William J. Blake: An American Looks at Karl Marx

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Sources of Marxian Economic Theory

It is extremely difficult, and certainly artificial, to separate the economic theories that preceded Marx’s formulations from their accompanying social philosophies. The economic thinking of a Ricardo or an Adam Smith cannot be disassociated from its assumptions, and these presuppositions are influenced by the circumambient notions concerning the soul of man and its modes of action, or of society as they conceived it.

It would be too remote an undertaking to point out to what an extent the association theories of Hume, the sensory approach of John Locke or the utilitarianism of Hartley colored the thoughts of the economists.

Nor is it amiss to point out that the rural organization of France determined the thinking of those remarkable men, the Physiocrats, or that the needs of English trade and colonial relations conditioned the more rambling, eclectic ideas of Adam Smith.

For our purpose, to trace the filiation of the purely economic ideas of Karl Marx we have to make three falsifications, the first that of separating the economic doctrines of his spiritual ancestors from their remaining philosophy, the second the assumption that the socialistic thinkers (the Utopians and politicians who preceded him) were inspired by economic ideas, instead of what is nearer the truth, that their humane perceptions led them to examine the economic system in a new way. Lastly, we assume that the Marxian economics itself is a system, whereas it is, so to speak, wrapped up in a system to which its bulk gives shape.

If these three artificialities are borne in mind, the following skeletal story can be of service. One more caution: when the theories of Marx’s predecessors are given it must be remembered that the economic facts they describe may be given in similar words to those of Marx, but, owing to the wholly different technological basis, the content of these expressions is dissimilar.

Aristotle and Plato

Aristotle noted the twofold nature of commodities, one peculiar to the thing and one not: that a sandal may be used for footwear and also it may acquire in exchange money or food or other clothes. When a person sells a sandal or exchanges it, he uses it as a sandal, says the Greek thinker, but in a different way. Its natural function is to clothe the foot. Here the idea of two values, use and exchange, is given, as also the idea that the use-value of the sandal remains, but it is not its natural use which it has in that special exchange relation.

Aristotle also discovered that money could be a medium of circulation and also a capital, and that it was a measure of value as well. These three functions he distinguishes exactly as does Marx, and not as other economists have since.

This teaching, combined with Plato’s acute idea of the division of labor as related to classes in the State, are the classical sources of Marx. (Like all Germans of his period, trained in their Gymnasiums, Marx was versed in Latin and Greek philosophy.)

Marx’s Sources in Early Capitalism

Marx himself has identified his ancestors. They are Sir William Petty in England, about 1660, and Boisguillebert in France, at the end of the reign of Louis XIV. Apart from Socialists, the last source is Ricardo. The subsequent work done in economic theory (not description or statistics), as stated earlier, is a disguised apologetic.¹

Petty was the first explorer of Marx’s economic doctrine. Petty held that value was estimated by the equality of labor contained in any two commodities and was the foundation, as to quantity, of the balancing of values.

But, he added puzzled, in the superstructure and in the practices of exchange there was “much variety and intricacy.”

Boisguillebert was the first thinker to see that metallic money could be replaced in its monetary functions by paper money; that the functions of money were that of a special universal equivalent in exchange.²

Boisguillebert, as well as Petty, the philosopher John Locke, and the merchant Dudley North, were the four pioneers of economic criticism in that they rejected the notion that the supply of gold and silver, by itself, was the wealth of a country and that the unique object of its trade was their acquisition. Nor did any of them, on the other hand, assume that if gold and silver were not the only form of national wealth paper money was a mode of augmenting it. What they denied to metal, they could scarcely give its paper messenger.

Despite the originality of Petty, the sources of Marx’s economic doctrine are proportioned to his system. They are the Physiocrats in France; the classic economists, principally Adam Smith and Ricardo, in England (the monetary speculations of Benjamin Franklin were in their frame of thought, though anticipatory); the communism of Robert Owen; the Utopian critique of capitalist society by Charles Fourier; and the inspired doctrine of the first of Socialists, Saint-Simon.

We are confining these sources to economic thinking and thus restricting the immense methodological contribution of Hegel’s philosophy.³

That gives the outlines of Marxian sources but its richness is due to its skillful use of science and mathematics and political history read by a real man. While only the first of his two giant contributions has gained uneasy ascendancy (historical materialism) and the other (surplus-value) is the center of conflict, it is significant that the cultural rather than the economic doctrine has done the best.

For all that, there is nothing eccentric in Marx’s economic doctrines. He is not the crackpot or reformer who thinks that his brain has illumined the universe which sat in darkness until his mighty mind came on the scene. Marx has been accused of deriving whole sections of his economics from Thompson and, by some, from various suggestions of Louis Blanc and Victor Considérant.

He would have pleaded guilty. For him, the thinker outside of the reference of the cumulative thought of men, is a fool. His theory of history required him to recognize that in discussing the real world, one begins with its phenomena and sees its reflection in the human mind, before one sits in judgment on the economic and historic progress of the race. But all the greater is the obligation to find a synthesis, to turn on a new point of departure.

The Physiocrats

The Physiocrats were the first thinkers to preoccupy themselves with the economic conduct of a nation as a whole, both its production and circulation. The Tableau Économique of Quesnay (1760) was the most ambitious construction of economic totality before Marx.

To the Physiocrats, only agriculture was productive, that is, returned a net surplus of national revenue. This surplus is rent. Apart from the primary class of farmers there is a second class-of landlords, priests, soldiers, government officials, the king, etc.—that live off this production of the soil. Then there is a third class, the industrial or manufacturing, artisan, and commercial class. These are sterile. They add to raw materials, given them by those that work the soil, only the amount of value they receive from the tillers of the soil, in the shape of their sustenance.

How Production Is Renewed

Those that farm in France, say, in one year, 1759, had a capital of ten billion livres (two billion dollars) of which a fifth is working capital that must be replaced annually. Assuming price and reproduction of capital as constant and circulation within any class as set aside, the sales and purchase relations of whole classes with each other are dealt with. Spinning and similar tasks were considered as farming. In those days home industry on the farms was important.

The harvest reproduces the real wealth of France each year. It comes to a billion dollars. (This was a real estimate made by then known methods.) All that is required for the subsistence and working capital replacement of farming comes in kind out of the farm produce. This comes to 400 million dollars, leaving 600 million surplus product. Of this 400 millions are in food and 200 millions in other raw materials. It is this 400 million they pay to the landlords, and this they call the net product (net income).

Now all this is predecent to circulation. Another 400 millions of savings of the farmers from former crops exists in the shape of cash. This sum represents the excess of money required from crop to crop above the movement of the crop itself and takes care of interim payments. That is the function of money and so this 400 millions is the total money circulation of France.

Of the 400 millions of net product paid to the landlords, they keep four-sevenths and pay two-sevenths to the government and a seventh to the Church by way of tithes (first fruits and tenths, as the phrase is).

Now the industrial class, which Quesnay thought sterile, uses working capital of 200 millions. These 200 millions are converted into goods worth 400 millions, but (here is the point) the surplus 200 million represents the subsistence given to the industrialists by the farmers. We are at the start of a new crop year. The farmers have 600 millions gross products and 200 millions money. The landlord has merely a claim on 400 millions. The manufacturing (sterile) class has 400 millions in manufactured goods. Circulation between two classes is called “imperfect,” between all (the completed circuit), “perfect.”

