Henry Ford and Karl Marx
I
Das Kapital, by Karl Marx, caused the greatest economic controversy of the nineteenth century. Of the twentieth, Henry Ford has performed the most spectacular individual industrial feat. Marx was at work on Das Kapital while Ford was being born in 1863, for the book was written between 1859 and that day in July 1867 when the author closed the preface to the first German edition with this injunction: ‘Follow your own bent no matter what people say.’ Marx was then following his bent, even as Ford is now following his, and people have had much to say of both.
Each of these men is a paradox. Marx, of a family of wealth, influence, and social position, was an intellectual, educated in the best universities Europe had to offer. Banished, and refused asylum in France, he later preferred the British Museum, and five dollars a week for doing odd jobs in London for the New York Tribune, to political preferment and plenty at home working with Bismarck.
He dedicated a mighty mind and a wretched poverty to an attempt to show that, in the main, human institutions have their roots in a crass materialism. Yet he was himself the most outstanding exception of his day to the doctrine he believed and preached: that it is not the consciences of men that determine their modes of existence, but their existence that determines their consciences.
Ford, of a middle-class American family, self-educated and possessed now of the greatest fortune ever amassed in private hands, earned by running counter to most of the accepted canons of business, is devoting his wealth and his unique ability to exemplifying the proposition that outstanding material success is dependent upon the unselfish and unstinted dedication of private capital to the service of society.
It would be strange indeed if an examination into the careers of these two leaders — one in economic thought, the other in economic action — should not reveal contrasts and similarities of a striking and illuminating character.
Marx believed himself the discoverer of a fundamental law of social evolution before which men are helpless except in so far as their feeble efforts may somewhat advance or retard the final outcome of its operation. To him socialism was not a programme but a name to describe this law of development. He proposed no plan. He looked upon himself as a scientist and not as a reformer. He laid out for himself the task of discovering and exposing the causes underlying social injustice, to the end that others might be informed and act.
He believed, and offered proof, that capital would ultimately and gradually be socialized, and that income would be enjoyed in common; that the political state, which he looked upon as an organization set up by the capitalist class for its own perpetuation, is but a passing phase in the evolution from capitalism and competition to socialism and cooperation; that the state would become progressively less political and more industrial. He could not conceive of conditions under the capitalist state that would give the worker a decent chance to live.
Ford believes as thoroughly as did Marx in cooperation, but he believes that effective cooperation can come only through voluntary association of the leaders of industry outside of, and beyond, the intervention of the political state. The political state is necessarily geared to deliberate and talk, not to act. He cannot conceive of enough efficiency under state control to save the worker from poverty.
A group of leaders composed of such as he is, actuated by the common purpose of economic betterment instead of by profits, would be in effect a socialized industrial state outside of but alongside the political state. Its plan would be simple, its object single: Banish want by work; high wages; short hours; low costs; low prices; big profits. Then more work for more people; shorter hours; higher wages; lower costs; lower prices; bigger profits in order to continue the upward and outward spiral of prosperity.
Individually Ford has socialized a billion dollars or so of capital by dedicating its output to an indispensable use and by redcdicating its profits to an extension of that use.
Given a few hundred Henry Fords, and cooperation among them, then the results of the law of socialism, as Marx set it forth, would be brought nearer — not by a socialization of capital through state ownership, but by a socialization of output through industrial leadership.
Certain natural points of comparison between Ford and Marx suggest themselves as a frame for this discussion. First, we must take account of the mental attitude of each toward the problems they faced in common; then follow their contrasting views of history, of class struggle, of wages and the wage system, and finally the opinions they hold of the supposed relation between profits and the recurring cycle of business depression.
II
Marx was an economic diagnostician. He toiled away trying to discover the causes of the industrial degradation of England and of the world, helpless to relieve the situation save in so far as he could explain it. His surroundings were unutterably oppressive to his keen and sensitive mind. No wonder that throughout his writings there runs a feeling of threatening destruction, impending doom, and a pessimism born of an effort to persuade men to walk in a light they would not see.
