Chapter 2: The Development of the Capitalistic Social Order

§ 14 The struggle between small-scale and large-scale production (between Working Ownership and Capitalistic Non-working Ownership)

“Huge factories, sometimes employing more than ten thousand workers, and having enormous machines, did not always exist. They appeared by degrees, growing up upon the remnants of artisan production and small-scale industry when these were undergoing ruin.“

Wouldn’t this be a good thing. If the small scale industry was undergoing ruin wouldn’t it be better for large factories to fill the void rather than ruin? If given the option of no product at all or mass production wouldn’t something be better than nothing? From the human perspective would it be better to face ruin with no prospect of escape or to be able to sell your remaining capital to the factory and possibly be employed by the factory ?

“The small producer…lives from hand to mouth. As soon as he has sold his product, he begins to use for immediate expenses the money he has received; he has no margin. For this reason he is forced to sell willy-nilly, for otherwise he will starve to death. It is obvious that this is a great disadvantage to him.”

Bukharin has devoted some time to the advantages that mass producers have over small producers. He thus far has failed to take into account any benefits that might result from mass production. Lower prices and greater supply being the first two that come to mind.

“If a great entrepreneur has urgent need of money, he can get it. Banks will always lend money to a solid' firm at a comparatively low rate of interest. But hardly anyone will give credit to the small producer. If he can borrow at all, exorbitant interest will be demanded. Thus the small producer easily falls into the hands of the usurer.”

Bukharin is spot on here. It is much easier for giant corporations to get access to credit. I think micro lending programs like those encouraged by Muhammad Yunus could hold potential. I also think an entrepreneurial spirit should be cultivated. Opportunities exist for banks to loan to smaller producers and it could prove lucrative to do so if a financial institution is willing to think outside of the standard playbook.

“Largescale capital crushes the small producer, takes away his customers, and ruins him, so that he drops into the ranks of the proletariat or becomes a tramp. In many cases, of course, the small master continues to cling to life.”

I don’t think this is always the case. It is however especially true when barriers to entry prevent more participants from entering the market. The covid 19 pandemic also provided government with the power to crush small businesses by deeming them non-essential. I would not call that a capitalist system however. It was authoritarian tyranny that allowed large scale capital to grow larger.

“The small producer is frequently in the toils of the moneylender. Ostensibly independent, he really works for this spider. Or he is a dependent of the purchaser of his commodities.”

Every business is dependent upon the people who buy their products. If consumers decided that they would never buy another pair of shoes from Nike then Nike would cease to exist. Small producers can become quite profitable and grow. If the right product is created consumers will buy it even if it originated from a small producer.

“In course of time the home worker began to work for one particular capitalist; this is what happened in the case of the Moscow hatmakers, toymakers, brushmakers, etc. In the next stage, home workers procure the raw materials from their own employer, and thus pass into bondage to him (e.g. the locksmiths of Pavlovsk and of Burmakino). Finally, the home worker is paid by his employer at piecework rates (the nailmakers of Tver, the bootmakers of Kimry, the matmakers of Makarieff, the knifeforgers of Pavlovo). The hand-loom weavers have been similarly enslaved.”

Wage labor is slavery. The notion that you are either a capitalist or a slave is over the top. The very wage labor that Bukharin classifies as slavery was sought after by the poor peasants. They would leave their rural villages for the city in hopes of landing a job as a wage laborer. They would save their money and send some of it back to the village to their families. They would be able to buy items they could never have afforded as peasants. The wage labor that Bukharin despises lifted millions of people out of poverty.