The first contribution made by Marx as a result of his research was his materialistic interpretation of history. This theory is that human actions are determined by material environment, and consequently the development of man�s culture, or human history, is determined by changes in physical nature. In other words, man�s history can be explained by the changes in his physical environment, and conversely, physical environment is the determinant of history. This discovery by Marx of a historical law been considered no less epoch-making than Newton�s discovery of the law of gravity in the field of natural science.
The theory of the materialistic interpretation of history has been considered so sound and true that because of it many people hitherto opposed to socialism have been converted to the socialist faith. After the European War, socialism was universally considered the only hope for the
future, and opposition to it had almost entirely disappeared. Indeed, it was felt that the time was ripe for the socialists to solve the social Question by practicing what they had advocated on a world-wide scale. But as already mentioned, instead of uniting together to reconstruct society, the socialists fought among themselves ; there was not only disagreement between utopian socialists and scientific socialists, but also a great deal of controversy among the scientific socialists themselves.
In 1848 in an international socialist convention held I Belgium, the Marxianists laid down a number of concrete proposals for a social revolution. After the Revolution of 1917 the Russians put these proposals into practice. But they soon had to declare that these policies were only war policies, and not aimed at the realization of Marxianism. The Soviet further declared that their policy was not different from the policies of England, Germany, or America during the War, when these nations either nationalized or put under government control their railroads, steamship lines, and big industries. In spite of this vindication of the Soviet policy, they were still considered by the rest of the world as Marxian policies rather than mere war measures. Then the soviets replied that Soviet Russia would not be ready to practice Marxianism until the country became as highly industrialized as England or America. This serves to illustrate the divisions among the socialists of different nations. Even an international group of Marxianists from Germany, France, and Russia, exhibited a strong sectarian spirit in the controversy ; and each group blamed the other as not being true Marxianists.
The significant result of this controversy is that some people have begun to throw doubt on the Marxian theories.
A sound theory, like Newton�s law of gravity, can be tested again and again, and still be found true and sound ; but it is said that the controversy among the Marxianists is an evidence that the Marxian theory of the materialistic interpretation of history is open to doubt, and moreover, cannot be tested. What is, then, the determining force in history ? Recently an American disciple of Marx by the name of William,1 after making a deep study of Marx�s philosophy, came to the conclusion that the disagreement between fellow Socialists was due to defects in Marxian doctrines. He sets forth the view that the Social Question, not the material environment, is the determining force in history, and that the level of subsistence is the heart of the Social Question. In other words, the problem of livelihood is the central force in social progress ; and social progress is the central force in history. Since subsistence is an element in livelihood, the theory of the American scholar is in entire accord with the Kuomintang Doctrine of Livelihood. For ever twenty years we have preached the Doctrine of Livelihood instead of socialism because the term livelihood is more exact and suitable to define the nature of the Social Question than these terms, socialism or communism. What is more interesting, this discovery on the part of the Marxian scholar and the development of new knowledge after the World War show so much more clearly that our Doctrine of Livelihood is consistent with the law of progress and is not a mere parroting of what others are saying.
1 Maurice William: The Social Interpretation of History. New York, Upshitz Press, 1920.
THE FALLACY OF �CLASS STRUGGLE"
To solve the problem of livelihood, according to the American writer referred to above, is ma�s constant
endeavor ; and thus it is the law of social progress—the gravity-law of history. This new theory of the social interpretation of history is fundamentally different from Marx�s materialistic interpretation of history. Which of the two theories is the correct one?
Marx analyzed the social Question from the materialistic standpoint, especially from the point of view of production. Large scale production in modern society is made possible through the organization or co-operation of three factors, namely, capital, labor, and machinery ; but at the ed of the process the capitalists take by far the larger share of the profits and labor receives a very insignificant portion. Hence, there is conflict between labor and capital which leads to class war. According to Marx. Class war is not characteristic of the industrial age alone, but has taken place in all ages of history. For example, we find in ancient times struggles between masters and slaves, between landlords and tenants, and between the nobility and the common people. In short, class struggle is a struggle between the oppressed and the oppressors ; and will last until society is thoroughly reorganized on the principles of social equality. Marx maintained also that in the past class struggle has been the motive force behind progress; in other words, class struggle is the cause and social progress is the effect.
