William J. Blake: An American Looks at Karl Marx
Marx has met with a paucity of criticism in America. The diligent hunter of Marxist foes may traverse volumes of the American Economic Review, The Quarterly Journal of Economics, the Political Science Quarterly, or similar periodicals and see a critique here and there, but there are dozens of articles on concepts of risk—like that of Knight, say—to a study of the Marxist doctrine that has moved millions of men to risk their lives. By a strange irony, the most important American critic is a Canadian, O. D. Skelton.
Skelton. Socialism a Critical Analysis
Skelton repeats Böhm-Bawerk’s dictum that Marx eliminates, by his method of averaging, precisely those variations that form the subject of investigation. His reasoning thus turns in a circle. How do you explain value? By the totality of value. And how does that explain the value we set out to discover? It doesn’t, but they all “cancel out each other.” Marx dodges the entire issue of exchange-value.
As to the total labor-power of society; what does Marx mean by normal labor? Marx speaks of labor socially necessary, on the average, then of the minimum time in which a commodity can be produced as determining value. Well, which is it, average of all labor or minimum of all labor?
Half a dozen hod-carriers could not reproduce the David of Michelangelo, nor half a dozen roustabouts one fine jeweler’s work. There surely are differences of quality as well as of quantity in labor and these differences are never reducible to quantity.
The ratio of skilled labor to unskilled is fixed by a “social process” that goes on behind the backs of labor, says Marx. Well, if that is true, there are relations behind labor that determine value, and yet we are told that it is the labor that determines value—and if we ask how a process outside of labor determines labor-value we are again put back to the valuation in the market.
Skelton accepts Böhm-Bawerk’s theory that values grow not out of the past but out of the future. They are not forged like iron, but they arise subsequently in the market. It is hoped that the product of labor will acquire a value; it does not have a value. Skelton then quotes Untermann in his Marxian Economics, to the effect that labor-value has only a future validity (which statement Skelton misreads, because of Untermann’s Germanic idiom).
Not only does Marx make the error that value arises in production, but also the untenable assumption, like all productivity theories, that it is possible to value the contribution of any one factor, labor, for instance, by isolating it. Neither in technique nor in value can an isolated factor’s imputation be discovered. (Here Skelton parts company not only with Marx but with nearly everybody else—Clark, Marshall, etc.)
Skelton states that he agrees with Cannan that if we rewarded the man who discovered each central invention (each based on the other), the overlapping rewards would leave no money to go round. Clark gets out of the difficulty by limiting imputation to the present stream of production.
Marx neglects the service of the entrepreneur.1 On his analogy that co-operation in manufacture is like a squadron of cavalry (more than the sum of its horsemen acting alone), is there no place for a Ney or a Sheridan? Even if management is deflected from production alone, by the need for its exploiting labor as well, is there no service it renders production? If there is any, should this not be rewarded? Would not socialism itself produce more or less according to quality of management?
As to surplus-value: If co-operation is a force above the sum of individual labors, then surplus-value is no longer the difference between the means of subsistence for the individual and his product but also between the value of individual labor-power and collective labor-power; which? For then there is some surplus-value not taken from labor.
Another paradox: Either the subsistence level determines wages or the level fixed by the competition of the industrial reserve army determines wages. Two unreconciled wage doctrines are given by Marx.
If it is asserted, says Skelton, that there is a causal connection between the fluctuations of the industrial reserve army and the fluctuations of the standard of living, there is a profound logical contradiction.
For Marx assumes that the proof of his theory of surplus-value is furnished by the notion of the industrial reserve army; it is the coping stone of a theory built up stone by stone out of surplus-value. But, on the other hand, the surplus-value theory is assumed in the proof of the surplus-value theory itself, since unless there is a competition in labor that forces it to a minimum level that allows of profit, how explain profit?
(Presumably what Skelton means is that the industrial reserve army is created by the intense competition brought about by the effect on prices of the drive for relative surplus-value, and that the end of this process is centralization, which is accompanied by misery at the other pole. On the other hand, the depression of wages to subsistence-levels is a factor in shaping surplus-value. Which horn of the dilemma does Marx want?)
On the contradiction between production and consumption Skelton asks: Could this not be overcome even if wages fell as a share of the total production by an expenditure of the rich on conspicuous waste? Or merely by the quantity of the production of goods?
