I. Part I: How Proudhon Solves the Housing Question

In No. 10 and following numbers of the Volksstaat there appears a series of six articles on the housing question which deserve attention for the one reason that — apart from some long-forgotten literary efforts of the forties — they are the first attempt to transplant the Proudhonist school to Germany. This represents so enormous a step backward from the whole course of development of German socialism, which dealt Proudhon’s notions the decisive blow as long as twenty-five years ago, that it is worth while to counter this attempt at once.

The so-called housing shortage, which plays so large a part in the press nowadays, does not consist in the fact that the working class in general lives in bad, overcrowded, unhealthy dwellings. This housing shortage is not something peculiar to the present; it is not even one of the sufferings peculiar to the modern proletariat as against all earlier oppressed classes; on the contrary, it has affected all oppressed classes of all times fairly equally. To put an end to this housing shortage there is only one means: to abolish altogether the exploitation and oppression of the working class by the ruling class. What is meant today by the housing shortage is the peculiar aggravation that the bad housing conditions of the workers have suffered through the sudden rush of population to the big towns: a colossal increase in rents, a still greater crowding of the inhabitants into the individual houses, and for some the impossibility of finding any shelter at all. And this housing shortage gets talked of so much only because it is not confined to the working class but has hit the petty bourgeoisie as well.

The housing shortage of the workers and of part of the petty bourgeoisie in our modern big towns is one of the countless smaller, secondary evils that result from the present-day capitalist mode of production. It is by no means a direct result of the exploitation of the worker, as worker, by the capitalist. This exploitation is the basic evil which the social revolution means to abolish by abolishing the capitalist mode of production. The cornerstone of the capitalist mode of production, however, is the fact that our present social order enables the capitalist to buy the labour-power of the worker at its value, but to extract from it far more than its value by making the worker work longer than is necessary to reproduce the price paid for the labour-power. The surplus value produced in this way is divided among the whole class of capitalists and landowners, together with their paid servants, from the Pope and the Emperor down to the night-watchman and below. How this division takes place does not concern us here; this much is certain, that all who do not work can live only on the scraps of this surplus value that reach them in one way or another. (Compare Marx’s Capital, where this was first worked out.) The division of the surplus value produced by the working class and taken from it without payment, among the non-working classes, proceeds amid the most edifying squabbles and mutual swindling; in so far as this division takes place by way of buying and selling, one of its chief levers is the cheating of the buyer by the seller, and in retail trade, particularly in the big towns, this has now become an absolute condition of life for the seller. When, however, the worker is cheated by his grocer or baker over the price or quality of the goods, this does not happen to him in his specific capacity as a worker. On the contrary, as soon as a certain average degree of cheating becomes the social rule in any place, it must in the long run be compensated by a corresponding rise in wages. The worker appears before the shopkeeper as a buyer, that is, as an owner of money or credit, and therefore not at all in his capacity as a worker, that is, as a seller of labour-power. The cheating may hit him, like the poorer class in general, harder than the richer classes of society, but it is not an evil that hits him exclusively, that is peculiar to his class.

It is just the same with the housing shortage. The growth of the modern big towns gives the land in certain areas, particularly in those centrally situated, an artificial and often colossally increasing value; the buildings erected on these areas, instead of raising this value, rather depress it, because they no longer correspond to the changed circumstances. They are pulled down and replaced by others. This happens above all with centrally situated workers’ dwellings, whose rents, even with the greatest overcrowding, can never, or only very slowly, rise above a certain maximum. They are pulled down, and shops, warehouses and public buildings are built in their place. Bonapartism, through its Haussmann in Paris, exploited this tendency to the utmost for swindling and private enrichment; but the spirit of Haussmann has also strode through London, Manchester and Liverpool, and seems to feel just as much at home in Berlin and Vienna. The result is that the workers are pushed out from the centre of the towns towards the outskirts; that workers’ dwellings, and small dwellings in general, become rare and dear and are often not to be had at all; for under these conditions the building industry, for which more expensive dwellings offer a much better field of speculation, will build workers’ dwellings only by way of exception.

This rent shortage thus certainly hits the worker harder than any better-off class; but, just like the cheating of the shopkeeper, it is not an evil weighing exclusively on the working class, and in so far as it affects the working class it must, once it reaches a certain degree and lasts a certain time, likewise find a certain economic compensation.

