William J. Blake: An American Looks at Karl Marx
Prior to the seventeenth century there is little economic thought. To Aristotle, to whom slavery is natural, or to a chancellor of a dying feudal state, Sir Thomas More, who turns in horror from completely money societies,2 all thinkers mirror the state of society in which they were educated.
St. Thomas Aquinas is anti-commercial, as befits the great synthesizer of a Church whose territorial and hierarchial institutions were analogous with feudalism. The wandering Jewish merchants, on the other hand, in their Talmud, maintain a commercial point of view that has an up-to-date look.
With the importance of the precious metals the mercantilist theories of the seventeenth century echo the need to acquire those reserves. The power of the absolutist state, during the brief honeymoon of manufacturing system and nobility, led to the “Cameralist” thinkers of the early eighteenth century.
So soon as trade became paramount, poets like Bernard de Mandeville in his Private Vices Public Benefits, maintain the point of view of luxury traders.3
It is not until the manufacturing system is triumphant (1750) that its exponents appear. These are Steuart in Scotland, and, for an attempt to appraise the relations of agriculture, trade, and manufacture, Quesnay in France (1760).
But the pure mercantile theory had already produced remarkable works as candid as they are original. Whether in the newly discovered art of statistics of Sir William Petty or the brutal truth of Jacob Vanderlint (1734) (Money answers all things), the keen trading wisdom of Dudley North or the intense studies of money and credit of the inspired Norman, Boisguillebert, there was no shirking of any issue, no toying with any problem.
In Marxist theory, the explanation of this candor lay in the rising fortunes of capitalism. It had a world to gain and its only fears were from feudal survivors, not from any inner danger.
Modern Political Economy
The Physiocrats, who really created the science of political economy, were concerned ardently with the question of total revenue and total reproduction of capital in their commonwealth. They, too, presented the most fundamental questions and feared no diffculties. Their radical solution, of a tax on the net product of the soil, accompanied by a total liberation of trade and production, was the great blast against the paternal monarchy.
A Scotch ethical philosopher, Adam Smith, fused their thought with that of the practical experience of the most mercantile and financial people in Europe, the Scots. His Wealth of Nations (1776) is the bible of Free Trade and, for people of English speech, the book from which every economist dates his branch of learning.
Smith dodges no issues. He is extremely sympathetic to labor, which “produces all wealth” and is the source of all value. Rent is often a criminal deduction from wages. Although Smith is eclectic, his book bristling with fundamental contradictions and stuffed with half-baked definitions, his courage is unmistakable.
His school is summed up in the greatest of classical economists, David Ricardo. A millionaire, speculator, banker, practical authority on currency, he concentrated on the question of distribution and on taxation. An adherent of the labor theory of value, protagonist of the law of rent (pretty much as economic science still sees it) he, too, stated every contradiction in the economic system with no reserve. For that reason he was assailed, despite his wealth and standing, as a sower of discord between the classes. With his rounded thinking, according to Marx, classical economics came to an end.
From that point on, the commentary of Sismondi (1830) that every contradiction noted by Ricardo leads to a socialist critique, haunts the economists. The fact that such millionaires as Ricardo embraced a social pessimism and other millionaires like Robert Owen, a Utopian Communism, frightened the rich. The panic of 1825 and the succession of commercial crises in its wake were symptoms that while the system would continue to advance, it had a mortal (though long-enduring) illness. Hence political economy, says Marx, becomes “vulgar” (from the French, vulgariser, to popularize a subject by making its superficial aspects appear equal to its total significance). It now has other than a scientific purpose. For it needs to justify the capitalist system against its class opponents, the workers.
Therefore it courts the eclectic theory of John Stuart Mill (1847) that the claims of labor are just and ought to find a place within capitalism. Or it seeks to state that there is no contradiction, as with Frédéric Bastiat of Bayonne in France (1850), who holds that economic harmonies can characterize the whole of production. Or, it declares that the nation is paramount and protective tariffs enrich employer and worker alike, as with the American, H. C. Carey.
According to Marx, economists become more and more timorous. The bourgeoisie, once having conquered the aristocrats in France, in the 1830 Revolution, and in England defeated the territorial magnates by the Reform Bill and the repeal of the Corn Laws (1832-46), now know that their enemies no longer come from the past but from the future. They can no longer ally themselves with unrestricted liberalism. They must defend the status quo.4
Reform Theories
Marx states that economists, from this point on, try every approach that will deflect the attention of workers from production relations. They center on distribution, as with Schultz-Delitzsch, a co-operationist. Or they seek the difficulties of all classes to lie in the phenomena of money and credit, such as the bimetallist or “social credit” schools.
