DOCUMENT 10 On the History of the Theory of Value (1903)
Rudolf Hilferding
Source: Rudolf Hilferding, ‘Zur Geschichte der Werttheorie', Die Neue Zeit, 21. 1902-3,1. Bd. (1903), H. 7, s. 213-17.
A review of Wilhelm Liebknecht, Zur Geschichte der Werttheorie in England [The History of the Theory of Value in England], Jena: Fischer, 1902.
Introduction by the Editors
In this essay Rudolf Hilferding addresses a twofold meaning of labour: as a physiological fact, and as a social-economic category of capitalist society. In the first sense, as Wilhelm Liebknecht1 pointed out, labour is an expenditure of human energy. In that regard he cited Marx's comment in Capital that all human labour is ‘essentially the expenditure of human brain, nerves, muscles and sense organs'. As Hilferding notes, the conclusion would appear to be that ‘the value of a product depends solely upon the amount of energy spent upon its production, which in turn is evidently determined by two factors: the duration and the intensity of labour. Skilled labour is more value-creating than simple labour only if it is also more intensive, which tends to be correct in general terms'.
But Hilferding adds that Marx's theory of labour value must also be understood ‘on methodological grounds', which in turn leads to the treatment of labour as a social-economic category. In his notes on ‘The Method of Political Economy', Marx spoke of labour as one of the ‘most simple definitions', reached through analysis of an initially given abstraction, a pre-given whole such as the economy or population. After arriving analytically at the most ‘simple concepts', it is then necessary to reconstruct society in thought, ending with ‘a totality comprising many determinations and relations'.[685] [686] From the perspective of political economy, the social significance of any simple concept is determined by the whole in which it is situated.[687] Labour, as a physiological fact, has a very different meaning from labour as an economic category in the social system of capitalism. It is true, Marx notes, that simple categories, including labour, may have an independent ‘historical or natural existence' that precedes their more concrete forms.[688] Physical ‘possession', for example, precedes the legal form of ‘property'; and ‘Money may exist and has existed in historical time before capital, banks, wage-labour, etc. came into being'.[689] Nevertheless, the simple category only reaches ‘its complete intensive and extensive development. in a complex social formation...'.[690] In the context of emerging capitalism, Adam Smith was able to treat ‘labour as such', whether in manufacturing, commerce or agriculture, as the universal activity that produces wealth. ‘It might seem', wrote Marx, ‘that. merely an abstract expression was found for the simplest and most ancient relation in which human beings act as producers - irrespective of the type of society they live in. This is true in one respect, but not in another'.[691] It was true in the sense that labour obviously occurred in primitive communities, but the universal abstraction of labour as value logically presupposed generalised commodity exchange. The social form of wage-labour, in turn, presupposes private ownership of the means of production. As Hilferding comments, wage-labour is ‘an historicalform, through which the proportional distribution of the total labour of society, required for production [Herstellung] of the social product, asserts itself in a society characterised by the fact that the connection of social labour takes place through the private exchange of individual labour products'. In the notes on method, Marx gave the following account of the universal role of wage-labour as a social category of capitalist society: The fact that the specific kind of labour is irrelevant presupposes a highly developed complex of actually existing kinds of labour, none of which is any more the all-important one [as, for instance, agricultural labour was in feudal society]. The labour that concerns Marx is the social category of wage-labour, whose value is the objective cost of reproducing labour power - including both means of subsistence and, as Hilferding points out, the educational costs involved in the reproduction of skilled and complex labour - which in turn determines the value of commodities, the rate of surplus value, the tendency towards the social average rate of profit, and thus ultimately the distribution of all the productive forces of capitalist society. As an ‘economic category', says Hilferding, labour must be regarded ‘in its specific social form, in its social function. This happens when the total labour of society is regarded as a unit, of which each individual labour represents only the aliquot part. Only as part of a unit, of the total labour, are the individual labours mutually comparable; and their common measure is simple average labour - an historically, not a physiologically, determined magnitude, which changes with alterations of the historical circumstances'. Whereas Liebknecht understood ‘the concept of labour, as the value-principle, in physiological terms', Hilferding explains why that view is fundamentally mistaken: ‘Production and the labour spent upon it must be regarded not as a natural but as a social fact'. Rudolf Hilferding’s Review of Wilhelm Liebknecht, Zur Geschichte der Werttheorie in England [The History of the Theory of Value in England] In economic literature there is still no history of economic doctrines that can meet even modest standards. The circumstances have not been conducive to fulfilment of this task. The speed of social development, whose inner laws economics attempts to discover, has quickly