Lassalle did not remain long in Marx's good graces either. In 1861 Marx had travelled to Prussia in an attempt to reclaim his citizenship and, while awaiting the (negative) decision, enjoyed a high-society summer with Lassalle and his Berlin fast set. The following year Lassalle returned the favour, residing at the impoverished Marxes in London for three weeks and, in the process, sending their precarious family finances into free-fall. The great philosopher was furious with this spendthrift, vainglorious popinjay, and a personal breakdown in relations opened up all their political differences: Lassalle's notion of a Malthusian-derived ‘iron law of wages’ (which were naturally kept low as more working-class children entered the labour market) led him to argue for a Proudhonian future of producer co-operatives set up by the state. Indeed, Lassalle always retained a romantic, almost Hegelian belief in the state as the highest form of human organization and thus the best potential agent of working-class emancipation. He even entered secret talks with Chancellor Bismarck in the hope of crafting this ideal state on the back of a grand electoral pact between the working class and Junker aristocracy united against the exploitative bourgeoisie (whom Bismarck also despised). But before Lassalle could realize this political masterplan, his Don Juan inclinations got the better of him when in 1864 he took a bullet in the stomach from the enraged fiancé of a young girl he had been courting. Suddenly, Engels rather admired the man. ‘Whatever Lassalle may have been in other respects as a person, writer, scholar – he was, as a politician, undoubtedly one of the most significant men in Germany,’ he wrote on hearing of the bizarre death. ‘But what an extraordinary way to lose one's life… Such a thing could only happen to Lassalle, with his strange and altogether unique mixture of frivolity and sentimentality, Jewishness and chivalresquerie.’33 But as soon as he was informed about Lassalle's secret alliance with Bismarck, it was straight back to the insults against ‘Baron Izzy’, ‘Lazarus’, ‘Smart Ephraim’ or, in pointed reference to his dark features, ‘the Jewish nigger’.
Such personalized attacks were stock in trade for Marx and Engels with the physical deformities, sexual peccadilloes and personal habits of their political opponents all subject to merciless ridicule. Yet their particular focus on ethnicity (and this was not an isolated case of saloon-bar boorishness on Engels's behalf: he complained about the number of Jews at the Schiller Anstalt in Manchester, was affectionately obsessed by Paul Lafargue's Creole heritage, and repeatedly used the term ‘nigger’ even when it was thought prejudicial in a nineteenth-century context) does briefly raise the rather ahistorical question as to whether Engels was a racist. Of course, he was a man of his time and politically committed to proletariat universalism, but when one combines his elemental outbursts with harsher strictures on the Slavs and other non-historic people there are palpably racist inclinations. Such sentiments emerge only fitfully into the historical light – as in 1866 when he and Marx discussed a new book by Pierre Tremaux, The Origin and Transformation of Man and Other Beings, which attempted to prove that geology and soil were instrumental in the development of racial characteristics. Initially, Engels was dismissive about Tremaux and his thesis. ‘Perhaps the man will demonstrate in the 2nd volume how he explains that we Rhinelanders on our Devonian transitional massif… did not become idiots and niggers ages ago, or else he will assert that we are really niggers.’ But Marx continued to think there was something in Tremaux's work forcing Engels to backtrack a little: ‘the man deserves credit for having emphasized the effect of the “soil” on the evolution of races’ – pointing to his basic belief in a graduated hierarchy of races and cultures.34 Like many of his milieu, he certainly thought western Europeans were more civilized, advanced and cultured than Africans, Slavs, Arabs and the slaves of the American South. Yet when it came to the raw politics of race, Engels was always on the right side: he supported the North against the South in the Civil War and, as we have seen, was appalled by the butchery unleashed on the Jamaican rebels by Governor Eyre during the 1865 Morant Bay rebellion. And, despite his own cultural reflex towards anti-Semitism, he consistently condemned Jewish persecution when it re-emerged – amongst both socialists and conservatives – in late 1870s Germany. Indeed, he used an entire essay on the issue to condemn anti-Semitism as backward and noxious – ‘nothing but the reaction of the medieval, decadent strata of society against modern society… [it] only serves reactionary ends’. Engels wanted the socialists to make the struggle against anti-Semitism their struggle and he outlined just how indebted the movement was to Jews, beginning with Heine and Borne via Marx, Victor Adler and the leading German social democrat Eduard Bernstein. And, like Marx, he believed that anti-Semitism would ultimately die out with capitalism.35 Yet when it came to the Jews Engels could never fully shake off his own Prussian reflexes.