Had Marx concentrated on the anarchial character of production, or rather the mis-production of certain goods, he would have had a much more tenable theory than total overproduction against limited consumers’ demand, due to class relations in production. Skelton rejects the department-of-production theory (producers’ vs. consumers’ goods) for the scattered segments or the misdeveloped special trades theory.
Marxian Commentary on Skelton
A great many of these objections have been met and discussed elsewhere. The averaging objection was commented on with Böhm-Bawerk. As to minimum and average, Marx does not use the terms to complement each other. The minimum is taken as a basis for calculation, that is, the social minimum, which is the average of the lower great mass of ordinary labor. It has an average of that great minimum group and from it we reckon hours of labor and skilled labor as multiples of that labor-time.
Let us say there are forty million laborers in the United States. Of these, twenty-five millions are pretty much minimum laborers, that is, do common work, with little skill. The average of this minimum group is a social basis for calculation.
As to the quality of labor, apart from time; the jeweler is equated as to time,2 and Michelangelo is not in capitalism. He does not produce for an employer for profit; the primitive tools he uses are personal. He sells labor and not labor-power; Marx’s theory of value is based on the sale of labor-power.
Once that distinction is grasped, Michelangelo can take up his chisel and Rembrandt his brush and the two standbys leave the 160 million skilled and unskilled workers in European and American industry to discover the differences of value due to labor-power as a social commodity. Useful as Michelangelo was to Pope Julius, and Rembrandt to Dutch burghers, their utility was as naught to those as compared to economic critics of Marx. Really, without the two of them, economic theory would be dull.
The objection of the value of unskilled labor and skilled labor being fixed in the market was answered as to Joseph and Lindsay. That values arise in the future is true, if one means that value is realized in the future, and if there is no realization there is no value to express. But what value? What quantity of value is expressed in the future? That is the issue. Marx says that socially it is the labor-time incorporated into commodities which, after they are produced, are valued at around that level, as a whole. The notion of futurity has not the significance Skelton assumes.
If no imputation can be made in economics, then what are we all talking about? Then neither rent nor interest nor wages are meaningful. We get down to empirical descriptions. If that is the case how does Skelton ask that the entrepreneur be rewarded? Actually Marx does not isolate labor as a factor increasing value, labor-time is value; there are no factors; we are speaking of an identity, not an isolation. The objection is not relevant.
As to the services of the entrepreneur: Good, leave out Marx’s dictum that he produces nothing. Suppose social productivity under socialism is, say 60 per cent, higher than under capitalism. The means of production increase merely by reason of socialistic organization. Are not the entrepreneurs to be charged with that social decrement as well as credited with an increment? Even were it true that management was a factor in production, if it contributed 40, and by reason of its class limitations sabotaged 60, then it owes 20 and has no reward coming to it. And this is just the issue! If management is to justify itself, it must be on a production basis.
According to Marx it once did so “justify” itself, for there was no better alternative management then possible, and now it does not. The question is not one of “justice” but of historic maturity. In mature capitalism, he holds, it is merely a mode of better exploiting labor without relation to production for use.
As to the theory that there is a contradiction in the co-operation theory, that is a figment of Skelton’s imagination. The labor-power sold by labor as a class is paid for at its cost of reproduction, like any commodity. The surplus-value above that production inheres to capital. What has this theory of surplus-value to do with labor as an individual? It is the laborer working in a co-operative society, as given, that yields the difference above reproduction of his power, however that difference arises, to the capitalist. The cardshuffling of individual labor being individually exploited, and then of social labor, and the idea of a contradiction, was due to the poker pack used by Skelton only.
The paradox of surplus-value and the industrial reserve army is no paradox. The surplus-value theory does not imply the industrial reserve army. It assumes that the laborer is helpless, that he is a seller only of labor-power. Long before there was mass unemployment, when the demand for laborers was so great that the land enclosures were hurried through so as to assure a supply, wages were at an animal level. It is a class question.
Now as to the second contradiction, that wages are determined either by the means of subsistence or by the industrial reserve army, there is a clarification given in Marx’s Capital. The means of subsistence determine in any given period and country the value of labor-power; the industrial reserve army is the variable that is used by the capitalists as a wedge to obtain labor for less than value, and also as a driving force with which they hope permanently to alter that value. Marx does not fit his theories into a Procrustean bed; he is speaking of laws of motion.
