Karl Korsch, Karl Marx 1938

ART II: POLITICAL ECONOMY

1. Marxism and Political Economy
2. From Political Economy to “Economics”
3. From Political Economy to Marxian Critique of Political Economy
4. Scientific versus Philosophical Criticism of Political Economy
5. Two Aspects of Revolutionary Materialism in Marx’s Economic Theory
6. Economic Theory of Capital
7. The Fetishism of Commodities
8. The “Social Contract”
9. The Law of Value
10. Common Misunderstandings of the Marxian Doctrine of Value and Surplus Value
11. Ultimate Aims of Marx’s Critique of Political Economy

Chapter 1. Marxism and Political Economy

Marx’s materialistic investigation of bourgeois society is based from the very beginning on a recognition of the cardinal importance of Political Economy. While but a few weeks before, he had written to his bourgeois-democratic friend Ruge, the characteristic words that the critic of modern society may start from “any given form of theoretical and practical consciousness” and that more especially the “political State” expresses within its form all social struggles, needs, and truths sub specie rei publicae, he now definitely transcended that intermediate stage of his materialistic moulding process by the conclusion that “the anatomy of civil society must be sought for in Political Economy.” Nor was this merely an advance toward a better method of scientific investigation. The theoretical transition to Political Economy coincided with a practical transition from the Jacobinic bourgeois revolution, which had aimed at solving the social problems and needs of the working classes sub specie rei publicae, to the independent action of the modern proletariat, which is resolved to seek for the specific roots of its oppression and for the specific path to its emancipation in Political Economy. “The economic emancipation of the working class,” say the Rules of the Working Men’s International Association drawn up twenty years later by Marx, “is the great end to which every political movement is subordinated as a means.”

The theoretical programme of the youthful Marx, to “seek for the anatomy of civil society in Political Economy,” does not, however, mean a simple acceptance of the accomplished results of the preceding period of economic science. Political Economy was, historically, the new science of the bourgeoisie, brought forth by the rising industrial class in its revolutionary fight against feudalism. Now, in a new historical epoch, that revolutionary struggle has come to an end. The bourgeois class rules, both politically and economically, in present-day society. Thus, Political Economy, dealing with the material foundation of the existing bourgeois State, is for the proletariat first and foremost an enemy country. Nor does it lose this character by the fact that parts of the ground held by its outposts are being occupied by the theoretical vanguard of the proletariat. The first task for the representatives of the new revolutionary class in this field is, therefore, to reconnoitre the enemy’s position.

In striking contrast to the illusions cherished by many socialists in their time and up to the present day, Marx and Engels never accepted the idea that this same economic science which the proletarian class inherited from the bourgeoisie, could now, by a mere elimination of its inherent bourgeois bias and a consistent working out of its own premises, be transformed into a theoretical weapon for the proletarian revolution. Wherever such an opinion was expressed by the first socialist Ricardians of 1820-30, by the Owenists, or by Proudhon, Rodbertus, and Lassalle, they declared it an “economically false theory,” an idealistic application of morality to economics and in its practical consequence a reactionary Utopia. They pointed out that the equality-idea resulting from the epoch of bourgeois “commodity-production” and expressed in the economic “law of value” is still bourgeois in its character. It is therefore only ideologically incompatible with the exploitation of the working class through capital, but not in actual practice. The socialist Ricardians imagined that they could attack the economists on their own ground and with their own weapons. On the basis of the economic principle that “it is Labour alone which bestows value,” they wanted to transform all men into actual workers exchanging equal quantities of labour. To one of the best of them, Bray, Marx replied that “ce rapport égalitaire, cet idéal correctif qu’il voudrait appliquer au monde, n’est lui-même que le reflet du monde actuel, et qu’il est par conséquent totalement impossible de reconstituer la société sur une base qui n’en est qu’une ombre embellie. À mesure que l’ombre redevient corps, on s’aperçoit que ce corps, loin d’en être la transfiguration rêvée, est le corps actuel de la société.” Instead of deriving demands of socialism and communism, in an idealistic and Utopian manner, from the laws of bourgeois economics, Marx and Engels formulated the materialistic conclusion that “according to the laws of bourgeois economics, the larger part of the product does not belong to the workers who have produced it.” In order to obviate this state of affairs one must not apply a different interpretation to bourgeois economics but rather, through a real change in society, bring about a practical situation in which those economic laws will cease to hold good and thus the science of economics will become void of contents and ultimately vanish altogether.

Political Economy then, according to Marx, is a bourgeois science. This applies even to Marx’s own contributions to the further development of its main doctrines. Marx fought to the end against the mistaken idea that his economic analysis of Value applied to any other than bourgeois conditions. Even the Marxian doctrine of Value and Surplus Value is only the final outgrowth of a conceptual process which, in content, had been almost completed by the classical bourgeois economists. Friedrich Engels, immediately after Marx’s death, made it quite clear, and the posthumous publications from Marx’s papers exhaustively proved, that Marx at no time in his life countenanced the opinion that the new contents of his socialist and communist theory could be derived, as a mere logical consequence, from the utterly bourgeois theories of Quesnay, Smith, and Ricardo.

How then are we to understand the leading part which, in spite of all this, Political Economy played in the genesis of Marx’s theory of society, and maintained through all its subsequent developments? This in itself shows again the superiority of the materialistic standpoint. Marx kept aloof from that superficiality by which many revolutionary theorists in his time and today imagined that by a mere theoretical effort, wishful thinking, or a simple “change of heart” they could ignore such objective facts as those investigated by economic science – the very fundamentals of all existing social relations. The modern working class in its independent social movement inevitably starts from the historical results of the bourgeois revolutionary movement. At the same time this bourgeoisie and the new mode of production it brought forth, its State and all its other institutions and ideas, are the very antagonist from whom the proletariat must completely separate its own action and whom it must ultimately conquer in a decisive battle. So must the proletariat, in evolving its own revolutionary thought, start from the results achieved by bourgeois economic investigation. It cannot skip over, in its own materialistic theory, the definite forms of economic science existing historically in the present epoch any more than it can neglect, in its revolutionary practice, the existence of the modern capitalistic mode of production. Only by means of a practical and theoretical action persistently continued for a considerable time through several intermediate phases, can the proletariat carry through the necessary change in the existing conditions of material production and thereby ultimately surpass the social forms of consciousness which are at present bound up with those conditions.