It is precisely these sufferings which the working class shares with other classes, particularly the petty bourgeoisie, with which petty-bourgeois socialism, to which Proudhon too belongs, prefers to concern itself. And so it is by no means accidental that our German Proudhonist seizes above all on the housing question, which, as we have seen, is by no means exclusively a workers’ question, and that he declares it, on the contrary, to be a true and exclusively workers’ question.

“As the wage-worker is in relation to the capitalist, so is the tenant in relation to the house-owner.”

This is totally false.

In the housing question we have two parties facing each other, the tenant and the landlord or house-owner. The former wants to buy from the latter the temporary use of a dwelling; he has money or credit — even if he must buy this credit too from the house-owner at a usurer’s price, in the form of a higher rent. It is a simple sale of a commodity; it is not a transaction between proletarian and bourgeois, between worker and capitalist. The tenant — even if he is a worker — appears as a man of means; he must already have sold the commodity peculiar to him, his labour-power, in order to appear with its proceeds as the buyer of the use of a dwelling, or he must be able to give guarantees of the impending sale of this labour-power. The peculiar results that the sale of labour-power to the capitalist has are completely absent here. The capitalist has the labour-power he has bought, first, reproduce its own value, and second, produce a surplus value, which for the time being, and subject to its distribution among the capitalist class, remains in his hands. Here, therefore, an excess value is produced; the total sum of existing value is increased. It is quite different with the renting transaction. However much the landlord may overreach the tenant, it is always only a transfer of value already existing and previously produced, and the total sum of the values possessed by tenant and landlord together remains the same as before. The worker, whether his labour is paid by the capitalist below, above or at its value, is always cheated of a part of the product of his labour; the tenant only when he has to pay more than its value for the dwelling. It is therefore a complete distortion of the relation between tenant and landlord to try to equate it with that between worker and capitalist. On the contrary, we are dealing with an entirely ordinary commodity transaction between two citizens, and this transaction proceeds according to the economic laws that govern the sale of commodities in general, and in particular the sale of the commodity landed property. The costs of building and maintaining the house, or the part of the house in question, enter into the account first; the value of the land, determined by the more or less favourable situation of the house, comes second; the momentary state of the relation between supply and demand decides in the end. This simple economic relation expresses itself in the head of our Proudhonist as follows:

“The house, once built, serves as an eternal legal title to a definite fraction of social labour, even if the real value of the house has long since been more than adequately paid to the owner in the form of rent. Thus it comes about that a house which, for instance, was built fifty years ago has during that time covered its original cost price two, three, five, ten times over in the yield of its rent.”

Here we have the whole Proudhon at once. First, it is forgotten that the rent of a house must not only pay interest on the building costs but must also cover repairs and the average amount of bad debts, unpaid rents and occasional vacancy, and finally pay off in annual instalments the building capital invested in a house which is perishable and in time becomes uninhabitable and worthless. Second, it is forgotten that the rent must also pay interest on the increase in value of the plot on which the house stands, so that part of it consists of ground-rent. Our Proudhonist does declare at once that, since this increase in value comes about without any action of the landowner, it belongs by right not to him but to society; but he overlooks the fact that in doing so he is in reality demanding the abolition of landed property, a point which it would take us too far to go into here. Finally, he overlooks the fact that the whole transaction is not at all a matter of buying the house from its owner but only of buying its use for a definite time. Proudhon, who never bothered about the real, actual conditions under which any economic phenomenon takes place, naturally cannot explain to himself either how the original cost price of a house can in certain circumstances be paid ten times over in fifty years in the form of rent. Instead of investigating this not at all difficult question economically, and establishing whether it really contradicts the economic laws, and how, he helps himself out by a bold leap from economics into law: “the house, once built, serves as an eternal legal title” to a definite annual payment. How this comes about, how the house becomes a legal title, Proudhon does not say. And yet that is exactly what he should have explained. Had he investigated it, he would have found that all the legal titles in the world, however eternal, cannot give a house the power to have its cost price paid ten times over in fifty years in the form of rent, but that only economic conditions (which may be socially recognised in the form of legal titles) can bring this about. And with that he would have been back where he started.

The whole Proudhonist doctrine rests on this saving leap from economic reality into legal phraseology. Whenever our good Proudhon loses the economic connection — and that happens to him with every serious question — he takes refuge in the sphere of law and appeals to eternal justice.