The landlords buy means of subsistence from the farmers with half the rent, so that the farmers get back 200 millions.

Apart from improving their properties, the landlords spend unfruitfully. With the other 200 millions the landlords purchase goods from the manufacturers, who, with this money, buy their subsistence from the farmers.

But of the goods bought by the farmers from the manufacturers, part are in instruments that help them in farming. But when the sterile class gets this from the farmers for its products, it must in turn buy from the farmers 200 millions in raw materials to replace its working capital. So the money given away as rent by the farmers comes back to them and the books are even. The net product (net income) of the farmers is completely explained as to its origin and destiny.

Theory of Interest by Fructification

But the farmer kept some product for himself; he did not pay out all in rent. That sum retained is 10 per cent of his invested capital, it is his interest. He takes it out of his produce, not out of circulation (circulation being defined as movement from class to class). He replaces this produce with manufactured goods. That is how it goes through the system. It is this 10 per cent on investment that reproduces the initial capital of farming but it is not a net product, it does not add to consumable wealth, although it adds reproduction by improving the soil, etc. To sum up:

Farmers produce 600 millions for themselves, 400 for the landlords. Their 600 millions is ⅔ subsistence, ⅓ raw materials. The landlords divide their rent ½ to consumption, ½ to buying manufactures. The manufacturers use this half, paid them, to replace working capital. Of total manufactured goods (400 millions), half goes to the landlords, half to the farmers. But for the farmers their share is merely the interest on their capital. The money put into circulation by the farmer’s paying rent comes back to him through the sale of his products to both classes and so the year is over.

This valiant attempt to depict the whole process of production, income, circulation, and reproduction was the last political economy of the agricultural system of Europe.⁴ It seems old-fashioned to us, but then it preceded the first great inventions of the machine age.

But its influence on Marx is striking. Here was an attempt not to describe empirically wages, rent, interest, etc., as though they were isolated “subjects” or different chapter headings; here was an attempt to integrate the whole movement of society by way of classes, to discuss what led to more wealth, how wealth was extended, who exploited, who appropriated, who reproduced, what everyone got, to whom he paid it, and how it all got started again.

Political economy under Adam Smith and Ricardo was painfully aware of the limitations of the Physiocrats, but it dared not imitate their bravery. Hence until Marx political economy turns into a fragmentary science—that is, a study of specific interactions—but no attempt is made to integrate the entire system, not even by the schematic Ricardo. With Sismondi we shall see such an attempt, and, of course, those of the Utopian socialists such as Fourier. But actually the Physiocrats are the only complete systematizers of political economy before Marx, and in a sense are his precursors.

Their free trade and single-tax theories (that the state should live only on a portion of the net product paid to landlords), their harmonious philosophy (Mercier de la Rivière), their political influence on the French Revolution by way of Turgot (1727-1781) and Mirabeau (financial scheme of 1790) are not specifically related to Marx. But their economic analysis inspired him constantly.

Adam Smith

With Adam Smith (1723-1790; Wealth of Nations, 1776) the British political economy is as representative of manufactures, trade, and credit as the Physiocrats were of the agricultural era. With Smith’s system we are not here concerned. It has been detailed in Cannan’s Theories of Production and Distribution. His relation to Marxian thought is close on fundamentals.

Smith held that the entire value of the social product resolves itself into revenue, which are wages plus surplus-value, or, in his speech, wages plus profits (interest included) and ground rent. The consumers must pay the producers the full value of their products.

This is to say, the price of every commodity contains wages, interest, and rent or one or any two of these. Most commodity prices include all three. Out of the exchange value of commodities come the three sources of revenue. But this relates to gross income. Reproduction must be allowed for, and so wages, rent, profits divide only net income. Marx points out that Smith has counted profits twice, once as an income, and then as a source of reproduction. The reproduction comes out of the value of products to begin with.

Smith was the first to understand the distinction between means of production and consumption. He observed that means of production yield the revenue of laborers and capitalists but contribute nothing to the net revenue of society, whereas means of consumption although used as capital by the capitalists (as wages), is really a part of social revenue.

Here, in his old speech, he is close to the distinction between constant and variable capital (as wages) which Marx used for his identification of surplus-value.

His theory of price gets down to the notion that commodities sell for wages plus the surplus produced by labor (V plus S, variable capital plus surplus-value, in Marxian language). He contradicts these ideas constantly (Adam Smith was the host of a household of contradictions), but they are at the basis of his analysis.

But he does hold that profit and rent are deductions from the whole product of the laborer, or from the value of what he produces, and are equal to the additional labor, above his compensation; in other words, are a surplus-value over his wages. This too anticipates Marx, though crudely. Smith determines the value of a commodity by the quantity of labor which the worker adds to the object he labors on. But he turns in a circle, for he determines the wages of laborers by the value of what they consume and the value of what they consume by the additional labor put into the articles consumed.⁵

Smith has an elaborate system of political economy, so impressive that from it has flowed all American and British doctrine ever since. Here we are confined to a few generating ideas for Marx. Marx’s critique of Adam Smith (in English) is available in extenso in Volume II of Capital, particularly pp. 415-450.

Ricardo

But the English economist to whom Marx owes most is the stockbroker, David Ricardo. In his Principles of Political Economy and Taxation, a relatively small book, one has the epitome of a society, such as that of Spanish civilization in Cervantes’ Don Quixote or of the medieval church in the Pantagruel of Rabelais. Not that its stature rivals the works of those two masters, but its function is parallel. After Ricardo political economy becomes eclectic or psychological. It has rarely found his path again.⁶

That is not to say that Marx follows Ricardo. Both he and Engels are never tired of pointing out his confusions, inconsistencies, errors. He was so much the epitome of his class that he became the perfect target as well.

For Ricardo labor is the source of value, labor is the sole creator of all values. He formulates three laws of value. A working day of a given length always creates the same amount of value, no matter how much the productiveness of labor, and therefore the quantity of its products, or the price of each commodity it produces, may vary.

If the value of ten hours’ work is a dollar, then more goods share that dollar if labor produces more. But time of labor is the total value. Ricardo consciously eliminates rare goods and declares himself concerned only with the mass of goods produced constantly by labor.

The second law is that the surplus value (Ricardo’s “profit”) increases as the value of labor (labor-power in Marx) diminishes. Since time of labor produces value, if part of that time goes to profit, labor gets less. An increase in the productiveness of labor reduces the value of labor (labor-power) whereas a decrease in productiveness increases its value. Marx corrects this principle, but it is close to his doctrine.

The third law is that increase or diminution in surplus-value is always a result of, and never a cause of, a corresponding change in magnitude of the value of labor-power.

Whatever their shortcomings gazetted by Marx, these three contributions are the directives of Marxian thought. For Ricardo the productiveness of labor is the source of profit as labor itself is the source of value. Marx traced his shortcomings to his inability to apprehend the importance (though he skirted about the fact) of the difference between use-value and value.

Prices, for Ricardo, are caused by a change in the value of money. Money declines in value when the quantity of currency rises above the amount of its intrinsic value (labor) and the intrinsic value of the commodities it exchanges against. This crude form of the quantity theory of money is interesting because of its relation to labor as money-value.

