The Gigantic Robbery that is Capitalism



Fred Henderson was a member of the Socialist League and greatly influenced by William Morris. He shared Morris' anti-reformist stance and expressed his Socialist convictions more in terms of the moral outrage characteristic of Morris than in the more precise, if dry, formulations of pristine Marxist economics. Oddly enough for one sometimes attacked as an "anarchist", the first chapter of The Case for Socialism was adopted in the early years of this century as an official pamphlet of the British Independent Labour Party. This original version of The ABC of Socialism, along with two important essays by William Morris and John Carruthers, is available from the William Morris Society as Reform and Revolution; three early Socialists on the way ahead, (Thoemmes Press, 1996). The version from which the following extracts are taken was revised for publication in the United States at a time when the writings of Edward Bellamy were still quite popular. This seems to have influenced some of Henderson's terminology, but at heart neither he nor Morris had much sympathy with the kind of top-down state socialism which Bellamy represented. (Bellamy, for instance, favored the organization of compulsory labor battalions; William Morris replied that if anyone tried to draft him into a labor battalion, he would lie on his back and kick.)

No doubt government-instituted reforms and, more importantly, the organization of working people into their own unions and other independent organizations, has enabled some sections of the working class to live, at least temporarily, at a higher standard of living than the subsistence level postulated by Henderson as the norm. But this has been at the expense of super-exploitation in "less developed" countries and of the creation of a sizable population within the advanced capitalist countries who are more or less permanently excluded from these benefits. These are to be pacified by "welfare" paid for not by the owners who profit from the situation, but by taxes taken out of the paychecks of those workers lucky enough to find an owner.

Meanwhile, these workers are earning 12% less, adjusting for inflation, than they did when Richard Nixon was president. Their productivity grew nearly 33% in the same period. Where did the benefits of this increased productivity go? Henderson would not be surprised: the top 1% of households have doubled their share of the national wealth and now have more wealth than the entire bottom 95%. The answer, we are told, is to "work harder and smarter". This is bullshit. Hard work never made anybody rich. What makes people rich is being in a position to profit from other people's hard work. As ever, "Them that works the hardest are the least provided."

A rising tide lifts all boats, we are told. But it doesn't if somebody's got a dam across the river, diverting the rising stream for their own exclusive use. The answer, as Morris and Henderson knew, is to tear down the dam.

-- Ted M.


The ABC of Socialism

from The Case for Socialism, by Fred Henderson. Revised American edition. New York State Socialist Party [1934].

In the first place, we Socialists believe that poverty can be prevented. The fact we ask you to begin by bearing in mind is that people are not poor because they live in a poor country. We believe that the civilized world is able to produce enough wealth to give a high standard of living to all its people, if only that wealth could be got into the lives of the people.

Our first point, therefore, is that poverty is not inevitable; that the resources of the world are sufficient to prevent it; and that it could be prevented if only the nation saw clearly what it is that stops the wealth of the country from getting into the homes of the people and being available for the general life.

That may seem like a commonplace to you. But if you will think about it for a moment, you will see that it establishes a very real difference between socialism and all other political ideas.

All other parties take the fact of poverty for granted, as being part of the natural and inevitable order of human affairs.

It is true that both Republicans and Democrats put forward schemes of social reform intended to get rid of the extremes of poverty; such schemes as those for old-age pensions, for feeding undernourished children, for insuring workmen against unemployment, and the like. That is all good as far as it goes; but it does not touch the actual problem of the cause of poverty. On the contrary, it assumes that there will continue to be poverty to be relieved in these ways. These reforms are only proposals for giving relief and amount to constantly bailing out the boat while the leak which causes all the trouble is left untouched. The problem of poverty can only be effectively dealt with at its source -- by stopping the leak.

What both Republicans and Democrats take for granted is the broad fact of a rich class and a poor class continuing to exist; a population on the one hand living at ease with all the comforts of a spacious life, and a working population on the other hand living in small houses with little leisure, and with incomes only at or about the margin of subsistence.

No political party other than the Socialist Party has any idea of fundamentally altering that state if things. The old parties are quite willing to give us reforms within the existing social order; and would be glad to see the poor class assured of regular work and wages good enough to go a little beyond the bare margin of subsistence: so that, for instance, working men might live in suburban streets of real homes instead of in slums, have a little back garden to cultivate, work eight hours a day instead of ten or twelve, and even get a week or a fortnight for holiday in the summer. But the broad fact of a rich class and a poor class would remain: a small rich class with spacious lives and a large poor class with comparatively little. The notion of the other political parties is that practical politics is limited to such reforms as simply ease the extremes of poverty; the Socialist idea is that the national resources should be made available for the general national life, and that class division, being in itself an evil and unjust thing, should cease.