His attitude toward the question of poverty may be taken as indicative of his mental make-up. To him poverty was an economic fact which had to be explained before it could be cured. But he described it, as few others have done, even before he tried to explain it.
The modern laborer, instead of rising with the progress of industry, sinks deeper and deeper below the conditions of his own class. He becomes a pauper, and pauperism develops more rapidly than population and wealth. And here it becomes evident that the bourgeoisie is unfit any longer to be the ruling class in society, and impose its conditions of existence upon society as an overriding law. It is unfit to rule, because it is incompetent to assure existence to its slave within its slavery, because it cannot help letting him sink into such a state that it has to feed him, instead of being fed by him.
Ford is an economic practitioner. He accepts conditions as he finds them, looks upon poverty as an ill to be healed, a fact too obvious to need explanation, and sets about to cure as much of it as he can. He takes up business, practises it as a profession, develops his philosophy as he goes along, and states it not as philosophy, but as a by-product of experience and observation.
The abolition of poverty is, as far as I am concerned, the only end of business which is worth considering. It is from this point of view, and only from this one, that we can see the futility of the profits motive. Once we see the ultimate purpose of business as a factor in the life of man, we are through with all the little tweedling fancies that formerly passed for business wisdom. The abolishing of poverty is the only legitimate purpose of business, and its accomplishment is not an impossibility unless we imagine that it can be done all at once by edict.
Ford’s work and writing create the impression of undeniable success and of satisfied living. His sense of accomplishment lies in action; that of Marx in analysis.
III
Marx did his work amid all the dislocation caused by the Industrial Revolution. After the application of power to machinery, factories grew up at water-power sites in out-of-the-way places. Children were worked unconscionably long hours unobserved; allbut-naked women were harnessed in the mines as beasts of burden. The greed and selfishness of employers were immeasurable.
Moreover, the spokesmen of the prevailing order, the economists, thought they had discovered fundamental and natural laws as immutable as those of pure science. To fly in the face of these was only folly. Laissez faire — let things go — was the shibboleth and the accepted doctrine of the day. Adam Smith looked upon the industrial organization of the time as a combination of employers on the one hand to get as much work for as little pay as possible, against a combination of laborers on the other to do as little work for as much pay as they could get, and this was in precise agreement with Marx’s view.
Marx turned to history, which he called logic in action, for an explanation of what he saw going on around him. The Feudal System, in which everything was a matter of custom, was his background. But under capitalism contract had dethroned custom; an industrial relationship between employer and employee had succeeded the status that prevailed between lord and serf. Class struggle took the place of noblesse oblige. Under feudalism and custom there was at least a trace of humanity; under the new contract relation even that trace had disappeared.
Ford has spent no time in the study of history, which he calls ‘bunk,’ in order to discover and develop a law of social evolution or industrial and business success. He assumes a law without recourse to history. He has hit upon a few fundamentals and practised them. These few are becoming truly revolutionary in their effect.
IV
It is in very truth an interesting coincidence that during the present depression Henry Ford should have discussed some of the tenets of socialism. Among these is the doctrine of the class struggle.
According to the Marxian doctrine, class struggle is inevitable under capitalism. Private ownership of the means of production creates an irreparable breach between the employer and the employee. The two may be the best of men and the best of friends, but so long as the employer-employee relationship continues, their interests are diverse. He who has the advantage will press it.
Society cannot move forward with group at the throat of group. But society must move forward. Therefore, class struggle under capitalism must give way to cooperation under socialism. Private ownership divorces the worker from his tools and the means of production. The worker, no longer his own master, must sell himself— for he has nothing else to sell — into temporary slavery for the duration of his employment. Robbed by the capitalist of the fruits of His labor, except enough to support a miserable existence and reproduce his kind, he continues to sell himself, generally at capital’s price, and extends a temporary relation into an intermittent bondage, broken now and then by periods of enforced freedom called unemployment, to which permanent slavery itself is preferable.
The whole history of mankind has been a history of class struggles, contests between exploiting and exploited, ruling and oppressed classes . . . the history of these class struggles forms a series of evolution in which nowadays a stage has been reached where the exploited and oppressed class — the proletariat — cannot attain its emancipation from the sway of the exploiting class — the bourgeoisie — without, at the same time once and for all, emancipating society at large from all exploitation, oppression, class distinction, and class struggle.
