Strachey has now taken time out for reflective thought; his book is a restatement of his philosophical position and a reinterpretation of the process of social change. The title is somewhat misleading, since the book contains very little on the institutional characteristics of contemporary economic organization—in fact, hardly more than a stereotype of oligopoly. What he does, essentially, is to set up two abstract creatures, capitalism and democracy, put them in the prize ring, and let them fight it out, while he cheers in the corner of democracy. Capitalism is a sort of brutal monstrosity—the apotheosis of every inhumane, antisocial pursuit of private self-interest. Democracy is the champion of all generous-hearted efforts to attain general well-being and communal interest. The complete victory of democracy would usher in socialism.
In a series of early chapters, Strachey reviews Ricardian, neoclassical and Marxist theory, with special reference to the labor theory of value and the theory of absolute and relative immiseration. Economists will not find much to interest them, since Strachey is a biased and at times not very accurate reporter. The later marginalist and equilibrium theorists are disposed of summarily, as having dropped the really important question of the social distribution of income among classes or groups. He is especially interested in the development of social accounting as a method through which to reopen the old question of social distribution on a factual basis.
Pending that basis, he commends Marx for asking the right questions and for devising a useful method of analysis, while he deplores the later translation of Marx into a rigid system of dogma and recognizes the failure in the field of prophetic vision.
Out of all this Strachey assembles a very personal, and highly debatable view of the validity of Marx's analysis, especially with respect to the prospects of the laboring classes. He takes the position that Marx's theory of progressive exploitation was a correct interpretation of a tendency inherent in capitalism as such. This tendency was, however, in practice offset by influences of a noneconomic character.
Marx cut his way through to the essential tendency of capitalism, which, however you express the point, is to channel the whole of its ever growing surplus towards the owners of the means of production to spend or invest, and thus to deprive the mass of the wage earning population of any part of it . . . unless we keep this conclusion in view, there is no hope of our understanding the world in which we live. (p. 86)
If this says what it appears to say, Strachey accepts as the central tendency of capitalism Marx's view that "the level of wages would be determined by what it took to produce the worker" (p. 88). "In the political and social conditions with which Marx was alone familiar, the tendency of wages to a subsistence level was over-riding" (p. 95; italics Strachey's).
Strachey at once points out that this is not what happened historitally. His answer to the apparent paradox is that noneconomic forces lying outside capitalism "over-rode" the tendencies inherent in capitalism. This is the clue to his whole pattern of thought. His "capitalism" is an abstract model without sociological content; or else, if it has any such content, it is limited to what Marx thought he saw in his own immediate environment.
Moreover, the model is so constructed that labor is always in such excess supply that employers will never be under the competitive inducement to bid up the rate of wages as productivity increases. Starting with a model of this sort, we must by definition attribute any improvement in the general standard of living to external forces.
For Strachey these moving forces are trade unions and political democracy. To them alone the whole of the improvement in real wages is attributed. "What has really happened is . . . that the wage earners, by political and trade unionist efforts, sustained over a century, have forced up their standards of life in the teeth of the economic tendencies of the system" (p. 109). He does not bother even to mention, much less to rebut, the idea that competitive bidding for scarce resources may have something to do with their rate of remuneration.
This doctrine encounters fairly rough going when one faces the circumstances of the United States. But Strachey is intrepidly dealing in universals, so he bravely faces the challenge. He says (p. 109 n) : The apparent exception is America in the second half of the nineteenth century. There the wage earner's standard of life undoubtedly rose while trade unionism remained weak. But is not this accounted for, first, by the existence of free land? By taking up free land an American wage earner could at any time escape right out of the capitalist system, as it were, back into the world of "small commodity production." And, second, the political pressure exercised by the American wage earners, and more especially by the American farmers, during the whole period was far from negligible.