When, therefore, we Socialists say that poverty can be prevented, you will see that what we mean by "poverty" is something very different from utter destitution. Poverty is not an absolute term. It is a relative; relative to the kind of life which the actual resources of the world might make possible for men.

A man is a poor man if he is shut out from any of the possibilities of human life within the range of the generally existing resources of the world.

He may have his animal wants supplied; may have a sufficiency of food, or clothing, and of shelter. His master's cattle have that, according to their cattle standard. But that is not human life. If the resources of the world are ample -- as they are ample -- to provide for all men leisure and a high standard of the graces of life as well as its animal satisfactions, he is a poor man as long as he is shut out from the full enjoyment of those graces. We Socialists refuse to accept as an adequate standard of life any standard which stops short of full human life. The habit of setting up separate class standards as to what is an adequate kind of life is so ingrained in the minds of men today that it is the commonest thing to hear rich men denouncing as extravagant and unreasonable any claim by working men to many things which the employer class would find an intolerable deprivation in having to go without themselves. We Socialists present our challenge straight in the face of that class idea. We say that a man is a man, and that we will have no class standards in these things.

We set up a human standard. And whatever kind of life the general resources of the world can make possible for all men has got to go into that standard; and as the powers of men over Nature increase, and their wealth-producing activities become more and more fruitful by reason of growing knowledge and invention, that increase has got to go into the general standard, raising the general level of life, leaving no class out of the general advance.

To be below that standard is to be poor. To reserve for the enjoyment of one class alone any of these things which might be the common human heritage, is evidence of injustice in our social organization. And if the whole of the proposals of the orthodox political parties for "social reform" within the existing order were carried out tomorrow, this fundamental injustice of class division and class privilege would still remain.

We should still not have a human society; but a class society of the rich and an underworld of the poor.

You are, therefore, something of what we Socialists mean when we say that our aim is to make the national resources available for the general life of the nation.

The question is: How can it be done?

And you cannot answer that question until you first see clearly what it is that now prevents the resources of the nation from getting into the life of the nation. To that point, therefore, our inquiry must in the first place be carefully directed.

The wealth upon which the world lives is produced by labor, skill, and thought, working upon land and capital.

Now, look at the two classes into which society is broadly divided, and you will see that they get their shares of that wealth in different ways.

The class which gives the labor, skill, and thought, lives upon wages.

The class which owns the land and capital lives upon rent, interest and profit.

In both cases the livelihood comes out of the current daily wealth production of the world. {Note this very carefully; you will see its importance as the argument develops.)

And, broadly speaking, the method of getting one's living by wages represents the bare life, and the people who get their living in that way are the poor class; while the method of getting one's living by rent, interest, and profit represents the full life, and the people who get their living in that way are the rich class.

There are exceptions, of course. There are people living poorly upon rents and dividends, and highly skilled experts living well upon wages. There is a certain mixture of classes. You do not have a mass of poor people living on wages, then a gap, and on the other side of the gap a mass of rich people living upon rent or dividends. From abject poverty to great wealth there is every sort of difference in between. Some small owners add to their little rents or dividends by earning wages, and some wage-earners save a little and draw dividends on a small scale. But broadly speaking, the generalization is true that the distinctive way of living of the poor class is by wages, and the distinctive way of living of the rich class is by ownership.

The purpose of our inquiry, therefore, is to discover how it is that the resources of the nation, daily produced by the activities of the nation, should be distributed in this way. Why is it that ownership should mean one way of life, and industry another way of life; the one abundant, the other poor?

And here a brief digression is necessary in order to make every step in the argument perfectly clear as we go along; a digression of which the reader will find the germ in the footnote to a previous paragraph calling upon him to note specially the fact that "in both cases the livelihood comes out of the current daily wealth production of the world."

The facts as to this must be made as clear as possible.

The problem into which we are inquiring is not a problem of one class possessing resources and the other not. It is a problem of the distribution day by day of the resources which are being produced day by day by the industry of the world.

It is upon this point that most confusion exists in the minds of those who do not think clearly on these matters. They imagine the rich man possessing wealth and living on that wealth, paying wages out of it to the people he employs, and so on. Nothing of the sort. The whole nation, rich and poor, lives upon the current daily wealth production of the world.

The rich man owns land. But he does not live on land. He lives on wealth produced out of the land by industry. He owns capital. But he does not live on capital. He lives on the wealth produced day by day by industry applied to his capital. The whole worth of his land and capital as a means of income to him is in the industry attached to that land and capital, and in the constant production of that industry. He does not pay wages to anyone. The industry produces its own wages as well as his income. If any workman doubts that, let him ask himself whether he would be allowed to remain ten minutes in the factory if he did not produce his own wages and something over.

