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Fourth International, March 1945


Lily Roy

Socialism Reaffirmed


From Fourth International, vol.6 No.3, March 1945, pp.91-95.
Transcribed, marked up & formatted by Ted Crawford & David Walters in 2008 for ETOL.


In March 1944 a pamphlet was published in India which created a sensation. Its title is Socialism Reconsidered. Its author is M.R. Masani, a renegade Indian socialist, now ensconced in the cushy post of Mayor of Bombay. The main thesis developed by Mr. Masani was borrowed by him from another renegade from socialism, James Burnham. In other words, Masani’s pamphlet is an adaptation of the “managerial revolution” for Indian consumption. It will be observed that this breed is by no means restricted to the United States but dispersed widely over our planet.

Socialism Reaffirmed is a pamphlet written by Lily Roy, one of the leaders of the Bolshevik-Leninist Party of India and Ceylon. With this issue we begin the publication of this brilliant and annihilating reply to an Indian Burnhamite by an Indian Trotskyist.

Twenty-five years ago, in the wake of the seizure of power by the Russian proletariat and in the midst of that vast upsurge throughout Europe and America which shook the power-structure of a capitalism whose very foundations had been undermined by the cataclysm of war, a veritable flood of petty bourgeois intellectuals flowed into the proletarian revolutionary movement. As the proletariat moved towards the seizure of power, the petty bourgeois moved towards the proletariat. Which was not strange: for whatever be the current bible of the petty bourgeois intellectuals, power is always their God!

For nearly fifteen years these “fellow travelers” of the revolutionary proletarian movement interpreted, or rather, subtly misinterpreted to the world their new faith, “Marxism.” The book-stalls were littered with their sumptuous publications, against the bright yellow background of whose blurb-filled dust-covers the titles flamed in bold red letters. Appropriately – as any Freudian would have said: for behind their red-lettered boldness there still continued the yellow-hearted cowardice which ever characterizes the petty bourgeois worshipers of established power.

Then, history took a turn. Betrayed by the Second International and led down wrong paths by the Third, the revolutionary proletarian movement was smashed in Europe. Fascism rose like a flood. And when, in 1933, the most powerful proletariat in capitalist Europe – the German proletariat – betrayed by Stalin’s Comintern itself, let Hitler into power without striking a blow, and underwent a smashing defeat, the already hesitant fellow-travellers began definitely to retreat. To whom the power, to him the petty bourgeois. The intellectuals began to return to the bourgeois fold.

Intellectuals in Retreat

Nevertheless a section still clung on – not to the proletariat, however, but to the Red Czar in the Kremlin. Stalin still held power over one-sixth of the globe; and the petty bourgeois worships power. Stalin was ruthless; and the petty bourgeois admires ruthlessness. And Stalin was abandoning the international revolution – which the petty bourgeois too was doing. Above all, Stalin was willing to pay – and the petty bourgeois intellectual in particular, must live. So he clung to Stalin. Filling the world with syllogistic proofs of the correctness of the theory of “socialism in one country,” they marched out of the revolutionary proletarian movement straight into the “Friends of the Soviet Union.” Paeans of uncritical praise for Soviet productive achievements became the order of the day. Slander of Trotsky became a paying proposition. And all Bohemia stood breathless, if unconvinced, before the acrobatic agility with which they “proved” that if indeed their present actions were not consistent with what Karl Marx had actually said, they certainly were consistent with what Karl Marx had really meant. After all, wasn’t Marx a “very obscure” writer whom only the intellectuals could understand – and “interpret”!

History unmasks every charlatanry sooner or later. And history certainly unmasked these charlatans before long. For with the coming into power of Hitler the second imperialist world war came on the order of the day. And war permits of no middle positions – you are either on this side or on that: the side of the imperialists or the side of the revolutionary proletariat. For five years the intellectuals sought to dodge the choice – via popular frontism. But when Stalin failed in this maneuver to trade the international revolutionary movement for an alliance with the “democratic. “ imperialists and allied himself with Hitler instead, the intellectuals held up their hands in horror and fled – to the bourgeoisie and to a new and, of course, paying pastime. The “unmasking” of Soviet reality became the prevalent fashion. The Kremlin Czar was still red – but only with blood. The Soviet Constitution, but lately hailed by them as “the most democratic in the world,” was now discovered to be a fraud (which indeed it was). Democracy was in danger; freedom in peril. The Soviet Union had neither. So, down with the Soviet Union!