But is Marx right in this ? Modern society is progressive ; and if we were to make up the account of its progress, it would be a very long, complicated list of achievements Let us take economic progress as an example. Roughly speaking, in recent years the Europeans and Americans have achieved four things : (1) improvement of the social conditions of the working class ; (2) socialization of
transportation and communication facilities ; (3) creation of direct taxation, and (4) socialization of distribution.
In regard to the first point : Modern states, led by Germany and followed by Britain and the United States, have instituted many reforms for the good of the working class, such as the establishment of schools for workers, the provision of health laws, the improvement of working conditions, and the reduction of industrial accidents. As a result of these reforms, there has been an increase of working efficiency with a corresponding increase of production.
In regard to the second feature of economic progress : Street cars, railroads steamship lines, postal and telegraphic service, and other important means of communication are gradually coming under government control. There are two important reasons against the private operation of big transportation industries : Firstly, private operation tends to create monopoly ; and secondly, it often suffers from insufficient capital. On the other hand, with plenty of capital and pure motives for service which facilitates the speedy transport of raw materials into the factory and of the finished products from the factory to the market, means low costs of production and consequent b7usiness prosperity. Germany realized this fact many years ago and nationalized all her big transportation industries. Even America, where individualism is still the predomination creed, had to follow Germany�s example during the Great War.
Thirdly, by the term direct taxation, I refer to such taxes as the income tax and the inheritance tax which are levied according to a graduating progressive scale. The
significance of direct taxation is that it is to draw a large portion of the national revenue directly from surplus capital which can always be taxed heavily without running into the danger of excessive taxation. In olden days when land tax and excise were the only taxes, the income of the poor or of the idle class, not the excessive wealth of the rich, was taxed ; so the rich enjoyed excessive wealth without being subject to taxation. Seeing this injustice, Germany and Britain many years ago adopted direct taxation. When the War broke out, Germany drew 60 per cent to 80 per cent and England drew 58 per cent of her revenue from the income and inheritance taxes. America, being slower in this matter, did not accept the income tax and the inheritance tax until ten years ago [1913], but since then her revenue from these items has been steadily increasing. In 1918 the income tax alone yielded $4,000,000,000. In all European and American states, the vast increase of national revenue from direct taxation has enabled the governments to undertake more social reforms.
Comment : personally I do not believe in the soundness of the taxation on incomes ; nor is the inheritance tax apparently equitable. One, undeniable, factor in the taxation on incomes is that any organization of the same is entirely arbitrary. Hence, the minimum income tax in the U.S. of the 1910-21�s to which Sun refers had in the meanwhile grown into an absurdity. On any count, such taxation does demonstrably penalize talent and productivity, the results are only lessening of the potential for wealth within the country. — (WPT).
Fourthly, socialization of distribution is the newest feature in Western social progress. Under the present bargaining system, buying and selling are done through middlemen, and money is used as a medium of exchange. The middlemen—the merchants—usually buy the goods from the producer at a very low cost ad sell to the consumer at high prices—in this way deriving great profits at the expense of the producer and the consumer. Recently it has been found that these middlemen can be eliminated by distributing agencies organized either by the government, or by private bodies which represent either producers or consumers. The kind of consumers?co-operation newly-adopted in England is an example of a private distributing
agency. Municipal water works, municipal electric systems, coal ad gas companies, and municipal dairies, are examples of government distributing agencies. This new development may be called the process of socializing distribution ; and the greatest advantage of this process is the saving of profits previously taken by the middlemen. In other words, it is �socialism applied in distribution.?