But it is the theory of rent by which Ricardo is immortalized. For him rent is the difference between the product obtained by the employment of equal quantities of labor and capital on two soils. Marx calls this differential rent. But his idea that cultivation must proceed from better to worse soils is rejected by Marx (Capital, Vol. III, pp. 772 et seq.). But it was by Ricardo that the foundations of the theory of rent were laid once and for all, and only an eccentric thinker like the American protectionist, Carey and his school, have contested it.⁷

Ricardo improved on Adam Smith by denying that rent is an element in price. Rent is rather the quantity of a tribute which was itself based on price.

Ricardo takes the magnitude of value as fundamental and analyzes its components, distributed as wages, profits, etc., whereas Smith has built it up from the components, additively.

The speculative superiority of Ricardo (a true pun; he made millions in stock-exchange speculation) to Adam Smith continues throughout.

In Engels’s introduction to the third volume of Capital (p. 25 et seq.) Ricardo’s limited theory of “value of labor” and its consequent errors are carefully assessed against the subsequent refinements of Marx. The subtle analysis by Marx of the confusion in Ricardo of fixed and circulating capital with constant and variable capital should be read as a post-graduate course in economic distinctions (Capital, Vol. II, pp. 245-259). But nothing that Marx criticized prevented him from rendering homage to the man whose theory of value and profit and rent are the pillars of political economy.

The only classical economist that Marx followed after Ricardo was the Genevan Sismondi, who was fully conscious of the limitations of the market due to the class relations of capitalists and laborers, and whose theory of underconsumption, although naïve, senses the basic class relations. From that point on, Marx relies only on the Utopian Socialists.

Sismondi (1773-1842) was not only the last term of classical economy, he is the herald of a type of socialist thinking that persists, under a dozen forms, in every non-Marxian school from Lasalle and Rodbertus down to Rosa Luxemburg and John A. Hobson, and even to the “social credit” groups (who are also modern disciples of Proudhon).⁸ Sismondi’s influence, on both Marx and non-Marxians, is gigantic (though in wholly different ways). The Russian populists (Nardoniks) took their economic system from Sismondi.

Sismondi was aware of the hesitations of Ricardo. He saw that the inner contradictions of his labor theory might easily lead to its being vulgarized as a cost-of-production theory, rather than a labor theory of value; in fact, this was what happened: John Stuart Mill geared political economy into cost theories (thereby leading to the subjective school of Jevons, that cost determines supply, and hence affects “utility”) whereas Marx geared it into labor-theory, but on a higher plane. Sismondi sought to build a system that would give Ricardo’s production scheme a meaning in the sphere of circulation.⁹

Sismondi held that the capitalist, by his command over labor, takes over the larger part of its production and forces it down to a subsistence level. But he deserves that part of his profits that inhere to management, and this is interest. Sismondi explains the spoliation of labor but not the constant repetition of profits in a recurring scheme of production.

He discovered that general crises were possible, that they would be periodic, and, by studying the mode in which capital moves from cycle to cycle, he became the founder of economic dynamics. Naturally Marx’s extremely kinetic view of economic theory comes more from him than from Ricardo.

Sismondi held that in a capitalist society, the extent and direction of economic activity is determined by exchange value but it is the uneven technological development of each branch of production that puts industry in a state of flux. But he looked for the base of that unequal development outside production (in consumption); Marx within production.

Therefore he repudiated the “price system” and thought production should be measured by the quantity of useful goods. But capitalism, he saw, has nothing to do with this aim. Sismondi too, for the first time in political economy, concentrated on the difference between gross production and net profits: one might contradict the other, and this led to his suspicion of capitalism.¹⁰

Despite the disavowal and refutation of his theory by Rosa Luxemburg, the Sismondi theories, against which Marx erected his entire concept of accumulation, held her in a vise. Marx makes the contradiction between social production and private appropriation, in a system requiring reproduction, both effect itself and contradict itself in the relations between two branches, the production and consumption sections of all production. For Marx the system can reproduce for long periods within that contradiction.

But Sismondism, by ignoring the two characters of labor, social and useful (social, as contradicted), failed to understand the process of reproduction, and thus believed that capitalism can keep alive only by plunder outside of the system, or by dumping.

Sismondi assumes that variable capital and surplus-value are the only production factors; he forgets the transfer of constant capital. Hence he assumes that consumption must equal production, unlike Marx, who saw that consumption merely gives the limits to production.

Sismondi anticipated Marx in that he saw that the ruin of the peasantry and the middle class is a factor in building capitalism. He assumed that the ruin of these two classes destroyed the internal market for commodities, whereas, for the primitive peasant, who produced all his own needs, his emigration to the city, or his entry into cash crops only, increased the market for goods. Capitalism relies on replacing domestic economy and barter economy by cash sales: that is a type of primitive accumulation.

Sismondi was probably too early a writer to see that the constant rising of the ratio of constant capital to variable means that for long periods the demand for that constant capital alone would keep the system going. Today it is the essence of the capitalist system as a going affair, although the ultimate consumer’s demand for the less important consumers’ goods, though much smaller statistically, still is the end of the series. But this consumption is itself determined by employment in means of production, so long as that endures.

Utopian Socialists

The first of these in importance was Robert Owen, a wealthy manufacturer. It is interesting to note that the founders of socialism were Owen (a millionaire), Fourier (a rich merchant), Saint-Simon (of the legendary nobility of France), Marx (of rich merchant stock), and in economic doctrine the multi-millionaire David Ricardo. The crude theory of economic determination can scarcely support a greater shock.

Robert Owen

Owen published his New View of Society in 1813. There was a ferment of radicalism about everywhere. The anarchist thinking of William Godwin and his son-in-law Shelley (also a millionaire) indicated that fundamental economic thought was on the way.

In his notes to Queen Mab in 1812, Shelley illumines the whole problem of surplus labor-time, and understands what we call capital as a social relationship. He quotes and glosses Godwin:

“Wealth is a power—of the few to compel the many to labor for their benefit.”

“These hours which were not required for the production of necessaries”—may enlarge our stock of knowledge, refining our taste, etc. The hours of labor, surplus hours for the rich, are noted.

Nor is Shelley unhistorical. He is as explicit as Engels. “It was perhaps necessary that a period of monopoly and oppression should subsist before a period of cultivated equality could subsist." He notes that "employments are lucrative in an inverse ratio to their usefulness.”

From the soil of the French Revolution, the seed of the industrial revolution sprouted the understanding of social contradictions.

After the stirring of men’s minds, though it was directed to the profit of the rich peasantry and the bourgeoisie, and though the revolutionists became Emperor, marquises, and dukes, the breaking up of the old society ended, once and for all, the established order of things.

Among the bourgeoisie men like Jefferson become normal, poets like Shelley and Byron break off from their class, millionaires like Ricardo and Owen ask why they are rich. Owen, who alone among manufacturers had been humane, philanthropic, and had encouraged co-operation among his work-people, and still made a fortune, was the first purely communist thinker who based his conclusions on political economy.

A giant manufacturer (for his time one of the largest in the world), he was puzzled by the immense development of productive forces and the poverty of the workers that produced so much more wealth than formerly.

Machines were invented steadily to save labor and yet labor always worked as much! Like John Stuart Mill he was puzzled that all the mechanical inventions made had not lightened the day’s labor of a single worker. He then fell back on commercial calculation.

In the meantime he never ceased acting as a practical reformer. He had a beautiful, simple face, a natural eloquence, and he stirred men to their depths by his pleadings. He persuaded Parliament for the first time to limit the hours of work of women and children. The precedent of social regulation of industry was established by his efforts.

When trades unionism was still a conspiracy and crime, he fought down the barbarous law that treated the joining of “servants” against “masters” as though it were mutiny.