“Proudhon first takes his ideal of eternal justice from the legal relations that correspond to commodity production; by which, be it noted in passing, the proof so consoling to all philistines is also supplied, that the form of commodity production is as necessary as justice. Then, conversely, he wants to remodel actual commodity production, and the actual law corresponding to it, in accordance with this ideal. What would one think of a chemist who, instead of studying the actual laws of the changes of matter and solving definite problems on the basis of them, wanted to remodel the changes of matter according to the ‘eternal ideas’ of ‘naturalness’ and ‘affinity’? Does one really know more about usury when one says that it contradicts ‘eternal justice’, ‘eternal equity’, ‘eternal mutuality’ and other ‘eternal truths’ than the Fathers of the Church knew when they said that it contradicted ‘eternal grace’, ‘eternal faith’ and ‘the eternal will of God’?” (Marx, Capital, p. 45.)

Our Proudhonist fares no better than his lord and master: “The rental contract is one of the thousand exchanges which are as necessary in the life of modern society as the circulation of the blood in the bodies of animals. It would naturally be in the interest of this society if all these exchanges were permeated by a conception of right, that is, if they were everywhere carried out according to the strict demands of justice. In a word, the economic life of society must, as Proudhon says, raise itself to the height of an economic right. In reality, as is well known, exactly the opposite takes place.”

Would one believe that five years after Marx had characterised Proudhonism so briefly and strikingly, precisely in this decisive respect, it would still be possible to have such confused stuff printed in the German language? What does this rigmarole mean? Nothing but that the practical effects of the economic laws governing present-day society offend the author’s sense of justice, and that he cherishes the pious wish that matters might be so arranged as to remedy this. Yes, if toads had tails they would no longer be toads! And is not the capitalist mode of production “permeated by a conception of right,” namely that of its own right to exploit the workers? And if the author tells us that this is not his conception of right, are we a step further?

But back to the housing question. Our Proudhonist now gives free rein to his “conception of right” and treats us to the following touching declamation:

“We do not hesitate to assert that there is no more terrible mockery of the whole culture of our celebrated century than the fact that in the big towns 90 per cent and more of the population have no place they can call their own. The real nodal point of moral and family existence, hearth and home, is being swept away by the social whirlpool.… In this respect we stand far below the savages. The troglodyte has his cave, the Australian his mud hut, the Indian his own hearth — the modern proletarian is in fact suspended in mid-air,” and so on.

In this jeremiad we have Proudhonism in its whole reactionary form. In order to create the modern revolutionary class of the proletariat it was absolutely necessary that the umbilical cord which still bound the worker of the past to the land should be cut. The hand-weaver who had his little house, garden and field alongside his loom was, for all his misery and political oppression, a quiet, contented man, “in all godliness and honesty,” who doffed his hat to the rich, the parsons and the officials of the state, and was inwardly a slave through and through. It is precisely modern large-scale industry, which has turned the worker formerly chained to the land into a completely propertyless proletarian, free and loose of all traditional fetters, an outlaw — it is precisely this economic revolution that has created the conditions under which alone the exploitation of the working class in its final form, capitalist production, can be overthrown. And now along comes this tearful Proudhonist and laments, as if it were a great step backward, the driving of the workers from hearth and home, which was precisely the very first condition of their intellectual emancipation.

Twenty-seven years ago I described in its main features (The Condition of the Working Class in England) precisely this process of the driving of the workers from hearth and home as it took place in England in the eighteenth century. The infamies of which the landowners and manufacturers were guilty in the process, the materially and morally harmful effects that this expulsion inevitably had at first on the workers concerned, are also depicted there as they deserve. But could it enter my head to see in this process of historical development, absolutely necessary under the circumstances, a step backward “below the savages”? Impossible. The English proletarian of 1872 stands infinitely higher than the rural weaver with “hearth and home” of 1772. And will the troglodyte with his cave, the Australian with his mud hut, the Indian with his own hearth, ever carry out a June insurrection or a Paris Commune?