Whether it was down to his ‘Jewish cunning’ or not, Lassalle's intellectual legacy certainly had a significant impact on German working-class politics. ‘Izzy has given the movement a Tory-Chartist character, which it will be difficult to get rid of,’ Engels regretfully noted after his death.36 This was especially dangerous given the direction the German state was heading: Bismarck, it seemed, had learned much from his old opponent Napoleon III and was now successfully imitating the Bonapartist template of populist authoritarianism, managed elections and a political equilibrium which allowed ‘the real governmental authority’ to lie ‘in the hands of a special caste of army officers and state officials’.37 Bismarck's reverence for state absolutism was now camouflaged under public opinion and an extended suffrage – a trap which Lassalle and his followers seemed content to blunder straight into.
Thankfully, Marx and Engels thought they had their own party to counter Lassalle's Bismarckian appeasement. Germany had come late to the Industrial Revolution but, during the second half of the nineteenth century, its now unified economy did all it could to catch up. Huge rail, road and naval infrastructure projects along with major advances in the chemical, metal and electrical industries saw an unprecedented expansion in the urban working class. This was the age of the booming Ruhr valley: of factory production lines, vast foundries, cartels and joint-stock companies backed by the big four banks – Deutsche, Dresdner, Darmstadter and Disconto-Gesellschaft. With mass industrialization and urbanization came new support for radical politics in the labourers’ overcrowded quarters of Berlin, Munich, Hamburg and Frankfurt. In 1869 these constituencies gained a voice in the Social-Democratic Workers’ Party founded at Eisenach by August Bebel and Wilhelm Liebknecht. As still patriotic Germans, Marx and Engels were enormously proud of the Eisenach party, regarding it as the most authentic, practical realization of the International ideal. Unlike the sloth of the English working-class movement, the confusion of Proudhonism amongst the French and Belgians, and the Bakuninist plague which infected Spain and Italy, the Germans held true to scientific socialism. Yet the founding fathers were never slow to point out where they thought the Eisenachers were going wrong – and they tended to give Liebknecht a particularly hard time for the various compromises which the management of a democratic party entailed. Their criticisms reached a climax in 1875 when, at a meeting in Gotha, Liebknecht took the Eisenachers into alliance with Lassalle's General Association of German Workers under the banner of the Socialist Workers’ Party of Germany (Sozialistiche Arbeiterpartei Deutschland).