Ford’s thinking — or perhaps it is his instinct — vaults class and class struggle. For him, an addict to efficiency, the struggle does not exist. How men should ever have engaged in it is beyond the comprehension of his mechanically inclined mind. There is only one class, and that is the worker’s; one struggle, and that to increase production, improve distribution, and extend the benefits to the maximum number of people at a minimum price. According to him, —
There is nothing a man can do, the benefits of which he can restrict to himself alone. Society is so constituted that any good overflows its original limits and benefits the adjacent people. The supreme folly of selfish intention is that it cannot be carried out. The intention may be present and the selfishness may be unlimited, but natural law frustrates the intended consequences.
The injustice, the inhumanity, the class struggle of a century ago, — or a quarter of a century ago, for that matter, — belong to a discarded order so far as Ford is concerned. What Marx took to be the natural results of inexorable laws of social evolution, Ford considers the unnecessary consequences of economic anarchy.
V
The storm centre of the capitalistic method of production was, and is, wages and the wage system. Marx was convinced that the wage system is so vicious that it too would pass with the going of the rest of the capitalistic order. But, being a philosopher, he had to find a rational explanation for his belief, one that would satisfy his sense of workmanship.
After a study of capitalism in the light of all the books, and the teachings of the philosophers and his fellow economists, he evolved his theory of surplus value. The essence of the theory is that the worker spends a part of his time supporting himself and the rest of it supporting the capitalist.
The worker can produce enough during the first few hours to pay his daily wage. But he works beyond that time and gets nothing for it. What he produces during this overtime is surplus value and goes to somebody who does not earn it.
Since to the socialist the capital instruments of production are nothing but crystallized labor, labor produces everything but gets only a part of the output. This is robbery, and the result is that the wages paid are not sufficient to buy that which labor produces. Marx states his law of surplus value thus: —
The functioning of labor power does not only reproduce the value of the laborer’s power, but produces value over and above. Such surplus value represents the excess of the value of the product above the value of the elements consumed in the formation of the product, that is to say above the value of the means of production and the labor power.
Lord, true to his character, accepts the wage system as he finds it, and uses it as the best means at hand of accomplishing what he wants to do. Unlike Marx, he resorts to no Hegelian system of reasoning for his conclusions or his action in regard to wages. Again he falls back upon his experience and observation. He makes short work of the situation and states his conclusion of the whole matter with little ado: —
The only effective wage policy is one that presses forward toward higher wages, lower costs, and lower prices. In all this we have a long way to go, for everything in this country is much too high except wages — they are too low.
Let him who will take his choice between these two, for the difference between the two opinions of how the wage system has worked is the gap which divides tweedledum from tweedledee.
Marx wrote about the problem and left evolution and posterity to solve it.
If prices are too high and wages are too low, as Ford declares, then the laborer is being robbed in two directions. lie is underpaid for bis work and overcharged for his wares. Something ought to be done about it.
Ford thumbed his nose at his fellow capitalists, and put in his five-dollara-day minimum wage, while James Couzens stood by and hitched his trousers belt in startled approbation.
And what a howl went up from industry! The five-dollar day was the best. Ford joke of fifteen years ago, and the first word most people had ever heard of the man Ford. But it ceased to be a joke with the advent of Model A and the new philosophy of business.
Ford’s hourly wage to-day is what his daily wage was twenty years ago, and vve have his word for it that production costs per unit have declined all along the line.
Marx believed that capitalism is a labor-robbing scheme and undertook to demonstrate just how and where the robbery was perpetrated. Ford set about raising wages for everybody and equalizing the purchasing power of the wages everywhere. Marx’s explanation and Ford’s programme dovetail into each other in a way so perfect as to be not only striking but startling. The very language employed is similar.
Marx’s belief was that exploitation takes place in the conversion of labor and materials into money, and the reconversion of the money back into labor and materials. This introduces the vagaries of the money regime into the wage problem.