Long before he applied this consequence of his materialistic principle to economic science, Marx had applied it to philosophical thought in the battles waged in the forties between the various groups of young Hegelians, on the question of the impact of “philosophy” (i.e., Hegelian philosophy) on the imminent political revolution. He had opposed the attitude of the philosophical party which derived the revolution immediately from the principles of philosophy just as much as he had opposed that of the anti-philosophical party which turned its back on philosophy. Just as he had done in his previous criticism of philosophy, so now in his criticism of Political Economy, Marx seemed to call out to the socialistic Ricardians, etc., who wished to derive socialism from bourgeois economics: “You cannot realize Political Economy (in practice) without doing away with it (by theoretical action)”; and to the “pure” historians, “pure” sociologists, “pure” revolutionary activists, who ignored all economics, “You cannot do away with Political Economy (by practical action) without realizing it (in theory).”

Chapter 2. From Political Economy to “Economics”

Classical Political Economy, as distinct from the adulterations of the “vulgar” economists of the 19th century and from the more recent attempts at an entirely new start, originated historically as an integral part of the new science of civil society, created by the bourgeoisie in its revolutionary struggle to establish this very society. It formed a realistic complement to the great philosophical, political, juridical, moral, aesthetic, and psychological upheaval, through which during the period of the so-called “Enlightenment” the ideological representatives of the rising bourgeois class first expressed the new bourgeois consciousness which corresponded to the change in the real conditions. Even in its purely theoretical form, the new science of Political Economy during this early period, as well as in the first great systems of the Physiocrats, was bound up with the whole of the new bourgeois social science in a natural and ingenuous unity. It is true that Adam Smith separated his economic Inquiry into the Nature and Causes of the Wealth of Nations from the “general principles of law and government, and of the different revolutions they have undergone in the different ages and periods of society,” as discussed in his academical lectures, just as he had already split another part from that bulky whole in his earlier Theory of Moral Sentiments. Yet in his economic work he embraced once more, along with the fundamental economic relations, the whole of the new political and social conditions arising from the development of industry, exchange of commodities, and the division of labour within the new bourgeois order of society. Even in the work of Ricardo, in which the classical epoch of Political Economy reaches its close, this “organic” connection between Political Economy and the whole of society is preserved. At the same time, it can be said that the system of Ricardo which, as a true “anatomy” of civil society, formally restricts itself to an ingenious dissection of the material foundations – the skeleton, as it were, of the social body – shows the first symptoms of an impending disintegration. Still more does the subsequent theoretical development of bourgeois economics reveal the inevitable results of the change which during the ensuing period was to strip the bourgeois “production-relations” more and more of their original positive functions as incomparable stimulators and encouragers of the productive forces inherent in the new, industrial society.

This historical process, through which the hitherto progressive forms of the bourgeois production-relations were finally transformed into so many fetters, has since, in spite of temporary interruptions, asserted itself with ever increasing strength. It finds its economic expression in those periodically recurring dislocations of all existing proportions of capitalist production which, since their earliest characteristic occurrence in the first modern economic crisis of the year 1825, have assumed ever greater dimensions and ever more acute forms during the whole of the following century, challenging at their culminating points the whole existence of bourgeois society. There is no need to deal in this connection with the manner in which the curve of “social unrest” during the last hundred years continuously reflected the course of economic development, if not exactly at each point yet in its entire movement. The only point to be discussed here is the difference which prevails between the repercussions on the labour movement of the periodic business cycle, and those more permanent alterations within the whole economic system of modern society which have been described by recent explorers as a “structural change.” While the recurring phases of the “normal” industrial cycle are followed by corresponding ups-and-downs in class warfare, there is no such “cyclical” rhythm discoverable in the underlying secular movement. In spite of the intervening longer periods of an apparently undisturbed upswing and prosperity brought about by the temporary defeats, iron-handed oppression, and effective crushing of all existing workers’ organizations, the proletarian struggle against the existing capitalist order of society has grown from its first elementary beginnings to embrace ever greater numbers, and to assume ever more efficient, more conscious, and more threatening forms. It has become a veritable war between the oppressing and the oppressed classes, a war conducted on many fronts simultaneously, which sometimes breaks out in open revolts. The first World War, 1914-18, and the first wave of the proletarian world revolution released by the war, challenged the very premises on which during the “restful” intervals of this restless development, the bourgeois economists, and in their wake the moderate socialists, had based their “historical refutation of the Marxian prognoses.” The first shock was followed by even stronger charges. The protracted economic crisis and the new series of wars and civil wars terminating the short-lived momentous upswing which had resulted during the 20’s from the first apparent recovery of post-war capitalist equilibrium, reflected once more the utter absence of cohesive forces within the present economic system, and finally refuted the illusions by which the economic optimists had conjured up for themselves a complete abolition of crises in “organized capitalism,” and of all class oppositions and class struggles in the “democratic” or, more recently, in the “totalitarian State.” Even such things as machinery and money, formerly so undoubtedly good and useful, have been robbed of their virtue as forces productive of social wealth and turned into forces destructive of social existence. The political and intellectual superstructure of society follows the change in its material conditions. The democratic forms of the State, the liberal ideas of the ascending phase of capitalist commodity production, have everywhere begun to totter. One after another of the safety-valves of the economic and political system is suspended. Emergency and martial law are the rule of common law. War and civil war on a world-wide scale have become the “normal” form of existence of present-day society.

