Heartbreaking

Introduction/Explanation
I spent a lot of time trawling through websites about labour history and documents on or about Socialism and Communism. Probably more than is healthy but occasionally it provokes some surprises. On one of them I saw in its index a listing for Ludwig von Mises (yes that one) and wondered what the hell he was doing their. If your not familiar Mises was "classical liberal" economist who promoted capitalist economics and liberal politics, he fled Europe in 1940 to teach in the United States. He's also something of a patient zero for the modern American Pro capitalist free market movements. He's taught or had some connection to nearly every "the market is the source of all liberty" spokesmen in 20th century America, from Ayn Rand to Rothbard.

So not someone you'd expect to see on a website dedicated to workers revolt, or this blog except maybe as a punching bag. But having given in to curiosity I read it, and I actually see why it was chosen as something of value. That essay was Marxism and the Labour Movement, published in 1944, though I suspect based on some of its comments it was written earlier, possibly before Germany invaded Poland.
Normally I'd just quote from it quite liberally (heh) and add my own commentary, but honestly while it isn't perfect and can't help but engage in some pretty transparent bad faith commentary, it largely holds up and I'd be quoting well over 50% of it anyway, so I figured might as well repost it in full.
I'll add my comments and addendums at the end. Footnotes using numbers were used in the original text, mine will be using *.
This version of the text comes from a website known as Panarchy.org and comes this explanatory paragraph.
Note
This essay is taken from Omnipotent Government. Here von Mises presents Marx's ideas with a lucidity rarely encountered in other classical liberals. What emerges is that Marx vision was in favour of the development of the capitalistic mode of production in view of the construction of a post-capitalistic society*. Instead liberals have presented Marx as a rabid anti-capitalism propagandist. Many have done it and are still doing it for political gains, in order that liberal parties prevail over socialist parties. Whatever the reason, the manipulation has been a stumbling block to a fruitful analysis of Marx's ideas.
Now I do have somethings to say about this note, but I'll leave that until later. I'll just quickly add that I don't believe Panarchy.org was motivated by a desire to take down Marx by hosting this essay, I say that because they also host texts by both Marx and Engels and their introductions are usually fairly positive to those.
Now then.

Ludwig Von Mises, 

Marxism and the Labour Movement

(1944)

Karl Marx turned to socialism at a time when he did not yet know economics and because he did not know it. Later, when the failure of the Revolution of 1848 and 1849 forced him to flee Germany, he went to London. There, in the reading room of the British Museum, he discovered in the 'fifties not, as he boasted, the laws of capitalist evolution, but the writings of British political economy, the reports published by the British Government, and the pamphlets in which earlier British socialists used the theory of value as expounded by classical economics for a moral justification of labor's claims. These were the materials out of which Marx built his "economic foundations" of socialism.

Before he moved to London Marx had quite naively advocated a program of interventionism. In the Communist Manifesto in 1848 he expounded ten measures for imminent action. These points, which are described as "pretty generally applicable in the most advanced countries," are defined as "despotic inroads on the rights of property and on the conditions of bourgeois methods of production." Marx and Engels characterize them as "measures, economically unsatisfactory and untenable, but which in the course of events outstrip themselves, necessitate further inroads upon the old social order and are indispensable as a means of entirely revolutionizing the whole mode of production." [1].

Eight of these ten points have been executed by the German Nazis with a radicalism that would have delighted Marx. The two remaining suggestions (namely, expropriation of private property in land and dedication of all rents of land to public expenditure, and abolition of all right of inheritance) have not yet been fully adopted by the Nazis. However, their methods of taxation, their agricultural planning, and their policies concerning rent restriction are daily approaching the goals determined by Marx**. The authors of the Communist Manifesto aimed at a step-by-step realization of socialism by measures of social reform. They were thus recommending procedures which Marx and the Marxians in later years branded as socio-reformist fraud.