That the situation of the workers has on the whole become materially worse since the introduction of capitalist production on a large scale only the bourgeois doubts. But should we therefore look back longingly to the (likewise very meagre) fleshpots of Egypt, to the small rural industry that bred only servile souls, or to the “savages”? On the contrary. Only the proletariat created by modern large-scale industry, freed from all inherited fetters, including those that chained it to the land, and herded together in the big towns, is in a position to accomplish the great social transformation that will put an end to all class exploitation and all class rule. The old rural hand-weavers with hearth and home would never have been in a position to do so; they could never have conceived such an idea, still less wished to carry it out. For Proudhon, on the other hand, the whole industrial revolution of the last hundred years — steam power, large-scale manufacture, which replaces handwork by machines and multiplies the productive power of labour a thousandfold — is a most repugnant event, something that really ought not to have happened. The petty bourgeois Proudhon demands a world in which each person turns out a separate and independent product that can be consumed at once and exchanged on the market; then, if only each person receives back the full value of his labour in another product, “eternal justice” is satisfied and the best of all worlds established. But this Proudhonist best of worlds has already been crushed in the bud under the foot of advancing industrial development, which long ago destroyed individual labour in all the large branches of industry and is destroying it more every day in the smaller and smallest branches; which puts in its place social labour, supported by machines and harnessed natural forces, whose finished product, immediately exchangeable or consumable, is the joint work of the many individuals through whose hands it has had to pass. And it is precisely through this industrial revolution that the productive power of human labour has reached such a level that the possibility exists — for the first time since human beings existed — with a rational division of labour among all, of producing not only enough for the plentiful consumption of all members of society and for an ample reserve fund, but also of leaving each individual sufficient leisure so that whatever in the historically inherited culture — science, art, forms of social intercourse and so on — is really worth preserving may not only be preserved but be converted from a monopoly of the ruling class into the common property of the whole of society, and developed further. And here is the decisive point. As soon as the productive power of human labour has developed to this level, every pretext for the existence of a ruling class disappears. After all, the final argument with which class distinctions were always defended was: there must be a class that does not have to toil at producing its daily subsistence, so that it has time to look after the intellectual work of society. This talk, which until now had its great historical justification, has had its root cut off once and for all by the industrial revolution of the last hundred years. The existence of a ruling class is becoming every day more an obstacle to the development of industrial productive power, and just as much to that of science, art and especially of cultivated forms of social intercourse. There have never been greater boors than our modern bourgeois.

All this does not concern friend Proudhon. He wants “eternal justice” and nothing else. Each person is to receive in exchange for his product the full proceeds of his labour, the full value of his labour. But to calculate this in a product of modern industry is a complicated matter. Modern industry obscures the particular share of the individual in the total product, which in the old individual handwork was self-evidently represented in the finished product. Modern industry, further, increasingly does away with individual exchange, on which Proudhon’s whole system is built — namely, direct exchange between two producers, each of whom exchanges the product of the other in order to consume it. Hence a reactionary streak runs through the whole of Proudhonism, an aversion to the industrial revolution, and the desire, expressed sometimes openly, sometimes covertly, to drive the whole of modern industry, steam engines, spinning machines and other trumpery out of the temple and return to good old solid handwork. That we should then lose nine hundred and ninety-nine thousandths of our productive power, that the whole of humanity would be condemned to the worst slavery of labour, that starvation would become the general rule — what does that matter, so long as we manage to organise exchange in such a way that each receives “the full proceeds of his labour” and that “eternal justice” is realised? Fiat justitia, pereat mundus! Let justice be done, though the whole world perish!

And the world would perish in this Proudhonist counter-revolution, if it could be carried out at all.

It goes without saying, by the way, that with the social production made necessary by modern large-scale industry, too, each person can be assured “the full proceeds of his labour,” so far as this phrase has any meaning. And it has a meaning only if it is extended to mean that not each individual worker becomes the owner of “the full proceeds of his labour,” but that the whole of society, consisting entirely of workers, becomes the owner of the total product of its labour, which it partly distributes among its members for consumption, partly uses for replacing and increasing its means of production, and partly stores up as a reserve fund for production and consumption.

After what has been said, we can know in advance how our Proudhonist will solve the great housing question. On the one hand we have the demand that every worker must have his own dwelling, belonging to him, so that we no longer stand below the savages. On the other hand we have the assurance that the payment two, three, five or ten times over of the original cost price of a house in the form of rent, as it actually takes place, rests on a legal title, and that this legal title is in contradiction with “eternal justice.” The solution is simple: we abolish the legal title and, by virtue of eternal justice, declare the rent paid to be a payment on account of the price of the dwelling itself. When one has arranged one’s premises so that they already contain the conclusion, it naturally takes no more skill than any charlatan possesses to pull the result, prepared in advance, ready-made out of the bag and to boast of the unshakable logic whose product it is.