The rich man does not inherit the wealth upon which he lives. He cannot live on any form of wealth other than the wealth which is being produced round about him day by day. What inherits is power over the source of that wealth. Land is the primary source of all wealth. Labor applied to land makes it fruitful; and it is upon that perishable and constantly renewed fruitfulness that the world lives. It is fruitful, not in food only, but in its minerals, its timber, its products out of which invention and labor shape the implements of the more complicated wealth production of modern life. As civilization advances, the production of these implements becomes greater and greater, representing vast powers of creating wealth when human energy and human ingenuity work with and upon them. This is the capital by whose aid man multiplies his ability to supply himself with the perishable wealth which he uses and consumes for the sustenance and comfort of his life.

It is power over these sources of production, land and capital which the rich man inherits; and the value of that inheritance is that it is a means of making the immediate perishable wealth upon which the world lives flow into his life as fast as it is produced.

You will thus see that, when you speak about the distribution of our national wealth, it is necessary to guard very carefully against the common error of picturing to yourself that wealth as a sort of fixed and permanent thing. When, for example, people repeat the familiar folly which some of the more stupid of them imagine to be an argument against Socialism, that if you divided up all the wealth of the country today there would be inequalities again tomorrow, the simple minded error into which they fall is that of supposing the wealth of the country to be a fixed and permanent thing, which you could get together into a heap and divide up. You could, of course, do no such thing, even if anybody were silly enough to suggest it.

The problem of the distribution of wealth is not the problem of an act of distribution, but of a continuous process of distribution. The wealth of the country is a constantly produced, constantly distributed, constantly consumed stream of commodities; and the problem of its distribution is not a problem of its division at any given moment, but a problem of having proper channels for its constant and regular flow into the life of the nation.

I have put this point at some length, because a thorough grasp of it is of fundamental importance. Confusion of mind about it means confused a fallacious thinking on the whole economic problem. Clearly see this true nature of the wealth on which the world lives -- how it is in constant production and constant consumption, how it is created and used day by day -- and the problem of its distribution at once present itself to you in a clearer light. The error into which people fall is that of supposing that the rich class actually possess great wealth, and that the Socialists want to take it from them and give it to the mass of the people. Whereas, I repeat again, the fact is that what the rich possess is power over the flow of wealth and over the process of distribution; so that wealth which does not now exist at all, wealth which will be created tomorrow, next week, next year, counts as their possession, and will flow into their lives steadily and constantly as fast as it is produced.

It is this process of distribution which is the important thing.

The rich class possesses wealth which is now passing through the national life; but that is only incidental to their power over the sources of wealth and over the processes of its production and distribution. The real nature of their class privilege is that they possess the power of appropriating wealth which is or will be created at any time, now, hereafter, and to all time if the existing system continues.

And so we get back to the question upon which this digression arose. What is it that prevents the resources of the nation from getting into the life of the nation? How is it that this constantly flowing stream of wealth, flowing from the daily activities of the nation, how is it that instead of irrigating the whole life of the nation, in runs in such a way as to make a few lives grow rank with excessive luxury, and leaves the other lives bleak and dry?

Is not the answer to that question already becoming clear to you? Hark back a moment to what we saw is the fundamental distinction between the two classes, and the different ways in which they get their living. The distinctive way of living of the poor class is by wages; the distinctive way of living of the rich is by rent, interest, and profits. Evidently the difference between incomes derived from wages and incomes derived from rent, interest, and profits, gives us the clue to be followed up in this inquiry as to what it is that prevents the resources of the nation from getting into the general life of the nation.

The best way of following up that clue is to take an actual case of wealth production under normal capitalist conditions, and see what happens.

Here, for instance, is a boot factory where a thousand men (they are largely women and boys, to be strictly accurate) are engaged in producing boots and shoes. By the end of the week, labor, operating on capital in the form of raw material and machinery, has created wealth in the form of finished boots and shoes.

The value of the finished boots and shoes includes the value of the raw material and the industry of a vast army of people engaged in preparing that material, from the cattle-herder to the tanner, before it comes into the hands of the shoe factory worker at all; beside the industry and skill of those who, from inventor to miner, have placed at the disposal of the worker the machinery with which he works. But the shoe machine tender, by transforming this raw material into the finished article, has created a new value and brought new wealth into existence, value and wealth which is his human energy embodied in the boots and shoes.

How is that new wealth distributed?