Although an employer he was invited to preside at the first general trades union meeting in Great Britain. He was the typical businessman turned Messiah: he thought the world could be arranged like his business, and that schemes like those that would make money would save mankind.

He believed in “labor-money,” like Proudhon after him and a multitude of theorists since. He believed in establishing communist colonies and lost a great fortune in New Harmony, as he called his ideal settlement in America. He opposed strife and violence, holding that the gateway to the worker’s heaven could never be hatred but only perfect love. It is easy to travesty the errors of an Owen; it is not so easy to recapture his immense talent.

His Book of the New Moral World supplements the co-operative and analytical sections of the New View of Society. But here he opposed private property, marriage, and religion, at least as they existed in his time. For him each must labor and each has an equal right in the product, according to his age. The future communist world is not only sighed for; it is also schemed, diagrammed, its modes of circulation fixed as well as of manufacture.

But above all it was the economic perception of Owen as a manufacturer, that the production process was fundamental, circulation derivative; of the contradiction between productive forces and their class utilization; and of the possibilities of technology, that led on to the Marxian doctrine and separated Owen from eighteenth-century communists like Morelly and Mably and the English radical, Godwin.¹¹

Charles Fourier

Owen was humane and practical, but he was not critical and he did not understand the political superstructure of the economic basis. Two Frenchmen are responsible for this clarification, Charles Fourier and Saint-Simon.

Fourier was a man in whom an analytical genius was allied to the most fanciful concepts. The latter have made him the butt of vulgar minds. He was convinced that under Socialism the sea would be turned into lemonade and that France would have forty million Homers and Newtons instead of nearly forty million nobodies.

These aspects of his thought, as also the terrifically detailed pictures of phalansteries, or integrated communal production groups, are stressed in most studies of the man.

Palgrave’s Dictionary of Political Economy descends to this low level, as it does in some other articles. It is by this means that unoriginal and cowardly commentators assail the reputations of pioneers.

Fourier had the weaknesses of originality. The same type of mind that makes a man question everything and explore to the depths, makes him wish to put up structures to the heavens. Unlimited curiosity and honesty is free of social limits and social shame. The sterile soul that sniffs books safely in the dead ranks of library shelves defends itself by attacking the men that dared. But Fourier must be appraised not by his weaknesses, for in those he is similar to men that have left no mark, but by his immense contribution.

That was the complete inventory and criticism of bourgeois society. When the French Revolution had given rise to the most financial society yet known, Fourier tried to analyze the failure of all the ideals of the revolution, liberty, equality, fraternity.

He analyzed the structure of society with a wealth of wit and satire but also with a study of the genesis of all these social forms in the mode of production and acquisition of wealth.

He sees it, unlike Owen, as an evolution. All these ideas are commonplace to us now, but we owe them mainly to Fourier. He was the first to perceive that every institution, as it evolves, achieves the opposite of what it set out to do. He saw that the cause of poverty was not the absence of goods but their presence in abundance. Engels says that Fourier understands dialectics as well as the German philosophers but with French gaiety and sparkle. Marx learned the application of the dialectical method, especially to political economy, from Fourier.

Fourier analyzed inefficiency in production and exchange, and this at a time when everyone was impressed by the dizzy gains in production due to the innovation of capitalism. He saw that the bulk of society’s forces are not engaged in production at all. His catalogue of waste is interesting:

First Waste: Useless or destructive labor.

(1) the army (2) the idle rich (3) ne’er-do-wells (4) sharpers (5) prostitutes (6) magistrates (7) police (8) lawyers (9) philosophical cranks (10) bureaucrats (11) spies (12) priests and clergymen.

Second Waste: Misdirected work, since society makes it repellent, and not a vehicle of man’s personality, attractive to him.

(a) Deflection of the passions into greed and morbidity, instead of their being utilized as society’s motors.

(b) Scale of production too small to utilize labor properly (this has certainly been altered since Fourier’s day).

(c) No co-operation.

(d) No control of production.

(e) No adjustment of supply to demand, except by the mechanism of the “blind” market.

(f) The family: this economic and educational unit is absurdly small.

Third Waste: Commerce dominated by middlemen.

It takes a hundred men to do what society, with warehouses, distributed according to need, could do with one. A hundred men sit at counters, wasting hours waiting for someone to enter, a hundred people write inventories, etc., competitively. (This later became the platitude of socialist street speakers, who contrasted the one postman with the three or four milkmen or grocer’s boys doing the same rounds.) These hundred wasted merchants eat without producing.

Fourth Waste: Wage labor in indirect servitude; cost of class antagonisms. Since class interests are opposed, the costs keeping men divided are greater than the gains in making them co-operate.

Fourier concludes that one-third of the people really work at something useful and the other two-thirds, no matter how much they buzz about, do no real work but are parasitic. And even this useful third receive no proper workers’ training, due to class corruption and distortion, and so they work poorly.

Society for Fourier will run a history parallel to the individual and must eventually die of old age. It has eight periods, from youth to senility, and we are now in the fifth. Unless man rejuvenates himself, the present gradual concentration of wealth, united to financial power, will produce a new feudalism and abolish the democratic gains of the French Revolution. This will lead to increasing misery for the many. This is a concrete anticipation of Marx.

Fourier called himself a “sergeant of trade.” He was a thriving merchant in Marseilles, and as Skelton so well puts it, “he analyzed waste with Poe-like imagination,” although he reproaches Fourier with his rectangular temperament.

Fourier, who hated industrialism, commerce, and finance, thought, like Owen, that the way out was by way of communal colonies. But unlike Owen he rejected communism and quaintly maintained even shares of stock and dividends in his communal society.

His influence on American thought was very important. Fourierists and Cabetists (an offspring sect) established colonies in the promised land, America. The Utopian movement described by Noyes and Hillquit in America was of Fourierist as well as Owenite origins. In New England it led to the Brook Farm experiment. Emerson and Whitman were affected by it. The American, Brisbane (father of the journalist who spent his life preaching the opposite), was the systematizer of Fourier’s thought in America. Nowhere has it left so deep a mark as in the United States, except for its effect on Marx himself.

Saint-Simon

Of the three founders of Socialism, Claude Henri de Rouvray, Comte de Saint-Simon, is much the biggest man. Of that bizarre family of aristocrats,¹² always on the periphery of the noble order, he thought for himself from youth.

The French Revolution, which ended his class, conjured up his system. He saw that the Revolution was not a collection of phrases, party cries, and theories. He saw that it was not made up of the “mob” against the “aristocrats.” For liquidating the version of history that still dominates the moving-picture industry, we are indebted to Saint-Simon. It was for him a conflict between the feudal elements, who owned the soil, the bourgeoisie who owned factories and ran commerce, and the poor workers and peasants. Property was at the base of ideas and parties.

Politics, he said later, is merely the science of production and as society becomes more complex, politics as such must fade and disappear into economics. At a time when diplomats and generals were still thought to create history, to have moved its habitation from the salon to the factory and railroad required a prophetic brain.

The state will go like any other device when economic society can regulate itself without that archaic contrivance.

Saint-Simon founded a new religion, which had offspring sects. Outside of political economy there are no socialist notions in Marx that (apart from their special setting) are not to be found in his works.

That is not to say that he worked out the import of all he conjectured. But he was so suggestive in his study of the historical framework of economics and the meaning of history that Marx is indirectly his scholar. His socialism was esthetic and aristocratic and mystical; that would not much impress Marx.