A minor consequence of this universal destruction of the positive social function of bourgeois production-relations manifests itself in the gradual decay of the encyclopaedic spirit which had been so conspicuous during that earlier period when Political Economy embraced the whole of the social progress of the community. It is only from a formal point of view that Ricardo’s economic system can be regarded as an advance on that of Adam Smith. While Smith had worked out his ideas on an epic scale and, little troubled by logical contradictions, developed the subject matter of Political Economy to a vast totality, Ricardo logically subordinated the whole of the bourgeois system to a unique principle, tracing back all its economic laws to the definition of value in terms of labour-time. The theoretical satisfaction offered in Ricardo’s Principles (and more especially in its first two chapters which, as is demonstrated by Marx, virtually contain the whole book) by their originality, unity of the basic view, simplicity, concentration, profundity, novelty, and pithiness, is purchased at the expense of a loss of substance foreshadowing an impending emaciation. The generality aimed at by Ricardo is only the generality of scientific form; there is nowhere in his work, as there had been in that of Smith, the urge of a wider political aim. Its historical function consisted in summing up the great positive achievements of the classical period of bourgeois economic science and in the formal conclusion of an actually completed epoch.

While thus in Ricardo the turn to formalism was historically necessary and, thereby, theoretically justified, the progressive formalistic anaemia of the later period brought none of the great theoretical advantages of which the sceptics and the cynics of present-day “pure” Economics are so proud. They are so convinced of their superiority over the “unscientific” methods applied by the classical economists that they even accept without demur the reproach that their new theoretical science has become a mere plaything, purged of any political significance and of any possibility of application. Following the example of some modern mathematicians, logicians, and physicists, but without in any other respect keeping pace with the achievements of those real sciences, they want to carry on, in a field which cannot otherwise boast of any particular purity, the business of “pure” science, not for any useful purpose but merely “for the greater glory of God.”

The actual outcome of this later development of Political Economy was a gradual decay. At the same rate as under the impact of the changed conditions of bourgeois production, bourgeois economic theory abandoned its original comprehensive social tendency, it abandoned also its formal scientific qualities, its impartiality, its logic, and fecundity. “From the year 1830 dates the finally decisive crisis.” Henceforth any genuine development of Political Economy was precluded by the real historic development of bourgeois society.

Marxism restored, consciously and on a higher level, the connection between Political Economy and social science which had spontaneously and unconsciously evolved with the bourgeois classicists at an earlier stage. Only for this reason had the science of Political Economy any interest, only thus did it assume its important place in the whole of the Marxian social research. For this reason alone, it appears absurd that so many people should rack their brains to find out why Marx never paid the slightest attention to that “new departure” which, since the middle of the 19th century, is assumed to have been made by an altogether new economic science based on subjective value and the theory of so-called “marginal” utility. Marx did take cognizance of every new word, true or false, which was contributed to any economic question during his lifetime, even by the least important Epigone of classical Political Economy. His adherence to the classicists did not make him neglect the work of another school which, to a certain extent, preceded the theorists of “marginal value” in an attempt to reconstruct economic research by stressing “subjective” value (value in use) rather than classical “objective” value (value in exchange). He did not shrink, though he sighed under the burden, from the task of refuting the many inconsistencies of the leaders of the so-called “kathedersozialistische” school, from Rodbertus to Adolf Wagner. His apparent neglect of the new questions raised by the theorists of marginal utility sprang from an entirely different source. By the very principle of his socio-economic research, Marx was not interested in the thoughts of people who, though still calling their science “Economics,” did not have anything in common with that research into the material foundations of society which had formed had formed the theme of classical Political Economy, any more than he would have been interested in some other auxiliary inquiry into a group of natural and technical facts not particularly important for the historical change of society. An economic doctrine indifferent to its social implications aroused the attention of Marx only when in spite of its purely “theoretical” concern, it afterwards did serve to draw practical application from its purely theoretical contents, and thus, like Duehring’s “socialist” doctrine in the 70’s, found supporters within the ranks of the workers’ movement. This, however, did not take place with the theory of marginal utility until some years after Marx’s death when, in Engels’s phrase, G. B. Shaw and his followers endeavoured to base a plausible kind of “vulgar” socialism upon “Jevons’s and Menger’s use-value and marginal-utility theory,” in order “to build on this rock the Fabian church of the future.” That is why Marx in all his comprehensive criticism of traditional economic theory never considered the theory of marginal utility while, on the other hand, Friedrich Engels, when editing the third volume of Capital, bestowed a critical after-thought upon this newest theoretical attempt, if only in that somewhat curt and deprecatory remark.

Chapter 3. From Political Economy to Marxian Critique of Political Economy

As the revolutionary bourgeoisie had enlightened itself as to the principles of the new industrial society in the new science of Political Economy, so did the proletarian class assert its revolutionary aims in the Critique of Political Economy. This is not a critique of single results of bourgeois economics from within. It is, fundamentally, a critique of the very premises of Political Economy based upon the new standpoint of a social class which, theoretically as well as practically, goes beyond bourgeois economy. It investigates the tendencies inherent in capitalist commodity production which in the course of their further development produce the necessary basis for the economic, political, and ideological struggle of the proletarian class, and which will ultimately overthrow the bourgeois mode of production and advance to the higher production-relations of a socialistic and communistic society.

The Marxian “critique” is not the first appearance of a genuine principle of criticism as a driving force in the development of economic science. Already in the earlier phases of Political Economy the Mercantile system had been criticised by the Physiocrats, the Physiocrats by Adam Smith, and Adam Smith by Ricardo. Nor was that earlier economic criticism a matter of pure theory. Each new phase of the theoretical development implied a new phase in the real historical development of the capitalistic mode of production. There was no clear distinction; in fact, every historical phase was in itself a criticism of the preceding phase. For all that, the actual historical and theoretical “subject” of economic science remained unchanged through all these stages. The bourgeois class in its revolutionary struggle against the obsolete forms of feudal production, could not, and did not, distinguish its particular interests as a class from its general interest in the whole of historical progress. Even after the defeat of feudalism, it could still for a considerable time quite honestly regard itself as promoting the general welfare of society. During this phase Political Economy was even striving to cooperate, with the utmost impartiality, in the solution of the new economic problems emerging from the increasingly unsatisfactory conditions of the real people, that is, the actually working section of the as yet undivided industrial society.

That state of things was profoundly changed by the new historical development which set in with the economic crisis of 1825 and with the great political changes of 1830. Henceforward, the new conditions established within bourgeois society no longer permitted an impartial analysis of the economic principles underlying those conditions. A strictly scientific investigation of social development was possible only from the standpoint of that class whose task in history is to transcend the narrow bourgeois horizon and, ultimately, to do away with classes altogether.

