The Instability of Capitalism

Updated: Jul 12

By Hilaire Belloc

Pp 81-93 Belloc, H. (1912). The Servile State (2nd ed.). Boston, MA: Le Roy Phillips.



which I have introduced by way of illustrating my subject in the last two sections I now return to the general discussion of my thesis and to the logical process by which it may be established.

The Capitalist State is unstable, and indeed more properly a transitory phase lying between two permanent and stable states of society.

In order to appreciate why this is so, let us recall the definition of the Capitalist State : —

"A society in which the ownership of the means of production is confined to a body of free citizens not large enough to make up properly a general character of that society, while the rest are dispossessed of the means of production and are therefore proletarian, we call Capitalist''

Note the several points of such a state of affairs. You have private ownership ; but it is not private ownership distributed in many hands and thus familiar as an institution to society as a whole. Again, you have the great majority dispossessed but at the same time citizens, that is, men politically free to act, though economically impotent ; again, though it is but an inference from our definition, it is a necessary inference that there will be under Capitalism a conscious, direct, and planned exploitation of the majority (the free citizens who do not own) by the minority who are owners. For wealth must be produced: the whole of that community must live: and the possessors can make such terms with the non-possessors as shall make it certain that a portion of what the non-possessors have produced shall go to the possessors.

A society thus constituted cannot endure. It cannot endure because it is subject to two very severe strains: strains which increase in severity in proportion as that society becomes more thoroughly Capitalist. The first of these strains arises from the divergence between the moral theories upon which the State reposes and the social facts which those moral theories attempt to govern. The second strain arises from the insecurity to which Capitalism condemns the great mass of society, and the general character of anxiety and peril which it imposes upon all citizens, but in particular upon the majority, which consists, under Capitalism, of dispossessed free men.

Of these two strains it is impossible to say which is the gravest. Either would be enough to destroy a social arrangement in which it was long present. The two combined make that destruction certain; and there is no longer any doubt that Capitalist society must transform itself into some other and more stable arrangement. It is the object of these pages to discover what that stable arrangement will probably be. We say that there is a moral strain already intolerably severe and growing more severe with every perfection of Capitalism.

This moral strain comes from a contradiction between the realities of Capitalist society and the moral base of our laws and traditions. The moral base upon which our laws are still administered and our conventions raised presupposes a state composed of free citizens. Our law defends property as a normal institution with which all citizens are acquainted and which all citizens respect. It punishes theft as an abnormal incident only occurring when, through evil motives, one free citizen acquires the property of another without his knowledge and against his will. It punishes fraud as another abnormal incident in which, from evil motives, one free citizen induces another to part with his property upon false representations. It enforces contract, the sole moral base of which is the freedom of the two contracting parties, and the power of either, if it so please him, not to enter into a contract which, once entered into, must be enforced. It Gives to an owner the power to leave his property by will, under the conception that such ownership and such passage of property (to natural heirs as a rule, but exceptionally to any other whom the testator may point out) is the normal operation of a society generally familiar with such things, and finding them part of the domestic life lived by the mass of its citizens. It casts one citizen in damages if by any wilful action he has caused loss to another — for it presupposes him able to pay.

The sanction upon which social life reposes is, in our moral theory, the legal punishment enforceable in our Courts, and the basis presupposed for the security and material happiness of our citizens is the possession of goods which shall guarantee us from anxiety and permit us an independence of action in the midst of our fellowmen.

Now contrast all this, the moral theory upon which society is still perilously conducted, the moral theory to which Capitalism itself turns for succour when it is attacked, contrast, I say, its formula; and its presuppositions with the social reality of a Capitalist State such as is England today.

Property remains as an instinct perhaps with most of the citizens ; as an experience and a reality it is unknown to nineteen out of twenty. One hundred forms of fraud, the necessary corollary of unrestrained competition between a few and of unrestrained avarice as the motive controlling production, are not or cannot be punished : petty forms of violence in theft and of cunning in fraud the laws can deal with, but they can deal with these alone. Our legal machinery has become little more than an engine for protecting the few owners against the necessities, the demands, or the hatred of the mass of their dispossessed fellow-citizens. The vast bulk of so-called "free" contracts are to-day leonine contracts: arrangements which one man was free to take or to leave, but which the other man was not free to take or to leave, because the second had for his alternative starvation.