As to the escape from the paradox of production and consumption by waste, the answer is, when has that failed? According to the exaggerated, but entertaining, hypothesis of Sombart, capitalism arose on and has since been based on war, waste, and luxury, and yet it has crises! As to increase of quantity of production, that is just where the trouble begins.
The disproportion theory of Skelton has been dealt with at great length in the exposition of Marxian doctrine (section on crises).
Even Marxists, though, would admit that Skelton’s book is lively and thought-provoking and well worth close study.
Thorstein Veblen (1857-1929)
This most unorthodox American economist is not so much a critic as an excursionist about Marxism. A quick glance at his two enduring books, The Theory of Business Enterprise and The Theory of the Leisure Class, would give the superficial idea that he was a pseudo-Marxist. Despite his quaint reference to the special propensities of the “dolicho-blond,” etc., his insistence on the pecuniary motives of business and his genuine hatred of the entire social appanages of “taste” and “refinement” and “culture” and his consciousness of their muddy origins, make him sympathetic to the Marxians. But his economic theory was poles apart from Marx’s, albeit he is the American economist who, with Seligman, has best understood Marx’s work.
Veblen is a Kantian, an idealist. As such he opposes Hegelianism and its illegitimate child, Marxism. He objects violently to the antithesis of capitalist and proletariat in purely economic terms, with no reference to their social and psychological aspects. To him the method of Marx is both too simple and too abstract. He, as the leader of the Institutional School, rejected the filiation of institutions and ideas as given by Engels.
Then too, he is conservative in some matters. For him the profits of high finance are, in some regards, “the usufruct of industrial technique.” But, strangely enough, Veblen is opposed to the “price system.” He is enmeshed in all the technocratic romance, for he looks on human labor as a stopgap until replaced by all sorts of automatic H. G. Wells and Jules Verne contraptions. He is a great partisan of engineers and apparently regards common labor as the last relic of a crude pre-mechanical technique. In fact, he is the economist of the romances of H. G. Wells, like The Shape of Things to Come. It is surprising that a still more violent futurist designer, J. B. S. Haldane of Daedalus fame, has joined the Marxians.
Veblen is at one with Marx in assailing such hedonistic conceptions as the subjective valuation theories of the Austrians. He believes competition to be inadequate. Marxism can be discussed, he holds, only as a totality. To criticize it in terms of one feature (as Böhm-Bawerk on value), is like discussing a solid two-dimensionally. No system of political economy is more logical than that of Marx. On Neo-Hegelian grounds, that value equals social labor-cost is self-evident, but it has no force in any other light. (And with this Marx would undoubtedly concur.)
Sachs. “Basic Principles of Scientific Socialism”
Sachs attacks the Austrian school because their analysis of demand applies only to consumption goods. How do they explain production goods, with which the great mass of capitalist production is concerned? If you say that they are valued indirectly by their products, how do I know these will ever be demanded when I make my elaborate investment in production goods?
And in any case, on their hypothesis, why should coats cost more than shoes? Why shouldn’t everyone want to have as many coats as shoes? The demand is as great. Why is anything “scarcer” than anything else, in goods capable of being manufactured by the million? Why do not all goods get to saturation point at the same speed? Because of the differing quantities of labor required, which is not a psychological but a real limitation. And this is Marxism.
Sachs then tries a comprehensive theory of value. Society requires a million coats that cost ten hours each. Eleven million hours are put into making coats. These extra hours were wasted and prices fall. Thus surplus-value may never be realized in this case. Price is regulated by the aggregate quantity of social labor that society allots to products divided by the number of products that are produced. In this manner monopolies and rarities are covered, as well as common commodities.
Sachs’s theory is a Marxian effort a little too ambitious for Marx himself. Surely there is an elasticity of prices! For example, we know that when the wheat crop is merely 10 per cent short, prices do not jump merely a tenth, but often a half. Each commodity has peculiarities of price, and these are not immediately referable to arithmetical changes in labor-value, nor need they be. To ignore elasticity of prices is to simplify the Marxian value-price equation unduly.
