1. MEANS OF STRUGGLE BETWEEN INDIVIDUALLY OWNED ENTERPRISES. 2. MEANS OF STRUGGLE BETWEEN TRUSTS. 3. MEANS OF STRUGGLE BETWEEN STATE CAPITALIST TRUSTS. 4. ECONOMIC SIGNIFICANCE OF STATE POWER. 5. MILITARISM. 6. CHANGE IN THE STRUCTURE OF STATE POWER.
The growth of competition outlined in the last chapter reduces itself to the fact that the continuous elimination of competition among smaller economic units calls forth a sharper competition among large economic units. This process is accompanied by curious changes in the methods of struggle.
The struggle of individually owned enterprises is usually conducted by means of low prices; small shops sell cheaper, reducing their standards of living to a minimum; capitalists strive to reduce the production costs by improving technique and lowering wages, etc. When the struggle among individually owned enterprises has been replaced by the struggle among trusts, the methods of struggle (in so far as it is conducted in the world market) undergo a certain change; low prices disappear in the home market, being replaced by high prices which facilitate the struggle in the world market; the latter is conducted by means of low prices at the expense of the high prices paid in the home market. The importance of state power grows: tariff rates, freight rates are taken advantage of; the tremendous economic power of the trusts opposing one another, both in the domestic and in the foreign market, allows them, under certain conditions, also to apply other methods. When a trust represents a large combined enterprise, when, for instance, it owns railroads, steamboats, electric power, etc., thus forming a state within a state, it can pursue a very complicated policy in regard to its competitors by regulating railroad rates, water transport rates, by establishing prices for the use of electric power, etc., etc. Of still greater significance is the closing of an access to raw materials and to the sales market, as well as the refusal of credit. The road to raw materials is usually blocked where there is a combined cartel. Raw materials produced by enterprises belonging to the cartel are not sold to outsiders "as a matter of principle" (the socalled ausschliesslicher Verbandsverkehr); as to the sales markets, here the organisations belonging to the cartel agree to buy nothing from outsiders; moreover, this, under the pressure of the cartel, is made binding also for "third persons" who usually buy from the cartel (for which they sometimes receive premiums, reductions, etc.). We must finally note a lowering of prices and selling at a loss to stifle the competitor. The trust here declares that "it does not wish to make profit on the enterprise itself, that the struggle is conducted only to defeat the competitor, and therefore without any relation to self-cost. The lower limit is formed, not by the production costs, but by the cartel's capital power and by the strength of its credit; the question thus reduces itself to how long its members will be able to stand a struggle which, for the time being, offers them no gain."1) In the home market this method is used to stamp out the final resistance of the opponent; in the foreign market it appears only as an increase of dumping. There are, however, still more striking examples of the struggle. We have in mind the struggle among the American trusts. The principles applied here went far beyond what is permissible in organised government: criminal gangs were hired to destroy railroad tracks, to damage and blow up oil pipes; incendiarism and murder were practiced; governmental authorities, including entire judicial bodies, were bribed on a large scale; spies were maintained in the camp of the competitors, etc., etc. - there is a plethora of material in this respect in the history of the giant American combines.2)
When competition has finally reached its highest stage, when it has become competition between state capitalist trusts, then the use of state power, and the possibilities connected with it, begin to play a very large part. The state apparatus has always served as a tool in the hands of the ruling classes of its country, and it has always acted as their "defender and protector" in the world market; at no time, however, did it have the colossal importance that it has in the epoch of finance capital and imperialist politics. With the formation of state capitalist trusts, competition is being almost entirely shifted to foreign countries; obviously, the organs of the struggle that is to be waged abroad, primarily state power, must therefore grow tremendously. The significance for capitalism of high tariffs, which increase the fighting capacity of the state capitalist trust in the world market, must increase still more; the various forms of "protecting national industry" become more pronounced; state orders are placed only with "national" firms; income is guaranteed to all sorts of enterprises, which present great risks but are "useful" from a social point of view; the activities of "foreigners" are hampered in various ways. (Compare, for instance, the stock exchange policy of the French government as mentioned in Chapter II). Whenever a question arises about changing commercial treaties, the state power of the contracting groups of capitalists appears on .the scene, and the mutual relations of those states-reduced in the final analysis to the relations between their military forces-determine the treaty. When a loan is to be granted to one or the other country, the government, basing itself on military power, secures the highest possible rate of interest for its nationals, guarantees obligatory orders, stipulates concessions, struggles against foreign competitors. When the struggle begins for the exploitation by finance capital of a territory that has not been formally occupied by anybody, again the military power of the state decides who will possess that territory. In "peaceful" times the military state apparatus is hidden behind the scenes where it never stops functioning; in war times it appears on the scene most directly. The more strained the situation in the world sphere of struggle-and our epoch is characterised by the greatest intensity of competition between "national" groups of finance capitalthe oftener an appeal is made to the mailed fist of state power. The remnants of the old laissez faire, laissez passer ideology disappear, the epoch of the new "mercantilism," of imperialism, begins.