Now the question is : What has caused these four factors of economic progress ? According to Marx�s way of reasoning, they should be caused by class struggle, that is, by the conflict between capital and labor, but historical facts have proved the contrary. They are the results, not of class struggle, but of mutual understanding between capital and labor and of their realization of the fact that capital will make higher profits and labor better wages through greater efficiency ; resulting in cheaper costs of production and therefore in business prosperity ; and also by the realization that these in turn are only possible by improving the working conditions, the transportation systems, the taxation systems, and the systems of distribution. In other words, modern economic progress is caused by the harmony, not the conflict, of the economic interests of society. Why is there such harmony? Because all men must live and must face the everlasting problem of livelihood. They either perish through conflict or live through co-operation.
Class struggle, therefore, is not the cause of social progress, but a kind of social disease, which develops when a social group lacks the means of livelihood and resolves as the last resort to use abnormal means of obtaining its livelihood. Marx�s trouble was that he mistook a social pathological condition for the cause of social
progress ; so rightly he should be called a �social pathologist" not a �social physiologist."
THE FALLACY OF �SURPLUS VALUE"
Marx further declared that the �surplus value" obtained by the capitalists was a robbery from labor. In this statement, Marx overstressed the contribution of labor in the process of production, and neglected the contribution of society in general. Take the modern cotton mills in China as an illustration. During the European War the mills in Shanghai, Nan Tungchow, Tientsin, and Hankow made a net profit—or surplus value—of from several hundred thousand dollars to several million dollars. Did every cent of this �surplus" come from labor? In the first place, cotton is the raw material for making cloth. When the farmer cultivates the cotton plant, he does it according to the instruction of the agriculturist ; especially does he use the knowledge of the agriculturist in making improvements. He uses farming machines to till the ground and fertilizer to enrich the soil ; after harvest, he sends his cotton to the factory either by railroad or by boat. Thus in the process of manufacturing cloth, in addition to the service of the laborer in the factory, there are the contributions made by the farmer, the agriculturist, the manufacturer, the inventor of farming machines, the person who discovered the use of fertilizer, the railway men or steamship merchants, the persons who invented the use of steam and electricity, and the miners who furnished the raw material for building the railroads and steamships. Lastly, without consumers to buy cloth, neither capital nor labor can derive any profit or value from the cloth however excellent may be its quality.
It seems to be absurd, then, for Marx in his �surplus value" theory to ignore all direct and indirect contributions by persons other than laborers. As a matter of fact, every one who is doing useful work whether he is a producer or a consumer, is a contributor to the �surplus value� ; and labor is only a minority group among the contributors to the �surplus value.� There are in the United States only 20,000,000 laborers, that is, one-fifth of the total population. In other countries such as Chine where industry is not so highly developed as in the United States, the proportion of laborers is much smaller than one-fifth. The industrial conflict, then, is not one between the laboring class and the capitalist class as Marx predicted, but one between society in general and the class of selfish capitalists. Because everyone in society must live and because a group of selfish capitalists is constantly encroaching upon the liberty of the majority who are endeavoring to earn a livelihood, modern society has decided to take under public control certain important industries, public utilities, and distributing agencies, to levy income and inheritance taxes and to improve working conditions in factories. These activities have undoubtedly promoted harmony among different economic interests in society, and the result is an increase in social happiness and a step forward in social progress. Now that we know that Marx�s theories are wrong, and that livelihood is the law of social progress or the center of gravity of history, we may proceed to find a solution of the great Social Question.
RECENT DEVELOPMENTS OF CAPITALISM
Since Marx, in his study of social progress, confuse cause with effect, his prediction has not been fulfilled ;
indeed, it has often been directly contradicted by subsequent facts in social history. For example, in 1848 Marx�s followers held for the first time an international communist congress, and in that congress a number of declarations were made. Subsequently the First International was organized, and then was dissolved at about the time of the Franco-Prussian War. Later the Second International was organized, differing from the First International in many principles. The First International advocated social reconstruction by revolutionary methods based upon the theory of class struggle and admitted no compromise or co-operation with capitalists. It forbade its members to enter into political activities in parliament. But later on German communists entered the Reichstag and were very active there. Today the British labor movement has even organized a labor cabinet. So many recent economic and political changes in the world have not been what the First International had proposed. The cleavage between the First International and the Second International became wider and wider, and internal dissention among Marxianists were correspondingly great. Marx never anticipated this development. This again, proves my point that it is easy to act, but difficult to understand.