The theoretical system of Ricardo marks the turning point.

The complete impartiality of the genuine scientific investigator which appears everywhere in the work of Ricardo, had seemed miraculous already to his contemporaries. “Mr. Ricardo seemed to have dropped from another planet,” said Lord Brougham. With faultless clarity, this English banker of the beginning of the 19th century, who nowhere goes beyond the boundaries of the bourgeoisie, presented in his system the inherent disharmonies as well as the harmonious and progressive features of the bourgeois mode of production; more particularly he revealed the inevitable opposition arising between the two industrial classes. He declared from the outset that the principal problem in Political Economy is to state the proportions in which the whole produce of society is allotted to each of the three social classes: the proprietors of land, the owners of capital, and the propertyless labourers. Thus “the contrast of class interests, of wages and profits, of profit and rent,” became indeed, as was later stated by Marx, the very “pivot” of Ricardo’s economic investigation.

The position of Ricardo in the history of economic science is precisely analogous to that occupied by Hegel in philosophical thought, just as in a preceding phase the economics of Adam Smith had corresponded to the philosophy of Kant. This analogous historical position appears most clearly in Ricardo’s important contribution to what we have described in an earlier chapter as the “bourgeois self-criticism.” The scientific criticism of the existing capitalistic system, which pervades the economic system of Ricardo, surpasses the occasional comments of the earlier economists on the unpleasant sides of the new bourgeois conditions even more than the earlier philosophical critics had been surpassed by Hegel. While in dealing with Hegel we had to disregard the mystifying form of his statements in order to find out his realistic advance on his predecessors, the superiority of Ricardo’s criticism over that of his forerunners is clear like day. His critical statements not only surpass all previous criticism in their sweeping power of generalization and in the irresistible logic of their reasoning. A more decisive difference appears in their very premises, namely, in the fact that they rest no longer on that naïve faith in the fundamental perfection or the unlimited perfectibility of the new world order, which had prevailed among the economists of the preceding period quite as much as among the philosophers.

Political Economy in its first period had been optimistic and confident to the extent that along with the blessings of the new bourgeois mode of production it could afford to acknowledge their purchase price. “Not for a single moment did it deceive itself as to the birth pains of wealth, but what is the use of crying over historical necessity?” Even for Adam Smith it had still been fairly easy, in his great inquiry into the best possible ways to raise the general wealth of society, to regard the interests of the “inferior order” of the wage-labourers as well as those of the two “superior orders” (profit and rent). He had even endeavoured to oppose the tendency of the newly arrived bourgeoisie to monopolize for itself the advantages won in a common battle and to bring definitely to the front the neglected interests of the common man. He did not thereby endanger, but rather tightened the apparent unity of the two industrial classes which were at that time still busy conquering the last surviving prerogatives of the landed aristocracy. A different situation was faced by Ricardo when in a supplementary chapter added to the third edition of his Principles he did not uphold the favourable view on the effects of machinery which he had expressed in the preceding chapters of his work but which in the meantime had been proved to him by Sismondi to be erroneous both in fact and in theory. While he had then emphasized the “general good” which must of necessity be brought about by “these mute agents which are always the produce of much less labour than that which they displace,” he now carefully re-examined his earlier position. A more realistic consideration of the “influence of machinery on the interests of the different classes of society” led him to the conclusion that

the opinion entertained by the labouring class, that the employment of machinery is frequently detrimental to their interests, is not founded on prejudice and error, but is conformable to the correct principles of Political Economy.

No wonder that the later pseudoscientific apologists of capitalism should denounce him on this count as the Father of Communism. Said a leading American economist in 1848:

The system of Mr. Ricardo is one of discord . . . it tends to foster enmity between classes and nations . . . His book is the right textbook for the demagogue who aims at power through agrarianism, war, and plunder.

All post-Ricardian developments of Political Economy testify to the fact that the historical struggle waged between the progressive industrial class and the obstructive forces of feudal oppression had now been finally superseded by a new revolutionary conflict arising within bourgeois society between the two hitherto united classes produced by modern industry itself – bourgeoisie and proletariat.

The first of the various schools to work out the scientific results of classical Political Economy under the changed historical conditions of the 19th century sprang up immediately after Ricardo’s death. From this school started the attempt with which we have dealt above, to use the Ricardian theory as a weapon against the existing economic system of society and thus to derive anti-bourgeois conclusions from bourgeois principles. But in the main the spokesmen of this new school contented themselves with celebrating the victory of the Ricardian principles over all pre-Ricardian economics in a series of splendid tournaments which were for the most part displayed in scattered review-articles, occasional papers, and pamphlets and were, after long oblivion, rediscovered and recognized in their historical importance, mainly by the endeavours of Marx. This last polemical intermezzo preceding the final collapse of the fighting spirit in bourgeois economic theory – a skirmish resembling, as Marx said, the “Sturm und Drang” period of economic science that had raged in France after Dr. Quesnay’s death, but not more than “Indian summer reminds us of the spring” – covered roughly the decade 1820 to 1830. After that it dragged on in ever weaker manifestations to the Repeal of the Corn Laws in England in 1846 and to the outbreak of a new revolution on the continent in 1848-49.