But his Nouveau Monde Industriel contains an astonishing number of ideas that recur in Marx, in the economic sphere as well. His immediate scheme was “the constant amelioration of the condition of the poorest and most numerous class.” For all that, he thought they required false ideas to keep them happy.

“Physics for the educated and Deism for the lowly” was his aristocratic epigram. Nor was Saint-Simon wholly materialistic in history, sharp as were his ideas. He believed in the abstract idea of progress, like his worshiped Condorcet who expiated the belief in the Terror. His motto, “From each according to his capacity, to each what he produces,” was made by Marx the watchword of the Socialist society to precede the Communist, “from each according to his capacities, to each according to his needs.”

It was from Saint-Simon that Marx learned that a social structure—a new one, that is—can be built only on the data of the society that exists, not of the one that one wishes.

Above all, it was from Saint-Simon that Marx learned the use of the word “class” as he employs it, as a group dependent on a particular mode of production relations, and as explaining the movement of history.

That is the opening paragraph of the Communist Manifesto. Historians like Mignet, Thierry, and Guizot, though bourgeois, took over Saint-Simon’s economic and class ideas and remade their science: their perceptions were more significant than those of the technically more advanced Germans like Ranke. Guizot plainly stated that history is class struggle.

It is little wonder that a man like Saint-Simon who opened so many vistas came, after his death, to be regarded by some forty thousand people as the reincarnation of an aspect of Jesus, as the incarnation of social dogma, as Christ was of the Godhead. A large number of the most active intelligences in Europe were seduced by this temporary adoration.

Saint-Simon was more scientific than other “Utopians.” He, too, held that private property was an evil, and was a right to receive an unearned income from the industry of others. Both capitalists and landed proprietors are the depositories of the past labor of others. This takes the shape of instruments of labor. Thus they collect rents and interest.

But Saint-Simon held that the entrepreneur suffered too, though less than the laborers. The exploitation of labor by wages is disguised slavery. The employment contract is not free. It is moneybags versus an empty stomach. Production is therefore badly organized and distribution unjustly effected.

Each period contains in itself the germ of its successor. Saint-Simon held that although history has governed up to now, his new principle of association would terminate change, in that sense, by the power of ideas. At no point has he asked, How is capital accumulated and renewed? For him it is conveyed by heredity out of past plunder, and the hereditary owners use the past instruments of labor to extort gain. This was a natural philosophy to a hereditary nobleman.

From his economic ideas flowed the notion that credit diffusion would save mankind by credit co-operatives. A large number of bankers and railroad promoters began as Saint-Simonians and decided that the large corporation with shares was the principle of association he forecast. De Lesseps who built the Panama Canal, the Percire brothers who financed railroads, etc., were Saint-Simonians.

His disciples, Father Enfantin, Bazard, Pecqueur, Cabet, Considérant, mostly formed societies based on Saint-Simonian ideas, in the Mississippi Valley and in Texas, by way of New Orleans which naturally attracted Frenchmen. At Nauvoo, where the communistically inclined Mormons met their Calvary, the most thriving settlement was made.

Despite his socialism, Saint-Simon’s theory that technicians, businessmen, and bankers were the natural leaders of socialist communities and that ideas alone were paramount, once classes were liquidated, led to easy divergences from his original idealism.

The sources here given do not exhaust the immediate inspirers of Marx. William Thompson, with his suggestive ideas on labor and the ratio of accumulated wealth to current and future production, is extremely important.¹³

The Ricardian Socialists and Chartists

The English workers, in the full flush of early trades unionism and Chartism, were quick to see the implications of Ricardo’s doctrines. The Irish landlord, William Thompson, invented the expression “surplus value,” from which Menger pedantically assumes that Marx “took” the idea. Really it was a convenient name for Ricardo’s profit-idea. Thompson also saw that the total labor of man was about three years’ production, and that even of that, the productive elements were less than the total, so that the capital that people strive to preserve cannot be the secret of their conservatism, but its ability to extract profit forever is what causes the upper classes to defend “property.” What they are defending is not property at all; their mantelpieces and chairs would let them starve, after a few months, if they did not exploit labor by the instruments of production they owned. The wealth of man is knowledge and co-operation for continuous production.

From the day of Thomas Spence (about 1780), who saw the meaning of rent as no one until Marx did, and Charles Hall, who held that the poor are robbed of seven-eighths of their income, English labor was awaiting an economic theory. At first it explored carefully. Hodgskin was more acute in stating the labor theory of value than Ricardo himself, and saw that it led to class struggle, but he distinguished lazy from productive rich people. John Gray said that barter was the true basis of exchange and that money falsifies values. National warehouses should determine prices based on labor value. The Poor Man’s Guardian in 1831 took up the song

The so-called English sources of Marx were thus a compound of “natural justice” advocates and post-Ricardian Socialists.

Nor were honest men wanting among the Tories. Malthus, arch-defender of the social order, held that there must always be a basic disharmony of three classes, the workers, landlords, and capitalists, but he based this everlasting unhappy prospect on the struggle for subsistence whereas Ricardo based it on the nature of exchange.

Further French Sources

The French sources of Marx, apart from the two greatest thinkers, were more in the realm of practice and in acute detailed studies of concentration. French conspiracies had been endemic since Buonarotti, a disciple of the martyred Babeuf, had revived revolutionary conspiracy in 1820. Marx began his revolutionary activity as a conspirator in the secret League of the Communists, allied to the older secret League of the Just. From these sources, he obtained the correlation of theory with action that was to distinguish his economic theory from all precedent systems.

Babeuf (1760-1797) saw that if liberty, equality, and fraternity were to be more than words, a type of co-operation must replace competition. These ideas were current enough in Paris during the Terror. Saint-Just, the right-hand man of Robespierre held ideas of state, revolution, and political economy that sound as though they might have been written in 1939. The Paris commune of 1793 that defied the armies of the world was based on the artisans, the little shopkeepers, and the workers.

When Robespierre fell, Babeuf asked what class forces broke that power. He became the first militant revolutionist, allying theoretical communism to political action. His failure was due to the embryonic state of the proletariat and the absence of material conditions—that is, large-scale production—prerequisite to its emancipation. Unlike Winstanley’s, in Cromwell’s time, this was the first non-religious, economic, theoretically formed communism based on class action. On the side of history, Babeuf is the ancestor of Marx.

His greatest disciple was L. A. Blanqui (1805-1881), “the eternal prisoner.” Brother of one of the most distinguished academic economists in Europe, he forsook honors for conspiracy. For him, only one class can be relied on for the revolution, the proletariat. This immense contribution to Marx remains his monument. The workers were to be the nucleus of a change of class-power, and the peasants were to be placated. The problem was first of all capitalism, then agriculture. His other economic studies are also valuable.

Unfortunately Blanqui is remembered by most extremely haughty Marxians as a man who overrated conspiracy. That is a travesty. Marx esteemed him highly, despite his dramatic errors, and he was a potent factor in molding Marx’s system. Then too, his political realism has caused Benedetto Croce to say, with justice, that through this channel Marx became the most remarkable continuer of Machiavelli.

On the economic side, Louis Blanc (1811-1882) is important. His Organisation du Travail in 1839 is a landmark of socialist theory. Unlike the English socialists, the French were concerned with economic tendencies. They were not steeped in the Bible and so mistrusted eternal wisdom. He coined the phrase “from each according to his ability, to each according to his needs.”