A deeper objection is the attempt to cover monopoly and rarities equally by the time society allots. For rarities one often has to face the fact that their production is not by social labor, or by the sale of labor-power, and they are not necessarily referable (although much more usually than is thought) to Marxian value. As to monopolies, it is not social allocation that fixes their labor-hours in the same sense as that assimilated to competition, as their ability to prevent their prices from falling in 1929-1933 by clogging elasticity of prices and “natural” remedies to the crisis, proves. Sachs is much too formal for a Marxian, but his book is excellent, and he has a really original and profound mode of thinking. (His materialistic section is simple and brilliant.)
Minor American Critics of Marxism
In assigning a minor role to the following critics, no disparagement is intended to their talents nor to the quality of their criticism; reference is rather to the small range of their economic objections. Some of the economists enumerated here are, in their field, the foremost names, but they won their spurs in other battles.
Prof. F. W. Taussig. “Principles of Economics”
In a rather long study of socialism Taussig makes two points: one that the process of investment by the well-to-do creates consuming power that is turned over to labor, subject to periodical readjustments of overproduction. (But why is there overproduction, if investment is the continuous source of corresponding consuming power in the workers?)
Marx spoke of the reserve army of the unemployed; no, lowered wages are due to ordinary labor competition, and the reserve army of the unemployed is a rectifying agency, since it lowers wages and enables workers thus to be re-employed.
Prof. E. R. A. Seligman. “Principles of Economics”
For a most distinguished student of Marxism, his economic references are slight. He simply rebukes Marx with identifying manual labor with labor as an economic category. But his tribute to Marx written elsewhere is his estimate: “Perhaps, with the exception of Ricardo, there has been no more original . . . no more powerful intellect, in the entire history of economic science.”
Lewis Corey. “The Decline of American Capitalism”
This is the most ambitious attempt to integrate the contemporary American scene into Marxist theory. Corey’s special contribution is that the long-term factors of recovery in America, that have carried its economy into new high levels after its many disasters, are now no longer operative.
These forces were primarily industrialization of new regions, development of altogether new industries, and mechanization of older industries. Today we have saturation of capital plant, overdevelopment of productive plant relative to its domestic market, export of capital (now congealed), and imperialism. This is, in effect, related to the thesis of Rosa Luxemburg that capitalism seeks its issue only by penetrating noncapitalist or precapitalist areas.
Corey does not endorse, explicitly at least, Lenin’s concept of the primacy of monopoly capital as itself the efficient cause of imperialism. Nor does he seem to hold that accumulation is effected by way of the ordinary exchange of commodities by capitalists within any given area. He does not assign a special technique to industrial monopoly, fused with finance monopoly, as willing to subjugate other countries, the fully capitalist ones as well as those that still leave scope for some primitive accumulation. For Corey, some adumbration of imperialism is the permanent characteristic of American economy; for his Leninist critics it is a special stage, arising out of the centralization due to relative surplus-value needs, but a special stage, nevertheless. When he states that the law of increasing misery for the workers is irrelevant to the question of high or low wages, it is difficult, from his text, to make out his exact theory. The general Marxian assumption would be that while the efforts of labor unions to counter capitalist efforts to sink wages below value can succeed, the accumulation needs of capital posit the increasing misery of the workers as a permanent tendency, to which strikes, etc., are a forced defense move. But the attack is that of accumulation and is a necessary permanent offensive of the capitalists.
Paul H. Douglas, in “Economic Essays in Honor of Gustav Cassel” (1933)
The most distinguished American wages theoretician thinks that the supply of capital, in excess of population growth, has been responsible for an advance in the material standard of living of the workers (in large degree). A stationary population will increase the relative growth of capital still further. Barring wars and catastrophes, real wages should advance. Even after population reaches a plateau, capital should advance for some time by net increments.
To Marxians, of course, wars and catastrophes are not barred, they are given in the system; they are not accidents but a function of capital difficulties. Their death and slavery costs are real deductions from wages. Barring wars and catastrophes to them is like saying that barring senile diseases and chances of death, we ought to live to be a hundred. So we ought.
Howard Scott. Technocracy
This modish intellectual fashion is now quite neglected, but its ways of thinking are still common enough.
The technocrats say that Marx is superseded because man-hours have given way to kilowatt-hours, and that we should count not by the time of living labor, as Marx contends, but by ergs or some other physical unit. The present system preserves a price system derived from exchanging manual-labor-counted goods.