Most important of all, the fundamental social fact of our movement, far more important than any security afforded by law, or than any machinery which the State can put into action, is the fact that livelihood at the will of the possessors. It can be granted by the possessors to the non-possessors, or it can be withheld. The real sanction in our society for the arrangements by which it is conducted is not punishment enforceable by the Courts, but the withholding of livelihood from the dispossessed by the possessors. Most men now fear the loss of employment more than they fear legal punishment, and the discipline under which men are coerced in their modern forms of activity in England is the fear of dismissal. The true master of the Englishman to-day is not the Sovereign nor the officers of State, nor, save indirectly, the laws; his true master is the Capitalist.

Of these main truths everyone is aware ; and anyone who sets out to deny them does so today at the peril of his reputation either for honesty or for intelligence.

If it be asked why things have come to a head so late (Capitalism having been in growth for so long), the answer is that England, even now the most completely Capitalist State of the modern world, did not itself become a completely Capitalist State until the present generation. Within the memory of men now living half England was agricultural, with relations domestic rather than competitive between the various human factors to production.

This moral strain, therefore, arising from the divergence between what our laws and moral phrases pretend, and what our society actually is, makes of that society an utterly unstable thing.

This spiritual thesis is of far greater gravity than the narrow materialism of a generation now passing might imagine. Spiritual conflict is more fruitful of instability in the State than conflict of any other kind, and there is acute spiritual conflict, conflict in every man's conscience and ill-ease throughout the commonwealth when the realities of society are divorced from the moral base of its institutions.

The second strain which we have noted in Capitalism, its second element of instability, consists in the fact that Capitalism destroys security.

Experience is enough to save us any delay upon this main point of our matter. But even without experience we could reason with absolute certitude from the very nature of Capitalism that its chief effect would be the destruction of security in human life.

Combine these two elements : the ownership of the means of production by a very few ; the political freedom of owners and non-owners alike. There follows immediately from that combination a competitive market wherein the labour of the non-owner fetches just what it is worth, not as full productive power, but as productive power which will leave a surplus to the Capitalist. It fetches nothing when the labourer cannot work, more in proportion to the pace at which he is driven ; less in middle age than in youth; less in old age than in middle age; nothing in sickness; nothing in despair.

A man in a position to accumulate (the normal result of human labour), a man founded upon property in sufficient amount and in established form is no more productive in his non-productive moments than is a proletarian ; but his life is balanced and regulated by his reception of rent and interest as well as wages. Surplus values come to him, and are the fly-wheel balancing the extremes of his life and carrying him over his bad times. With a proletarian it cannot be so. The aspect whence Capital looks at a human being whose labour it proposes to purchase cuts right across that normal aspect of human life from which we all regard our own affections, duties, and character. A man thinks of himself, of his chances and of his security along the line of his own individual existence from birth to death. Capital purchasing his labour (and not the man himself) purchases but a cross-section of his life, his moments of activity. For the rest, he must fend for himself; but to fend for yourself when you have nothing is to starve.

As a matter of fact, where a few possess the means of production perfectly free political conditions are impossible. A perfect Capitalist State cannot exist, though we have come nearer to it in modern England than other and more fortunate nations had thought possible. In the perfect Capitalist State there would be no food available for the non-owner to save when he was actually engaged in Production, and that absurdity would, by quickly ending all human lives save those of the owners, put a term to the arrangement. If you left men completely free under a Capitalist system, there would be soheavya mortality from starvation as would dry up the sources of labour in a very short time.

Imagine the dispossessed to be ideally perfect cowards, the possessors to consider nothing whatsoever except the buying of their labour in the cheapest market — and the system would break down from the death of children and of out-o'-works and of women. You would not have a State in mere decline such as ours is. You would have a State manifestly and patently perishing.

As a fact, of course, Capitalism cannot proceed to its own logical extreme. So long as the political freedom of all citizens is granted [the freedom of the few possessors of food to grant or withhold it, of the many non-possessors to strike any bargain at all, lest they lack it]: to exercise such freedom fully is to starve the very young, the old, the impotent, and the despairing to death. Capitalism must keep alive, by non-Capitalist methods, great masses of the population who would otherwise starve to death; and that is what Capitalism was careful to do to an increasing extent as it got a stronger and a stronger grip upon the English people. Elizabeth's Poor Law at the beginning of the business.The Poor Law of 1834, coming at a moment when nearly half England had passed into the grip of Capitalism, are original and primitive instances: there are to-day a hundred others.