Some maintain that social security can be gained fully within the framework of the present social order (the Socialists of the Chair, and State Socialists of Germany) for example. Others hold that within the legal framework of capitalism, a gradual transformation from private enterprise to public enterprise can begin with municipal ownership, etc. (Fabians in England like Bernard Shaw or New-Dealers like F. D. Roosevelt.)5
For these theoreticians and statesmen the social economic relations are determined experimentally, without reference to such large words as socialism and capitalism.
The state interventionists do not hold the field, however. There are modern physiocrats like Henry George (Progress and Poverty, 1879), who hold that the capitalist system does not really exist now, but only a mixed society in which capitalism (which is good) is corrupted and falsified by privilege. Remove this privilege, and the capitalist system will really be as harmonious as Bastiat thought. This is the most radical solution within the framework of capitalism, because it would confiscate the value of land and public utility and railroad rights of way and end tariffs. For that reason it has met with the least favorable reception. It is the only bourgeois system that declares Marx naïve. It believes that in attacking “capitalism” he failed to identify it correctly by not analyzing its constituent factors. (See Chapter 35)
How Economics Molded ldeas
About 1850, the English economic school believed that it had a perfectly objective science. This, according to Marx, was an illusion. It defended Free Trade because England required cheap raw materials and also wanted a universal market for her goods.
So soon as her privileged situation came to an end, economists like Ashley (about 1900) and a host of others abandoned Free Trade. They think it is because they now think otherwise, but actually they are conditioned by the specific needs of their bourgeoisie.
The Germans, about 1850, denounced England for its universal deductive theories and declared that only in the total historical experience of each nation was to be found the organic presentation of economic wholes. Marx holds that these theories are a product of the German need for tariffs to build up industries to rival England.
Not that he is as direct as the foregoing sketch indicates. There are still Free Traders in England and Germany. American economists have usually been Free Traders despite the consistent national policy.
There are mighty contradictions within each class, and, in addition, there is a scholastic lag behind the brutal present needs of new classes.6 But by and large, economists think they are objective, when they are as determined in their arguments by the prevailing needs of the economic system, especially in fundamentals, as though they were commanded.
The Austrian School
The most vivid example of Marxian contentions is in the school that has been the forefront in Marx-criticism, the so-called Marginal Utility economists.
One and all they hold value to be subjective, and many of them declare it to be a relation, not a quantity. They represent the viewpoint of consumption, of the buyer. According to Marxians, this is the economic theory of the leisure class. It represents that enormous body of capitalists, who, living on interest on bonds, mortgages, rents, pensions, dividends, bank accounts, etc., no longer have any connection with the production of wealth.
They view all society as a market in which goods are offered for their appraisal and among which they choose. The fluctuations of their choices are the fluctuations of value and price. Coal-miners in England, say, spend fifty hours a week in production and have $13 a week (when employed) with which to figure out consumption. Necessity figures about all that £2/15 for them.
Sir John Wastrel in Piccadilly has $200 a week, whose origin he scarcely knows, and he spends all day long deciding between various flavors in Havana cigars and the most suitable type of stud for his evening shirt.
According to Marx, the economists of the two classes will think differently. Sir John’s cousin who goes to Oxford and dallies in economics will think of subjective valuation. The coal-miner’s “agitators” will think of what he can get out of the boss in the wages-struggle in the mine.
Marxians hold that the economic theory of their critics, then, is based on class thinking. Their own, they proudly admit, is. They tear the veil of objectivity from their opponents. But at the same time they maintain that the character and diffusion of their ideas cannot be ignored by the historian, for they are part of his material.
1. There is some repetition in the next two chapters and some restatements of earlier reference in this textbook. But these are necessary (and rare), because of their being presented logically for other purposes.
2. In his celebrated Utopia.
3. Dryden in his “Annus Mirabilis” says,
“Trade which like blood should circularly flow.”
4. These thinkers are studied from a different point of view in the chapter on the sources of Marxian economic theory.
5. Naturally the significance of such ideas varies greatly with the degree of development of capitalism when they are advanced.
6. Scholarship, too, by encouraging objective examination, is biased toward honesty.