To the Marxians, apart from the absurdity of kilowatt-hours being self-generating, etc., the technocrats are like any other currency cranks who look for economic difficulties in the sphere of circulation as primary. For Marxists, price is a derivation of value-expression in exchange, and this necessarily includes surplus-value. Not price but value must be abolished.
Technocracy, too, ignores the law of the position of the development of productive forces to production relations. Unless this is borne in mind, all distribution theories fall into the trap that in the sphere of production use is the object of fabrication. In exposing any price theory, however disguised in engineering language, the fetichism of commodities must be exposed, for it covers up surplus-values.
Lewis H. Haney. “History of Economic Thought”
Haney asks why, if use is no criterion of production, as Marx contends, some men grow cotton, say, rather than linen? Specific utility must be the function of goods. But this is affirmed equally in the first chapter of Capital.
The prices of particular goods fall and rise, even according to Marx, and these prices can be altered by credit. But credit, says Haney, is a factor in time. Thus time is also a factor in value, along with labor. This is like Böhm-Bawerk’s theory of “other things being equal” as a refutation of Marx, and is subject to the same observations.
Haney sums up Marx: “In learning, philosophic acumen and literary power, he is second to no economist of the Nineteenth Century. He seems to have been master of the whole range of economic literature, and wielded it with a skill no less masterly . . . his strength lay in knowledge of technical and economic development and marvelous insight into tendencies in social evolution determined by technical and economic factors. Whether his theories are right or wrong, they have suggested questions that will demand the attention of economists for a long time.”
John Dewey
Among the scattered observations of this philosopher are a few economic saws, of no particular merit nor a credit to his standing. It must be his distinction in other fields that causes his ideas to be so much noted.
He points out, for example, that Marx had no conception of the way in which modern industries could use new scientific discoveries (!), or create new wants and occupations. Nor did he credit the employing class with enough intelligence to see that production and profits could be maintained only by high wages and sustained purchasing power.
Apparently we do not read the newspapers carefully, for we think that we are always reading that the intelligent employers fight strikes, unionization, battles for higher pay, and struggle before the labor relations board against minimum wages, etc. But then we are thinking of Ford and Girdler and other professors instead of an eminent employer like John Dewey.
Max Eastman. “Marx and Lenin, the Science of Revolution” (New York, 1927)
The economic aspects of this well-known controversialist concern the inefficiency of the value concept of Marx for socialism, which, it appears, is a science of engineering based on empirical observations. In Capital Marx offers no proof that capitalism passes into its negation, and this type of statement is a relic of religious metaphysics, as is the whole categorical economic-historic system of Marx.
Had Marx been as up-to-date as advanced Westerners, not as beclouded Carlylean German professors, he would have been an empiricist (presumably like Mill, or a pragmatist like James, or an instrumentalist like John Dewey), and understood the art of practical thinking.
His dialectical materialism assumes that Hegel knew all about mind, and it lives and dies with that assumption. (Apparently Freud is more significant than Marx, though that seems nowhere to be affirmed.)
It is interesting to note that this philosophic critic of Marxist economics is editor of an edition of extracts from Capital, done by Borchardt, in which the paging of the German edition is not even corrected for English and American readers. That is an empirical job.
Sidney Hook. “Towards the Understanding of Karl Marx”3
Professor Hook has gained distinction in university circles as the most learned exponent of Marxism. His philosophic eminence does not concern us here. Hook’s economic contribution consists of a denial of the efficiency of the theory of value, exactly like Simkhovich and other revisionists. These all agree that Marx rises or falls by his analysis of the catastrophic potentialities of capitalism and not by the economic system he postulated with which to explore those possibilities. They view his system as given, in effect, in the Communist Manifesto of 1847-1848. They disregard the tremendous economic contributions from 1844 on, in practically all of which the later system of Capital is suggested and out of which only his later conclusions could possibly arise.
The pamphlets contemporary with the Manifesto are trumpets of surplus-value. As they have been gathered together in one volume (see Bibliography), this thesis can easily be verified.
Marx has a logical unity, and his complete opponents, like Turgeon and Böhm-Bawerk, are nearer the point than his “dissectors.” Shakespeare’s text can be disintegrated, but Marx’s must be accepted or rejected as a system. Value is central.