Though this cause of insecurity — the fact that the possessors have no direct incentive to keep men alive — is logically the most obvious,and always the most enduring under a Capitalist system, there is another cause more poignant in its effect upon human life. That other cause is the competitive anarchy in production which restricted ownership coupled with freedom involved. Consider what is involved by the very process of production where the implements and the soil are in the hands of a few whose motive for causing the proletariat to produce is not the use of the wealth created but the enjoyment by those possessors of surplus value or "profit."

If full political freedom be allowed to any two such possessors of implements and stores, each will actively watch his market, attempt to undersell the other, tend to overproduce at the end of some season of extra demand for his article, thus glut the market only to suffer a period of depression afterwards — and so forth. Again, the Capitalist, free, individual director of production, will miscalculate; sometimes he will fail, and his works will be shut down. Again, a mass of isolated, imperfectly instructed competing units cannot but direct their clashing efforts at an enormous waste, and that waste will fluctuate. Most commissions, most advertisements, most parades, are examples of this waste. If this waste of effort could be made a constant, the parasitical employment it afforded would be a constant too. But of its nature it is a most inconstant thing, and the employment it affords is therefore necessarily precarious. The con- crete translation of this is the insecurity of the commercial traveller, the advertising agent, the insurance agent, and every form of touting and cozening which competitive Capitalism carries with it.

Now here again, as in the case of the insecurity produced by age and sickness, Capitalism cannot be pursued to its logical conclusion, and it is the element of freedom which suffers. Competition is, as a fact, restricted to an increasing extent by an understanding between the competitors, accompanied, especially in this country, by the ruin of the smaller competitor through secret conspiracies entered into by the larger men, and supported by the secret political forces of the State. In a word, Capitalism, proving almost as unstable to the owners as to the non-owners, is tending towards stability by losing its essential character of political freedom. No better proof of the instability of Capitalism as a system could be desired.

Take any one of the numerous Trusts which now control English industry, and have made modern England the type, quoted throughout the Continent, of artificial monopolies. If the full formula of Capitalism were accepted by our Courts and our executive statesmen, anyone could start a rival business, undersell those Trusts and shatter the comparative security they afford to industry within their field. The reason that no one does this is that political freedom is not, as a fact, protected here by the Courts in commercial affairs. A man attempting to compete with one of our great English Trusts would find himself at once undersold. He might, by all the spirit of European law for centuries, indict those who would ruin him, citing them for a conspiracy in restraint of trade; of this conspiracy he would find the judge and the politicians most heartily in support.

But it must always be remembered that these conspiracies in restraint of trade which are the mark of modern England are in themselves a mark of the transition from the true Capitalist phase to another.

Under the essential conditions of Capitalism — under a perfect political freedom — such conspiracies would be punished by the Courts for what they are: to wit, a contravention of the fundamental doctrine of political liberty. For this doctrine, while it gives any man the right to make any contract he chooses with any labourer and offer the produce at such prices as he sees fit, also involves the protection of that liberty by the punishment of any conspiracy that may have monopoly for its object. If such perfect freedom is no longer attempted, if monopolies are permitted and fostered, it is because the unnatural strain to which freedom, coupled with restricted ownership, gives rise, the insecurity of its mere competition, the anarchy of its productive methods have at last proved intolerable.

I have already delayed more than was necessary in this section upon the causes which render a Capitalist State essentially unstable.

I might have treated the matter empirically, taking for granted the observation which all my readers must have made, that Capitalism is as a fact doomed, and that the Capitalist State has already passed into its first phase of transition.

We are clearly no longer possessed of that absolute political freedom which true Capitalism essentially demands. The insecurity involved, coupled with the divorce between our traditional morals and the facts of society, have already introduced such novel features as the permission of conspiracy among both possessors and non-possessors, the compulsory provision of security through State action, and all these reforms, implicit or explicit, the tendency of which I am about to examine.