Thus the retreat of the intellectuals became a rout. But some among them, anxious to preserve some appearance at least of intellectual integrity, sought to cover their retreat, not indeed with a rear-guard action, but with a smoke-screen of new philosophical constructions. Littering their theses with a welter of verbiage about “socio-economic considerations” and such like, they set about “proving” that the issue was not socialism at all but Democracy (with a capital “D”). And as for the Soviet Union – why, the issue was simple. Hitler is a dictator; so is Stalin. Hitler murders his opponents; so does Stalin – on an even vaster scale. Hitler allows only one party, his own; so does Stalin. And above all, Hitler and Stalin are allies. Therefore – yes, therefore the Soviet Union and the Third Reich are states of one and the same order! Down with totalitarianism! Long live Democracy!

The subtlest effort thus to assimilate two essentially different social systems into the same category has been made by James Burnham, current darling of the neo-intellectuals. In a book entitled The Managerial Revolution, he seeks to prove that the alternative to the capitalist state is not the socialist state but the “managerial state”; the capitalist class will be replaced not by the working class but by a “new” “class,” the managerial class. This is what has happened in the Soviet Union, and this is what has happened in Germany. And this, despite Marx – or is it because of Marx? – is what the socialist movement and a victory of the proletariat will lead to. The socialist ideal is a mirage and the proletarian dictatorship a myth. The reality will be the managerial state, i.e., a middle class heaven. For, here, that stratum in modern society which is hired by the capitalists to run the productive system they own and which is known as the new middle class will not only manage but rule!

It is plain that the managerialist thesis is one of the subtlest attacks on the socialist movement yet made. For if socialism is not the alternative to capitalism, then why a socialist movement at all? And if the proletarian overthrow of the bourgeois power cannot lead to the establishment of a proletarian power but only to the placing in power of a new bureaucratic “class,” then why a proletarian revolution at all? What a brilliant justification for retreating intellectuals and renegade socialists! How simply it paves the way for a return by them to the service of the bourgeoisie! It will surprise nobody that the author of this thesis, James Burnham, is a renegade socialist who is in the service of the bourgeoisie.

The managerialist thesis has now found its way to India – appropriately enough also through a renegade “socialist,” Mr. M.R. Masani. This gentleman was once a leading light of the Congress Socialist Party but later retired from politics. That retirement he fully observed right through the dangerous days of the August struggle. When Gandhi launched his fast, however, Mr. Masani suddenly emerged from his retirement, issued a Manifesto, led a demonstration towards the Aga Khan’s palace, and was duly arrested. The sheer bravery of his conduct was in due course recognized by the Congress Party in the Bombay Municipality; for, on his return from prison, they promptly elected him Mayor of Bombay. It is after this that his Socialism Reconsidered saw the light of day. And from that day unto this, despite his retiring nature, both he and his book have been well in the limelight. The bourgeois press has seen to that!

We do not grudge Mr. Masani his popularity among the Congress high-ups. The laborer is worthy of his hire! But it is necessary that Mr. Masani himself should realize what this popularity signifies. Congress is the political party of the Indian bourgeoisie. Those who are popular in its circles are not those who serve the cause of socialism but those who betray it. And when a socialist finds himself acclaimed as “brilliant,” “detached,” “impartial,” etc. in the Congress press let him be sure that his socialism somehow dovetails with the bourgeois interest. And despite his protestations that he is still a socialist and seeking to serve its cause by reconsidering its alleged fundamentals, Mr. Masani does serve the bourgeois interest in his book. For in it he performs the acrobatic feat of “proving” that the only way to reach socialism is not through the abolition of the bourgeoisie but actually through their preservation! No bourgeois can demand more than that of any “ socialist.”

How does Mr. Masani perform this really astounding feat of intellectual acrobatics? Through the application of the bourgeois law of trusteeship! (Isn’t that really clever – to use the bourgeois law against the bourgeoisie themselves?) It is worth quoting Mr. Masani at length.