In London, in the 'fifties, Marx learned very different ideas. The study of British political economy taught him that such acts of intervention in the operation of the market would not serve their purpose. From then on he dismissed such acts as "petty-bourgeois nonsense" which stemmed from ignorance of the laws of capitalist evolution. Class-conscious proletarians are not to base their hopes on such reforms. They are not to hinder the evolution of capitalism as the narrow-minded petty bourgeois want to. The proletarians, on the contrary, should hail every step of progress in the capitalist system of production. For socialism will not replace capitalism until capitalism has reached its full maturity, the highest stage of its own evolution. "No social order ever perishes before all the productive forces for which there is room in it have developed; and new higher methods of production never appear before the material conditions of their existence have matured in the womb of the old society itself." [2].

Therefore there is but one road toward the collapse of capitalism - i.e., the progressive evolution of capitalism itself. Socialization through the expropriation of capitalists is a process "which executes itself through the operation of the inherent laws of capitalist production." Then "the knell of capitalistic private property sounds." [3]. Socialism dawns and "ends . . . the primeval history of human society." [4].

From this viewpoint it is not only the endeavors of social reformers eager to restrain, to regulate, and to improve capitalism that must be deemed vain. No less contrary to purpose appear the plans of the workers themselves to raise wage rates and their standard of living, through unionization and through strikes, within the framework of capitalism. "The very development of modern industry must progressively turn the scales in favor of the capitalist against the workingman," and "consequently the general tendency of capitalist production is not to raise but to sink the average standard of wages." Such being the tendency of things within the capitalist system, the most that trade-unionism can attempt is to make "the best of the occasional chances for their temporary improvement." Trade-unions ought to understand that and to change their policies entirely, "Instead of the conservative motto: A fair day's wages for a fair day's work, they ought to inscribe on their banner the revolutionary watchword: Abolition of the wages system!" [5].

These Marxian ideas might impress some Hegelians steeped in dialectics. Such doctrinaires were prepared to believe that capitalist production begets "with the inexorability of a law of nature its own negation" as "negation of negation," [6] and to wait until, "with the change of the economic basis," the "whole immense superstructure will have, more or less rapidly, accomplished its revolution." [7]. A political movement for the seizure of power, as Marx envisaged it, could not be built up on such beliefs. Workers could not be made supporters of them. It was hopeless to look for cooperation on the ground of such views from the labor movement, which did not have to be inaugurated but was already in existence. This labor movement was essentially a trade-union movement. Fully impregnated with ideas branded as petty bourgeois by Marx, unionized labor sought higher wage rates and fewer hours of work; it demanded labor legislation, price control of consumer's goods, and rent restriction. The workers sympathized not with Marxian teachings and the recipes derived from them but with the program of the interventionists and the social reformers. They were not prepared to renounce their plans and wait quietly for the far-distant day when capitalism was bound to turn into socialism. These workers were pleased when the Marxian propagandists explained to them that the inevitable laws of social evolution had destined them for greater things, that they were chosen to replace the rotten parasites of capitalist society, that the future was theirs. But they wanted to live for their own day, not for a distant future, and they asked for an immediate payment on account of their future inheritance.

The Marxians had to choose between a rigid uncompromising adherence to their master's teachings and an accommodating adaptation to the point of view of the workers, who could provide them with honors, power, influence and, last but not least, with a nice income. They could not resist the latter temptation, and yielded. They kept on discussing Marxian dialectics in the midst of their own circles; Marxism, moreover, had an esoteric character. But out in the open they talked and wrote in a different way. They headed the labor movement for which wage raises, labor legislation, and social insurance provisions were of greater importance than sophisticated discussions concerning "the riddle of the average rate of profit." They organized consumer's cooperatives and housing societies; they backed all the anticapitalist policies which they stigmatized in their Marxian writings as petty-bourgeois issues. They did everything that their Marxian theories denounced as nonsense, and they were prepared to sacrifice all their principles and convictions if some gain at the next election campaign could be expected from such a sacrifice. They were implacable doctrinaires in their esoteric books and unprincipled opportunists in their political activities.