Another tendency of post-Ricardian economics is represented by a school of pseudoscientific writers who flattened, diluted, and gradually entirely dispersed the theoretical results reaped from the work of classical economists. The theoretical contents of the prolific writings of this school are most aptly, if somewhat cruelly, described by Marx as a mere “vulgarization” of the scientific achievements of Political Economy. The “vulgar” successors of the great classical economists have, indeed, not added any new contribution to that genuine work of discovery by which their scientific predecessors had discerned the inner relations of the modern bourgeois mode of production and thus brought forward the necessary premises for its genetic presentation. Scientific analysis was everywhere replaced by mere conceptual reflection. That simple reproduction of the given external conditions, which for the classicists had been merely one of the constituents of their theory – its “vulgar” element – was now finally set up as a separate existence. Yet this was not the lowest point reached in the gradual decay of a formerly vigorous and vital science. A still more complete loss of scientific character was seen, when later, along with the further development of the real oppositions inherent in the life of bourgeois society, economic science itself split in mutually opposing parts. Bourgeois economists, when no longer confronted with their own internal dissensions, but with a group of socialistic dissenters opposing them from without, promptly threw over all semblance of unbiassed theoretical research. From a mere neglect of the progressive tasks of true science, they turned to a conscious defence of existing bourgeois conditions against the impending socialistic menace embodied in the writings of Sismondi, Owen, Fourier, Saint-Simon. The more the stern outlines of the class strife asserted themselves in the actual development of capitalist society, the more the economists applied themselves to a misrepresentation and, ultimately, to an entire negation of these new historical tendencies. At each further step in the unavoidable development of “class” and “class discord” within reality, they strengthened their desperate efforts to keep these embarrassing topics entirely out of their theoretical picture. They even endeavoured to purge the classical concepts of any such impurities wherever they had already been introduced into economic theory by their great scientific predecessors. Thus bourgeois economists became even incapable of a faithful registration of external facts. By the combined effect of all these self-established obstructions, the “vulgarized” economic theory of the 19th century became poorer and poorer in theoretical content. There is, however, a difference between the earlier stage when, for instance, Say had “vulgarized” Adam Smith, and the latter stage when MacCulloch, Bastiat, and others had “vulgarized” Ricardo. In the earlier phase the “vulgarizers” had found their material as yet unfinished, and thus had been compelled to contribute, though in a diminishing degree, to the solving of real economic problems. In the later phase they dropped all independent theoretical effort and occupied themselves with a mere plagiarizing of the doctrines of Ricardo and with an arguing away of the unpleasant aspects.

The deductions which the socialist Ricardians had been unable to draw, and which the “vulgar” economists had deliberately dodged, were formulated fifty years later by a new school of economic research. The true conclusions of classical Political Economy were drawn by Marx. The “critical” tradition of the classical epoch of Political Economy was revived by the Marxian “Critique” of Political Economy in Capital. This new criticism, however, was more than a transition from a given phase to a further developed phase of economic science. It implied a change of the class which henceforth was to be the historical as well as the theoretical “subject” of all Political Economy. While previous criticisms had for their practical aim a further “development” of the bourgeois mode of production, the Marxian criticism aims at its complete overthrow. “Critique” of Political Economy, then, is the theory of an impending revolution.

Not only Marx and Engels, but all revolutionary Hegelians of the 40’s and 50’s of the last century, had used the word “critique” in this large historical sense. The terminology fell into complete oblivion during the sad period of decline which set in after the collapse of the Chartist movement and the triumph of the counter-revolution in the whole of Europe consequent upon the defeat of the Paris proletariat in June, 1848. Thus a complete abandonment of all revolutionary “critical” tendencies in theory coincided with the abandonment of the last residues of a practical revolutionary tendency. Marx and Engels were the only ones who rescued from oblivion both the practical and the theoretical aspects of a truly revolutionary “critique.”

Chapter 4. Scientific versus Philosophical Criticism of Political Economy

Marx’s approach to Political Economy was from the outset that of a critical and revolutionary student of society rather than that of an economist. Yet a long period was still required before, from the first discovery of Political Economy as an “anatomy of civil society” through a series of intermediate phases, he arrived at his final scientific and materialistic investigation and critique of the whole complex of ideas and facts constituting the historical existence of “Political Economy.”

Marx was already an outspoken revolutionary and even a proletarian socialist at the time when he regarded a really developed “Political Economy” as it existed in England and France as being in itself revolutionary progress, and practically identified the aims of Political Economy with the aims of socialism. He contrasted this modern form of relating industry to the State, or the “world of wealth” to the “world of politics,” with the reactionary form in which that “main problem of modern times” had then begun to occupy the attention of the Germans. “While the problem in France and England is worded Political Economy, or wealth controlled by society, in Germany it is termed National Economy, or nationality controlled by private property.” If we apply to Marx the terms which he, but a short time later, was to apply to a similar standpoint, we may say that during this short first period Marx had criticized politics only from the standpoint of economics, but had not yet extended his revolutionary criticism to the economic basis itself; or that up to now he had merely “criticized Political Economy from the standpoint of Political Economy.”

By the time when he had raised this objection to his first socialist antagonist, Proudhon, Marx himself had adopted an altogether different standpoint which utterly transcended all economic science in an apparently final manner. His economico-philosophical manuscripts dating from this second period, and the economic fragments inserted in a mainly philosophical work written at the same time, anticipated all the critical and revolutionary conclusions which were later embodied in Capital. Yet this new critical insight was couched in a highly philosophical language and appeared much more as a materialistic continuation of the old philosophical struggles among the different Hegelian schools than as a scientific criticism of the contents and premises of Political Economy. Instead of dealing directly with the theories and concepts of the great classical economists, Marx dealt rather with the idealistic, that is, insufficient reconstruction and criticism which these concepts had in the meantime found in the philosophy of Hegel and of the right and left Hegelians of the 1830’s and 40’s. For example, he disposed of the socio-economic phenomenon which he was later to solve in a rational way in his critical exposure of the “Fetishism of Commodities,” by a reference to the then most fashionable Hegelian term of “human self-alienation.” He summed up his criticism of Proudhon in the sentence: “Proudhon conquers economic alienation only within the bounds of economic alienation.” In the same manner his criticism of other fundamental economic phenomena started from the assumption that “Hegel takes the position of modern Political Economy” and that, therefore, a materialistic exposure of the idealistic shortcomings of Hegel’s philosophical criticism of the economic terms is equivalent to a final refutation of Political Economy itself.