And so it happens here. The abolition of the rented dwelling is proclaimed a necessity, and in the form of a demand that every tenant be turned into the owner of his dwelling. How do we do that? Quite simply: “The rented dwelling is redeemed.… The former house-owner is paid the value of his house to the last farthing. Instead of the rent paid representing, as hitherto, the tribute which the tenant pays to the eternal right of capital, from the day on which the redemption of rented dwellings is proclaimed the exactly fixed sum paid by the tenant becomes the annual instalment on the dwelling that has passed into his possession.… Society… in this way transforms itself into a totality of independent, free owners of dwellings.”

The Proudhonist sees a crime against eternal justice in the fact that the house-owner can, without working, draw ground-rent and interest from the capital he has invested in the house. He decrees that this must stop; that capital invested in houses shall no longer yield interest and, in so far as it represents purchased land, no ground-rent either. Now we have seen that this does not touch the capitalist mode of production, the basis of present-day society, at all. The pivot on which the exploitation of the worker turns is the sale of labour-power to the capitalist and the use the capitalist makes of this transaction by compelling the worker to produce far more than the paid value of his labour-power. It is this transaction between capitalist and worker that produces all the surplus value which is afterwards divided, in the form of ground-rent, commercial profit, interest on capital, taxes and so on, among the various sub-species of capitalists and their servants. And now our Proudhonist comes along and believes that if one single sub-species of capitalists — and capitalists, moreover, who buy no labour-power directly and so cause no surplus value to be produced — were forbidden to make profit or interest, we should be a step further! The mass of unpaid labour taken from the working class would remain exactly the same even if the house-owners were deprived tomorrow of the possibility of collecting ground-rent and interest. That does not prevent our Proudhonist from declaring: “The abolition of the rented dwelling is thus one of the most fruitful and magnificent aspirations ever born from the womb of the revolutionary idea, and must become a demand of the first rank on the part of social democracy.” Exactly the puffery of the master Proudhon himself, whose cackling was always in inverse proportion to the size of the eggs he laid.

Now imagine the fine state of affairs if every worker, petty bourgeois and bourgeois were compelled, by annual instalments, to become first part-owner and then full owner of his dwelling! In the industrial districts of England, where there is large-scale industry but small workers’ houses, and every married worker occupies a little house of his own, the thing might still make some sense. But the small-scale industry of Paris and of most of the big towns of the Continent is supplemented by large houses in which ten, twenty, thirty families live together. On the day of the world-liberating decree proclaiming the redemption of rented dwellings, Peter is working in an engineering works in Berlin. At the end of a year he is the owner of, let us say, the fifteenth part of his dwelling, which consists of one room on the fifth floor somewhere near the Hamburger Tor. He loses his job and soon finds himself in a similar dwelling with a splendid view of the yard, on the third floor in the Pothof in Hanover, where after a stay of five months he has just acquired 1/36 of the property when a strike drives him to Munich and compels him, by a stay of eleven months, to burden himself with exactly 11/180 of the ownership of a rather dark ground-floor property behind the Obere Angergasse. Further removals, such as so often fall to workers nowadays, saddle him further with 7/360 of a no less recommendable dwelling in St. Gallen, 23/180 of another in Leeds and 347/56223 — exactly calculated, so that “eternal justice” has no cause for complaint — of a third in Seraing. What does our Peter get out of all these shares in dwellings? Who is to give him their proper value? Where is he to find the owner or owners of the remaining shares in his various former dwellings? And what of the property relations of any large house whose floors contain, say, twenty dwellings and which, when the redemption period has expired and the rented dwelling has been abolished, perhaps belongs to three hundred part-owners scattered over every quarter of the globe? Our Proudhonist will answer that by then Proudhon’s exchange bank will exist, which will pay anyone at any time the full proceeds of labour for any product of labour, and so the full value for a share in a dwelling too. But, first, Proudhon’s exchange bank does not concern us here at all, since it is nowhere mentioned even in the articles on the housing question; second, it rests on the strange error that when someone wants to sell a commodity he will always necessarily find a buyer for its full value; and, third, before Proudhon invented it, it had already failed more than once in England under the name of the Labour Exchange Bazaar.

The whole idea that the worker should buy his dwelling rests again on the reactionary basic view of Proudhon’s, already pointed out, that the conditions created by modern large-scale industry are morbid excrescences and that society must be led forcibly — that is, against the current it has been following for a hundred years — towards a state in which the old stable handwork of the individual is the rule, and which is altogether nothing but an idealised restoration of small-scale production, already ruined and still being ruined. Once the workers are flung back into these stable conditions, once the “social whirlpool” has been happily done away with, the worker can of course again make use of ownership of “hearth and home,” and the above theory of redemption appears less absurd. Only Proudhon forgets that to bring this about he must first put back the clock of world history by a hundred years, and that he would thereby turn the workers of today back into the same narrow-minded, crawling, sneaking slave-souls as their great-great-grandfathers were.