Since Hook repudiates the economic system of Marx, and gives his relativism an interpretation it cannot stand (Marx was keenly aware, as Engels confirmed, that our successive approximations to truth are due to the divided organization of society at specific levels of production), it is hard to say that he is a Marxian, though he belabors all those who deny him the appellation. Hook’s activism, too, does not seem to be involved in the central thesis of Marxism of the unity of true theory and practice. Without that Marxism would sink into academic dogmatism on the one hand and nominalism on the other.
Rudas has attacked Hook because in his symposium on the Meaning of Marx (1934) he does not understand the synthesis, that labor transfers dead labor-value and creates new value in one and the same operation. This would, of course, arise out of Hook’s refusal to accept the concrete, abstract, use-value and value distinctions of Marx’s economic system.
Hook asks, what are the specific mechanisms by which economic conditions affect classes, since individuals deviate from self-interest in many instances; asks how you measure the concept that economics governs in the last instance, and if man changes his nature how do we understand the past? He leaves room for contingency, insists on relative chance, and asks if the materialist interpretation of history is itself merely a transient phenomenon of class society? He rejects the copy theory that perception is a mirror of the real world, as given in the Anti-Dühring.
J. R. Commons
In the wealth of legal and labor history literature with which Professor Commons has enriched our knowledge, there is only one pertinent Marxian remark, that Marxian economics is obsolete because it related to an age of cut-throat competition and not to monopoly; the same view is affirmed by Maurice Williams, in his Social Interpretation of History (Brooklyn, 1920), in which he asserts that Marxism is concerned primarily with the individual producer.
Norman Thomas. “America’s Way Out” (New York, 1931)
The socialist leader agrees that the wise use of capital is productive, and so grants the entrepreneur thesis. The subsistence theory of wages is held to be refuted by its wide variations. Distribution adds to value. Thomas decidedly is not a Marxian. He is a revisionist, but even Bernstein would not have affirmed the last or the first of the three theories.
Emil Lederer
Although Emil Lederer is an ornament of German science, his recent activities entitle him to rank as American. He maintains that the Marxian concept of the labor market and of the consequent commodity character of labor-power, etc., may be brought into accord with the marginal utility hypothesis. Marginal economics may give the specific mode of action, the surplus-value being identified as a special situation in the labor market. Thus Marxism gives us the basic theory, marginal utility the manner in which underlying factors manifest themselves in our experience. This is an ingenious concordance theory, more plausible than Tugan-Baranowski, but subject to the same Marxian analysis.
Rubinow. “Was Marx Wrong?” (New York, 1914)
This was a controversial essay in reply to Simkhovich. Rubinow maintains that one commodity is not measurable as to labor-time. But skilled labor counts as more time, for therein time is a subjective measure of common valuation, for differing kinds of human effort. The mechanical measure of labor falls away, but it has class utility: “It is hard to prove any theory because of class bias involved.”
In this controversy Boudin, too, endorsed Diehl’s statement that value need not explain specific price. Kautsky too held that one cannot isolate the amount of labor in any single commodity. Marxian value arises from specific conditions of production and subjective value—as a relation of man to things, whether produced or not, throws no light on social conditions of production.
A. M. Bingham, Jr. “Man’s Estate” (New York, 1939)
Examinations of the bases of Marxian economic theory are now rare events and the treatment in Bingham’s book (the nub is pp. 260-282) has some original argumentation.
Bingham denies the notion that the exchange of two commodities requires a third common factor to explain the transaction. Both parties sought differing advantages in trading; hence the sign of equality used by Marx is not required. Had he used some other shorthand that revealed the dynamic nature of the transaction, his entire problem of a third factor would vanish. For there is no equality, therefore no common factor to be isolated. Equality is in price, not value.
His next point is that Marx ignored the professions and was baffled by the “white-collar” worker. The merchant function also nonplussed Marx: in Volume II of Capital (page 157) storage adds to value, on page 165 it does not.
Marx must face the fact that half the working people are not value-creating. Where will they be in the class struggle?
If value is measured by abstract labor but the value of labor-power is based on maintenance (a variable depending on custom or on success in collective bargaining), then how can anyone differentiate with any accuracy the worker’s share and surplus-value? Or how can one deduce any law of motion from their ratio, as both are indeterminates?
Even under socialism there may be a conflict between productive workers and the six or so groups who derive their living from the other producers, as foreshadowed in Marx. (Bingham must be referring to the Gotha Program.) If classes are based on value-production, Bingham infers, then the basis of class conflict remains.
