In turning our attention to Germany “we come to the period of classical epoch-making socialism.” It is the only living socialism of world-wide importance; for, with few comparatively unimportant exceptions, all socialism of to-day, whether found in Paris or Berlin, in New York or Vienna, in Chicago or Frankfort-on-the-Main, is through and through German.

The German socialists are distinguished by the profundity of their systems. These are not exhausted by a few hours’ study. You can come back to them time and time again, and obtain ever new ideas. A great German economist (SchÄffle) declares that it took him years to comprehend the full significance of German socialism. It gives no evidence of decreasing power, but, on the contrary, its influence is manifestly spreading and becoming more and more deeply rooted in the minds and hearts of large masses. Its vitality is due, on the one hand, to the logical and philosophical strength of the systems on which it is based; on the other, to the patience and indomitable perseverance of its leaders.

One of its leading characteristics is its thoroughly scientific spirit. Sentimentalism is banished, and a foundation sought in hard, relentless laws, resulting necessarily from the physiological, psychological, and social constitution of man, and his physical environment. Like French socialism, its most prominent side is its negative character, but this is not declamatory. Coldly, passionlessly, laws regulating wages and value are developed, which show that in our present economic society the poverty of laborers and their robbery by capitalists are as inevitable facts as the motions of the planets. Histories, blue books, and statistical journals are searched, and facts are piled on facts, mountain-high, to sustain every separate and individual proposition. Mathematical demonstrations as logical as problems in Euclid take the place of fine periods, perorations, and appeals to the Deity. Political economy is not rejected, but in its strictest and most orthodox form becomes the very corner-stone of the new social structure. No writer is valued so highly as Ricardo, who, in political economy, was the strictest of the strict, a Pharisee of the Pharisees. English political economy is developed to its logical and consistent conclusion with wonderful learning and skill. In the German socialists, says Rudolf Meyer, “we have learned men belonging to the higher mercantile and professional classes, in affluent circumstances, who, out of pure love for the cause, devoted themselves to profound economic investigations, and who united a serious, searching mind with thorough knowledge of history, philology, and law. They are political economists equal to the great English leaders in this study, but having at their command a greater scientific apparatus, especially such as is afforded by statistics.”[155] Roscher, indeed, finds in them alike the strength and the weakness of the English school. He describes them thus in his “History of Political Economy in Germany.” “Some of them seem to be more historical than the Free-trade School, but this is only an appearance, as they apply history so sophistically. As far as doctrinal abstractions are concerned, they are at least equal to the extreme Free-traders.[156] They indulge in the same cosmopolitism, which entirely overlooks real peoples, states, and degrees of culture, in the same naÏve assumption of the equality of all men, ... and in the same mammonistic undervaluation of ideal goods.”[157]

Two of the earliest adherents of this school were Friedrich Engels, who wrote a work on the “Condition of the Laboring Classes in England;”[158] and K. Marlo, who published, in 1849, his “System of World-Economy, or Investigations Concerning the Organization of Labor;”[159] and proposed a federation of socialistic communities. Both of these writers, however, were soon so far surpassed in importance by the three socialists, Rodbertus, Marx, and Lassalle, that they are scarcely noticed in the great current of German socialism. We will consequently at once proceed to the consideration of the life and teachings of Rodbertus, from whom it may be considered as taking its beginning. Its growth from the time he published his doctrines has been unbroken.

Karl Rodbertus, who lived from 1805 to 1875, was a man of social standing, universally respected alike for learning and character. He was at first a jurist, and afterwards a farmer, having purchased the estate in Pomerania called Jagetzow. On this account he is often called Rodbertus-Jagetzow.[160]

Rodbertus took some part in politics during the stirring events of 1848, and for a short time thereafter. He was member of the National Assembly in 1848, and in 1849 of the Second Chamber of the Prussian Parliament. He was Prussian Minister of Education and Public Worship for a brief period. But he finally abandoned politics and led a quiet life in his country home, devoting himself chiefly to scientific and literary pursuits. His knowledge of some parts of Roman history is considered quite profound.

Rodbertus, one of the ablest socialists who ever lived, is perhaps the best representative of pure theoretical socialism. Professor Wagner of Berlin calls him the Ricardo of socialism. This gives him an important place in the history of political economy, for political economists may be considered as practically unanimous in the opinion that “scientific socialism represents an economic system which no science of political economy can any longer neglect” (Wagner). It is certain that he resembles Ricardo in many respects, and I personally am quite inclined to think he equalled him, though his name has never become very popular, as his life was a quiet, retired one, and he took no part in agitation. His writings are rather difficult reading for laborers, and they are consequently little acquainted with him. His influence on the greatest living economists has been remarkable.[161]

Rodbertus’s principal works are:

The aim of Rodbertus is naturally to solve the social problem, to abolish the sharp contradiction between the real life of society and the desired and striven-for ideal. But there are two chief evils in the existing economic life of man, which are the cause of most of the others. These evils are pauperism and commercial and financial crises, the latter leading to over-production and a glut in the market. Rodbertus directs his attention principally to the means of abolishing these evils.

