This section is from the "Economics In Two Volumes: Volume II. Modern Economic Problems" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 5. The two pillars of "scientific" socialism. Scientific communism was to be based upon two immovable pillars, the one economic, the other historical (or historico-philosophical). The one was the labor theory of value, by which Marx sought to show that all profits and incomes from investment were due virtually to robbery of the wage-workers.4 "Capital," that is, the ownership of the means of production, was declared to be the instrument of this "exploitation."
3 See Vol. I, p. 502, on communism and value theory.
The other pillar was "the materialistic philosophy of history," that is, the explanation of all the intellectual, cultural, and political changes of mankind from the side of the material economic conditions as causes. As Engels expressed it, "The pervading thought that the economic production with the social organization of each historical epoch necessarily resulting therefrom forms the basis of the political and intellectual history of this epoch." This doctrine denies that, in an equally valid sense, biological changes in brain, and cultural changes in science, arts, and education, cause the mechanical inventions and improved processes and thus alter the form of economic production.
§ 6. Aspects of the materialistic philosophy of history. Marx's general philosophy of economic materialism had three minor propositions or doctrines. (a) The doctrine of increasing misery; capital in private hands results in the "exploitation" of the workers as explained by the economic theory of surplus value (labor theory of value) ; this causes and must cause the steadily increasing degradation of the masses. (b) The doctrine of the class conflict; all history is a record of the class struggle between those who have property, the ruling classes within the nations, and those who have not, the oppressed working class, (a conception of history blind to most of the great international conflicts). The class conflict was declared to be growing more sharply marked and bitter than ever before; "the entire human society more and more divides itself into two great hostile camps, into two great conflicting classes, bourgeoisie and proletariate." (c) The catastrophic theory; the final and inevitable result of this misery and class conflict must be a revolution, when the downtrodden workers will throw off their chains and "expropriate the expropriators," and institute the communistic order in place of capitalism.
4 See Vol. I, pp. 210, 228, 502 on the labor-theory of value.
§ 7. Utopian nature of "scientific" socialism. The term "scientific" set in contrast with "Utopian" was meant to imply that the doctrine of Marx was not "utopian" (a word that had come to mean fanciful and impracticable). Marx had a contempt for the romances of the ideal state and for what he deemed to be the unfounded speculations of earlier prophets of communism. But Utopian (from utopia, Greek for no place) means nonexistent, and Marxian socialism surely was that. The words "experimental" or "actually at work" would have been a more logical contrast with " Utopian" than is the word "scientific." Marx and his followers likewise had a contempt for the communistic experiments, or settlements and colonies, which by the scores had been started and had failed, bringing discredit upon all communistic proposals. The beauty of "scientific" socialism for the purpose of discussion was that it never could be tried on a small scale, or tried at all until a whole nation adopted it; therefore, its adherents believed that no facts of history or of human nature could be used to disprove its workableness.
The old time "scientific" socialist had a lofty scorn for any less dogmatic philosophy than his own or for any less sweeping social change than that he expected. Moderate social reform to him was but temporizing; indeed, it was evil, inasmuch as it helped to postpone the inevitable, but in the end, beneficent catastrophe of the social revolution. A step-by-step movement toward socialism, state socialism,5 even of a pretty sweeping character, was, to the old-time Marxians, not really socialism at all. Some explanation of this attitude is found in the extremely limited manhood suffrage and in the aristocratic class government of most European countries, especially of Germany; so that, as the party socialists saw it, multiplying state enterprises but increased the power of the ruling, and eventually of the militarist, class. The social-democratic leaders felt that until they themselves were in power, the growth of "state socialism" would be a calamity for the nation. The events of 1914 may make our judgment tolerant toward their feeling.
5 See above, § 3.
§ 8. Its unreal and negative character. The so-called "scientific" socialism had, therefore, a peculiarly unscientific spirit; for, in a modern sense, science implies a patient search for truth, not a sudden revelation; a constant testing of opinions by observation and experiment, not a dogmatic conviction that refuses the test of reality. "Scientific" socialists talked much, and still talk much, of the "evolution" of social institutions; but they refused to admit the essential condition for institutional evolution, the competitive trial on a small scale, of a new form of economic organization to prove its fitness to survive. Indeed, communism had been tried on a small scale many times in the communistic societies, and had always failed in a brief time.
Lincoln said that a man's legs ought to be long enough to reach to the ground; but "scientific" socialism was not built on that plan. To be sure it contained many elements of truth, but these were so distorted that the result was a caricature of history, of philosophy, of economics, and of prophecy. The most important influence of radical socialism has been exerted through negative criticism. It has performed the function of a party in opposition, relentlessly hunting out and pointing out the defects of existing institutions, arousing the smugly contented, and, by its very recklessness and bitterness, inspiring at times a wholesome fear of more revolutionary evils. This has been a real service to the cause of moderate and constructive reform in the more democratic countries of western Europe and in America.
§9. Revisionism in the Marxian ranks. "Marxism" or Marxian "scientific" socialism, from the time of its promulgation was studied by a small but increasing group of disciples as a well-nigh inspired and perfect revelation of economic truth. Das Kapital became known as the communist bible; zealous followers held it to be their duty to accept it, even where they could not understand it or reconcile it with the realities around them. The various doctrines composing the Marxian system were expressed in phrases ambiguous enough to permit much loose and shifting thought. But vigorous criticism forced upon the attention of the more frank and intellectual radicals, the need of more accurate and greatly modified conclusions. The labor theory of value which Marx had taken from English Ricardian economics was discredited by the critique of the psychological economists of Austria and America. The doctrine of increasing misery which first was taken to mean what is said, came to be explained not in an absolute sense, but in a relative sense (that the masses may be getting more wages, real as well as monetary, but they are not getting as much more as are the owners of capital). The doctrine of class conflict, it was admitted, had to be softened greatly to fit the facts of modern society. Doubt as to the inevitableness of the great catastrophe grew steadily. It cannot be questioned that Marx, when he first formulated his philosophy, believed that a revolution, most violent in nature, would occur within a few years. The revolutions of 1848 came, but with no such results as Marx predicted. Thereafter radical socialists played fast and loose with the word "revolution." They made it mean a violent and bloody civil war with victory for the warlike minority, whenever they wished to rouse a proletarian audience. But in addressing bourgeois hearers they made revolution mean a slow evolution ending in peaceful victory at the polls by a majority of the nation, after many years of educational propaganda and of further industrial changes.
As socialist intellectual leaders began to be affected by the criticism originating outside of the ranks they lost some of their theoretical illusions, and began to temper their claims of Marx's infallibility. "Revisionism," the socialist higher criticism, beginning in 1899 with the work of Eduard Bernstein, a prominent German Social-democrat, gained influence in the party counsels in all countries in the years before 1914. This brought many of the Marxians much nearer to the more opportunist ideas and plans of the Fabian society, which had been founded in England in 1884, but which had been regarded scornfully by the adherents of "scientific socialism."
 
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