“Trusteeship in law is the ownership of property by A under such circumstances that he is bound to use the property for the benefit of B, who is called the beneficiary. If trustee A should in any way misuse his legal ownership by seeking to make any personal gain out of it, the law sees to it that he is removed from possession. A’s property rights are, to put it bluntly, a legal fiction. Applying this to the rights of property owners generally, what the theory of trusteeship comes to is that the state allows the present owners of property to continue in possession only on condition that they use the property for the benefit and profit of the entire community. Any property owner who uses his property primarily for private profit would be removed from possession on the ground of breach of trust. In other words, it is a concept in which the capitalist is defunctionalized. It is a repudiation of the entire capitalist conception of property rights. The owner must produce in his factory the kind of goods and the quantity of goods that he is asked to by the state, he must pay his workers the wages which are dictated by the state and he must sell his product at prices fixed by the state. All he would get would be a five or six percent dividend.” (Our emphasis.)

Isn’t the matter crystal clear? The capitalist shall not use his property “primarily for private profit.” But he shall get a “five or six percent dividend”! Do you see the distinction? Or don’t you? Not profit but – dividend! This is more than acrobatics: this is veritably magic. You cover profits with your hat and you produce in its place – dividends! We cannot help asking Mr. Masani whether capitalist companies pay their dividends from any other source than precisely, profits. We would also like to ask Mr. Masani whether there is any modern big capitalist who would not be satisfied with a steady, guaranteed “five or six percent” profit, howsoever it be designated. The American rate of profit, that is to say, the rate of profit in the most advanced capitalist country in the world, had long fallen below this level before the war. So also Britain’s, France’s, Germany’s. Which is precisely why German capitalism turned to fascism, and French, British and American capitalism developed strong fascist tendencies. Which is precisely why they also went to war. For fascism is but declining capitalism’s internal means of raising the rate of profit by brutally breaking down working class resistance; while war is an external means of doing the same thing by acquiring new markets for exploitation. It is a pity, therefore, that Mr. Masani was not there to advise international capitalism. He would on the one hand have saved the world from fascism and war and he would, on the other, have converted the capitalist dream of “five or six percent” into a reality. Wherefore, no doubt, international capitalism would have made him its trustee and the world would have acclaimed him its saviour. “All” indeed, Mr. Masani – and what an all!

“Defunctionalizing” Capitalism

So Mr. Masani’s “trustees” are to get private profit after all – and a guaranteed profit at that! What then happens to his celebrated “trustee A“? This estimable gentleman, you will remember, is to be promptly dispossessed by the “law,” i.e. by the state, if he should “misuse” his property for “personal gain,“ i.e. for his private profit instead of the profit of the beneficiary. We now have the self-same gentleman, generalized into a capitalist class which acts as the trustee of the community, being allowed, nay guaranteed, “five or six percent” personal gain. In other words, the very person who was to be denied personal gain is now to be entitled precisely to personal gain. Another feat of acrobatics! – or should we say legerdemain? Have it which way you will; the point is that Mr. Masani’s original “trustee A“ has simply dropped out of the picture – and that in the very passage in which he was introduced.

However that may be, Mr. Masani would have us believe that this “trusteeship” of his is “a concept in which the capitalist is defunctionalized.” And how? The specific function of the capitalist is precisely the acquisition of private profit. If then you expressly guarantee him his “five or six percent,” how is he defunctionalized? On the contrary, do you not maintain him precisely in this his anti-social function? For the source of capitalist private profit is unpaid labor, i.e. the capitalist exploitation of the worker. All profit, we must stress, and not merely some or “excessive” profits as Mr. Masani would seem to imply with his supposedly low rate which turns out actually to be high. The source of all profit, whether high or low, is unpaid labor, i.e. the exploitation of the worker. If therefore you guarantee the capitalist his “five or six percent” profit, you guarantee to him precisely this very right which is the basic right of capitalism – the right of exploiting the worker. That is the grim reality which all the confused verbiage about penalizing property owners who use their property “primarily for private profit” (secondarily would apparently not matter), is designed to cover.

According to Mr. Masani, however, his concept is “a repudiation of the entire capitalist conception of property rights” – the entirety, note you: Mr. Masani is nothing if not thorough-going; he is satisfied with no mere encroachment. And how is it a “repudiation”? Because in his dispensation the capitalist “must produce in his factory the kind of goods and the quantity of goods that he is asked to by the State, he must pay his workers the wages which are dictated by the State and he must sell his products at prices which are fixed by the State.” Does it not all sound like Utopia come true? But let us look at the matter a little more closely than is suitable for Mr. Masani.