The starting-point of Rodbertus’s political economy is his conception of labor expressed in the following sentence: “All economic goods are to be regarded only as the products of labor, and they cost nothing but labor.”[162] This proposition he claims was first introduced into economic science by Adam Smith, and was more firmly established by the school of Ricardo. His whole theory consists of a logical extension of this theory, according to which pauperism and crises result from one and the same circumstance—viz., “that when economic processes are left to themselves in respect to the distribution of goods, certain relations (VerhÄltnisse) connected with the development of society bring it about that as the productivity of social labor[163] increases, the wages of the laboring classes constitute an ever-decreasing portion of the national product.”[164] This does not mean necessarily that what the laborer receives becomes absolutely smaller; only that it decreases relatively. If ten laborers produce now twenty bushels of wheat in a given time, and receive ten bushels as wages, and at a later period the productivity of labor has increased to such an extent that they produce thirty bushels in the same time, but receive only thirteen, their portion, their quota has decreased.[165]

Now let us see how this produces pauperism and crises.

In society we find laborers, capitalists, and landlords. These classes can exist only because there is a division of labor, and laborers produce more than they consume. Landlords and capitalists receive what is called rent, which is any income derived from the fact of possession and not from labor. All the rest is labor’s share. Now how does it happen that rent-receiving classes are able to exist? in other words, how is one man enabled to take from another a part of the fruits of his labor? This is because private property in land and capital exists. Land and capital constitute the instruments of labor, and without them production is impossible. Their possessors refuse to give them up to another’s use unless a share of the produce is guaranteed them therefor, while the laborer’s hunger and the sufferings of his family compel him to assent. Labor is treated as a commodity. It is bought and sold like other commodities, and its value depends on its cost. What is the cost of labor? Manifestly the cost of continuing labor; in other words, such means as will enable the laborer himself to live and to beget children who shall continue to labor after he is gone. What the laborers require to live, and to marry, and beget children in sufficient numbers to supply the labor market, is their standard of life. This they obtain and no more. Labor costs labor, and is measured by labor; but labor produces more than it consumes, and this surplus-value is rent. Does the laborer’s standard of life rise with the increase in productivity of economic forces? No, it is even doubtful whether it is rising at all. Then the conclusion is inevitable that labor’s proportion or quota decreases. Rodbertus thinks he can prove, from the income returns in England since 1800, and from the division of the national product of England into rent, wages, and profits, that the increased production of machine power, estimated as equal to the labor of five hundred and fifty millions of men, has benefited wholly and entirely landlords and capitalists.[166] Rodbertus puts the matter as follows to laborers: “Under the rÉgime of laissez-faire and with our present property laws, your level, your portion of the goods produced, tends to fall, not to rise; to convince yourselves, look at our situation in general. Has the separation in the incomes of social classes become greater or smaller since we possess machines and railroads, and productivity and production have increased so remarkably? The answer cannot, indeed, be doubtful. Or consider our situation in particular, and ask the oldest among you whether, during the last forty years, wages—real wages, measured in what wages will buy—have increased as much in your fatherland or your native city as land-rent, or, what is the same, the value of the land, and as much as capital has increased.”[167] We have here, then, an explanation of pauperism and of discontent. A man’s poverty does not depend so much upon what he has absolutely, as upon the relation in which his possessions stand to those of others about him, and upon the extent to which they allow him to share in the progress of the age. A cannibal in the Sandwich Islands is not poor because he has no coat; an Englishman is. When the vast majority were unable to read, a man was not poor or oppressed because he was unable to purchase books, but a German who to-day has not the means to do so is both poor and oppressed.[168]

Rodbertus undertakes, in the second place, to prove that crises result from the continued decrease in labor’s share of all the goods produced. His arguments are remarkable, and contain the ablest explanation yet given of the commercial and industrial crashes which occur every few years.[169]

Let us suppose that the total national production equals at a given moment ten millions of units. It makes no difference what a unit is. It may represent the value of ten oxen, five horses, one thousand bushels of wheat, ten tons of hay, and one hundred sheep, or it may equal the value of any other amount of economic goods. That is a matter of indifference. This production is divided between landlords, capitalists, and laborers, so that each class receives three millions of units, one million going to the state in the shape of taxes. Let us further assume that there is at this moment an equilibrium in production. Three millions of units of such goods, necessaries and comforts, as laborers require, are produced; three millions of units of necessaries, comforts, and luxuries are produced for capitalists; and a like amount for landlords. One million units of goods, such as the state requires, are produced. So long as this relation is maintained a cessation in production is needless. The laborers have the means of purchasing all that is produced for them, as have also landlords, capitalists, and state. If production is doubled, and the same relations are preserved, no crisis is thereby occasioned. But the difficulty lies in the fact that the same proportions are not preserved. Production increases, but the laborer’s share diminishes. He has not the means of purchasing what is produced for him. The capitalists and landlords do not increase their consumption of luxuries pari passu with the diminishing consumption of laborers, as they save in order to become wealthy. Their savings are invested in putting up factories and producing goods for laborers, which laborers have not the means of purchasing in the additional amounts. Cotton goods, cloths, and other commodities are heaped up, and finally there comes a crash. During the period of depression the proper relations are gradually restored. The production has increased to twenty millions of units, let us say, of which the laborers receive four millions of units. Equilibrium is restored, when four millions are produced for them and sixteen millions for the other classes of society. Consequently, in a state of increasing production, we observe an increased consumption of luxuries after every crisis. Production continues to increase in the same relations until the laborers are again unable to purchase what is produced for them, when goods are again heaped up, and we have the anomaly of magazines full of commodities for which there are no purchasers, although there are plenty who desire them. Those for whom they were destined have not the means of purchasing them; and this entails also distress upon others, those who handle these commodities, as well as upon a large part of the rest of society, owing to the close relations existing between different members of the social body. Equilibrium is finally restored by an increased consumption of luxuries. So long as economic life is not regulated these processes will never cease to repeat themselves.

