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Indeed, one
of the chief respects in which history has pursued a somewhat different
course from that expected by Marx has been in the failure of capitalist
society to attempt _immediately_ this solution of the trust problem
through government ownership. Marx expected that this attempt would
necessarily be made as soon as the monopolies reached an advanced state,
and that the resulting economic revolution would develop into a
Socialist revolution. But this monopolistic period has come, the trusts
are rapidly dominating the whole field of industry and government, and
yet it seems improbable that they will be forced to any final compromise
with the small capitalist investors and consumers for some years to
come. In the meanwhile, no doubt, the process of nationalization will
begin, but too late to fulfill Marx's expectation, for the large and
small capitalists will have time to become better united, and their
combined control over government will have had time to grow more secure
than ever. The new partnership of capitalism and the State will, no
doubt, represent the small capitalists as well as the large, but there
is no sign that the working people will be able to take advantage of the
coming transformation for any non-capitalist purpose. Nor did Marx
expect national ownership to increase the relative strength of the
workers _unless it was accompanied by a political revolution_.

Another vast capitalist reform predicted by Socialists since the
Communist Manifesto (1847) is nationalization or municipalization of the
ground rent or unearned increment of land. At first Kautsky and others
were inclined to expect that nothing would be done in this direction
until the working classes themselves achieved political power, but it
has always been seen from the days of Marx that the industrial
capitalists had no particular reason for wishing to be burdened with a
parasitic class of landlords that weighed on their shoulders as much as
on those of the rest of the people. Not only do industrial capitalists
pay heavy rents to landlords, but the rent paid by the wage worker also
has to be paid indirectly and in part by the industrial capitalist: "The
quantity of wealth that a landlord can appropriate from the capitalist
class becomes larger in proportion as the general demand for land
increases, in proportion as population grows, in proportion as the
capitalist class needs land, _i.e._ in proportion as the capitalist
system of production expands. In proportion with all this, rent rises;
that is to say, the aggregate amount of wealth increases which the
landlord class can slice off--either directly or indirectly--from the
surplus that would otherwise be grabbed by the capitalist class

The industrial capitalists, then, have very motive to put an end to this
kind of parasitism, and to use the funds secured, through confiscatory
taxation of the unearned increment of land, to lessen their own
taxation, to nationalize those fundamental industries that can only be
made in this way to subserve the interests of the capitalist class as a
whole (instead of some part of it merely), and to undertake through
government those costly enterprises which are needed by all industry,
but which give too slow returns to attract the capitalist investor.

This enormous reform, in land taxation, which alone would put into the
hands of governments ultimately almost a third of the capital of modern
nations, was considered by Marx, in all its early stages, as purely
capitalistic, "_a Socialistically-fringed attempt to save the rule of
capitalism, and to establish it in fact on a still larger foundation at
present_."[91] Indeed, I have shown in a previous chapter that radical
reformers who advocated this single-tax idea, along with the
nationalization and municipalization of monopolies, do so with the
conscious purpose of reviving capitalism and making it more permanent,
precisely as Marx says. The great Socialist wrote the above phrase in
1881 (in a recently published letter to Sorge of New York) after reading
Henry George's "Progress and Poverty," which had just appeared. He calls
attention to the fact that James Mill and other capitalistic economists
had long before recommended that land rent should be paid to the State
so as to serve as a substitute for taxes, and that he, himself, had
advocated it in the Manifesto of 1847--among _transitional measures_.

Marx says that he and Engels "inserted this appropriation of ground rent
by the State among many other demands," which, as also stated in the
Manifesto, "are self-contradictory and must be such of _necessity_." He
explains what he means by this in the same letter. In the very year of
the Manifesto he had written (in his book against Proudhon) that this
measure was "a frank statement of the hatred felt by the industrial
capitalist for the landowner, who seems to him to be a useless,
unnecessary member in the organism of Capitalist society." Marx demanded
"the abolition of property in land, and the application of all land
rents to public purposes," _not because this is in any sense the
smallest installment of Socialism, but because it is a progressive
capitalistic measure_. While it strengthens capitalism by removing "a
useless, unnecessary member," and by placing it "on a still larger
foundation than it has at the present," it also matures it and makes it
ready for Socialism--ready, that is to say, as soon as _the working
people capture the government and turn the capitalists out, but not a
day sooner_.[92] Until that time even the most grandiose reform is
merely "a Socialistically-fringed attempt to save the rule of

