Chapter 5 - The Part Played by Machine Development
We perceive, then, the part that mechanical development and advancing technology play in producing crises and unemployment. We see, too, that these crises are periodic and recur at all stages of capitalistic evolution from the era of handicraft to the present. These periods of recurrence are called the "Business Cycle" by Roger Babson and others. They have been analyzed by capitalist economists from every possible viewpoint. Wesley C. Mitchell, Irving Fisher, Paul Douglas, Roger Babson and innumerable others have gathered the most exhaustive data and assigned the most various reasons for the cyclical slump into depression from peaks of prosperity. Psychology and astrology have been seriously involved as explanations of the phenomena. Prof. Irving Fisher is inclined to think that astronomical causes such as spots on the sun, periodic diminution of solar heat radiation and the conjunction of the earth and other planets are factors in causing the panics. The one perfectly obvious reason for the cyclical slump is forbidden—surplus value in the form of debt burdens laid upon industry, such as over issues of speculative capital and excessive bond issues based upon speculative productive power of the workers in industry. The cumulative character of investment capital drawn from surplus value must, of necessity, make these speculative crises more and more severe and more world-wide in scope. The only thing to consider in this present, the world's worst and longest period of stagnation and depression caused by the capitalist system, is whether or not it is the inevitable, final collapse from which there can be no recovery under capitalism. And while we are trying to answer this question, it is well that we reiterate our original statement that it is not the technological and mechanical advance that produces the crisis and that must ultimately end in abandonment of the entire system of uncontrolled private ownership of industry and the ungoverned capitalist mob rule of the economic structure by which the entire world makes its living through labor. The advancing machine processes are no more to blame than advancing education, advancing science, advancing progress in general. It is the social relations that are to be adjusted to the changing technology, and not the technology that is to be adjusted to. the established and obsolete social relations. As H. M. Hyndman has said, "Facts move faster than human minds." The human mind must catch up with the facts. And in this connection let us quote the statement of Karl Marx (Vol. 1, "Capital", Swan Sonnenschein Edition) :
Capital is not a thing, but a social relation between persons established by the instrumentality of things.
The "things" in this reference are the implements and means of producing wealth, owned by the capitalist class. The "social relation" is that of capitalist and wage slave. This social relation is established by means of surplus value—the product of unpaid labor which is withheld from the worker by the capitalist through the division of the day's work into necessary labor and unnecessary or surplus labor.
The social relation between the capitalist and the wage slave existed a long time before the accumulation of capital was sufficient to offer means, incentive and stimulation to the general improvement of the tools of production. It began to exist when the master craftsman of the middle ages engaged the services of journeymen and apprentices. Through the accumulation of wealth produced by the handicraft of his "help" and the sale of the commodities produced, the master craftsmen became separated economically from his journeymen. From guild-master to merchant and manufacturer was a step and it was from the rapid accumulation of manufacturing wealth that surplus value became both a means and an incentive to the invention and introduction of power-driven machinery. We thus see that the relation of capital to labor antedated machinery and was its genesis, not its result.
But lest we give the capitalist undue credit for stimulating progress in the arts and sciences, it is well to differentiate right here between "capitalism" and the "capitalist". It was not the capitalist who invented all the vast complex of mechanical devices that make up the modern technology of industry. Inventions are social growths. Most inventions arise from the use of the machines by workers. Most of the world's greatest inventors have died poor—stripped of the fruits of their genius and patient labors by capitalist promoters. The intricate character of modern machinery represents the aggregate of small contributions and accretions from the hands and brains of thousands of obscure workers and inventors who died in their obscurity while the clever promoter capitalized the invention or process and reaped a harvest of surplus value from the exploitation of both the inventor and the workers who produced the increased volume of wealth. The great capitalists are strange combinations of gambler, adventurer, huckster and politician; they are neither scientists nor inventors. The Rockefellers, Morgans, Insulls, Kruegers, Weyerhaeusers, Carnegies, Schwabs, and their like never contributed a single valuable idea or discovery to society. It is not the Marconis, De Forrests, Steinmetzs and Michaelsons that today dominate the financial world and reap the harvest from their benefits to mankind.
Not even as organizers of industry are the capitalists either original or able. Their failure as administrators is clearly shown by the haphazard and wasteful manner in which they have manipulated the banks, the railroads and the natural resources of the country. They accumulate their vast holdings as frequently by wrecking and mal-administering industry as by promoting it. In every national crisis of war or depression, the first step toward efficiency is to undo the evil done by their greed and incompetency as stewards of the public weal. The government took over the railroads during the war to reorganize them into a state of efficiency. It called in boards of technical experts to produce results. It is necessary in the present panic to consult the "brain trust" before the politician and capitalist can act intelligently.
In the beginnings of capitalism the rate of accumulation of surplus value was necessarily slow, being generated from the primitive processes of handicraft. It acquired momentum like a snowball rolled down hill as the general demand for commodities increased. Trade developed rapidly between the nations, the producers of raw material in undeveloped nations exchanging their product for the manufactured product. Manufacture succeeded handicraft and the mechanical development increased in speed throughout the capitalistic nations. The power-driven factory succeeded hand-manufacture. Revolution followed when the agrarian landlords attempted to stay the tide of wealth and power that swept into the hands of the previously despised trading and manufacturing classes by the vast accumulations of capital and commodities. The feudal system collapsed and the feudal aristocracy was displaced by a hitherto unprivileged class—the bourgeoisie.
It should be clear from what has preceded that the existence of the capitalistic "social relation" essential to the existence of the capitalist system depends upon the accumulation of surplus value. And this accumulation depends in turn upon the co-existence of undeveloped, non-industrial raw-material producing regions with manufacturing regions, each exchanging its products for those of the other. The surplus value which is the source of capitalist accumulation arises from the conversion of the raw material or the natural resource into the manufactured produce or usable commodity through the instrumentality of labor applied to machinery and the natural resources. It is the value transferred from human labor to the raw material in the process of manufacture or conversion into commodities that creates the "profit" of the capitalist. It is derived solely from the exploitation of unpaid labor. The paid-for portion of the day's work produces no profit. Quite naturally, the raw-material producing nations prefer to develop their own manufacturing resources and thus save this profit for themselves. So capital is borrowed from the accumulations of surplus value in the manufacturing nations and used to develop the industries of the less developed regions. This, as has been shown, constantly reduces the fields open for exploitation, narrows the market and ultimately renders the taking of surplus value impossible; for, although surplus value arises from production only, it cannot be converted into either capital or revenue until it has passed into the money-form through sale. It follows that capitalism can exist only as long as it has open markets and regions undeveloped capitalistically in which to expand, for the condition of profit-taking requires that the worker who produces the values shall always produce more for the capitalist than he receives in wages or purchasing power. A stabilized exchange between the producers or workers and their exploiters is, therefore, impossible. Machinery and technology are the means through which surplus value is increased at the expense of the worker and thereby hasten the ultimate collapse of the capitalist system.
Next page: Chapter 6 - The Modern Machine Era