The German Social Democrats developed this double-dealing into a perfect system. There was on the one side the very narrow circle of initiated Marxians, whose task it was to watch over the purity of the orthodox creed and to justify the party's political actions, incompatible with these creeds, by some paralogisms and fallacious inferences. After the death of Marx, Engels was the authentic interpreter of Marxian thought. With the death of Engels, Kautsky inherited this authority. He who deviated an inch from the correct dogma had to recant submissively or face pitiless exclusion from the party's ranks***. For all those who did not live on their own funds such an exclusion meant the loss of the source of income. On the other hand, there was the huge, daily increasing body of party bureaucrats, busy with the political activities of the labor movement. For these men the Marxian phraseology was only an adornment to their propaganda. They did not care a whit for historical materialism or for the theory of value. They were interventionists and reformers. They did whatever would make them popular with the masses, their employers. This opportunism was extremely successful. Membership figures and contributions to the party, its trade unions, cooperatives, and other associations increased steadily. The party became a powerful body with a large budget and thousands of employees. It controlled newspapers, publishing houses, printing offices, assembly halls, boarding houses, cooperatives, and plants to supply the needs of the cooperatives. It ran a school for the education of the rising generation of party executives. It was the most important agency in the Reich's political structure, and was paramount in the Second International Working Men's Association.

It was a serious mistake not to perceive this dualism, which housed under the same roof two radically different principles and tendencies, incompatible and incapable of being welded together. For it was the most characteristic feature of the German Social Democratic party and of all parties formed abroad after its model. The very small groups of zealous Marxians - probably never more than a few hundred persons in the whole Reich - were completely segregated from the rest of the party membership. They communicated with their foreign friends, especially with the Austrian Marxians (the "Austro-Marxian doctrinaires"), the exiled Russian revolutionaries, and with some Italian groups. In the Anglo-Saxon countries Marxism in those days was practically unknown****. With the daily political activities of the party these orthodox Marxians had little in common. Their points of view and their feelings were strange, even disgusting, not only to the masses but also to many party bureaucrats. The millions voting the Social Democratic ticket paid no attention to these endless theoretical discussions concerning the concentration of capital, the collapse of capitalism, finance capital and imperialism, and the relations between Marxian materialism and Kantian criticism. They tolerated this pedantic clan because they saw that they impressed and frightened the "bourgeois" world of statesmen, entrepreneurs, and clergymen, and that the government-appointed university professors, that German Brahmin caste, took them seriously and wrote voluminous works about Marxism. But they went their own way and let the learned doctors go theirs.

Much has been said concerning the alleged fundamental difference between the German labor movement and the British. But it is not recognized that a great many of these differences were of an accidental and external character only. Both labor parties desired socialism; both wanted to attain socialism gradually by reforms within the framework of capitalist society. Both labor movements were essentially trade-union movements. For German labor in the imperial Reich Marxism was only an ornament. The Marxians were a small group of literati*****.

The antagonism between the Marxian philosophy and that of labor organized in the Social Democratic party and its affiliated trade-unions became crucial the instant the party had to face new problems. The artificial compromise between Marxism and labor interventionism broke down when the conflict between doctrine and policies spread into fields which up to that moment had had no practical significance. The war put the party's alleged internationalism to the test, as the events of the postwar period did its alleged democratic tendencies and its program of socialization.





Notes
[1] Communist Manifesto, end of the second section. In their preface to a new edition of the Manifesto, dated June 24, 1872, Marx and Engels declare that because of changed circumstances "stress is no longer laid on the revolutionary measures proposed at the end of the second section."
[2] Marx, Zur Kritik der politischen Oekonomie, edited by Kautsky (Stuttgart, 1897), p. xii.
[3] Marx, Das Kapital (7th ed. Hamburg, 1914), I, p. 728.
[4] Marx, Zur Kritik der politischen Oekonomie, p. xii.
[5] Marx, Value, Price and Profit, edited by Eleanor Marx Aveling (New York, 1901), pp. 72-74.
[6] Marx, Das Kapital, op. cit., p. 729.
[7] Marx, Zur Kritik der politischen Oekonomie, p. xi.

Some Comments

* Just to comeback to that note, this is true up to a point, the writings of Marx contain many references to a progressive feature of Capitalist development, perhaps the most infamous example of this was when Marx commented on Imperialism. Especially regarding India in the 1850s for example this passage written in 1853 for the New York Daily Tribune 

All the English bourgeoisie may be forced to do will neither emancipate nor materially mend the social condition of the mass of the people, depending not only on the development of the productive powers, but on their appropriation by the people. But what they will not fail to do is to lay down the material premises for both. Has the bourgeoisie ever done more? Has it ever effected a progress without dragging individuals and people through blood and dirt, through misery and degradation?...

