How Leland Stanford and Karl Marx were Alike: Or, What the Stanford Alumni magazine would not publish

On a whim of fancy, I thought I would give the Stanford Alumni magazine chance to publish what I consider a rather interesting piece. It was not surprising that they passed on it, so I offer it to curious readers everywhere to ponder. I personally find it fascinating.

Leland Stanford didn’t like Communism. He said flatly:

The political economist and the communists have much to say concerning the distribution of wealth…. Many writers upon the science of political economy have declared that it is the duty of a nation first to encourage the creation of wealth; and second, to direct and control its distribution. All such theories are delusive. The production of wealth is the result of agreement between labor and capital, between employer and employee.

This statement is from “Co-operation of Labor — Interview with Senator Stanford: Reasons why the laboring man should be his own employer — delusive theories about the distribution of wealth.” The interview was conducted in San Francisco on April 29, 1887, and published in the New York Herald on May 4, 1887. It has been published as a book readily available on Amazon.

Stanford’s proposal, which he is presenting to the US Senate that very moment, is for co-operative associations, in which employers and employees would be the self-same. In his view, the time is ripe for this new “arrangement” precisely because the “working man” has become more intelligent, more savvy, and more educated. One notes that Leland and Jane Stanford had established Stanford University just two years before. One should also note that the quotes from Marx which I cite here come within seven years of Stanford’s interview. Both are commenting on the same thing — a new arrangement between capital and labor wherein the contradiction between the two shrinks. Indeed, for Stanford, there is no real contradiction between the two:

From my earliest acquaintance with the science of political economy, it has been evident to my mind that capital was the product of labor, and that therefore in its best analysis there could be no natural conflict between capital and labor, because there could be no antagonism between cause and effect, between effort and result of effort; and, since capital is the product of labor, there could be no conflict between labor and its project. Keeping this fundamental principle in view, it is obvious that the seeming antagonism between capital labor is the result of deceptive appearance. I’ve have always been fully persuaded that through cooperation labor could become its own employer.

Stanford’s conviction largely stems from what he has witnessed in mining camps. He tells of an instance where miners banded together: “By their association they contributed to a common fund, as it were, a laboring capacity equal to the work to be accomplished. If these enterprises had been projected by a single capitalist, the first step would have been to engage an amount of labor necessary to the accomplishment of the work — that is, to purchase the labor. Instead, therefore, of selling the labor to a single far-sighted and enterprising employer, these men contributed by subscription the amount of labor required to be performed. The work accomplished in this way gave all the result attained to the labor expended upon it.” He reaches this conclusion: “the association of laboring men into co-operative relation, which in a large measure can take the place of the employer class, must therefore of necessity be ennobling.”

What he sees in this instance is a rebuttal to the idea of government give-aways, but not in the form of championing individual “boot-strap” efforts, which is the familiar argument of conservatives. Instead, he encourages collective enterprise: “All legislative experiments in the way of making forcible distribution of the wealth produced in any country have failed…. But aggregated into co-operative relation, intelligent, educated labor possesses the capacity for the accomplishment of any undertaking or enterprise, and need not wait for an individual called an employer to associate its effort, and direct and control the industry out of which it earns wages and pays premium to capital.”

How could someone who is staunchly against communism write in ways that so clearly coincide with these statements of Karl Marx, which also see collective arrangements as a new stage of capital-labor relations:

But there was in store a still greater victory of the political economy of labour over the political economy of property. We speak of the co-operative movement, especially of the co-operative factories raised by the unassisted efforts of a few bold ‘hands’. The value of these great social experiments cannot be over-rated. By deed, instead of by argument, they have shown that production on a large scale, and in accord with the behest of modern science, may be carried on without the existence of a class of masters employing a class of hands; that to bear fruit, the means of labour need not be monopolised as a means of dominion over, and of extortion against, the labouring man himself; and that, like slave labour, like serf labour, hired labour is but a transitory and inferior form, destined to disappear before associated labour plying its toil with a willing hand, a ready mind, and a joyous heart. — -Marx, “Inaugural address of the working men’s international association, 1894.”