In the course of development from barter to business, some one commodity becomes so universally popular that other commodities come to be thought of in relation to it and their desirability measured by it. In time that popular commodity becomes the coin of the realm. Marx believed this process to be artificial and unnatural. To him the only true common measure of value is the amount of abstract human labor embodied in the commodity to be valued — or, as he expresses it, the amount of socially necessary labor required to produce it. And socially necessary labor, he explains, is the amount of labor necessary to produce the given result when applied through machines reasonably efficient considering the stage of technical development of the time.
Since, under modern conditions, goods are and must be made for sale, and not for the immediate use of the maker, a fact which Marx recognizes, his logical conclusion is that the medium of exchange should be labor time. The cure under the Marxian theory would be the establishing of a circulating medium, not on the basis of some commodity such as gold or silver, but on some form of labor time. Some of Marx’s Utopian predecessors actually advocated it, but Marx shied off from the idea of trying out a labor currency in a competitive world. Nevertheless he expected the eventual development of some such monetary system under socialism.
Ford’s method of wage adjustment and wage determination goes a long way toward the fulfillment of that expectation. Ford is bolder than Marx was. He has in reality established an industrial state of international scope. This state grants franchises in the form of agencies, makes automobiles and sells them, all over the world. It has its own ‘labor currency’ and actually calls it by that socialistic name. The unit of value is the ‘minute cost,’which is the time necessary to do a standardized job under uniform conditions. Ford determines wages in terms of this unit. What it all amounts to is that he pays his men their wages in an invisible labor currency, which they in turn use to purchase from him the currency of the country in which they happen to work, He sees to it that the purchasing power of the labor currency received, when converted into a country’s currency anywhere, is such that all workers of equal grade and efficiency may everywhere enjoy equally high standards of living. A Ford worker is a Ford worker.
One blinks, rubs his eyes, and is in doubt whether he should measure Ford by Marx or Marx by Ford.
VI
Marx raged inwardly against the plight of labor which he was powerless to help. But he was sustained by the belief that he had demonstrated that capitalism, the cause of the plight, carries within itself the seeds of its own undoing; that it is itself paving the way for its own destruction and the advent of socialism. He held that the underlying cause of the coming downfall was profits and that the probable occasion would be the commercial crisis or war.
The very word ‘profits’ was anathema to Marx. The thing profits is the socialist’s explanation of the crisis, such as that in which we now find ourselves. The love of profits, which makes men desert the altars of service and worship at the altars of mammon, turns them from making goods to trying to make money, is Ford’s explanation. The Marxian view is that the crisis has its origin in overproduction of goods and inability to sell them because labor does not have the wherewithal to buy. Ford’s view attributes the business crisis to inefficiency, born of the cupidity of business leaders, and consequent underproduction and underdistribution through overcharging.
What management is entitled to for management is to Ford not profit at all. It is the payment for work, the reward for toil without which industry could not go forward. The profits he hates are those accidental money gains which come to one group at the expense of another, those speculative prizes which many seek, few find.
It was incomprehensible to Marx that any other incentive than profits could motivate industry under capitalism, and he all but quotes Scripture to prove it.
Accumulate! Accumulate! That is Moses and all the prophets! Industry furnishes the material which savings accumulate! Therefore, you must save, you must save! You must reconvert the largest possible proportion of surplus value and surplus product into capital. Accumulation for accumulation’s sake, production for production’s sake, this was the formula by which the classical political economists gave expression to the historical mission of the bourgeois.
Ford by implication pleads guilty, on behalf of industry, to the indictment that Marx brought against profits. So far as the old order was concerned Ford agrees with Marx, but denies that he himself is of that order.
Nothing seemed so solid and stable as the edifice of selfish business; in reality it is this moment as a snow bank settling under the April sun. . . .
Industry as a department of human activity does not exist merely to support men; its primary purpose is to create goods that will serve people. . . .
Why waste time with a bankrupt system of business based upon profits, which won’t work, says Ford, and forthwith adopts one based upon service to the public, which he thinks will work. He has demonstrated pretty clearly that it does. Renouncing profits and accumulation as not worth while competing for, he has challenged capital to a contest in efficient distribution of goods.