He believed that social, universal workshops should be established until social capital was collectively owned.

It was the first time anyone had sought a realistic industrial method, based on what existed, as a lever to bring about Socialism. In its early stages, the compensation for labor was to be based on time devoted to work. It is not to the point that Blanc proved an opportunist and shabby political type. His scheme of National Workshops was the first demand of the Paris workers in 1848 and was shamelessly sabotaged by Thomas, the government agent in charge, so that for fifty years it could be cited triumphantly to show that “socialism can’t work.”

Louis Blanc, also, formulated the idea of the inevitable concentration of capital more concretely than did Fourier. Both Considérant and Pecqueur declared that cheap prices would cripple the small producer and lead to large scale production, which alone could cheapen costs to meet lower prices. Either feudalism or social ownership would be the only alternatives when this developed. It was Louis Blanc who stated that cheap prices must lead to concentration and then to centralization, and used the phrase, “large capitalists eat up the small.”

To sum up: “Surplus-value,” with no reference to its source, the twofold nature of labor, comes by way of Turgot, Godwin, Hall, and Thompson, through Ricardo as the theoretical foundation. But it is not Marx’s idea at all, merely the notions that must have set him to his task, which was to find out why there was a profit not realized exclusively in production or in distribution.

The theory of concentration was suggested, in some outlines and even as to its mechanics, by Fourier, Blanc, Considérant, Pecqueur.

The class struggle came from Saint-Simon, Thierry, Guizot.

Dynamic economics came from Sismondi, and also the idea that classical economy had turned into its opposite, socialism.

The periodicity and necessity of crises, as formal ideas, came also from Sismondi, Owen, Fourier.

The proletariat as the lone carrier of revolution to begin with, was Blanqui’s idea.

But all these together, and the others detailed before, no more explain Marx and Engels than the predecessors of Shakespeare explain Shakespeare. Neither Marlowe’s blank verse nor the sonnet forms of Sidney explain the syncretic genius of Shakespeare. Nor does a collection of snippets explain the total systematic work of Marx, nor the fact that the only Socialism that ever moved the masses and concerns the thinkers of the world is Marx’s.

The miserably inadequate socialist fantasies of Immanuel Kant and Fichte, their philosophers’ closed economies in a pocket-handkerchief state, are not his sources either, pace economic historians, any more than Plato’s Republic is. The “true” German socialists or communists, such as Weitling, Hess, Grün, could have suggested little to that acute mind.

Marx transformed the economic theory of socialism, first, from ethical to scientific; second, from “socialist”—that is, static—schemes to what he termed communism—that is, a kinetic scheme; third, it directed attention from the future to a realistic critique of the present, as the only source of the future; fourth, it excluded utopianism; fifth, it held for evolution; sixth, it denied class co-operation or philanthropy and was based on class struggle; seventh, it was historic, it held that the role of the working class was not made because it incarnated justice, as Blanqui thought, but that certain material conditions made it significant as the future class. Eighth, it held that man was determined basically by his modes of production relations and their interplay with techniques; and ninth, that man could remold history, within obedience to a given set of facts.

From that point on, dead ideas in all his predecessors sprang into life, for they were of the stuff of man’s experience. Marx counted with his environment, and yet made it serve as an economic horoscope. No phrase like concentration of capital, or surplus value, or profit, or labor-time has anything like the same meaning hereafter in Marx as in his predecessors, to whom, nevertheless, he was so much indebted.

If anything, there has been too much of an attempt, on the part of those who seek to reduce the historic significance of Marx, to state that he took whole sections of his economic theory from Ravenstone, Hodgskin, Thompson, Bray, etc. Of course on so pervasive a theme as labor and production, hundreds of ideas are bound to converge in sharp intelligences, but regrettably mostly as isolated observations or as fragments of a system, at best.

German Historic Sources

Marx was educated in Germany at a time when the worship of history was almost excessive. When Böckh in his Political Economy of the Athenians, published in 1818, demonstrated the role of the silver mines of Larium in the Athenian policies, he upset idealistic ancient history for an economic outlook.

Moser’s History of Osnabruck had given the German mind an economic-historical outlook that had no match in Europe until Thierry, Mignet, and Guizot wrote in France. When Marx studied, German economy of the bourgeois type, like that of List, aimed at a historic base for economics, and so did the unmethodical Roscher.

Those who wish to recreate this atmosphere (but they must really be equipped) should read Lord Acton’s “German Schools of History” in the English Historical Review, Volume I. A good description of their methods and enthusiasms, above all of Ranke, is given in Gooch’s elegant but somewhat disappointing History and Historians of the Nineteenth Century.

Marx’s Rivals

In his lifetime Marx had four rivals whose theories for a time enjoyed a popularity equaling or surpassing his. These were the Anarchists, P. J. Proudhon and Michael Bakunin, and the Socialists, Ferdinand Lasalle and Karl Rodbertus. That is not to say that these exhausted the roll-call of socialist theoreticians, many of whom were sharp and suggestive in thinking. Some of the greatest names in the Socialist movement, though, were not strong in economic thinking. Such was the grand old man of revolution, Blanqui, who taught Marx much in tactics but little in political economy.

There were all sorts of systematic economic critics such as the remarkable Russian (whose long name torments Anglo-Saxons), Tschernischewski, and the systematic Lavroff.¹⁴ But the four men mentioned above stand out as conspicuous in socialist theory as John Stuart Mill then was in bourgeois economics. (He too became a state socialist in later life, but his conversion was largely sentimental.)

One other influence must be noted. It was outside of political economy but it influenced Marx and Engels extremely. That was Charles Darwin, whose Origin of Species came out in 1859, the same year as Marx’s first great economic essay, Critique of Political Economy.

Darwin was interpreted by Marx and Engels in a Hegelian and Socialist manner, an interpretation exactly the opposite of that of the individualists Huxley and Spencer.

The Socialist summing up of some of his lessons, though, was left to an Anarchist, the geographer, Prince Peter Kropotkin, whose Mutual Aid remains the most suggestive biological summary of co-operative effort in biology and human endeavor ever produced, one that annulled the vulgar axiom of the “survival of the fittest.”

Proudhon

First in time comes Proudhon. He is not the most important of the Anarchists; in fact, for clear economic thinking he must yield pride of place to two good Yankee Anarchists, Josiah Warren and Stephen Pearl Andrews.

But a man must be judged by his influence as well, and Proudhon’s ideas are not only still popular with Anarchists, but from him comes every type of currency idea, such as “credit currency,” that enchant the declassed elements from bankrupt grocers down to futurist poets.

He bases his theory on an ethical indictment, “Property is theft.” We must leave out of account his theory of autonomous groups (still the gospel of a million workers in Spain) and his hostility to trades unionism (to which these Spanish disciples emphatically dissent). His economic theory turns on how to annul the theft called property. He proposes to attack the problem in the sphere of circulation, in that of credit.

Interest on money loaned is at the source of all economic dislocation. The lender sells the same article over and over again (money) and receives its price over and over again (interest) and still owns it.

But a man who sells a hat sells it for good; he has the money, his client has the hat.

As Marx says, he never sees that selling is an act of conserving the value you have for you yield it only for an equivalent. If the seller has surplus-value in the value of hat (and he usually has), then he conserves the increase of value in it with every dollar of money he takes in in exchange for it. He has the same surplus and yet, since he sold the hat at its value, retains the same original value as the moneylender.