Indeed, a key point for both these men is that no real conflict between capital and labor, there is an argument about equity. Stanford comments:

The real conflict [between labor and capital], if any exists, is between two industrial systems. Labor desires that the premium paid for its employment shall be small. If it could succeed in eliminating the premium altogether it will leave no encouragement to the employer class, and, as we have already seen, under the present system the employer class is not only indispensable, but is a great benefactor. If, however, there were no profit whatever to the employer class, then practical co-operation would be realized. …When, therefore, men ask for higher wages, and demand that the margin of profit to the employer shall be less, they are really demanding a nearer approach to the realization of co-operation.

For his part, Marx notes that both co-operatives and joint-stock companies produce a similar effect of abolishing the opposition between capital and labor:

But the opposition between capital and labour is abolished there, even if at first only in the form that the workers in association become their own capitalists, i.e., they use the means of production to valorise their labour. These factories show how, at a certain stage of development of the material forces of production, and of the social forms of production corresponding to them, a new mode of production develops and is formed naturally out of the old’ [.. .] ‘Capitalist joint-stock companies as much as cooperative factories should be viewed as transition forms from the capitalist mode of production to the associated one, simply that in one case the opposition is abolished in a negative way, and in the other in a positive way. (Marx, Capital Vol. III, 1894)

It’s important to resist the temptation to say, “well maybe Leland Stanford anticipated the start-up.” Because even if a group of people come up with an idea, find investors, and achieve success, if the people who actually perform the labor of making things — whether in the form of information or commodities — do not hold equal ownership of the business or have any say in their rate of compensation, this does not conform to Stanford’s proposal.

The Role of Education

Stanford’s proposal is intimately connected to his founding of the university which bears his son’s name. For Stanford, the success of co-operatives is based on pragmatism above all. In the past, collective efforts were bound to fail because workers lacked the necessary intelligence to embark on such an endeavor: “In past times, when labor was less intelligent than now, when the opportunities for education among working men were more restricted and limited than at present, an intelligent employer class originating and directing labor was indispensable.”

But in 1887, things were different: “What I believe is, that the time has come when the laboring men can perform for themselves the office of becoming their own employers; that the employer class their own employers, that the employer class is less indispensable to the modern organization of industries, because the laboring men themselves possess sufficient intelligence to organize into co-operative relation and enjoy the entire benefits of their own labor.” Seen in this light, the building of a great university is part of a general progressive moment of greater economic freedom.

But beyond mere pragmatics, for Leland Stanford co-operatives helped people realize their inter-dependency: “Each individual member of a co-operative society, being the employer of his own labor, works with that interest which is inseparable from the new position he enjoys. Each has an interest in the other; each is interested in the other’s health, in his sobriety, in his intelligence, in his general competency, and each is a guard upon the other’s conduct.” Crucially, this common economic interest was not an end to itself, but rather a token of a more basic and foundational social bound:

A man may own a piece of land, but he is dependent upon the labor of others for the instruments with which to till it. The owner of a piece of land who has nothing but his hands with which to cultivate the soil is powerless to make it productive. Take the most primitive agricultural implement, a spade. When his hands are supplemented and aided by a spade, he may stir the ground and plant something. This he could not do were his hands not supplemented with tools, and these tools, you will observe, are the product of the labor of others.…the man I have supposed owned the land is powerless without the assistance of others.

Put bluntly, Stanford declares, “Taken as a whole, society is the grand co-operative association.”

This is exactly what David Graeber and David Wengrow, in their magisterial book, The Dawn of Everything: A New History of Humanity, call “baseline communism”:

[T]here’s another way to use the word “communism”: not as a property regime but in the original sense of “from each according to their abilities, to each according to their needs.” There’s also a certain minimal, “baseline” communism which applies to all societies; a feeling that if another person’s needs are great enough (say, they are drowning), and the cost of meeting them is modest enough (say, they are asking for you to throw them a rope), then of course any decent person would comply. Baseline communism of this sort could even be considered the very grounds of human sociability, since it is only one’s bitter enemies who would not be treated this way. (47)

Indeed, that famous quote from Marx (“from each according to their abilities, to each according to their needs”) occurs precisely where he is speaking of “co-operative wealth”: “after the productive forces have also increased with the all-around development of the individual, and all the springs of cooperative wealth flow more abundantly — only then can the narrow horizon of bourgeois right be crossed in its entirely and society inscribe on its banners: from each according to his ability to each according to his needs” (1875, “Critique of the Gotha Programme”).