In so far, however, as this Proudhonist solution of the housing question has a rational content that can be put to practical use, it is already being carried out today, and this carrying out does not spring from “the womb of the revolutionary idea” but — from the big bourgeois themselves. Let us hear on this point an excellent Spanish paper, La Emancipación of Madrid, of 16 March 1872:

“There is still another means of solving the housing question, which was proposed by Proudhon and which dazzles at first sight but on closer examination reveals its total impotence. Proudhon proposed turning tenants into buyers by instalments, so that the rent paid annually would be credited as an instalment on the value of the dwelling, and the tenant would after a certain time become the owner of this dwelling. This means, which Proudhon considered very revolutionary, is put into effect today in all countries by companies of speculators, who in this way, by raising the rent, get the value of the houses paid two or three times over. M. Dollfus and other big manufacturers of north-eastern France have put this system into practice, not only to make money but with a political ulterior motive besides.

“The cleverest leaders of the ruling classes have always directed their efforts towards increasing the number of small proprietors in order to rear for themselves an army against the proletariat. The bourgeois revolutions of the last century divided the great landed estates of the nobility and the Church into small parcels of property — as the Spanish republicans want to do today with the great estates that still exist — and thus created a class of small landowners which has since become the most reactionary element in society and the constant obstacle to the revolutionary movement of the urban proletariat. Napoleon III intended, by reducing the size of the individual shares of the state debt, to create a similar class in the towns; and M. Dollfus and his colleagues, by selling their workers small dwellings to be paid off by annual instalments, sought to stifle all revolutionary spirit in the workers and at the same time to chain them by their property to the factory in which they once worked; so that Proudhon’s plan not only brought the working class no relief — it even turned directly against it.”

How, then, is the housing question to be solved? In present-day society just as every other social question is solved: by the gradual economic levelling out of supply and demand, a solution which constantly reproduces the question itself and is therefore no solution. How a social revolution would solve this question depends not only on the circumstances of the time but is also bound up with much more far-reaching questions, among which the abolition of the antithesis between town and country is one of the most essential. Since we have no utopian systems to construct for the arrangement of the society of the future, it would be more than idle to go into this here. But this much is certain, that there are already enough dwelling houses in the big towns to remedy any real “housing shortage” at once, if they were used rationally. This can of course only be done by expropriating the present owners or by quartering in their houses workers who are homeless or excessively crowded in their present dwellings; and as soon as the proletariat has conquered political power, such a measure, dictated by the public good, will be just as easy to carry out as other expropriations and billetings by the present-day state.

Our Proudhonist, however, is not satisfied with his achievements so far in the housing question. He must raise it from the flat earth into the sphere of higher socialism, so that it may prove itself there too an essential “fraction of the social question”:

“Let us now suppose that the productivity of capital is really taken by the horns, as it must be sooner or later — for instance by a transitional law fixing the interest on all capital at one per cent, with the tendency, mark you, to bring even this rate closer and closer to zero, so that in the end nothing more is paid than the labour necessary for the turnover of the capital. Like all other products, house and dwelling are naturally included within the scope of this law.… The owner himself will be the first to offer to sell, since otherwise his house would stand unused and the capital invested in it would be simply useless.”

This sentence contains one of the chief articles of faith of the Proudhonist catechism and gives a striking example of the confusion that reigns in it.

The “productivity of capital” is an absurdity that Proudhon takes over uncritically from the bourgeois economists. The bourgeois economists, it is true, also begin with the proposition that labour is the source of all wealth and the measure of the value of all commodities; but they must also explain how it comes about that the capitalist who advances capital to an industrial or handicraft business receives back at the end of the business not only the capital he advanced but a profit on top of it. They therefore have to get entangled in all sorts of contradictions and ascribe a certain productivity to capital as well. Nothing proves better how deeply Proudhon is still caught in the bourgeois way of thinking than the fact that he has adopted this way of speaking about the productivity of capital. We saw right at the beginning that the so-called “productivity of capital” is nothing but the quality attaching to it (under present-day social relations, without which it would not be capital at all) of being able to appropriate the unpaid labour of wage-workers.