Marxian accumulation theory is only half-true. The law of diminishing returns in most types of agriculture is a barrier to large-scale capitalist agriculture. Even in trade and industry and services, small-scale operation has survival value. Only 30 per cent of total economic activity is effected by “big business.” Electricity has reduced large-scale industry. The middle class between plutocrats and industrial wage-earners has been enlarged. Bingham resumes the stake of the poor in capitalism; 5 million shareholders or 30 million savings bank depositors or 65 million policyholders. Control may rest in the “sixty families” but ownership is diluted.
Further, Marx gives no explanation of various automatic adjustments of the price and market mechanisms, especially those that restore equilibrium after instability. Further, Marx has no rigorous proof that unemployment must constantly rise. Nor can he demonstrate that the larger the investment in constant capital, the less in variable. For the money laid out for means of production is not removed from circulation. It goes to living labor in the capital goods industries.
Further, Bingham “cannot help thinking” that despite Marx’s refutation of underconsumptionism, the idea haunted him. Hence he had a mistaken theory concerning the whole of capital, even though when he came to Volume II of Capital he had to admit there was no necessary stoppage of the flow of money and goods. (This calls for a rebuke. To make an assumption concerning what a critic thinks an author ought to have had in mind, and then calmly transfer this intention as a fact, and then speak of the author’s “admission,” is a rhetorical dodge. It is careless but in less honest hands could be vicious.)
Bingham denies that the origin of crises is completed in Marxian terms; for him there are many factors in disequilibria. He challenges the law of the tendential fall in the rate of profit. There are two objections. First, it is counteracted by increasing the rate of exploitation. Marx gives no indication of what governs the rate of exploitation, or as to why it should not rise faster than the increased organic composition of capital. Secondly, the producers of constant capital are themselves making profits. Therefore, since we are speaking of the rate of profit for the capitalist class as a whole, neither the aggregate increase in roundabout costs, which must enrich some capitalists, nor interest charges, which must enrich others, can be taken into account, for Marx is seeking to describe a fall in the overall rate of profit.
There is no factual proof of a long-term fall in the rate of profit. The little evidence we have, though only indicative and not complete, indicates stability rather than decline. Nor does the fall in interest rates confirm Marx, for interest is only a part of profit, and that rate is not affected by the rate of exploitation but by the competition of loan capital.
The next contradiction alleged is that on the central question of merchant profits, Marx contradicts himself on pages 329-330 of Volume III of Capital and again on page 386. But even Engels had trouble with Marx’s reasoning, for Marx was not skilled in computation and was greatly confused on this point.
From Marx, Bingham goes on to Lenin. The decline of foreign trade and foreign lending since 1929, and the rise of autarchy, indicates that the imperialist tendencies before 1914 are no longer descriptive. They may even be reversed. It is significant that the chief economic drives towards war—raw materials, land for surplus population, rounded resources, and self-sufficient economy—are wholly compatible with collective economics and do not relate to the dynamics of capitalism.
Bingham returns to Marx. Money and credit are the Marxian blind spots. A large part of investment comes from “new money,” that is, bank credit. Public investment is financed by a direct creation of credit. Capital need no longer be formed by the accumulation of capital or surplus value!
Marx himself saw that investment could be financed out of credit (money capital), the “duplicate” of actual capital. He had to speak of fictitious and illusory capital in Volume III, pages 547-553, to save the logic of his previous analyses. But therewith his general law of accumulation is gone, for henceforth capital can be accumulated without impoverishing the worker or enriching the capitalist. Marx never goes further than the assertion that fictitious capital is merely a reflection of actual capital and referable to its laws, in Capital III, 559-580, or an anticipation of income in III, 549. Marx seemed aware of the difficulty, for he speaks of credit as outside the scope of his plan in III, 469 and 520-22. “But he had gone too far to turn back.”
NOTATIONS. On the notion of equality in commodity exchange, Bingham offers no proof, since Marx assumes that an exchange advantages both sides in use-value and that the dynamics are in this exchange of utilities. The exchange of commodities, irrespective of utilities, is the field of political economy.
As to the fact that Marx did not fully comprehend the professions: rather his study of the displacement of machinery takes as a central theme that this displacement is compensated largely by clerical, merchandising and professional activities, sustained out of surplus-value. He gives the mechanism of the rise of these classes, in pure economic terms.