Marx began to free himself from the remaining vestiges of his former philosophical creed by a comprehensive criticism of all post-Hegelian philosophy. In this he was joined by Engels. As a first result of their life-long cooperation, which after some more or less frustrated earlier attempts was now really beginning, Marx and Engels during the next two years worked out in detail the contrast prevailing between their own materialistic and scientific views and the various ideological standpoints represented by their former friends among the left Hegelians (Feuerbach, Bruno Bauer, Stirner) and by the philosophical belles-lettres of the “German” or “true” socialists. Thus, they finally broke with what Marx later called their “former philosophical conscience.” From this thoroughly changed standpoint Marx now cruelly criticized the somewhat bewildering manner in which his former philosophical criticism of Political Economy in the meantime had been further worked out by Proudhon. He showed that Proudhon did not treat the economic categories as theoretical expressions of historical conditions, corresponding to a definite stage in the development of material production, but as “pre-existing eternal ideas,” and thus ultimately fell back on the standpoint of bourgeois economics. Such criticism of Proudhon’s philosophical mystification of economic concepts was undoubtedly justified. But Marx’s new anti-philosophical tendency was now so strong that, instead of supplanting Proudhon’s bad philosophy by a better and more scientific criticism of Political Economy, he rather confronted Proudhon’s unscientific criticism with the science of Political Economy itself, i.e., with Ricardo’s theory of value. Thus he no longer reproached Proudhon for not having passed critically beyond the narrow bounds of economic science. He now reproached him for sharing, as an economist, the “illusions of speculative philosophy” and for not yet having entered the realm of a really scientific Political Economy.

Only with the next stage of this long and somewhat circuitous development do we reach the period, during which Marx finally worked out his own critical economic theory which is, at the same time, the basic part of his materialistic theory of the historical development of society and of the proletarian revolution. The first mature fruit of this new stage is contained in the masterly lectures which Marx delivered to the German Workers’ Educational Association at Brussels in 1847 and later published, in a revised form, in his own revolutionary paper during the 1848 revolution. Outline and contents reveal that we have here the first fragmentary statement of that comprehensive exposition of the “economic conditions underlying all present-day class wars and national struggles,” which, later, after being further worked out and many times entirely recast was to appear as Das Kapital. The most conspicuous difference is that Marx in the earlier work does not yet start from the analysis of “commodities” in general but from a particular kind of commodity – wage-labour, and from the opposition between the two main classes of modern capitalistic society which directly springs from the appearance of that commodity. We find, moreover, in this first scientific exposition the striking description (pivotal for all subsequent developments and unsurpassed, in trenchant power, even by Marx’s own later formulae) of “capital” itself, which is defined as not being a relation between men and nature, but as a relation between man and men based on a relation between man and nature – a specific historic form of a social relation arising and decaying with the rise and decay of modern industrial or “capitalistic society.”

The working out of this first scientific exposition of Marx’s revolutionary criticism of Political Economy was interrupted by the outbreak of the February Revolution, just as in a later period of world history, Lenin’s presentation of “The Marxian Doctrine of the State and the Task of the Proletariat in the Revolution” was interrupted by a situation calling for the performance of that very task.

After the final defeat of the abortive European revolution of 1848-49, Marx made the most of the long years of involuntary leisure which were forced upon him as an exile in London, by making “an entirely fresh start” in his economic studies. The ultimate form of his materialistic theory, which resulted from that new and prolonged period of economic and social research, is at the same time Political Economy and a criticism of Political Economy. It works out the classical system of bourgeois economy and ultimately transcends all phases and forms of bourgeois economy. It shows the most general ideas and principles of Political Economy to be mere fetishes disguising actual social relations, prevailing between individuals and classes within a definite historical epoch of the socio-economic formation.

Chapter 5. Two Aspects of Revolutionary Materialism in Marx’s Economic Theory

There appears in the successive phases of Marx’s theory, besides the main line of a continuous growth of the critical revolutionary standpoint, another line of development which, to a certain extent, runs contrary to the first. Hand in hand with increasing stress on a strictly materialistic and scientific approach, goes a greater emphasis on economic theory itself, as against a mere critical attack on its philosophical, historical, and practical premises. It seems as if Marx during the further study of the vast unexhausted material accumulated during the classical epoch of Political Economy that he found heaped up in the vaults of the British Museum, was more and more strongly impressed by the lasting significance which the scientific results of classical Political Economy were bound to have for the new revolutionary class, for a really materialistic theory of bourgeois society, and for a practicable way to its revolutionary overthrow. Just as the tremendous depression and stagnation following the defeat of the Paris workers in 1848 had imposed upon the materialistic investigator a long period of leisure for his ever-expanding, ever-deepening economic studies, so at the same time many revolutionary impulses within the actual workers’ movement were forcibly repressed in their genuine practical function. A new stage of development seemed to be opened for Capitalism with the discoveries of gold in California and Australia – discoveries which attracted the most active members of the working class and thus further paralyzed even the faintest attempts at recovery within the European revolutionary movement. All those historical changes were reflected in the later development of Marx’s revolutionary theory. The social revolution of the proletariat was now mainly represented as a necessary development of society, during which capitalistic production by the working of an inevitable economic law brings forth its negation with the inexorability of a natural process. He did not for this reason commit himself to the so-called fatalist tendency “discovered” over and over again in some of Marx’s phrases by the later bourgeois critics and by their supporters within the labour movement. A closer investigation reveals that even in that gloomiest period, both of the proletarian movement and of his own career, Marx kept himself far away from any fatalism. Still, it is a definitely changed pattern of revolutionary action which was henceforward sketched out by the materialistic theory for the historical movement of the workers’ class. The question as to whether that change resulted in a strengthening or a weakening of the revolutionary movement can only be answered by taking into account the historical circumstances prevailing at the time, or rather, through the entire historical period. We merely note that the new phase of Marx’s revolutionary science and the increased importance which was now assigned to economic theory within its frame, arose from a particular historical situation and suggested a form of behaviour adapted to that particular situation. Marx’s materialistic theory, grounded on firm economic foundations, seemed to point out a new way to the workers, who had now passed the period of their first Utopian enthusiasm and spontaneous aggressive activity. Though this new way might not ensure a quick and easy advance to victory, nor even a direct approach to decisive battles, yet in comparison with the meagre chances of the earlier period, it afforded a distinctly better opportunity, nay even a practical certainty of success.

