Commune to Capitalism - Part 3

EDITOR’S NOTE:  This is the third part of a five part series.

 A Brief History of American Economics

In the 19th century, while Americans were getting the “feel” of their new republic, their free market economic system was having great success.  New immigrants continued to arrive and America absorbed them effortlessly.  The political and economic freedom that so many in Europe craved was in great abundance in America.  The Louisiana Purchase doubled the size of the country and as the westward expansion continued thoughout most of the century.  The newly minted Republic of Texas would join the Union and a war with Mexico would add the Spanish settled territories from New Mexico and Colorado west to California.  Gold strikes in California and the Black Hills of South Dakota would fuel the expansion west in search of fortunes.  Colorado and Nevada would add new riches in silver.  The Great Plains states would yield to the self-cleaning plow and begin to produce vast amounts of grain.

The northern states would become full participants in the industrial revolution.  Factories and mills would spring up and a web of railroads would be built.  In Europe a new economic theory was beginning to get attention.  Economic growth spurred by their industrial revolution had opened up huge gaps between the rich and poor.  In Europe this was exacerbated by the class system.  The economic gap between landowners and the peasants dated back to the middle ages and led to a class system.  A newly created group of wealthy merchants and manufacturers did little to solve the problem.  America did not suffer from such an ingrained class system.  To be sure, many new immigrants found their first work in factories and the working conditions were not noticeably better than in Europe, but there was greater potential for upward mobility.  Land was plentiful if you had the will to go for it.

To many in Europe the solution to this unequal distribution of the wealth was to be found in the new economic theory of socialism.  Broadly speaking, socialism is the economic theory that society should be reorganized with public or government ownership of the means of production and providing for a “fair” distribution of goods to all members of the society.  Socialism, in practice, takes many forms and can run from the relatively benign excesses of a welfare state to brutal dictatorship.  In the early part of the 19th century they just wanted to make life better for the majority of the people.  Because America held more potential for people, even very poor people, to improve their circumstances, and the idea of economic freedom fit hand in glove with the American ideas of political freedom, a rigid class system never developed here.  There was one glaring, brutal exception to that rule, slavery.  The agricultural base of the south was built on the exploitation and ownership of black slaves, and many of the arguments in favor of slavery were economic.  It would take a bloody civil war to finally end that chapter in American history.

Europe, however, and especially Britain and France produced many prominent thinkers and lecturers promoting various views of how to organize government, the economy and society as a whole to produce the desired result from a socialist model.  One prominent socialist was the Welsh social reformer Robert Owen.  Owen’s first move from philanthropy and social reform to socialism came in a report he presented to the British House of Commons in 1817.  In his work Revolution in the Mind and Practice of the Human Race published in 1849 Owen laid out his principles of socialism.  His philosophy was based on three intellectual pillars.

1. Everyone is the product of their environment and not responsible for their own behavior.
2. All religions are based on absurd imagination and make men weak.
3. Support for the “putting out” system of contracting to cottage industry rather than the factory system.

Robert Owen believed that people should live in small working communities, mostly agricultural, of between 500 - 3000 individuals.  In 1825 such an experiment was attempted near Glasgow, Scotland under the direction of one of his disciples, Abram Combe.  Although there seemed little real interest in America in socialist ideas, Robert Owen himself attempted such a community in America in 1826 when George Rapp, a religious zealot who had founded the community, sold the town of New Harmony, Indiana to him.  Like the Pilgrims experiment with socialism in 1621, though they didn’t have that name for it yet, these experiments failed completely within two years.  Despite these failures the ideas of socialism continued to spread and develop.

As socialist ideas spread and multiplied, so too did the number of variations.  Theorists kept tinkering with the model but every attempt at failed.  In 1848 a German philosopher and theorist, Karl Heinrich Marx, published The Communist Manifesto.  In it he summed up his belief that,  ”The history of all hitherto existing society is the history of class struggles”.  Marx didn’t really present a new variation on socialism.  Instead he provided an interpretation of history and a political model for moving beyond socialism.  The communists, as they came to be called, believed that socialism as envisioned then was merely an interim step.  They saw history as a struggle of the working class or “proletariat” against the wealthy class or “bourgeoisie”.  The communists believed that the bourgeoisie must be overthrown by revolution and a “dictatorship of the proletariat” be established.  This was a political approach.  Socialism would then be an interim step in moving to a truly fair and classless society.

Since Marx and his followers believed the political ideas of communism followed from their perspective of the history of man, they believed the only way war would end and peace be established was by the final, world wide victory of the proletariat.  Then the state would own all the production and fairly distribute the wealth.  “From each according to his ability, to each according to his need.”  Marx believed this would only come about by revolution, but he believed the revolution was inevitable.  From The Communist Manifesto:

 The development of Modern Industry, therefore, cuts from under its feet the very foundation on which the bourgeoisie produces and appropriates products. What the bourgeoisie, therefore, produces, above all, are its own grave-diggers. Its fall and the victory of the proletariat are equally inevitable.

In 1867 Marx would publish the first volume of his massive study on political economy, Das Kapital which translates from the German to Capital.  He would die before finishing volumes two and three although he had written the drafts.  His friend and collaborator, Friedrich Engels would finish them and publish them in Karl Marx’s name in 1885 and 1894.  Although socialist theory never found much fertile ground in America, the ideas of Karl Marx would take root in Europe and become major threats to American survival in the 20th century.  They would also lead to the three greatest mass murderers in human history.