Other "transitional measures" mentioned by Marx and Engels in 1847, some
of which had already been taken up as "Socialistically-fringed attempts
to save the rule of capitalism" even before their death were:--

The heavily graduated income tax.
The abolition of inheritance.
A government bank with an exclusive monopoly.
A partial nationalization of factories.
(No doubt, the part they would select would be that operated
by the trusts.)
Government cultivation of waste lands.

Here we have a program closely resembling that of "State capitalism." It
omits the important labor legislation for increasing efficiency, since
this was unprofitable under competitive and extra-governmental
capitalism, and in Marx's time had not yet appeared; _e.g._ the minimum
wage, a shorter working day, and workingmen's insurance. As Marx and
Engels mention, however, the substitution of industrial education for
child labor (one of the most important and typical of these reforms),
they would surely have included other measures of the same order, had
they been practicable and under discussion at the time.

There can be little doubt that Marx and Engels, in this early
pronunciamento, were purposely ambiguous in their language. For example,
they demand "the extension of factories and instruments of production
owned by the state." This is plainly a conservatively capitalistic or a
revolutionary Socialist measure entirely according to the degree to
which, and the hands by which, it is carried out--and the same is
evidently true of the appropriation of land rent and the abolition of
inheritance. This is what Marx means when he says that every such
measure is "self-contradictory and must be such of necessity." Up to a
certain point they put capitalism on "a larger basis"; if carried beyond
that, they may, _in the right hands_, become steps in Socialism.

Marx and Engels were neither able nor willing to lay out a program which
would distinguish sharply between measures that would be transitional
and those that would be Socialist sixty or seventy years after they
wrote, but merely gave concrete illustrations of their policy; they
stated explicitly that such reforms would vary from country to country,
and only claimed for those they mentioned that they would be "pretty
generally applicable." Yet, understood in the sense in which it was
originally promulgated and afterwards explained, this early Socialist
program still affords the most valuable key we have as to what Socialism
is, if we view it on the side of its practical efforts rather than on
that of abstract theories. Marx and Engels recognize that the measures I
have mentioned must be acknowledged as "insufficient and untenable,"
because, though they involve "inroads on the rights of property," they
do not go far enough to destroy capitalism and establish a Socialistic
society. But they reassure their Socialistic critics by pointing out
that these "insufficient" and "transitory" measures, "in the course of
the movement, outstrip themselves, _necessitate further inroads on the
old social order_, and are indispensable as a means of entirely
revolutionizing the mode of production." (My italics.)

That is, "State Socialism" is indispensable as a basis for Socialism,
indeed necessitates it, provided Socialists look upon "State Socialist"
measures chiefly as transitory _means_ "to raise the proletariat to the
position of ruling class"; for this rise of the proletariat to the
position of ruling class is necessarily "the _first step_ in the
revolution of the working class."

From the day of this first step the whole direction of social evolution
would be altered. For, while the Socialists expect to utilize every
reform of capitalist collectivism, and can only build on that
foundation, their later policy would be diametrically opposed to it. A
Socialist government would begin immediately an almost complete reversal
of the statesmanship of "State Socialism." The first measure it would
undertake would be to begin at once to increase wages _faster than the
rate of increase of the total wealth of the community_. Secondly, within
a few years, it would give to the masses of the population, according to
their abilities, all the education needed to fill _from the ranks of the
non-capitalistic classes_ a proportion of all the most desirable and
important positions in the community, corresponding to their numbers,
and would see to it that they got these positions.

It is undoubtedly the opinion of the most representative figures of the
international Socialist movement that there is not the slightest
possibility that any of the non-Socialist reformers of to-day or of the
near future are following or will follow any such policy, or even take
the slightest step in that direction; and that there is nothing
Socialists can do to force such a policy on the capitalists until they
are actually or practically in power.

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Keywords: transitional, production, taxation, direction, wealth, merely, foundation, people, expect, socialistically-fringed
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