Poverty and commercial panics can be banished only by arrangements which guarantee to laborers a share in the national product, which increases pari passu with increasing production. How is this to be done? I cannot, in this place, give the details, which must be sought in Rodbertus’s writings, particularly in his “Normal Arbeitstag.” I will sketch the outlines of his plan.

The state must interfere. An estimate must be made of the value of the national product, and of the share which laborers receive at the time of the valuation. We will assume that all the products of society during a year can be produced by four millions of hours of the labor of an average man. The value of the yearly production equals four millions of hours. Let us suppose that the laborers receive the product of one million hours. They are given in exchange for this receipts, a kind of paper money, the unit of which is one hour. All that is produced finds its way first into magazines, and laborers and others, on presenting labor-time money, receive its value in goods. If the productivity of labor doubles, an hour will secure double the amount of goods. This is the solution, then, of the problem of securing for the laborers a fixed share of production and an amount of goods which increases with increased production.

It is probably in itself, per se, not impossible. What is lacking is the will. This makes it practically impossible. Many practical men have regarded the scheme with favor. Indeed, a German architect has prepared and published tables showing the value of the product of an average hour’s work in the building trade, and of the share received by the laborer himself.[170] Their accuracy was not disputed by builders, though they doubted the advisability of letting the laborers know exactly the proportion which constituted their wages. Rodbertus did not claim that it would be the task of a day to carry out this plan, but he thought a state which regarded lightly the expenditure of four hundred millions for military purposes ought not to begrudge one hundred millions at once, and perhaps more hereafter, to banish pauperism and stagnation in trade and industry. He spoke of one or two centuries as necessary to realize these plans. He did not, however, regard private property in land and capital as the ultimate form of their possession, although the above scheme allows both. He thought there were three stages in economic development. In the first, private property in human beings—slavery, serfdom, and vassalage—existed; in the second, that in which we now live, private property in capital—i.e., the instruments and means of labor—was a social institution; in the third, private property in income alone was to be allowed. Each one was to enjoy in this third stage the full fruits of his labor.

It is needless to say that Rodbertus waged no crusade against land or capital. No one was ever so great a fool as to do that. Every social democrat, even, admits the necessity of both land and capital. He did not, however, believe that it was forever necessary that capitalists and landlords as separate classes should exist. There is the same difference between capital and capitalist as there is between labor and slave. Once, he who waged war on slavery was looked upon as a man who was trying to abolish labor. In the future Rodbertus thinks we will separate in the same manner capital and capitalist, and abolish the capitalist class as we have already abolished the slave-holding class. This does not at all imply equality. Great differences could still exist, but they would be based on merit.

A period of laissez-faire was held by Rodbertus to denote a transitional stage and a preparation for a different social organization. After the social order of the Roman republic, which was founded on the possession of many slaves, and production on a large scale by them, had had its day, freedom in trade and commerce reigned under the emperors, but was terminated by the feudal system of the Middle Ages, for which state it was only preparatory. In the same manner, the present imperfect and unsatisfactory organization, or, as he perhaps would have said, disorganization, was to end in a higher social stage. It was wicked and impious to hope for an improvement from laissez-faire, which he called a fool’s paradise. Good things did not come to us in this world of themselves. It was intended that we should work for them, and for their attainment use all the instrumentalities which Providence has committed to us, the state included.

All of the leading socialists of to-day, to whatever socialistic group they may belong, have been influenced greatly by Rodbertus. An understanding of his theories renders it comparatively easy to understand Marx and Lassalle.

German socialists of to-day may be divided into three groups—viz., social democrats, professorial socialists, and Christian socialists. We also hear of state socialists, who form one class with professorial socialists; save that a few of them may, perhaps, belong to the social democrats. Sometimes they are separated from professorial socialists and made to include simply German office-holders, but the ideas of German office-holders, as such, can have no interest for us in this place. The same man is sometimes called a professorial socialist and sometimes a state socialist, as, for example, Professor Wagner—state socialist as an office-holder who lays stress on the beneficial effects of state activity, professorial socialist as a professor who does the same. It is best to use the term professorial socialists in a wide sense, so as to include all holding similar views.