Why must there be a determinate ratio of variable capital and surplus-value? Why not a series of indeterminates, fluctuating around a given analytical set of limits? Marx is not additive: he is dynamic. The laws of motion are best ascertained from variables in action, not from rigid determinates.
On socialism, this objection shows that Bingham was not attentive on the philosophic foundations of value. Under capitalism one group of workers creates values, another does not. Under socialism, value is annihilated and all create use-values. Hence the conflict is a conflict of capitalism and of capitalism alone. As to the percentage of business done by big capital, if Bingham had added housework of isolated housewives, the percentage would sink still further. It is not the total economic activity that is in question; it is its directing and significant impact for accumulation, crisis, etc., that measures its effects on the life of man.
The other objections on agriculture and the diffusion of ownership have been treated elsewhere. That Marx does not explain the price and market mechanisms of restoring equilibrium is true—for a simple reason, that he denies equilibrium. For Marx there are various states of disequilibrium, some, like crises, sharp, others, like “booms,” in which a disproportionate investment is creating deeper contradictions. Cycles are a series of manifestations of differing types of disproportions, due to the underlying class contradictions. He does, however give the mechanism of the restoration of constant capital investment, which is what Bingham probably means.
The argument that Marx ignored the investment in constant capital, as employing living labor, is amazing when one remembers that Marx’s total schema of capital reproduction studies the interchange of these two departments as a necessarily integrated science.
On the theory of accumulation, Marx does state that the capitalist seeks to increase the rate of exploitation to counteract the tendential fall. The history of recent capitalism is a series of efforts to counteract this tendency, which is the force always pushing the capitalist on, even though it is also the force that leads him to utilize all the mechanisms that prevent its realization. Marx identifies not realized form but the foundations of the appearances contrary to such realizable form.
On the factual question of rate of profit, the decline in the rate of interest, practically secular, is a striking confirmation. The escape from this confirmation by saying that though interest is only a part of profit, yet it is not affected by the rate of exploitation which is the source of profit, is fanciful. To ascribe a low rate of interest to a surplus of loan-capital, without giving the economic basis of that surplus, is like the absurd physician in Molière who said that opium caused sleep because it has a dormitative faculty.
The Leninist answer to Bingham would probably be that the very success of Imperialism that led to the war of 1914 caused the defeated states to seek other means of egress from their difficulties. Hence autarchy, fascism, etc., since the capitalists of these lands are debtors, not creditors. Hence what they seek is some escape from the dilemmas that led to Imperialism. They seek conquest, not investment. This is the last phase of Imperialism, one in which its very success leads to its opposite: cessation of foreign investment (which is relatively peaceful) for outright plunder. As to the notion that certain requirements are compatible with socialism, any answer concerning raw materials etc., that ignores the class utilizing this resource, is, of course, to the Marxians, mere formal rhetoric.
On the question of Marx’s credit hypothesis: He never takes the view anywhere that duplicate capital has a life of its own, not referable to the physical accumulation of capital. Burns’s little pamphlet on “Money” gives the exact Marxian analysis of the “creation of bank credit,” and it is really surprising that Bingham has not analyzed it. But anyone who believes that capital can be provided for in the non-material world, must after all be referred to the adepts of Mme. Blavatsky or Aladdin, for this is the philosopher’s stone and textbooks on alchemy have been unfashionable since Bacon.
The contradictions alleged, as to merchant capital, are not there. Marx clearly defines the conditions under which storage is productive labor and under which it is not. The same physical activity often has differing economic significance. As an example, wasted labor is not value-forming, although the same activity is value-forming toil.
The reference to the difficulties that Engels had in restoring the reasoning of Marx is surely unkind: the full description should have been cited of the terrible illness of Marx that compelled him to leave his notes and marginalia unworked. To use the illness of the greatest economic mind that ever lived (due to his passionate overstudy and sacrifice) as an argument against his reasoning, is the kind of commentary that is censurable. For Engels, on page 13 of Vol. III, explains exactly why Marx’s manuscripts were difficult to handle.
1. The old banker’s epigram comes to mind: “What is an entrepreneur? He is the man that furnishes the experience and the capitalist the money. After six months he has the money and the capitalist the experience.”
2. This objection is dealt with in great detail in the original explanation of value theory in this book.
3. Hook has also studied the chain of ideas from Hegel to Marx.