It is indeed a part (but neither the entirety nor the essence) of the capitalist conception of property rights that the capitalist is entitled to produce what he wills when he wills. He is entitled to do so: but, and that is the point, he cannot do so! For profit is his motive and profit is his aim. Therefore, whatever he be entitled to produce, what he must produce is that which will enable him to make a profit. And this, under the competitive capitalist system, may well be wheat at one stage, gramophones at another, and bombs always. Hence the necessity to the capitalist of the property right of producing what he wills when he wills. But if the state guarantees to him his profit on condition that he produces what the state wants, then this right is simply not necessary to him at all. On the contrary, he will gladly produce what the state wills. For his object – the acquisition of private profit – is achieved precisely thereby, inasmuch as his profit is guaranteed. We know of no capitalist who would not readily give up “the capitalist conception of property rights” for Mr. Masani’s conception. No capitalist, we say: for, on the one hand, a sure “five or six percent” is the current bourgeois dream, and, on the other, Mr. Masani’s “repudiation” of the capitalist conception of property rights turns out to be nothing but a reaffirmation of the one basic capitalist property right of them all – the right of appropriating private profit, i.e. the right of exploiting the worker.

Thus every time Mr. Masani purports to be catching his capitalist by the throat it turns out that he is only clinging to his coattails. This appears also from certain further considerations arising from the self-same classic passage in his brochure which we are now studying. Mr. Masani declares, as we have seen, that the capitalist is to “produce in his factory the kind of goods and the quantity of goods that he is asked to by the State, ... pay his workers the wages which are dictated by the State and ... sell his products at prices which are fixed by the State.” For doing all this, the reader will remember, our capitalist, who is to receive no “personal gain,“ is to receive a presumably impersonal “five or six percent dividend.” Now all this sounds idyllic so long as it is not analyzed.

The State is to determine the goods to be produced. No capitalist will quarrel with that – at “five or six percent.” The State is also to dictate wages and fix prices: which sounds terribly determined, for presumably the capitalist will have to be forced (non-violently, of course) on that. But let us see. The State has guaranteed “five or six percent” to the capitalist. So the State must ensure the capitalist this. How can it do so? Only in one way: by “dictating” wages at a level low enough and “fixing” prices at a level high enough to ensure the capitalist a “five or six percent” profit, that is to say, by exploiting the toiler mass for the capitalist benefit. There is no other way.

Mr. Masani may, perhaps, suggest subsidies; but subsidies work out to the same thing – as can be easily demonstrated. The funds for subsidies can come only from taxation. Then who is to be taxed for the purpose? Industry itself? In that case it will simply be included in the cost of production when the price which is to ensure “five or six percent” is calculated. The working class? In that case it will only amount to a proportionate reduction in wages. Is it then to come from the capitalist class itself? If so, the capitalist class must have the income from which the tax is to be drawn. This it can have only if it already has a profit. And how can this be ensured? Only in the way we have pointed out: by dictating wages at a level low enough and fixing prices at a level high enough to ensure to the capitalist the guaranteed rate of profit. By dictating, we say: only not in the Masanian sense or to the Masanian “trustee.” The State will have to dictate – low wages to the workers and high prices to the community. Which also – let us give Mr. Masani his due – constitutes another acrobatic feat on his part. He set out with a State which would compel the capitalist to act as a trustee on behalf of the community. He ends up with a State which, far from compelling the capitalists to be trustees for the community, is itself compelled to act as the trustee for the capitalists against the community.