The tendency towards imperialism combines economic phenomena with a great political power. Everything is organised on a large scale. The free play of economic forces, not so long ago highly alluring to thinkers and men of affairs, dies out. There is an ebb and flow of migrating people everywhere, and that process is supervised by the state. The new economic and social forces require powerful protection both inside the country and outside of its frontiers; for this purpose the state creates new organs, great numbers of officials and institutions. State activities are everywhere enlarged by new functions. Its influence over the facts of home life and over foreign relations becomes more multifarious. The government would not decline directly to look after the interests of its people [the term "people" must, of course, be understood conditionally when reading bourgeois economists - N.B.] at whatever point of the globe the interests may appear. National economy and politics are most closely interlocked. The breach between this epoch and the epoch of old liberalism, with its advocacy of free play, with its doctrine of the harmony of interests, becomes ever wider. This makes one think that there is more cruelty and pugnacity in the world as a whole. The world is more united than ever: everything is contiguous to everything, everything is influenced by everything, at the same time everybody jostles against everybody else, and deals blows right and left.3)
If state power is generally growing in significance, the growth of its military organisation, the army and the navy, is particularly striking. The struggle between state capitalist trusts is decided in the first place by the relation between their military forces, for the military power of the country is the last resort of the struggling "national" groups of capitalists. The immensely growing state budget devotes an ever larger share to "defence purposes," as militarisation is euphemistically termed.
The following table illustrates the monstrous growth of military expenditures and their share in the state budget.
| States | Years | Military expenditures per capita of the population | All state expenditures per capita of the population | Percentage of military expenditures in relation to all expenditures | Years | Military expenditures per capita of the population | All state expenditures per capita of the population | Percentage of military expenditures in relation to all expenditures |
| England | 1875 | 16.10 | 41.67 | 38.06 | 1907-08 | 26.42 | 54.83 | 48.06 |
| France | 1875 | 15.23 | 52.71 | 29.0 | 1908 | 24.81 | 67.04 | 37.0 |
| Austria-Hungary | 1873 | 5.92 | 22.05 | 26.8 | 1908 | 8.49 | 37.01 | 22.8 |
| Italy | 1874 | 6.02 | 31.44 | 19.1 | 1907-08 | 9.53 | 33.24 | 28.7 |
| Russia | 1877 | 5.24 | 15.14 | 34.6 | 1908 | 7.42 | 20.81 | 35.6 |
| Japan | 1875 | 0.60 | 3.48 | 17.2 | 1908 | 4.53 | 18.08 | 25.1 |
| Germany | 1881-82 | 9.43 | 33.07 | 28.5 | 1908 | 18.44 | 65.22 | 28.3 |
| United States of America | 1875 | 10.02 | 29.89 | 33.5 | 1907-08 | 16.68 | 29.32 | 56.9 4) |
The present military budgets are expressed in the following figures: the United States (1914), $173,522,804 for the army and $139,682,186 for the navy, total $313,204,990; France (1913), 983,224,376 francs for the army and 467,176,109 francs for the navy, total 1,450,400,485 francs (in 1914, 1,717,202,233 francs); Russia (1913, counting only ordinary expenditures), 581,099,921 rubles for the army and 244,846,500 rubles for the navy, total 825,946,421 rubles; Great Britain (1913-14) 28,220,000 pounds for the army and 48,809,300 pounds for the navy, total 77,029,300 pounds; Germany (1913, both ordinary and extraordinary expenditure), 97,845,960 pounds sterling, etc.5)
We are now passing through a period when armaments on land, on water, and in the air are growing with feverish rapidity. Every improvement in military technique entails a reorganisation and reconstruction of the military mechanism; every innovation, every expansion of the military power of one state stimulates all the others. What we observe here is like the phenomenon we come across in the sphere of tariff policies where a raise of rates in one state is immediately reflected in all others, causing a general raise. Of course, here, too, we have before us only a case of a general principle of competition, for the military power of the state capitalist trust is the weapon to be used in its economic struggle. The growth of armaments, creating as it does a demand for the products of the metallurgic industry, raises substantially the importance of heavy industry, particularly the importance of "cannon kings" à la Krupp. To say, however, that wars are caused by the ammunition industry,6) would be a cheap assertion. The ammunition industry is by no means a branch of production existing for itself, it is not an artificially created evil which in turn calls forth the "battle of nations." It ought to be obvious from the foregoing considerations that armaments are an indispensable attribute of state power, an attribute that has a very definite function in the struggle among state capitalist trusts. Capitalist society is unthinkable without armaments, as it is unthinkable without wars. And just as it is true that not low prices cause competition but, on the contrary, competition causes low prices, it is equally true that not the existence of arms is the prime cause and the moving force in wars (although wars are obviously impossible without arms) but, on the contrary, the inevitableness of economic conflicts conditions the existence of arms. This is why in our times, when economic conflicts have reached an unusual degree of intensity, we are witnessing a mad orgy of armaments. Thus the rule of finance capital implies both imperialism and militarism. In this sense militarism is no less a typical historic phenomenon than finance capital itself.