But Proudhon differs from the bourgeois economists in that he does not approve of this “productivity of capital” but, on the contrary, discovers in it a violation of “eternal justice.” It is this that prevents the worker from receiving the full proceeds of his labour. It must therefore be abolished. And how? By lowering the rate of interest by compulsory laws and finally reducing it to zero. Then, according to our Proudhonist, capital ceases to be productive.

The interest on loaned money capital is only a part of profit; profit, whether of industrial or of commercial capital, is only a part of the surplus value taken from the working class by the capitalist class in the form of unpaid labour. The economic laws governing the rate of interest are as independent of those governing the rate of surplus value as is at all possible between laws of one and the same form of society. As regards the distribution of this surplus value among the individual capitalists, however, it is clear that for industrialists and merchants who have in their business a great deal of capital advanced by other capitalists, the rate of their profit must rise — all other circumstances remaining the same — in the same measure as the rate of interest falls. The lowering and final abolition of the rate of interest would therefore by no means really “take the so-called productivity of capital by the horns,” but would merely regulate differently the distribution among the individual capitalists of the unpaid surplus value taken from the working class, and would secure an advantage not for the worker against the industrial capitalist but for the industrial capitalist against the rentier.

Proudhon, from his legal standpoint, explains the rate of interest, like all economic facts, not by the conditions of social production but by the laws of the state in which these conditions receive a general expression. From this standpoint, which lacks any notion of the connection between the laws of the state and the conditions of production of society, these laws of the state necessarily appear as purely arbitrary commands, which could at any moment just as well be replaced by their direct opposite. Nothing, then, is easier for Proudhon than to issue a decree — as soon as he has the power to do so — reducing the rate of interest to one per cent. And if all other social circumstances remain as they were, this Proudhonist decree will exist only on paper. The rate of interest will continue to be governed by the economic laws to which it is subject today, in spite of all decrees; creditworthy people will borrow money at 2, 3, 4 and more per cent according to circumstances, just as before, and the only difference will be that the rentiers will take great care to advance money only to people with whom no lawsuit is to be expected. Moreover, this grand plan of depriving capital of its “productivity” is age-old, as old as the usury laws, whose only aim was to limit the rate of interest, and which have now been abolished everywhere because in practice they were always broken or evaded and the state had to confess its impotence before the laws of social production. And the reintroduction of these medieval, unworkable laws is to “take the productivity of capital by the horns”? One sees that the more closely Proudhonism is examined, the more reactionary it appears.

And when the rate of interest has in this way been brought down to zero and interest on capital thus abolished, then “nothing more is paid than the labour necessary for the turnover of the capital.” This is supposed to mean that the abolition of interest is equivalent to the abolition of profit and even of surplus value. But if it were possible really to abolish interest by decree, what would be the result? That the class of rentiers would no longer have any inducement to lend out their capital in the form of advances, but would invest it industrially themselves, or in joint-stock companies, on their own account. The mass of surplus value taken from the working class by the capitalist class would remain the same; only its distribution would change, and not much even then.

In fact our Proudhonist overlooks the fact that even now, in the buying of commodities in bourgeois society, on average nothing more is paid than “the labour necessary for the turnover of the capital” (which is supposed to mean, for the production of the particular commodity). Labour is the measure of the value of all commodities, and in present-day society it is — apart from the fluctuations of the market — quite impossible that more should be paid for commodities, on the overall average, than the labour necessary for producing them. No, no, my dear Proudhonist, the catch lies somewhere quite different: it lies in the fact that “the labour necessary for the turnover of the capital” (to use your confused expression) is precisely not paid for in full! How this comes about you can read in Marx (Capital, pp. 128–60).

Nor is that all. If interest on capital is abolished, rent is abolished with it — for in German both are called Zins. For “like all other products, house and dwelling are naturally included within the scope of this law.” This is quite in the spirit of the old major who sent for his one-year volunteer: “Tell me, I hear you are a doctor — then come round to me from time to time; when a man has a wife and seven children there is always something to patch up.” Volunteer: “But excuse me, Major, I am a doctor of philosophy.” Major: “That’s all the same to me — a sawbones is a sawbones.” So it goes with our Proudhonist too: rent or interest on capital, it is all the same to him; Zins is Zins, a sawbones is a sawbones. We saw above that the price of renting, commonly called rent, is made up of: 1) a portion of ground-rent; 2) a portion of interest on the building capital, including the profit of the builder; 3) a portion for repairs and insurance; 4) a portion that pays off the building capital, including profit, in annual instalments (amortises it) in proportion as the house gradually wears out.