Of course, where Proudhon adds the cost of interest to the cost of the hat, Marx assumes that the interest is a division of surplus value already embodied in the hat.

Hence the talk of “interest-slavery” of the capitalist to the banker (used by Hitler and Feder as vote-bait and promptly forgotten) is to Marx a superficial form of accounting.

But it immensely impressed even Saint-Simon financiers, and such important politicians as Napoleon III were affected by Proudhon’s ideas that cheap and abundant credit reduced industrial costs. For that reason the Bank of France has since discounted notes so small that no American bank would ever look at them. As part of the political defenses of the little shopkeeper and independent artisan in France and the Latin countries, it is impossible to overrate Proudhon’s influence.¹⁵

He is rigorous in his definition of an economic class. To him, the receipt of interest meant that the same men who loaned money would be the men that forever controlled credit and owned capital. His system was made the subject of attack by Marx in his polemic The Poverty of Philosophy, a reply to Proudhon’s Philosophy of Poverty. Despite its rather elephantine humor, it is decisive, and only the Anarchists still think Proudhon survived the engagement.

Bonar, in Philosophy and Political Economy, says that in the then tone of controversy, Marx was really comparatively moderate. What irritated Marx was Proudhon’s true statement that political economy was a dismal science without philosophy, and then the shoddy Hegelianism he retailed.

He also resented Proudhon’s calm appropriation of the “productive association” ideas of Louis Blanc.

The most valuable part of Marx’s economic examination is that of the so-called droit d’aubaine or right of toll which Proudhon held required the laborer to pay back, in prices for goods consumed, the surplus above what he was paid in wages. That is, he constantly rewarded the capitalists for plundering him. Marx’s exposure of this shallow radicalism is much required today.

For all that, Proudhon’s followers were so powerful in the labor movement that Marx had to combine with them in the First International Workingmen’s Association. In the Paris Commune, the Proudhonists did yeoman service in the financial organization of that short-lived but significant revolution.

Proudhonism has dogged the footsteps of Marxism from 1847 to the present day. Its type of thinking is the standard “radical” approach throughout the world. It is common to currency reformers and fascists (in theory), and its isolation of the banker as the source of all evil is extremely popular. But it lacks any understanding of the totality of production relations, and is gaseous.

Bakunin

The teachings of Michael Bakunin were wholly different. He favored trades unionism of an aggressive sort and from him flows the fighting Anarchist and later (through a Frenchman, Sorel)¹⁶ the Syndicalist doctrine. This is a form of what is termed “economism.”

That is the notion that all political action and reference is anti-economic, purely predatory, and evil and that prior to the realization of any ordered economy, the state must be destroyed, and by force.

Bakunin must then think of the state as an active force, above society, but as imposing the domination of the rich. In addition he requires militant atheism, since God is only another name for the police, for a force above man, who is himself the highest good.

Bakunin is a communist in the primitive sense; that is, he favors free, autonomous communes (on a collectivist basis), self-sustaining as to means of subsistence, but making arrangement by fluid treaties with other groups for superfluities and transport.

Modified into anarchist communism by Malatesta, the theory has been carried into detail (and the collectivist idea altered) by Kropotkin in Fields, Factories and Workshops and by the Spanish Anarchist-economist, the resourceful Santillana.

The anarchist, unlike the Marxian, will not accept the capitalist system as given, as the basis for analysis, and the study of its actual tendencies as a substitute for immediate action. For the Marxian, political economy is the science of the capitalist system; when that goes political economy goes with it. For the Bakuninists, political economy is a normative science, that is, one that sets standards by which the capitalist system is to be judged.

As Marx rejected any analysis that did not conscientiously observe the real and eliminate the wishful, the controversy between his followers and those of Bakunin was bitter and never has been healed.

They regard Marx as a man who merely takes over the whole of the capitalist mistakes—giant factories, mass production, immense cities—and rivets them onto the workers forever with a socialist bureaucracy.

For them the function of revolution is not to understand but to annihilate that which is not worth understanding because it is so vile. The lifetime behavior of Thoreau, for example, would have been cheerfully endorsed by Bakunin were it not for his mildness. The questions this raises are outside of political economy. But that is not to say that the economic work of such men as Kropotkin is not important and deserving of high respect.

Ferdinand Lasalle

The Socialist thinker who has enjoyed a following rivaling that of Marx was the German lawyer, orator, and economist Ferdinand Lasalle. In his short but hectic life he made far more noise than Marx ever did. Bismarck treated with him and his political pronouncements were European news.

He is a direct follower of Ricardo. He holds that labor creates all wealth and that the “iron law of wages” makes it certain that they will always fall to the lowest level at which life can be sustained.

From that point of view, it is clear that the working class has no interest in taxation, since if it is merely paid enough to live on, then it is without a cent of surplus and all the questions raised by statesmen such as protection of free trade, or high or low taxes, or sound and unsound money are all bourgeois swindles and do not concern them.

The “iron law of wages” of Lasalle is often confounded with the subtle Marxian doctrine, and it has left traces in ostensibly socialist movements, especially in the United States. The most brilliant, polemical Marxian advocate this country has seen, Daniel de Leon (once of Columbia University), followed the Lasallean doctrine in such matters as taxation as though Marx had believed this.¹⁷

Lasalle held that capital is a means of production, that managers in factories help produce wealth (not extract surplus-value), etc.

The influence of Lasalle, like that of Fourier, Owen, and Saint-Simon, was rather on intellectuals and leaders than on the workers and their trades unions. That piqued him and, perhaps, made him exaggerate economic dogmas like the “iron law of wages,” and demand the “full product of labor.”

He held that compared to the working class all other classes form a homogeneous reactionary mass.

Lasalle did not distinguish between labor and labor-power.

What is worse, if Lasalle had to state why the “iron law of wages” prevailed, he would have to formulate two arguments. One that there is a perennial oversupply of laborers, which is the argument of Malthus and is certainly no argument for socialism, or secondly, he would have to assume that if labor was the only creator of wealth, and the worker’s subsistence had to sink lower all the time, that he was “robbed” of the full produce of his labor.

In other words, Lasalle would have been forced to biological or ethical outlets for his wretchedly thought-out economic system.

What has remained of Lasalle are his extremely amusing pamphlets and his ability to stamp vulgar coins, so that if the man in the street and even the average socialist were asked what was Marxian Socialism, he would define it in Lasallean terms.¹⁸

Rodbertus

The last of the four rivals was a Prussian Junker, Karl von Rodbertus-Jagetzow (1805-1875). He was a systematic thinker, ponderous, sharp, and extremely belligerent. He was convinced that important doctrines of Marx had been pilfered from his writings, including that of surplus-value, interest, and rent.

As he had been Minister of Commerce of Prussia when Marx was a revolutionist, his charges were given weight. He wrote a treatise, later called Capital, and one on The Demands of the Working Class, among a host of others.

A landlord and rural gentleman, he saw all of political economy as comprehended in the forms of rent payments customary in his region.

Rent is the addition of ground rent and profit and it represents a deduction of value from the wages of labor. Wages represent only a part of the value of a given product. If labor is sufficiently productive wages need not be “equal to the natural exchange value of labor’s product” so that a surplus can be left for the replacement of capital and for “rent.”