And all this because of that historic “all,” the “five or six percent dividend” which Mr. Masani thoughtfully sandwiched in the middle of his paragraph explaining “trusteeship.” Profits are what is hidden in the Masanian wood-pile. What Mr. Masani forgot, overlooked or simply does not understand (Mr. Masani can take his choice; so can the reader) is that capitalist profit derives from capitalist exploitation. You cannot preserve capitalist profit without preserving capitalist exploitation. Or, if you wish it that way, you cannot preserve capitalist profit and abolish capitalist exploitation. All of which goes to show that not even Mr. Masani, or his renegade mentors, can square the capitalist circle. For, although Mr. Masani “allows” the present owners of property to continue in possession only on condition that they use the property for the benefit and profit of the “entire community,” he also “allows” them “five to six percent” profit. But the “five or six percent profit” can come only from the exploitation of the community – as we have shown. And not even Mr. Masani would argue that the exploitation of the community for the benefit of a section is “for the benefit and profit of the entire community” – indeed he is very strong on this self-same exploitation in contemporary Russia and is out to show us how to prevent it. In other words, capitalist private profit and “the benefit and profit of the entire community” are irreconcilable opposites. The former is an infraction of the latter. Wherefore, the protection of the latter demands, not the perpetuation of the former, but its abolition. And this can be done, as we shall see, not by maintaining capitalist private property, but only by abolishing it.

So much for Mr. Masani’s attempt to reconcile the irreconcileable, viz., the profits of the capitalists and the benefit of the community. It is necessary now to look a little closer at the magic weapon with which this historic feat is to be performed.

That weapon, we have already noted, is the State. Mr. Masani’s State is to square the capitalist circle. It will do so by allowing the capitalist that celebrated “all” on the one hand, viz., “five or six percent dividend,” and by compelling him, on the other, to produce “the kind of goods and the quantity of goods that he is asked to by the State,” to pay his workers “the wages which are dictated by the State,” and to sell his product “at prices which are fixed by the State.” This is Mr. Masani’s ideal State for India, the State which will do all these things. And presumably this State is specifically Eastern since Mr. Masani has some hard words to say about the “slave mentality” of the Indian intelligentsia “which expresses itself specifically in an exaggerated deference towards intellectual leaders in the West.”

Paradoxically enough, however, Mr. Masani’s ideal State of the Indian future has already come into existence in the very West that he apparently abhors. There is in Europe at this very day at least one State which claims to do, nay, actually does precisely what Mr. Masani would have his ideal State do. That is to say, it “allows” the capitalists their “dividend,” it determines the kind and quantity of goods the capitalist must produce, it “dictates” the wages to be paid to the workers and it “fixes” the prices to be paid by the community. Yes, it does all these things – all! In other words, it answers to every one of Mr. Masani’s careful specifications. Which is this State? If Mr. Masani hasn’t guessed, we shall give the answer. It is the Nazi State.

.Adolf Hitler’s Third Reich not only claims to do these things, it actually does these things. And in fact, it was brought into being precisely to do these things, namely, to ensure German capitalist profit, to regiment German capitalist industry, to dictate German capitalist wages and to fix German capitalist prices. Brought into being by whom? By the German bourgeoisie; more exactly, by the German big bourgeoisie, (everyone knows how they financed Hitler and helped him to power).

Incidentally, Hitler also promised in his publications that the Nazis would do still another thing, when they came into power, which Mr. Masani too promises for us in his book, when he comes into power with the neo-Gandhians. In reference to his “trustees” who are to receive that celebrated “all,” viz., “five or six percent dividend,” Mr. Masani also tells us vaguely: “the maximum permitted to such ‘trustees’ would not exceed twelve times the prevailing minimum.” It is important to note, in the first place, that this limitation or qualification is not incorporated at all in his description of his “trustee concept.” There, the “five to six percent” remains absolute: no question of any further or alternative limitation through proportion is even introduced; still less is there even a hint whether the “five or six percent” or the “twelve to one” proportion is to prevail in case the former is greater than the latter.

Secondly, the limitation itself is vague beyond understanding. Read grammatically, the sentence means that the maximum income of a “trustee” is not to exceed twelve times the minimum income of a “trustee” – a meaningless limitation, as the minimum itself is not fixed. If read, however, with a later remark of Masani’s, that “Gandhi’s ratio of twelve to one between maximum and minimum compares favorably with the existing disparity of eighty to one in Russia,” his proportion appears to be between that maximum income of a “trustee” and the minimum wage of a worker. If this is indeed the intention, then what a normal big capitalist would have to be allowed is not Mr. Masani’s “five or six percent,” but something like one thousandth of one percent: which raises the question, thirdly, who is to enforce this on the capitalist?