There are those to whom such a course seems incomprehensible, absurd. Yet Ford, when challenged on the grounds of impracticability, has but to show as his contribution the greatest number of passenger miles at the least unit cost ever produced. If challenged on grounds of financial feasibility, he has but to point to his purse.
Any man who can sell a half million Model A automobiles, sight unseen, price unset, has a convincing argument in support of his economic philosophy.
What is this new philosophy of industry of which Ford is the most advanced proponent? Is the world really going socialistic unawares, without revolution or the intervention of the state? Assuming that Mr. Ford does not charge interest on his plant and equipment and cover it into the cost and selling price of his car, what is the actual status of the Ford billions?
Ford and Marx may be entirely wrong in their opinion that profits are the fundamental cause of the crisis, but it remains for somebody to offer a more plausible reason. The wisest, from the Ex-President of the United States, the President and his astute Secretary of the Treasury, and the financially experienced junior Senator from New Jersey down, profess ignorance, and have to be content with saying merely that the causes are multiple, complex, and not yet understood.
For well over a century depressions in business have been accepted with fatalism and such fortitude as could be mustered. According to the socialist view, the industrial crisis is the natural manifestation of the contradiction between socialized production, as it exists under machinery, and individual appropriation. Socialized production and individual appropriation are at war, and the crisis is the reverberation. This is but to say that consuming society’s money income ceases periodically to take enough of producing society’s output of goods off the market at prevailing prices to keep business going. Marx’s description of a crisis written nearly a hundred years ago and Ford’s written in 1930 are equally graphic. According to Marx, society relapses into temporary barbarism because there is too much civilization — so many goods that can’t be sold that the worker has to stop work and, therefore, stop buying what he has made. He is poor because he has made society too rich. According to Ford, shortsighted producers run up prices for the sake of profits and rob the witless public till it refuses any longer to buy, and then industry and business rot.
At this very moment industrial leaders are turning heaven and earth to revive business from one — and a very severe one — of its decennial slumps. The remedies proposed this time — different from those ever proposed before — run straight and obviously to the Marxian philosophy. It is proposed to keep labor employed, and at high wages, to the end that the purchasing power of the masses may be preserved — or, to put it in Ford’s language, it’s a good deal more important to society that corporations pay wages than that they pay dividends. Good wages are more salutary in lime of trouble than big profits. Have we, under the industrial leadership of the country, come upon a time when the temporary forgoing of profits in the interest of wages is considered a remedy for the crisis? Shall we come upon a time when industrial leadership will set so much store by service and so little by profits, as Ford says he does, that the Marxian cause of the crisis will become innocuous?
But, Ford and Marx aside, evidence is not wanting during these troublous times that industrial leaders at this very moment are looking to the pay envelope and not to profits to pull t he country out of its morass.
The Chairman of the Board of Directors of the Chamber of Commerce of the United States wrote not so many months ago that he doubted whether business would have regarded so formidable an undertaking as the prevention of crises as practicable a decade or two ago, but that the analytical scrutiny to which they have been subjected by the economists has done much to shake the faith of business in the inevitableness of their recurrence. There is much in this to hearten the economists, for they, even when they were right, have not been particularly successful in convincing business.
The Secretary of the American Federation of Labor stated recently that Labor Day of 1930 was marked by an unusual situation; that this is the first time a depression has not been featured by charges that wages were ‘too high.’ The president of General Motors and many others of no less note have recently joined him.
And it is a fact that all over the country, wherever and whenever men have been let out or wages reduced, it has not been done ruthlessly and immediately upon the first appearance of difficulties, but reluctantly and with a decent regard to the prevalent sentiment. that national unemployment is a national disgrace, that the purchasing power of labor, the bulwark against crises, must be preserved, not destroyed, even if it has to be done at the expense of profits or to the extent even of a bearable loss.
It would not be extravagant to say that Karl Marx and Henry Ford have done more toward the development of this wholesome sentiment than any other two men of the last two centuries.