In Regent's Park Road Engels was incredulous. While Marx penned his withering Critique of the Gotha Programme highlighting all the Lassallean fallacies which the Eisenachers had fallen for, Engels castigated Bebel for dropping the commitment to trade unionism, accepting the flawed notion of an ‘iron law of wages’ and signing up to the Utopian nonsense of eliminating social and political inequality. Engels, the bohemian aficionado of the high life, was never a Leveller: ‘living conditions will always evince a certain inequality which may be reduced to a minimum but never wholly eliminated. The living conditions of Alpine dwellers will always be different from those of the plainsmen. The concept of a socialist society as
a realm of equality is a one-sided French concept…’ With this wretched kowtowing to Lassallean doctrine, Liebknecht had shown signs of ideological freelancing and Engels pompously warned Bebel that ‘Marx and I could never recognise a new party set up on that basis and shall have to consider most seriously what attitude – public as well as private – we should adopt towards it. Remember that abroad we are held responsible for any and every statement and action of the German Social-Democratic Workers' Party.’38 Once again, they directed most of their ire towards Liebknecht for his failure to consult beforehand and desperate ‘anxiety to achieve unity and pay any price for it’.39
Bismarck was far more perturbed by this spectre of organized, unified socialism, and two hapless attempts on the life of the Emperor Wilhelm I provided just the excuse he needed in 1878 to introduce the illiberal Sozialistengesetz prohibiting all organizations ‘that seek by means of Social Democratic, Socialistic, or Communistic activities to overthrow the existing political and social order’. While individual social democrats were free to stand for election, the anti-socialist law prohibited all assemblies and publications, outlawed trade unions, saw party members summarily dismissed from jobs and declared the SAPD organization illegal. Inevitably, this torrent of state persecution served both to radicalize party members and engender a highly effective underground organization. While Engels expressed deep sympathy for the jailed leadership and their families (whom he supported financially), he was delighted by the political consequences of this excessive clampdown, which he hoped would move the party leftward from its Gotha compromises. ‘Mr Bismarck who, for seven years, has been working for us as if he was in our pay, now appears incapable of moderating his offers to speed up the advent of socialism,’ he wrote to his Russian correspondent Pyotr Lavrov.40 To Engels's mind, Bismarck had entered the zone of Zugzwang – the situation in chess where any move only hastens the player's own demise. ‘In Germany we have fortunately reached the stage when every action of our adversaries is advantageous to us,’ he told Bebel, ‘when all historical forces are playing into our hands, when nothing, absolutely nothing, can happen without our deriving advantage from it… Bismarck is working for us like a real Trojan.’ The first fruits fell at the October 1881 elections when the socialists secured 312,000 votes in predominantly urban areas, translating into twelve Reichstag seats. ‘Never has a proletariat conducted itself so magnificently,’ declared Engels. ‘In Germany, after three years of unprecedented persecution and unrelenting pressure, during which any form of public organization and even communication was a sheer impossibility, our lads have returned, not only in all their former strength, but actually stronger than before.’41 Gratifyingly, the German working class had finally reclaimed the proletarian leadership from the French and English.
But even this stunning advance had its risks as electoral success allowed political power to gravitate upwards from the militant grassroots to a legitimized, often middle-class parliamentary leadership dangerously susceptible to reformist ideas. Engels, who always contended that ‘the masses in Germany have been far better than their leaders’, now combed every announcement from the Reichstag group for signs of weak-willed opportunism. Issuing from the Regent's Park Road presidium came sometimes daily instructions about how to vote on individual bills (from protective tariffs to the minutiae of the Schleswig-Holstein canal – which Engels decreed too shallow at nine metres) or what political stance to take on any given controversy. It was extreme micro-management as Engels remained ever alert to ‘the voices of the representatives of the petit-bourgeois, terrified lest the proletariat, impelled by its revolutionary situation, should “go too far” ’. With half an eye to covering his own bourgeois tracks, Engels was adamant that class struggle had to remain fundamental to the movement: ‘The emancipation of the working class must be achieved by the working class itself.’42 And so he and Marx were greatly relieved when, at a clandestine 1880 Congress of Social Democracy in Wyden Castle in Switzerland, the SAPD rowed back from its Reichstag reformism and recommitted itself to the revolutionary struggle ‘with all means’