Mr. Masani relies on “moral suasion plus State pressure.” It is plain, therefore, that he himself does not feel he can rely on “moral suasion” alone. Then, whose State is to bring the “pressure” to bear on the capitalists: not this or that individual capitalist, note you, but. on the capitalist class as a whole? The capitalist State? If so, we have the remarkable outcome that the capitalists are to impose upon themselves through their own State this drastic limitation upon, amounting to expropriation of, their own interests! What is this but a return to the very “moral suasion” which Mr. Masani himself, with his “plus State pressure,” finds insufficient?

Is it then to be some other State? The only alternative to the capitalist State, as we shall prove later in relation to Mr. Masani’s managerial thesis, is the workers’ state. For, the State is not a disembodied entity but the instrument of a class. If, then, it is to be the workers’ State, why should it leave the property in the hands of the capitalist class at all? Indeed, it doesn’t; it expropriates them: which is why, as we shall see, Mr. Masani, who objects to expropriation of the capitalists, also objects to the workers’ state itself. All of which leads us to our last point in this connection. Just like Mr. Masani with his “defunctionalization,” Hitler too promised to abolish “the thraldom of interest.” The reader knows how Hitler did that; so the reader will also know how to evaluate this supposed limitation which Mr. Masani throws in anyhow and nohow into his book. For ourselves, we are compelled to say that it is a typical example of that double book-keeping, which consists of illusions for the masses and protection for the capitalists, that is characteristic of the Nazi State. Mr. Masani’s “twelve to one” ratio, unlike his “five to six percent dividend,” is both pointless and meaningless.

To return to our argument – we have noted that the Nazi State was brought into existence by the big bourgeoisie. Which raises the question, why did the German big bourgeoisie need such a State? We are sorry to have to say so, but it was precisely because of Mr. Masani’s “five or six percent.” The German capitalist rate of profit had long fallen below this level (as we have previously noted), and unless it was restored, German capitalism was faced with collapse. And how could it be restored? Only by driving down German wages to bare subsistence level, on the one hand, and extending German markets throughout the world, on the other. And this signified, internally, intensified class exploitation, externally intensified competition leading to – war.

All the world knows how thoroughly the Nazi State carried out these tasks for the German big bourgeoisie. Nevertheless, Mr. Masani would have us believe that somehow or other the Nazi State is not a capitalist State, nor the contemporary German economy a capitalist economy. Here are his very words:

“Neither Russia nor Germany today are capitalist countries in any strict sense of the word. If you have any doubt about Germany, you have only to read Burnham’s book, Peter Drucker’s End of Economic Man, Freda Utley’s The Dream We Lost. ‘Almost the only freedom left to the German employer is to put his name on the firm’s stationary,’ says Geoffrey Crowther, editor of the Economist, putting the matter in a nutshell.”

In a nutshell indeed! The German employer has, it seems, lost his freedom. Freedom to do what? To produce what he wants, apparently. If this is what makes a country cease to be capitalist “in any strict sense of the word,” we would like to ask Mr. Masani a question. Has the contemporary British employer the freedom to produce what he wants? We shall answer for Mr. Masani: No, he has to produce what the State directs according to the needs of the war. Has contemporary Britain then ceased to be capitalist? We don’t know how Mr. Masani would answer this question; but we do know the correct answer. It is a capitalist state organized for war. It directs what is to be produced for the war it is conducting in the collective interests of the capitalist class. And it ensures them a profit from the very destruction they have organized by paying for the products according to the formula “costs plus,” i.e. costs plus an appointed rate of profit. Doesn’t this, too, sound like Mr. Masani’s “trustee capitalist” state? We don’t think he would wish us to enquire too closely. So we shall return to his managerial thesis.

We are told that the German employer has lost the freedom to produce what he wants. But is this true? What the German employer, or any other employer for a matter of that, wants to produce is that which will bring him a profit. And this, the German employer produces. For the State gives him the orders and the State pays him for the product – with an assured margin of profit. (Costs plus is clearly not a British but a Nazi invention.) There’s the rub – the assured margin of profit. For how does the State assure him the appointed margin of profit? Why, by the methods already pointed out, viz., by dictating wages at a level low enough and fixing prices at a level high enough to ensure the difference. That is the point, Mr. Masani, precisely the point. For it proves that the German employer still has the one freedom which he prizes, the one freedom which is basic to his existence, viz., the freedom to make profits, i.e. the freedom to exploit the worker.

(To Be Continued)

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