The devastating effects of English industry, when contemplated with regard to India, a country as vast as Europe, and containing 150 millions of acres, are palpable and confounding. But we must not forget... [t]he bourgeois period of history has to create the material basis of the new world — on the one hand universal intercourse founded upon the mutual dependency of mankind, and the means of that intercourse; on the other hand the development of the productive powers of man and the transformation of material production into a scientific domination of natural agencies. Bourgeois industry and commerce create these material conditions of a new world in the same way as geological revolutions have created the surface of the earth. When a great social revolution shall have mastered the results of the bourgeois epoch, the market of the world and the modern powers of production, and subjected them to the common control of the most advanced peoples, then only will human progress cease to resemble that hideous, pagan idol, who would not drink the nectar but from the skulls of the slain.

https://www.bradford-delong.com/2009/01/marx-the-future-results-of-british-rule-in-india.html

 Though there is evidence that his ideas had started to shift somewhat on the progressive character of Empire building. One of the most commonly cited is a letter to Danielson in 1881 shortly before his death.
In India serious complications, if not a general outbreak, is in store for the British government. What the English take from them annually in the form of rent, dividends for railways useless to the Hindus; pensions for military and civil service men, for Afghanistan and other wars, etc., etc. – what they take from them without any equivalent and quite apart from what they appropriate to themselves annually within India, speaking only of the value of the commodities the Indians have gratuitously and annually to send over to England – it amounts to more than the total sum of income of the sixty millions of agricultural and industrial labourers of India! This is a bleeding process, with a vengeance! The famine years are pressing each other and in dimensions till now not yet suspected in Europe! There is an actual conspiracy going on wherein Hindus and Mussulmans co-operate; the British government is aware that something is “brewing,” but this shallow people (I mean the governmental men), stultified by their own parliamentary ways of talking and thinking, do not even desire to see clear, to realise the whole extent of the imminent danger! To delude others and by deluding them to delude yourself – this is: parliamentary wisdom in a nutshell! Tant mieux!

https://www.marxists.org/archive/marx/works/1881/letters/81_02_19.htm

But yeah, his comments on the necessity for capitalistic development aren't very popular even amongst most self described Marxists.
**

This is the big weakness of the essay, I guess Mises can't help himself, this argument is incorrect on nearly every level. Let's get started with a refresher on the ten points from the Manifesto

1. Abolition of property in land and application of all rents of land to public purposes. 
2. A heavy progressive or graduated income tax. 
3. Abolition of all rights of inheritance. 
4. Confiscation of the property of all emigrants and rebels. 
5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly. 
6. Centralisation of the means of communication and transport in the hands of the State. 
7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan. 
8. Equal liability of all to work. Establishment of industrial armies, especially for agriculture. 
9. Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country. 
 10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production, &c, &c.

These are the ten points, Mises admits that points 1 and 3 weren't applicable, his assertion that they were on the way in the future though is dubious because he cites trends in Nazi economics that simply didn't exist. The main issue here is that Mises is lying, what similarities between the Manifesto and German economic reality of the 1930s was not the work of the Nazi party, but the government they replaced. They inherited large state companies and proceeded to sell them off.

The Great Depression spurred State ownership in Western capitalist countries. Germany was no exception; the last governments of the Weimar Republic took over firms in diverse sectors. Later, the Nazi regime transferred public ownership and public services to the private sector. In doing so, they went against the mainstream trends in the Western capitalist countries, none of which systematically reprivatized firms during the 1930s. Privatization in Nazi Germany was also unique in transferring to private hands the delivery of public services previously provided by government. The firms and the services transferred to private ownership belonged to diverse sectors. Privatization was part of an intentional policy with multiple objectives and was not ideologically driven. As in many recent privatizations, particularly within the European Union, strong financial restrictions were a central motivation. In addition, privatization was used as a political tool to enhance support for the government and for the Nazi Party.