Engels spent a large part of the 1870s concerned with his other means: the liquid cash and stock capital he had taken out of Ermen & Engels on retirement. In the process, he metamorphosed into one of the stock villains of vulgar Marxism – the rentier. He did so at a highly propitious time as the British economy mirrored Engels's move from north to south with the City of London and its financial services sector beginning to assert themselves from under the industrial canopy. Economic historians have come to call the last third of the nineteenth century ‘the Great Depression’, as agriculture suffered and prices fell. But for those with a regular income, it was boom time. ‘We here are now in the full swing of prosperity and thriving business,’ Engels wrote in Der Volkstaat in 1871. ‘There is a surplus of capital on the market and it is looking everywhere for a profitable home; bogus companies, set up for the happiness of mankind and the enrichment of the entrepreneurs, are shooting up out of the ground like mushrooms. Mines, asphalt quarries, horse-drawn tramways for big cities, and iron works seem to be the most favoured at the moment…’43 Engels was living in the louche London of Trollope's coruscating novel The Way We Live Now – the London of joint-stock capitalism, a roaring exchange, Mansion House and a cast of international financiers beautifully embodied in the baroque crook Augustus Melmotte, who ‘could make or mar any company by buying or selling stock, and could make money dear or cheap as he pleased’. It was the London of an army of black-coated clerks populating the endless offices of commerce, banking, shipping, insurance and real estate. In Marxian terms, the British economy was on its way towards a more concentrated form of monopoly capitalism. ‘Floating” – transforming large private concerns into limited companies – has been the order of the day for the last ten years and more,’ Engels reported in 1881. ‘From the large Manchester warehouses of the City to the ironworks and coalpits of Wales and the North and the factories of Lancashire, everything has been, or is being, floated.’44 And this surplus capital was soon at work around the world. Imperial London became ‘the clearing house of the world’, funding railways in Peru, trams in Lisbon, mining in New South Wales and tea plantations in India. Between 1870 and 1914 the United Kingdom was responsible for 44 per cent of global foreign investment (compared with 19.9 per cent by France and 12.8 per cent by Germany) with an ever-increasing proportion heading to major infrastructure projects and extractive industries in the Empire. ‘Britain was becoming a parasitic rather than a competitive economy,’ in the words of Eric Hobsbawm, ‘living off the remains of world monopoly, the underdeveloped world, her past accumulations of wealth and the advance of her rivals… The prophets already – and not incorrectly – predicted the decline and fall of an economy symbolized now by the country house in the stockbrokers' belt of Surrey and Sussex and no longer by hard-faced men in smoke-filled provincial towns.’45
Primrose Hill was some way from Surrey, but Engels was a part of this colonial-capitalist, stockbroking nexus. The contradictions had not ended with his last day at the mill. ‘I, too, have stocks and shares, buying and selling from time to time,’ Engels told Eduard Bernstein, entering the rather surreal debate as to whether the German social democrats' paper in exile, Der Sozialdemokrat, should run a finance page. Engels, like Marx, preferred to peruse the Economist. ‘I am not so simple as to look to the socialist press for advice on these operations. Anyone who does so will burn his fingers, and serve him right!’ Engels's own portfolio of shares was lucrative and extensive: his probate at death revealed a stockholding valued at £22,600 (some £2.2 million in today's money) with shares in the London and Northern Railway Company, the South Metropolitan Gas Company, the Channel Tunnel Corporation Ltd, and even some imperial investments – notably the Foreign and Colonial Government Trust Company.46 Luckily, investment in the stock exchange was deemed ideologically sound. ‘You are right in describing the outcry against the stock exchange as petit-bourgeois,’ he informed Beb
el in language approaching a Papal bull. ‘The stock exchange simply adjusts the distribution of the surplus value already stolen from the workers…’ In fact, as the stock exchange tends to centralize and concentrate capital, it serves an essentially revolutionary purpose, ‘so that even the most stupid can see where the present economy is taking them’. One had to look beyond its obvious rascality to realize that there was no shame in living indirectly on the exploitation of others: ‘one can perfectly well be at one and the same time a stock exchange man and a socialist and therefore detest and despise the class of stock exchange men’. As we know, it was a contradictory existence with which Engels had long been familiar. ‘Would it ever occur to me to apologise for the fact that I myself was once a partner in a firm of manufacturers? There's a fine reception waiting for anyone who tries to throw that in my teeth!’47
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