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the several states. But even here it was not socialism but rather statecapitalism, if such a term is permissible. The German states made apoint of operating their enterprises for profit as a source of staterevenue. It was in no sense an experiment in production "for use* 1in a classless society. Moreover, while in bulk these enterprises wereconsiderable, they formed only a small fraction of the wholeeconomy. Nevertheless, they did accustom the German mind to theintrusion of the state into enterprise as a normal function of government.Whatever its shortcomings it remains a fact that Germany between1870 and 1914 was the most prosperous large country on thecontinent. But despite this fact, it is equally true that its economicsystem, in common with that of other countries, was beset by gravedifficulties. These may be classified as (a) chronic inability to providesubsistence for a large part of the population and (b) recurringperiods of depression.This brings us to say what is of the utmost importance to thiswhole subject; namely, that in this system of private capitalismthere is an organic flaw of some sort which tends to break it downat intervals and to infect it with a heavy dilution of poverty at alltimes. I do not say that this defect is irremediable. And obviouslyno one will say that poverty has increased under the capitalistsystem, £ven so unfriendly a witness as Karl Marx said in 1848, beforethe greatest creations of capitalism had been produced:The bourgeoisie during its rule of scarcely one hundred years has createdmore massive and colossal productive forces than all the preceding generationstogether. Subjection of nature's forces to man, machinery, applicationof chemistry to industry and agriculture, steam navigation, railways, electrictelegraphs, clearing of whole continents for cultivation, canalization ofrivers, whole populations conjured out of the ground—what earlier centuryhad even a presentiment that such productive forces slumbered in the lapof social labor? 1In the years after Marx wrote that paragraph Germany becamethe most prosperous nation on the continent. But despite this thetwo great problems—persisting poverty and cyclical depression—*Quoted by Robert Hunter in Revolution—Why, How, and When? Harper Bros., NewYork, 1940.82