Against the Mainstream Germa Bel  http://www.ub.edu/graap/nazi.pdf

The German Central bank was the Reichsbank which was founded in 1876 and was a private monopoly. Nazi policy changed its name to the German Reichsbank and placed it under the control of Hitler. Beyond the Reichsbank the Nazi party merely setup a regulatory body and then sold the states shares in the banking sector to private interests.

In the end, the Banking Investigation Committee recommended strengthening public supervision and control of private banking and introducing new restrictions on the creation of credit institutions and the exercise of the banking profession (Lurie, 1947, p. 62). These recommendations were implemented through the German Bank Act of 1934, which allowed the government to exercise tight control over private banks. Regulating banking appeared to the regime as a safe and economically sound alternative to proposals by party radicals for controlling finance through socialization (James, 1995, p. 291). Afterwards, and consistent with the theoretical insights of Shleifer and Vishny (1994), the reprivatization of the big commercial banks (Deutsche Bank, Commerz-Bank, and Dresdner-Bank) was implemented within the new regulatory framework. The alliance of financial interests and top economic echelons in the government held the reprivatization of State-owned banks as one of its top priorities.

And progressive income tax? Uh not really, if anything the Nazi party taxation plans benefited the wealthy who could make investments in their businesses tax deductible and count servants as dependendents. The highest rate of tax in Germany was 13.7% compared to 23.7% in the UK at the same time.

How about centralisation of the means of communication and transport? Again no, they all remained in private hands, the closest to centralisation I can think of would be the Authobahn construction programs, but again this was an inheritance from the previous government.

Railways: In the 1930s The Deutsche Reichsbahn (German Railways) was the largest single public enterprise in the world (Macmahon and Dittmar 1939, p. 484), bringing together most of the railways services operating within Germany. The German Budget for fiscal year 1934/35, the last one published (Pollock, 1938, p. 121), established that Railway preference shares4 worth Reichsmark (Rm.) 224 million were to be sold.5 

Point 8, well yes the Nazi party did establish large industrial armies to build roads and work in factories, however in the Manifesto this demand is coupled with the "Equal liability of all to work" and this was not the case in Nazi Germany. Jewish people were systematically denied the right to work outside of the ghettoes and labour camps.

Point 4 is the only point that I can see a case for comparison. The Nazi party did confiscate the property of exiles and its enemies.

***

The SPD weren't monolithic but it seems hard to deny that their orthodoxy fell overwhelmingly on the cautious and gradual approach. Rosa Luxemburg is famous for publishing the text "The Mass Strike" in 1906 which advocated for a general uprising of labour in the workplaces by seizing control through direct action of capitalist property. But the party under Kautsky very quickly moved away from such radical ideas and soon Luxemburg would find herself increasingly isolated as part of fringe minority. Though the official breaking point wouldn't come until the outbreak of the First World War.

****

In the UK the dominant socialist party was the Labour party, unlike the French and German Social Democrats there were few if any Marx admirers within the Labour party ranks. It was founded largely by the Trade Unions and members of social reforming societies and smaller Socialist and workingmen's parties. Its intellectual wing became dominated by the Fabian society.

There was however a small Marxist current in the Social Democratic Federation founded by Henry Hyndman, but by 1911 it had split into several other competing groups that eventually faded away. Apparently Marx and Engels who didn't care for him very much, though the SDF did attract for a time at least most of the early English Marxists.

*****

The SPD at the turn of the 20th century was both the largest political party in Germany, (especially when factoring in its affiliated Trade Unions, co-operatives and associations) and the largest nominally Marxist group in the world. However not only were many of its rank and file not Marxists, but many of its leaders and theoreticians also came from non or anti Marxist traditions. When the party was formed it was done with the alliance of two groups, one around Marx and the other around Lassalle. And many of the works of Marx, Engels and Kautsky about the nature of Social Democracy and the role of the party were written as criticism or outright opposition to the rival currents within Social Democracy.

Such as the Critique of the Gotha Program, or Engels Anti-Duhring. So while the party was large and quite powerful physically, the party seems to have failed utterly in its role as teacher of the class, since even many of its leaders had at best payed lip service to the works of the three great Marxist thinkers, Marx, Engels and Kautsky.