This element of disillusionment and dearly-bought sobriety which is inherent in the later phases of Marx’s “materialism” and is largely responsible for the tremendous effect which Marxism was to exert upon the workers’ movement during the ensuing historical period, was produced by the historical conditions of the 50’s. It is, at the same time, both historically and theoretically connected with another and much more general chain of historical events. The proletarian revolution of the 19th century, which so far had found its most powerful and most conspicuous theoretical expression in the revolutionary materialism of Marx, appears, under a secular aspect, as being itself a mere second phase within the whole of the modern revolutionary movement. Thus it shares, to a certain extent, the more general “disenchantment” which after the conclusion of the great French Revolution was first proclaimed by the early French theorists of the counter-revolution and Romanticists. This idea of disenchantment has, in fact, exerted a considerable influence upon Marx mainly through Hegel, and has thus directly entered into the “materialistic” Marxian theory of the modern workers’ movement. Nay, more, we may go still further back and find within the materialistic theory of the proletarian revolution some traces of the revolutionary tradition of the Jacobinic Convention of 1792-94. This particular phase of the French revolution which was afterwards exalted over and over again by Marx, Engels, and Lenin as a model of the highest political sagacity and energy, had, likewise, been a “second” and sobered phase in contrast to the exuberant and illusionary phase of 1789-92.

On all these grounds the Marxian materialistic and economic theory bears the specific characteristics of a theory of the second phase of the proletarian revolution, and has actually made its first entrance in all countries where it became the dominant revolutionary theory at the very time when an analogous historical situation had arisen in that particular country. Even in Russia, where revolutionary Marxism was to make world history by a first great victory of its principle, similar historical circumstances accompanied its reception. The revolutionary social democratic, i.e., “Marxist,” principle was inaugurated in Russia since 1883, according to the testimony of the best authority on the subject, mainly by a pamphlet of Plechanov which, under the heading Socialism and Political Struggle, endeavoured to “open up a new way for the defeated revolutionary movement through which it could secure for its cause a certain, if not immediate, victory.” Instead of following by a conscious and violent action the model set by the preceding generation of Russian revolutionaries, it was to rely on the socio-economic process of development which would “slowly but unavoidably undermine the old régime” and through which the Russian working class “in an historical development proceeding just as inexorably as the development of capitalism itself,” would finally “deal the death blow to Russian absolutism” and would then “join, as an equal member, the ranks of the international proletarian army.”

In a similar way, Marx and Engels themselves upon several occasions expressed the idea that the different degrees of “maturity,” or the preparedness of the workers’ movement in various capitalistic countries to accept the Marxian materialistic theory, more or less depended upon the experience gained by each section of the workers concerned during a preceding phase of Utopian illusions and immediate revolutionary attempts. This assumption of two definite phases, one “Utopian,” the other “scientific,” through which every modern labour movement must pass in its historical development, was finally stated by Friedrich Engels in his well-known pamphlet on The development of Socialism from a Utopia to a Science. Since its first appearance in France, in 1880, this pamphlet was spread under this and under various other titles in large editions throughout the world and became as significant for the various Social-Democratic Movements preceding the World War, as have been, for other historical phases of the modern workers’ movement, The Communist Manifesto of 1848, Marx’s Address and Rules of the Working Men’s International Association of 1864, and Lenin’s pamphlet on State and Revolution of 1917.

Whatever the reasons, there is no doubt that Marx, during his later development, linked himself more and more closely with the scientific results of classical Political Economy. The Marxian “Critique” as contained in the second and third books of Capital (which after his death were edited by Engels), and even in the first book edited by Marx himself, not infrequently gives the unwary reader the impression of being no longer directed against the whole of the preceding bourgeois economic science, but only against those superficial and apologetic forms into which the truly scientific statements and concepts of the great classical thinkers had degenerated with the post-classical or “vulgar” economists. Yet this is by no means the real significance of Marx’s economic and social theory. It is easy to clear up some ambiguous statements by reference to those sections of the first Chapter of Capital in which Marx stated with the utmost precision the difference between his critical economic theory and the doctrines presented by even the greatest and most advanced thinkers of the classical epoch of bourgeois Political Economy.

Chapter 6. Economic Theory of Capital

In our presentation of the economic theory of Capital, we shall confine ourselves to one or two results of the Marxian teaching, extremely abstract in appearance, which include, in our opinion, the revolutionary kernel of the Marxian theory and thus constitutes its fundamental and epoch-making importance. It is this, in fact, which explains why the teaching of Marx has gained and retained, for almost a century, the active support of millions of revolutionary workers in all parts of the world, and which even today forces from the most bitter opponents of the proletarian class movement an unwilling tribute, in that they announce as the aim of their reactionary and counter-revolutionary endeavours – War against Marxism.

Marx himself, in a letter which he wrote to Engels soon after the appearance of Capital, designated as the “three fundamentally new elements” of his book, the following:

(1) that in contrast to all earlier economics which from the outset had dealt with the detached fragments of surplus value in their fixed forms of Rent, Profit, Interest, as given entities, he first treated the general form of Surplus Value, in which all those elements are still comprehended in an undivided unity like the uncrystallized components in a chemical solution;

(2) that, without exception, economists had missed the simple fact that if a commodity is the sum of the “value in use” and the “value in exchange,” the labour entailed in the production of the commodity must possess the same twofold character, while the mere analysis for “labour sans phrase,” as in Smith, Ricardo, etc., must inevitably stumble upon something inexplicable. This is indeed the whole secret of the critical conception;

(3) that for the first time wages are shown to be an irrational manifestation of some other relation hidden behind them.

All these innovations are of decisive importance with regard to the ultimate aim of the Marxist theory, the critical transformation of economics into a direct historical and social science dealing with the development of material production and of the class struggle. That goal, however, is not reached by an immediate disintegration of economics as a particular form of knowledge but by a further theoretical development which brings into relief the inherent contradiction between the economic categories and principles and the actual facts which had hitherto been presented in their guise. While Marx seems merely to proceed with the work begun by the great bourgeois economists, his further development of their theories is guided in every case by a definite critical purpose. A more refined, more comprehensive, more thorough, and more consistent analysis serves to advance the traditional economic concepts and theorems to that point where the practical reality behind them, i.e., their historical and social contents become tangible and subject to a critical attack.

