a

mistake, and I have a terrible suspicion that our cause has been betrayed at the moment of its utmost realization.

Yours in fraternal greeting,

N. LOPOUSHKIN

90. The bolshevists return to the capitalistic system? The conditions to which Lopoushkin had called attention were Lenin meanwhile impressing themselves upon the minds of other bolshevist accepts the

essential officials. At length even Lenin was convinced that only a return features of to capitalistic methods would save the country from ruin. Accord- capitalism

before the ingly, free initiative and open competition in certain forms of trade end of were allowed. The socialization of railroads, mills and natural 1919. resources was halted. Land was again cultivated under the wage system. By the end of 1919 the essential features of capitalism had been accepted by Lenin and Trotzky, the bolshevists continuing in power as a despotic group which maintained its authority by armed force. On August 9, 1921, Lenin issued an important decree, in which In 1921

he gives he paved the way for a more complete abandonment of socialism. The following are excerpts from a press report of the contents of this document:

[The decree states that the bolshevist government] must take most energetic measures to save the situation, which can be done only by carrying out in a firm and businesslike way the following instructions and directions with regard to the new economic policy. ...

Section 3 [of the decree] sets forth four reasons which led to the his reasons abandonment of the old policy. They were: first, the vast number

for still

further of enterprises which the State attempted to direct without having abandoning adequate supplies of food and material; second, the confusion of socialism, powers and handling of supplies which resulted in “too much red tape, cross instructions and irresponsibility"; third, the fact that "with such methods of supply and with the methods of remuneration of labor those engaged in production were not and could not be interested in the work or in improvement of the methods of production”; fourth, the war and the extreme exhaustion of Russia.

Section 4 runs thus: “In order to prevent the further deterioration and admits

the necessity of a new policy, in which socialist activities are to be restricted,

while industry is to be directed more and more in accordance with capitalistic methods.

of national life it is necessary to remodel this life on the following lines:

“The State ... will concentrate under its direct management certain branches of production and a certain number of great enterprises of national importance and their auxiliaries. Such establishments shall be conducted on strict economic principles. The Supreme Economic Council and its subordinates shall be allowed to start and conduct enterprises only when there is assurance of sufficient materials, money, etc. ..."

Section 5 says that the establishments and enterprises not included in the above groups shall be leased to coöperatives, commercial companies and other collective bodies, and to private individuals, according to a decree governing such leases. It adds that “Soviet institutions shall take most energetic steps to lease such establishments as cannot now be conducted by the Soviet economic organizations or are being conducted without success, in order to relieve the strain of the State machinery."

Section 6 provides for shutting down the establishments which are not leased or which the State decides not to run, and the distribution of the better workers among the other establishments.

Section 7 emphasizes the importance of small industries as auxiliary to State industry and peasant agriculture, and adds: “It has been thought necessary to create conditions in which State industrial workers and artisans may normally develop production and enjoy the free disposal of the fruits of their work.”

Section 10 ... is perhaps the most revolutionary of all. It says: ... To resuscitate the national economic life, it is necessary to develop free commercial intercourse between town and country, and in particular to revise the monetary system. Therefore, measures must be taken not only to develop goods exchange as medium of local trade, but also to inaugurate within the limits of possibility and expediency the circulation and use of money as a means of exchange." ..

A further concession.

Socialist
principles
with respect
to trade
and the
monetary
system are
abandoned.

Questions on the foregoing Readings 1. When did the bolshevists seize the reins of government in Russia? 2. When was the bolshevist constitution adopted?

3. Summarize the principles expressed in Article One, Chapter Two,

of the bolshevist constitution. 4. What classes of citizens were allowed to vote under the bolshevist

régime? 5. Name some groups of individuals which were excluded from the

suffrage. 6. Define the " dictatorship of the proletariat” as applied by the

bolshevists. 7. Why did the bolshevists suppress the freedom of meeting and

other similar safeguards to the liberty of the individual? 8. In what terms did Lenin defend the dictatorship of the proletariat? 9. Why did he consider“ freedom of meeting impossible under

bolshevism? 10. What was Lenin's attitude toward freedom of the press? 11. What, according to Lenin, was the essence of Soviet authority? 12. What did the bolshevists urge upon radical groups in countries

other than Russia? 13. Outline the work of bolshevist propagandists in foreign countries

with regard to international relations. 14. How were bolshevist propagandists instructed to act with regard

to the internal politics of foreign countries? 15. Outline the aims of bolshevist propagandists “in the economic

sphere." 16. What were to be the aims of bolshevist propagandists “in the

military sphere"? 17. Give the chief reason why the bolshevist official, Lopoushkin,

feared for the future of bolshevism. 18. What, according to this man, were the general effects of bolshevism

in Russia? 19. What were some of the earlier steps taken by Lenin in the matter

of a return to capitalistic methods? 20. What is the importance of the decree issued by Lenin on August 9,