Despite what might be considered promising ventures into progressive thought, we cannot ignore the critical leverage Stanford installs into his comments — Native Americans. It is precisely here that we discover a fundamental, and fatal flaw, in his conception of “cooperatives,” and, indeed, in his faith in capitalism.

Where Stanford Went Wrong

It is a sad but perhaps an inevitable fact that despite these progressive ideas, Leland Stanford was still a creature of his age when it came to issues of Indigenous knowledge. In this last section, I will explain why this matters to us today.

Stanford’s championing of co-operatives was based on the belief that as society advanced, so too would its needs and wants, and therefore there would be an endless demand and supply. He makes this point over and over again. Capital and labor, now in harmony rather than contradiction, would know no limits. Indeed, Stanford confidently declares: “The earth, the source from which all wants are supplied, is an inexhaustible mine.”

To better delineate the goals and potentials of modern man, he uses Indigenous peoples and cultures as polar opposites:

The Indian on the plains of Nevada with his unaided hand, presents no evidence of civilized capacity or productive power. With him the primitive problem of sustaining existence has not been solved. His hand is not supplemented by tools and implements, and his unaided hand finds constant employment in obtaining the mere necessities of physical existence. It is therefore impossible for him to enter any higher realm.

Again:

The uncivilized man, like the Indians of the plains, has never felt higher wants. When his physical wants are gratified, he falls into a condition of sloth and indolence, if indeed he has time for indolence, for in a barbarous condition, with the hands unaided by implements, it requires constant effort diligence and industry to obtain the means of supporting mere physical existence. It therefore follows that every discovery in economic science which makes the production of things useful to man cheaper, and every new want that is felt by man in his progress toward higher civilization, enlarges the field of labor.

Graeber and Wengrow take a different view: “Humans were once living a ‘fairly comfortable life’, subsisting from the blessings of Nature, but then we made our most fatal mistake. Lured by the prospect of a still easier life — of surplus and luxury, of living like gods — we had to go and tamper with that harmonious state of nature, and thus unwittingly turned ourselves into slaves” (231). Indeed, Capital, and indeed “civilization” as described by Stanford, is perpetually creating needs and wants to satisfy. The entire machinery of both would grind to a halt if people were actually satisfied with what they had.

Graeber and Wengrow address the notion of the “primitive” as imagined in the western imagination: “Much though later European authors like to imagine them as innocent children of nature, indigenous populations of North America were in fact heirs to their own, long intellectual and political history — one thing had taken them in a very different direction to Eurasian philosophers and which, arguably, ended up having a profound influence on conceptions of freedom and equality, not just in Europe but every well everywhere else as well.”

Indeed, they argue that the very structures of education were invented by the ancient Sumerians:

[T]he mere existence of a college of scribes administering complicated relations between people, animals and things shows us there was much more going on in the large “houses of the gods” then just ritual gatherings. There were goods and industries to be administered, and a body of citizens who developed pedagogical techniques they quickly became so essential to this particular form of urban life that they remain with us to this day. To get a sense of how persuasive some of these innovations are, consider that just about anyone reading this book is likely to have first learned to read in classrooms, sitting in rows opposite a teacher, who follows a standard curriculum. This rather stern way of learning was itself a Sumerian invention, one now to be found in virtually every corner of the world. ( 307)

Finally, it is hard not to pause over Stanford’s claim that for Native peoples “the primitive problem of sustaining existence has not been solved.” Perhaps Stanford refused to acknowledge any other form of existence as legitimate; or acknowledge that the West’s genocide against Indigenous peoples made their existence particularly fraught.

Indigenous peoples’ reverence for the Earth was committed to sustainability rather than extraction, and a collective life in harmony with all other forms of life. Stanford’s proposal for a “grand co-operative association” was indeed promising, but devastatingly incomplete.