And now it must have become clear even to the blindest: “The owner himself will be the first to offer to sell, since otherwise his house would stand unused and the capital invested in it would be simply useless.” Naturally. If interest on loan capital is abolished, no house-owner can get a penny of rent for his house any longer — simply because rent is called Mietzins and the rent includes a portion that is real interest on capital. A sawbones is a sawbones. While the usury laws could be made ineffective only by evasion as regards ordinary interest on capital, they never even remotely touched the level of house rents. It was reserved for Proudhon to imagine that his new usury law would without further ado regulate, and gradually abolish, not only simple interest on capital but also the complicated rent of dwellings. Why, then, the “simply useless” house should still be bought from the house-owner for good money, and why under these circumstances the house-owner should not pay money on top to get rid of this “simply useless” house so as to be spared the cost of repairs, we are left in the dark.

After this triumphant achievement in the field of higher socialism (Master Proudhon called it supra-socialism), our Proudhonist considers himself entitled to fly a little higher still. “It is now only a matter of drawing a few more conclusions in order to let full light fall from every side on our so important subject.” And what are these conclusions? Things that follow from what went before just as little as the worthlessness of dwelling houses follows from the abolition of interest, and which, stripped of our author’s pompous and solemn phrases, mean nothing more than that, for the better handling of the business of redeeming rented dwellings, it is desirable to have: 1) exact statistics on the subject; 2) a good sanitary police; and 3) co-operatives of building workers able to undertake the building of new houses — all things that are certainly very fine and good, but which, in spite of all their wrapping of puffery, bring no “full light” whatever into the darkness of Proudhonist muddle.

He who has achieved such great things has the right, too, to address a serious admonition to the German workers: “Such and similar questions, it seems to us, are well worth the attention of social democracy. May it seek to become clear, as here about the housing question, so also about the other equally important questions, such as credit, state debts, private debts, taxation, etc.,” and so on.

Here, then, our Proudhonist holds out the prospect of a whole series of articles on “similar questions,” and if he treats them all as thoroughly as the present “so important subject,” the Volksstaat will have manuscript enough for a year. We can anticipate them, however — it all comes down to what has already been said: interest on capital is abolished; with it the interest to be paid on state and private debts disappears; credit becomes free of charge, and so on. The same magic word is applied to any subject whatever, and in each individual case the astonishing result comes out with inexorable logic: that when interest on capital is abolished, no more interest has to be paid on borrowed money.

Fine questions, by the way, with which our Proudhonist threatens us! Credit! What credit does the worker need, other than credit from week to week or the credit of the pawnshop? Whether he gets this free of charge or at interest, even at the pawnshop’s usurious interest, how much difference does that make to him? And if he did, generally speaking, gain an advantage from it — if the cost of production of labour-power thus became cheaper — would not the price of labour-power have to fall? But for the bourgeois, and particularly for the petty bourgeois, credit is an important question, and for the petty bourgeois in particular it would be a fine thing to be able to get credit at any time, and without paying interest into the bargain. “State debts”! The working class knows that it did not incur them, and when it comes to power it will leave their repayment to those who contracted them. “Private debts”! — see credit. “Taxes”! Things that interest the bourgeoisie a great deal but the workers very little: what the worker pays in taxes enters in the long run into the cost of production of labour-power and must therefore be compensated by the capitalist. All these points, which are held up to us here as highly important questions for the working class, are in reality of essential interest only to the bourgeois and still more to the petty bourgeois; and we maintain, in spite of Proudhon, that the working class has no calling to look after the interests of these classes.

Of the great question that really concerns the workers — the relation between capitalist and wage-worker, the question of how it comes about that the capitalist can enrich himself from the labour of his workers — our Proudhonist says not a word. His lord and master did, it is true, concern himself with it, but brought no clarity into it at all, and even in his last writings got essentially no further than in the Philosophie de la Misère (Philosophy of Poverty), which Marx in 1847 so strikingly dissolved into its utter nothingness.

It is bad enough that for twenty-five years the Romance-speaking workers have had almost no other socialist mental nourishment than the writings of this “socialist of the Second Empire”; it would be a double misfortune if the Proudhonist theory were now to flood Germany as well. But that has been taken care of. The theoretical standpoint of the German workers is fifty years ahead of the Proudhonist one, and it will be enough to make an example of this one question of housing to be spared further trouble in this respect.