1921? 21. Give the four reasons why the socialist policy of the bolshevists

was abandoned. 22. To what extent did the decree of August 9, 1921, provide for

private control of production? 23. To what extent did this decree provide for the application of

capitalistic methods to commercial intercourse and the monetary system?

CHAPTER XVI

THE CASE AGAINST SOCIALISM

91. The labor theory of value is untrue 1 Importance The most striking proof of the untrustworthiness of socialism is of disprov- the fact that the whole socialist doctrine is based upon false principles. ing the labor theory We have seen that socialism is founded primarily upon the labor of value.

theory of value. If the labor theory is disproved, therefore, the chief stone is removed from the foundation of socialism. In the following extract, Professor Le Rossignol explains why the labor theory of

value is untrue: This theory [The labor theory of value, or the labor-cost theory, as it is often does not

called], certainly does not account for the value of land, particularly account for the value of of unimproved city lots. Such land can be exchanged for cotton, land, wheat, hats, silver, or gold, and must, therefore, have some property

in common with them all, which is the cause and measure of its value.

But it cannot be labor-cost, for land is a product of nature. nor for the When we come to commodities in the narrow, Marxian sense of value of

that word, we find innumerable exceptions to the supposed law that commodities in the nar

“commodities in which equal quantities of labor are embodied, row, Marx

or which can be produced in the same time, have the same value.” ian sense.

Old coins, stamps, manuscripts, autographs, birds’ eggs, fossils, and the thousand and one objects dear to the heart of collectors, are surely to be classed as commodities, although there is no discoverable relation between their market value and their cost of product as measured in labor-time. What was the labor-cost of the Sistine Madonna? What would be its cost of reproduction? What is the labor-cost of a rare stamp or coin? How much “congealed labor” is there in the egg of that extinct bird, the Great Auk, which sold some years ago for the enormous sum of $1200. On the other hand, how many hours

1 From James Edward Le Rossignol, Orthodox Socialism. T. Y. Crowell & Co., New York, 1907; pp. 15, 17-20.

of human labor did it cost to build the pyramids, how many sighs and tears and drops of blood, and what is their intrinsic value to-day? The works of authors, artists, and inventors are commodities in The theory

does not the strictest sense of that word, and yet their market value has no

explain the definite relation to the labor-time spent in their production. A value of the

works of popular novelist may receive $50,000 from the sale of a book written

authors, in six months, while his less fortunate brother, after spending six years artists and

inventors. of unrequited toil, must publish his book at his own expense. He has not been able to produce a work of social necessity; therefore his labor-time is wasted, and does not determine the value of the product. ...

Commodities subject to the caprice of fashion quickly lose their value when their usefulness is gone, no matter what their cost of production or reproduction. ...

Every farmer knows that the labor-cost theory fails to explain It fails to the value of agricultural produce. On some lands wheat may be explain the grown at a cost of 50 cents a bushel; on poorer lands at 75 cents, agricultural $1, or $1.25, and yet the total supply, produced at various costs, produce. may be sold on the same market at $1 a bushel. This law of varying costs applies to the production of all raw materials: grain, meat, leather, cotton, wool, sugar, lumber, iron, clay, gold, silver, and the rest, because of the fact that land of the best quality is limited in quantity. In fact, the land-cost of these commodities has as much to do with their value as their labor-cost. But neither land-cost, labor-cost, or capital-cost can be regarded as of prime importance in determining the value of the product, which is due first of all to utility, or the power which commodities have to satisfy human wants.

Finally, the value of staple manufactured articles, factory products, The value such as cotton and woolen goods, boots and shoes, refined sugar,

of staple

manufacand steel rails, is not determined chiefly by their labor-cost. In the tured goods first place, the value of the raw material of which they are composed is not so determined. In the second place, their value as finished is not exproducts is not determined solely by cost, which limits supply, nor by plained by

the labor utility, which controls demand, but by both of these factors together. theory of Utility and cost are the two factors which determine value, and of value, these utility is chief.