The whole of it belongs to the man who owns the factory.

At the end of the week, having come into possession of the created wealth, the owner pays a portion of its value back to the worker in the form of wages.

What is it that regulates the amount so paid back as wages?

Just in the same way as oil and fuel have to be supplied to the inanimate machinery to keep it in a state of working efficiency, so the workman, the human machinery, has to be supplied with food and clothes and shelter to keep him in efficient working order. The owner of the factory buys labor as cheaply as he can. Wages represent the cost of keeping labor alive and working -- the cost of running the human machinery of the factory.

Now compare this with the position of the slave under a slave-owner. When a slave-owner bought a man, he bought labor. The value of the slave to his owner was the slave's capacity for labor. All that the slave produced belonged to his owner. The cost of the slave's keep had to come out of it; and the owner lived on the surplus.

So far as the distribution of wealth between the slave-owner and the slave is concerned, is it not analogous to the distribution of wealth between ownership and industry under capitalism?

The slave-owner had to make three payments -- the payment of a lump sum down for the slave, the payment for land and tools and equipment for the slave to work with, and after that the constant daily payment of the cost of the slave's maintenance.

The capitalist has this advantage over the slave-owner, that he escapes the first of these payments. He gets his labor for nothing, and calls that process "providing men with employment," claiming to be a benefactor to the community by doing so. All they produce belongs to him, in exactly the same way that all the slave produced belonged to the slave-owner. The cost of their keep has to come out of it in the form of wages and the owner takes the surplus.

Try and stop meThat is the process by which the constantly produced wealth of the country is distributed between wages on the one hand, and rent, interest, and profit on the other. We Socialists can see no essential difference between this system, which we call "wage slavery," and the old system of chattel slavery. There are superficial and non-essential differences in detail; but the two things are identical in the main fact that th he slave-owner and the capitalist both live in exactly the same way -- upon the surplus wealth remaining after paying the cost of maintenance of the labor which produces that wealth.

The chief superficial difference between the two forms of slavery is that whereas the slave-owner owned both the man and the means of the man's work, the capitalist owns only the means of the man's work. Under this latter system the man is nominally free. But in its practical consequences there is little real difference between owning the man and owning the means of the man's work. The man is helpless without access to the means of his work. He must either sell himself into wage slavery to the owner of the means of his work, or starve. It comes to the same practical end in either case; whether you own the man or own the means of his work, either form of ownership gives you power to take possession of everything the man produces, simply for the price of his keep out of it.

We come, therefore, to the fact of private ownership and control of the means of the nation's work, as the explanation of the present one-sided distribution of the national wealth; the reason why vast armies of people live in poverty in a land of plenty. The nation's industry is organized for their exclusive benefit. The share which the workman gets is simply maintenance for himself and his family, necessary to keep wealth production going. It is not regarded by the employing class as being really part of the national distribution of wealth at all. The industry of the nation belongs to them; and they look upon the amount paid in wages simply as a charge upon their resources; a charge which they enter in their accounts as "cost of labor"; so much taken off the profits; an expense in the same category as the expense of machinery or fuel. The workman has no status, no right to work or to live, unless they find it profitable to employ him. He is an alien in the land, taking his place in organized society only by permission of an owner and on condition of his being able to provide a proprietor willing to buy him. What is spent upon his keep is, from the point of view of his proprietor, merely one of the expenses of business to be set against the profit got out of his labor; like the cost of feeding cattle set against the price of beef.

We can now see pretty clearly how it is that the constantly produced stream of national wealth is distributed; and why it is that the distinctive fact about poverty is that men live by wages, while the distinctive fact about the abundant kind of life is that men live by ownership. The private ownership of land and capital stands revealed as simply a device for enabling a small class to live by imposing their maintenance upon the industry of the community; diverting into their possession as fast as it is produced, the whole of the wealth created by the national industry over and above the necessary maintenance of the workers.

Ask yourself, frankly, is that way of living honest?

We Socialists assert that there is no moral difference between this process of capitalist exploitation of the workers and ordinary pocket-picking or highway robbery. To us, the gentleman class which lives in this way is merely a class of "disgraceful sponging creatures." I put this general consideration of the ethics of the question to you -- that in a world in which no human need is served without human labor, there must be a process of dishonesty hidden somewhere in the social and industrial arrangements which send the flow of the world's wealth into non-productive lives. Call it what fine names you please -- rent or interest or return on capital or unearned increment -- the fact remains that in its essential character it is theft, tribute levied by an idle class upon industry.

It is this private ownership of land and capital which we Socialists indict as the root cause of poverty. We challenge its justice, and its right to exist or continue. . .


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