Thus the Marxian definition of value in terms of labour differs from the classical definition not by its conceptual form but rather by a closer connection with the underlying social conditions. Similarly, the advance made by the famous Marxian doctrine of surplus value, as stated by Marx himself, is new only because of the more comprehensive synthesis, by which he reduced to a common denominator the various phenomena of profit, interest, and rent as described by the classical economists. Nor does the new Marxian definition of wages, not as the “price of labour” but as the price of labour-power, amount to a major scientific discovery since the best classic writers, and, indeed, Marx himself in his earlier period had already applied the former term in exactly the same sense which was later more fully expressed by the more elaborate description. Both these apparent technicalities and, in fact, the whole of the Marxian improvements upon classical economic theory are important, not for their purely formal advance over the classical concepts, but for their definite transfer of economic thought from the field of the exchange of commodities and of the legal and moral conceptions of “right” and “wrong” originating therein to the field of material production taken in its full social significance. For example, the economic concept of a surplus value existing in the form of goods and money and competed for by its rival claimants is now transformed into the concept of a surplus labour performed by the real workers in the workshop under the social domination exerted upon them by the capitalist owner of the workshop. Furthermore, the “free labour contract” of the modern wage labourer is, by an apparent change of terminology only, now revealed as a real sale of the labour-power of the wage-labourer to the capitalist in return for wages, and thus as a social oppression and exploitation of the labouring class persisting within an assumedly “free” and democratically ruled society.

Marx begins the further theoretical development of the economic categories at the point where classical political economists had ended, i.e., with an analysis of “value” based on the distinction of a “value in use” and “value in exchange,” and with the reduction of “value” to “labour.” These two scientific discoveries of the last stage of bourgeois classical economics, of which, as they were then represented, the one was bound to remain entirely sterile, and the other led only to a one-sided and formalistic further development, were used by Marx to work out his new concept of “commodity-producing labour” which was henceforth to serve as a pivot for a new understanding of the whole conceptual system of Political Economy.

The distinction between use-value and exchange-value, in the abstract form in which it had been made by the bourgeois economists, (and had, in fact, already been applied by Aristotle to the commodity production of Antique Society) did not provide any useful starting-point for a materialistic investigation of bourgeois commodity production as a particular social form. It was insufficient also for theoretical reasons. The concept of use value was only perfunctorily mentioned by them as a presupposition of exchange value, and exchange value alone was treated as a real economic category.

With Marx, as we have seen in a former chapter, use value is not defined as a use value in general, but as the use value of a commodity. This use value inherent in the commodities produced in modern capitalistic society is, however, not merely an extra-economic presupposition of their “value.” It is an element of the value, and itself is an economic category. The mere fact that a thing has utility for any human being, does not yet give us the economic definition of value. Not until the thing has social utility (i.e., utility “for other persons”) does the economic definition of use value apply.

Just as the use value of the commodity is economically defined as a “social use value” (use value “for others”), so is the specifically useful labour which goes into the production of this commodity defined economically as a “social labour” (labour “for others”). Thus, Marx’s “commodity-producing labour” appears as a social labour in a twofold sense. It has, in common with labour in other stages of the historical development of production, the general social character of being a “specifically useful labour,” which goes to the production of a definite kind of social use value. It has, on the other hand, the specific historical character of being a “generally social labour,” which goes to the production of a definite quantity of exchange value. The capacity of social labour to produce definite things useful to human beings (a general condition of the Circulation of Matter going on between Man and Nature) appears in the use value of its product. Its capacity for the production of a value and a surplus value for the capitalist (a particular characteristic of labour which derives from the particular form of the social organization of the labour process under the conditions of the capitalistic mode of production within the present historical epoch) appears in the exchange value of its product. The fusion of the two social characteristics of commodity-producing labour appears in the “value form” of the product of labour, or the “form of commodity.”

Only thus critically modified, is the theory of labour value a suitable starting-point for an economic theory in which labour is considered not merely formally and in one of its aspects but in its full material realization. The earlier bourgeois economists when speaking of labour as a source of wealth, had likewise thought of “labour” in terms of the various forms of real work, though they did so only for the reason that their economic categories were as yet undeveloped, and still in the process of separation from their original material contents, vague and indeterminate. Thus, the Mercantilists, the Physiocrats, etc., successfully declared the true source of wealth to lie in the labour expended in the export industries, trade and shipping, in agricultural labour, etc. Even with Adam Smith, who from the different branches of labour definitely advanced to the general form of commodity-producing labour, we find that concrete aspect retained, along with the new and more formalistic definition which is also expressed in his system and was later to become the exclusive definition of value in the work of Ricardo, and by which labour is defined as an abstract and merely quantitative entity. This same abstract form of labour, which he correctly defined as exchange-value producing labour, he at the same time, irrationally enough, declared to be the only source not only of value (exchange value) but also of the material wealth of the community, or use value.

This doctrine which still obstinately persists in “vulgar” socialism, and which is unjustly imputed to scientific socialism by its bourgeois critics, is according to Marx economically false. In so far as “labour” is regarded in its specific character as useful labour, and, in the same way, “wealth” its material form as an object of utility, labour is not the only source of wealth. (If this were so, it would be difficult to explain why in present-day capitalistic society just those persons are poor who hitherto have had that unique source of wealth at their exclusive disposal, and even more difficult to account for the fact that they remain unemployed and poor, instead of producing wealth by their labour.) But it is just here, in the very inconsistency of his economic theory, that a remembrance of the concrete reality of human labour lingers in the mind of Adam Smith. In praising the creative power of “labour” he was not thinking so much of the forced labour of the modern wage-labourer, which appears in the value of the commodities and produces capitalistic profit, as of the general natural necessity of human labour, which produces things useful and beautiful. Likewise, his naïve glorification of the “division of labour” achieved in these “great manufactures,” by which he understood the whole of modern capitalist production, does not so much refer to the extremely imperfect form of present-day capitalistic division of labour (arising through commodity production and exchange) as to the general form of human labour vaguely fused with it in his theoretical exposition. “Adam Smith’s contradictions,” said Marx later, “are significant in so far as they contain problems which he indeed does not solve, but which he reveals just by contradicting himself.”