With the growth of the importance of state power, its inner structure also changes. The state becomes more than ever before an "executive committee of the ruling classes." It is true that state power always reflected the interests of the "upper strata," 7) but inasmuch as the top layer itself was a more or less amorphous mass, the organised state apparatus faced an unorganised class (or classes) whose interests it embodied. Matters are totally different now. The state apparatus not only embodies the interests of the ruling classes in general, but also their collectively expressed will. It faces no more atomised members of the ruling classes, but their organisations. Thus the government is de facto transformed into a "committee" elected by the representatives of entrepreneurs' organisations, and it becomes the highest guiding force of the state capitalist trust. This is one of the main causes of the socalled crises of parliamentarism. In former times parliament served as an arena for the struggle among various factions of the ruling groups (bourgeoisie and landowners, various strata of the bourgeoisie among themselves, etc.). Finance capital has consolidated almost all of their varieties into one "solid reactionary mass" united in many centralised organisations. "Democratic" and "liberal" sentiments are replaced by open monarchist tendencies in modern imperialism, which is always in need of a state dictatorship. Parliament at present serves more as a decorative institution; it passes upon decisions prepared beforehand in the businessmen's organisations and gives only formal sanction to the collective will of the consolidated bourgeoisie as a whole. A "strong power" has become the ideal of the modern bourgeois. These sentiments are not "remnants of feudalism," as some observers suppose, these are not débris of the old that have survived in our times. This is an entirely new sociopolitical formation caused by the growth of finance capital. If the old feudal "policy of blood and iron" was able to serve here, externally, as a model, this was possible only because the moving springs of modern economic life drive capital along the road of aggressive politics and the militarisation of all social life. The best proof may be found not only in the foreign policies of such "democratic" countries as England, France, Belgium (note the colonial policy of Belgium), and the United States, but also in the changes that take place in their internal policies (militarisation and the growth of monarchism in France, the increasing attempts at attacking the freedom of labour organisations in all countries, etc., etc.).
Being a very large shareholder in the state capitalist trust, the modern state is the highest and all-embracing organisational culmination of the latter. Hence its colossal, almost monstrous, power.
1) Fritz Kestner: Der Organisationszwang. Eine Untersuchung über die Kämpfe zwischen den Kartellen and Aussenseitern, Berlin, 1912. Commenting on Kestner is Hilferding's article, "Organisationsmacht and Staatsgewalt," in the Neue Zeit, 32, 2.
2) Cf. Gustavus Myers: History of the Great American Fortunes, Chicago, 1909
3) Prof. Isayev, l.c., pp. 261-262.
4) O. Schwarz: "Finanzen der Gegenwart," in Handwörterbuch der Staatswissenschaften. It must be noted that the author's figures of German and Austrian expenditures are incorrect, for they do not include the extraordinary budgets and the appropriations made only once; the figures for the U.S.A. do not include the "civil expenditure" of the individual states, so that the increase (335-569) is in reality much larger.
5) We quote from The Statesman's Yearbook for 1915.
6) Cf. the above mentioned book by Pavlovich. A more shallow variety of this theory is advanced by Kautsky when he asserts (in his Nationalstaat, imperialistischer Staat and Staatenbund, also in numerous articles in the Neue Zeit during the was) that the war was caused-by mobilisation. This is, indeed, putting things on their heads.
7) This is recognised also by a few burgeois sociologists and economists. Franz Oppenheimer, for instance, views the state as the organisation of the classes that own the means of production (in the first place the land) utilised to exploit the masses of the people. His formula to a certain degree approaches the Marxian theory-with modifications that impair its value (placing the emphasis on the "land," etc.). It is a curious incident that in polemic notes against Oppenheimer such an authority of German sociology and economics as Adolf Wagner admits to a large extent the correctness of Oppenheimer's formula, referring it, however, to the "historic" (!) state. See his article, "Staat in nationalökonomischer Hinsicht," in Handwörterbuch der Staatswissenschaften, 3rd edition, Vol. 7, p, 731.