So far we are not ahead of, nor even as clear as, Ricardo and his advanced disciples. But Rodbertus became for the German scholars, above all, the exemplar of critical socialism and Böhm-Bawerk ranked him with Marx (even higher) as an advocate of what he chose to term the “exploitation theory of interest.” This is part (perhaps unconsciously) of the systematic denigration of Marx.

Actually Rodbertus held that any theory of surplus-value, as created by labor, was purely conceptual and did not apply to our present society. He was an underconsumptionist like Sismondi. Rodbertus held the surprising view that the mass of capital was immaterial to profits. The higher the capital, the higher the mass of profits, the lower, the less, but the rate never changes. That means that the capitalists of this earth who have tried to increase the rate of profits by concentration were subject to a collective economic hallucination.

It is true that if prices expressed in changes of money, alter, or if the proportion of constant to variable capital is unchanged, the rate of surplus-value is unchanged. But it is the object of concentration of capitals to change that organic composition. But that larger capitals do not increase the profits of their participants over what they would have had separately has been proved statistically wrong even apart from theory.

Rodbertus held that only goods that contain labor are economic. All others are natural goods. By labor he means material labor that changes the shape or position of natural goods.

Rent persists because labor can produce a surplus above its needs and because of private property in land.

Owing to their hunger, the laborers give all they produce to the capitalist, who returns them a pittance. Rent increases with productivity, since labor receives only a maintenance and can never participate in any new surplus above that maintenance.

But rent, wonder of wonders, is also a salary for management, as well as plunder. Rodbertus holds, like Marx, that the quantity of labor is value, but he sees one kind of labor only. His idea that the capitalist appropriates surplus in the wage contract differs from Marx, who holds that the laborer is paid value in the contract, as such.

Wages can be increased only at the cost of “rents.” Or wages can be increased out of production gains without reducing money “rents.” Mind and nature do not enter into costs (then why wages of management?). Costs are three: raw materials, labor, depletion of tools.

The laborer produces his own food. Since value decreases with productivity (also similar to Marx), and land rent is antithetical to capital rent, the effect of increased productivity causes each of the two capitalist classes to seek to recover value from its own laborers. This is easy because labor is bought and sold for the cost price of foods, as expressed in labor and not in money, for that includes a “rent.”

Rodbertus held that property could be abolished and yet income remain. Like Fourier, Saint-Simon, and Sismondi, he could not bear to see rich people deprived of all resources and so he smuggled in their claims. No wonder that, although theoretically Rodbertus is more radical than Marx, and with Lasalle held everyone but the workers to constitute a homogencous reactionary mass, the two got together to help Bismarck! Lasalle paid the tribute to Rodbertus that he, and not Marx, was the German Ricardo. Actually we know that practically every idea of Rodbertus comes from Sismondi with a dash of Saint-Simon. A Junker disciple of Frenchmen is a rare bird; it was not suspected until much later.

Rodbertus’s agrarian and bureaucratic socialism found high favor with the governing class. Since he held land to be alienated capitalistically, the cabbage Junkers, as Marx termed them, saw in him a savior. His theory that the three factors in production are paid for their market services, but are abstracted from the producer (a pale imitation of Marx’s surplus-value and the modalities of its division), was hailed by Wagner and others as the key to political economy.

He also advocated a labor-currency to replace money and, of course, it would be based on labor-time. His social remedy was rent-limitation, so that the landlords (he was one) kept their income, but participated in no increment in the future. Land ownership also should be inalienable in the family. No wonder Hitler has adopted his notion of blood primacy by making the right of the eldest son to a farm, inalienable, and leaving the other children to figure it out!

Because of Rodbertus’s inability to formulate a real theory of surplus-value (based on an understanding of twofold labor, and the sale of labor-power), Engels in his introduction to Volume II of Capital challenged the disciples of Rodbertus to explain how an equal rate of profit could come about, not in violation of the law of value but because of it. If Rodbertus was practically as good as Marx, this could be done easily. It was not taken up.

Rodbertus had no method of escaping from contradictions, such as Marx had with his subsequent divisions of surplus-value, etc. Hence he is touted generally as far more profound than Marx because he is so much more casily vanquished, and if you assimilate a genius to a plodding fellow and say they are the same and refute the plodder, you appear then to have refuted the genius. This is the exact procedure of Böhm-Bawerk in Capital and Interest, but its prestidigitation imposes on no one any longer.

But Rodbertus was a close thinker, and in many fields, well worth close attention. His rank is due partly to his social position and as a forerunner of “state socialism.” He saw the difference between natural and social forms of production, and he pointed out that political economy deals not with a real (a physical) world but one framed by private property. He saw that the “waiting” theory of production, such as that of Böhm-Bawerk, was contradicted by the simultaneous processes of production, so that the serial production-time idea of the Austrians was a false abstraction.

Unfortunately for theory, Rodbertus thought there was a “logical” conception of capital which was independent of a “historical” conception. But even when the greatest allowances are made, it is a fact that there is little in Rodbertus that is not more systematically and organically given in Marx; his reputation will continue to be based on the fact that independently he came nearer than anyone else to a large number of quasi-Marxian theories. Owing to his high social and political position, too, he was important because he compelled respectful attention to that type of criticism.

CHRONOLOGY OF BOOKS AND SIGNIFICANT EVENTS LEADING TO
MARXIAN POLITICAL ECONOMY

Footnotes

1. Except where class interests were not involved. The penetrating analysis of J. E. Cairnes on the slave power in America was first-rate objective British science.

2. And also the first to anticipate the Ricardian law of rent.

3. Not enough attention has been paid to the rich contribution of Hegelian thought to Marx’s notion of economic categories immanent in capitalism and externalized categories, such as value and price of production; for example, value, immanent; prices of production, externalized.

4. Bryan’s “Cross of Gold” speech (1896) is an echo. He was unconsciously a Physiocrat.

5. If Smith had hit on the twofold nature of labor, he would have been led out of his circle.

6. Ricardo knew but deliberately ignored historical changes and forces outside economics.

7. And some modern economists like Fetter give it a curious meaning.

8. According to H. Grossman, even Boudin and Cunow, famed Marxians, have fallen into Sismondi’s errors. Owing to the consequences of Sismondi’s theories on political action, Lenin frequently attacked his presuppositions.

9. Both Gonner and Davenport have tried to reduce the direct labor-value theory of Ricardo, pointing to its exceptions; they have added little to Sismondi.

10. Sismondi’s underconsumptionist theories were given in literary guise; an old friend of Mme. de Staël, colorful history and the study of literature were his main interests; political economy an amazing side-interest.

11. Other ideas of Owen that inspired Engels were the end of the town-country difference; his environmentalism, which meant that circumstances determine men’s individual and collective acts; his theory that society from now on required collective and not individual actions to remedy defects.

12. Alleged descendants of Charlemagne.

13. See the informative Right to the Full Produce of Labor by Anton Menger (London, 1891); philosophically weak but excellent history.

14. Benoit Malon (1841-1893), in his Socialisme Intégral (1879), rejected historic materialism for preconceived ideas of justice implicit in the masses. This affected the Russian “Narodniks.”

15. See the speeches of the French banker, Lanson, in my novel The World Is Mine. [Author.]

16. Really Sorel was a disciple of Lagardelle.

17. See the pamphlet of John D. Goerke published by the Socialist Labor Party (followers of Daniel de Leon) on “Taxation.”

18. Many commonly used economics textbooks would confirm this.

19. Orthography varies; also spelled Boisguillebert.

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