Moreover, Marx predicted that the capitalist systems would soon break down if there was a period of extreme centralization. The capitalists, according to Marx. Would fight among themselves because of the conflicts between their interests, and as result the big capitalists would absorb the small capitalists until there would be only tow classes left in society, the extremely rich capitalists and the extremely poor laborers.
Finally, the stupendous capitalist system would break down and a social revolution would
take place. But seventy years have elapsed since Marx passed away and the capitalist system has developed in a contrary manner to what Marx predicted. What is more interesting still, Marx himself told the workers in London that their employers would never consent to their demand for an eight-hour day and that this ideal would never be realized until the capitalist system had been replaced by the socialist system. Today, although England has not given up her capitalist system, not only have the employers consented to observe the eight-hour day, but the government is in many cases enforcing the law.
Turing to Germany, we find that this autocratic government under Bismarck created by law an eight-hour day, required industrial accident compensation, regulated the working conditions of children and women, and instituted workers�� pensions and social insurance ; Bismarck enforced these regulations by his �Iron and Blood Policy� in the face of stormy protests from German capitalists. It was thought at the time that with reduced hours and better wages labor might profit, but that production would decrease and industry itself would suffer depreciation. No one, it was argued, could produce as much in eight hours as in sixteen hours, but the practical result turned out to be entirely different from what was expected. German workers became more efficient, and the cost of production per unit was greatly reduced with the result that German industry and commerce prospered. Why ? It was simply a question of health. When the German worker worked sixteen hours a day, he was worn out before he was through with his work ; and consequently became careless and inefficient. His carelessness caused damage to the machine and his fatigue led to sickness. In the end the loss to the
factory from machine repair and workers' sickness was very heavy.
On the other hand when the German worker was required to work only eight hours a day, he was not tired out and so he was much more efficient. Such being the case, there was more actual gain from eight hours of efficient work than from sixteen hours of inefficient work. It you do not believe this statement, experiment on yourself You can do more study in eight hours a day than in sixteen hours a day, for it you do not have sufficient rest and exercise, you will be tired and will not be able to do good work. The success of the German experiment aroused enthusiasm in other countries, particularly England and America ; and when they understood the simply theory that I have outlined, other countries followed the example of Germany.
SOCIAL EXPERIMENT IN FORD FACTORIES
Not knowing of this new theory, Marx had said that in order to exact the maximum of surplus profit the capitalists would insist on three conditions, namely, small wages, long hours, and high prices. That these three conditions are not logical can be proved by the greatest money-making industries of modern times. The Ford factories which are well known to all of us, are among the largest of modern factories, and their enormous out put of motor cars which are distributed all over the world, result in a profit of over a hundred million dollars a year. What are the manufacturing and business conditions in these factories / Their equipment, both in the factories and in the business offices, is perfectly suitable for the job in hand ; and conforms to all regulations for the protection and health of the workers. The longest working day is not more than
eight hours, and the lowest wage received per day by any worker is five dollars gold or ten dollars Chinese currency, while many workers receive higher wages. Besides high wages, these factories provide playgrounds for the workers�� recreation, medical and health offices for the treatment of the sick, schools for the education of new workers and workers�� children, and in addition life insurance for the workers, so that after a worker��s death his family receives both insurance money and a pension.
When we come to the question of the prices of Ford cars, all those who have bought Fords know how reasonable the prices are. While ordinary cars cost five thousand dollars (Chinese currency), the Ford car costs not more than one thousand five hundred dollars. In spite of its very reasonable price, the Ford has a powerful engine and is especially suitable for mountain roads and it can be used for long periods without the danger of breakdowns. Because of their low price and high endurance quality, Ford cars are sold all over the world ; and in consequence, the Ford factories are making immense profits. The economic and industrial principles underlying the prosperity of the Ford factories contradict in three aspects at least Marx��s theory of surplus value. Instead of insisting on long hours, low wages, and high prices, the Ford factories have (1) decreased the working hours, (2) increased wages, and (3) reduced the price of their product.