intensified the social difficulties under which England suffered in the beginning of the nineteenth century. It both promoted the idea that industrialism was necessary to open up new opportunities of employment, and greatly strengthened the opposition of the underprivileged, who very soon turned against the new industrial system. Since England’s economic and social development between 1750 and 1850 determined the basic features of capitalism, the effects of the great change in English agriculture have influenced the economic and social history of the world.

Socialism was not only a reaction to the realities of early capitalism; it was also a reaction to the philosophy which justified these realities and was partly responsible for the favors which capitalistic business was granted by the political powers. This philosophy has its roots in the period of mercantilistic thought. Mercantilism originated as the economic philosophy of absolutism, and the outlook of the mercantilistic writers was largely determined by the specific needs of the absolute monarch in his struggle with the feudal powers. The mercantilists had originally a very limited insight into the nature of economic life, and a very narrow conception of what was economically advantageous. But in the course of the two centuries—from 1500 to 1700—in which mercantilism dominated economic thought (this is only the period of its unchallenged domination, while its influence was to be felt for at least a century more), it went through a great internal development which refined its arguments and broadened its scope, so that in the end it had gone a long way toward discovering the real object of economic science; the interrelations between economic events of seemingly different character, as for instance between the price on the one hand, quantities demanded and supplied on the other; or between the amount of money and the general level of prices. In some ways mercantilism was even more similar to the modern approach than its successor schools, especially in that mercantilism had a dynamic view of economic life, being interested in processes of development rather than in static situations. However, mercantilism was greatly handicapped in its development toward a comprehensive theory of economics by the overemphasis which most of its representatives placed upon money as a form of wealth.¹

The school which followed mercantilism, the physiocrats, made some significant contributions. They considered land rather than money the most important form of national wealth and thus understood the nature of the latter better than the majority of mercantilists. Since the physiocrats were not committed to the belief that the surest way to add to the national wealth was to increase the nation’s stock of precious metals, they were able to see the importance of the producer as such, not only of the producer of exportable goods. They considered the farmer—either the peasant or the large tenant farmer—the typical producer and demanded an economic policy favoring that class, although they were by no means hostile to the landowning nobility. They were able to develop a much more comprehensive picture of the exchange of commodities within a national economy than even the advanced mercantilists had possessed. To be sure, the picture (the physiocrat Quesnay really drew it as a tableau économique) was still confused, and flows of money were not clearly distinguished from flows of goods, but the picture made it clear that economic life was dependent on a comprehensive system of internal exchange, regulated by the value of commodities and services. It was only then that it became possible to regard economic life as a self-steering mechanism, with which the government could not arbitrarily interfere without causing undesired effects. Incidentally, the important idea that the essential thing in economic life (for the nation as well as for the individual) is to obtain a net product—a surplus of product value over cost value—first received its due emphasis in physiocratic philosophy.

The physiocrats tied the idea of self-steering economic machinery up with the idea of a natural order which dominated their age, the Age of Reason. Their economic arguments were not sufficiently refined to make a good case for noninterference, but were supplemented by the conviction that it is generally wholesome to let nature take its course, because the original state of unregulated nature represents a more perfect order than that which man has tried to make by organized effort. The idea that an individualistic form of economic life is something more natural than an economy organized by government (though in fact every form of economy is man-made, and the collectivism of the ants is just as natural as the individualism of the bear) was first established by physiocrat thinkers, and it greatly influenced economic and social thought even long after the general philosophy of the natural order was abandoned.

Whatever objections we may have against the concept of a natural economic order, it proved beneficial for the progress of economic science that the physiocrats introduced, or at least reemphasized, the analogy between the body economic and organic bodies. People knew, of course, that interference with any part of a living organism might affect other parts, and that the wholesome or adverse result depended on the sum total of all these effects. Now this insight was applied systematically— sporadically, it had been done in the mercantilist period already—to the body economic, and thereby the foundation was laid for the kind of economic analysis that could effectively guide economic practice. No true economic science and no rational reform of social conditions—except improvement of detail on a merely empirical basis—are possible as long as the evaluation of an economic change is only based upon the observation of its most immediate effects. The essence of economic science is the investigation of the more remote effects of economic changes, which are not visible to the layman’s eye but may nevertheless be more important than those which are conspicuous to everybody without much analysis.

Here lies the tremendous importance of the work which the advanced mercantilists started, the physiocrats greatly promoted, and the classical school all but completed: The development of economics from an empirical collection of facts to a systematic investigation of economic interrelations. This work was as important for the rise of socialism as it was for economics in general. Without Adam Smith and Ricardo, there would have been no Marx, for the methods of economic analysis which the classicists had established were an instrument which Marx had to use in his investigation of the nature of capitalism.

The reason why Adam Smith and Ricardo were able to take such a great step toward a more systematic, clear, and realistic view of economic life lay in their broad concept of national