made every system of political economy appear obsolete; a new one, better adapted to new phenomena and interests, soon appeared inevitable; and pressing problems left no room for detailed historical consideration. But our own times are likewise not favourable for the start [of such an enterprise]. The development of social contradictions more and more deprives bourgeois democracy of its innocence. Its representatives have abandoned too long ago the reckless disinterestedness of the great economists not to dread its reappearance. Finally, as the break-up continued and the [German] historical school negated the very possibility of a theoretical economics,[693] it has seemed a totally idle enterprise to write a history of political economy that would be a mere catalogue of fruitless errors. We must, therefore, content ourselves for the time being with some preliminary monographs dealing with individual doctrines or particular periods. But most of these presentations suffer from the drawback that the subjective views of the author constitute an obstacle to objective assessment of the economists. If a judgement of the significance of individual doctrines can only be understood contextually, in connection with an entire system, and if severance of this connection by any particular monograph [Elnzeldarstellung: individual presentation] already provides an opportunity in advance for arbitrary or unjustified objections, then a merely historical study of economic theories [dogmengeschlchtllche Studle] offers no objective standard whatever for appraising an economic doctrine. Wilhelm Liebknecht most likely thought something similar when he published his work on the history of the theory of value in England.n By choosing, however, to describe the theory of value as the basis of any great economic system [i.e. system of economic thought], he preserves the unity of the presentation as he portrays the characteristic traits and essential elements of each doctrine. And since he traces the historical development of criticism, he [also] secures his subjective point of view - which, in the absence of a genetic deriv- ation,12 must guide him in the arrangement and assessment of the authors - against eventual attacks and thus avoids any charge of arbitrariness. Liebknecht is a supporter of the labour theory of value. He sees in Ricardo the leading exponent of that theory prior to Marx, and, while describing Ricardo's predecessors in chronological sequence, he arranges the economists who came after Ricardo according to the position they adopted towards that theory. But if, in his criticism, he wanted to secure the labour theory of value, and in that way his own standpoint, against its enemies, he also had to include in his presentation that theory's most developed form, i.e. With the author's guidance, it is pleasing to follow how the original subjective conception - which looked for the cause of valorisation and regarded value as something only relative - was increasingly displaced by objectivist tendencies that strove to find an absolute standard of value, and how this [effort] was simultaneously accompanied by the separation of use-value, as a natural category, from exchange-value as a social category, until finally the labour theory of value was developed by Marx as the strictest objectivism. Marx regards the social category of exchange-value only as an historicalform, through which the proportional distribution of the total labour of society, required for production [Herstellung] of the social product, asserts itself in a society characterised by the fact that the connection of social labour takes place through the private exchange of individual labour products. By doing so, Marx substituted the objective standpoint of social production and distribution for the subjective starting point, viewed as the motivation for individuals engaged in economic activities. In the second part of the work, in his criticism of the theories [of value], Liebknecht first briefly shows the groundlessness of the theory of supply and demand as well as of the theory of production costs, in order to discuss in more detail the labour theory of value in its Marxist form. First of all, in an analysis that is all the more commendable given the many errors prevailing among both friends and opponents on the issue, he explains exactly what the progress from Ricardo to Marx involved. We would only have wished that the advance by Marx had been appreciated not only on purely economic but also on methodological grounds, which, of course, is impossible without probing more deeply into the connection between Marx's economics and his general social-theoretical views. But perhaps this task would have gone beyond the scope of Liebknecht's presentation. In his criticism of objections to the labour theory of value, Liebknecht first dismisses the tedious misunderstanding of those who interpret the theory in ethical terms and foist upon Marx judgements, whereas what he offers are explanations. Then Liebknecht considers in more detail two objections, one of which concerns the role of use-value in Marx's system while the other deals with the problem of skilled labour. The question of the significance of use-value leads to a debate with marginal utility psychology, whose inadequacy on the crucial points Liebknecht successfully demonstrates. It appears to us, however, that his remarks are less felicitous concerning the relation between simple and skilled labour. Liebknecht understands the concept of labour, as the value-principle, in physiological terms, referring to the well-known passage in Capital that says: however varied the useful kinds of labour, or productive activities, it is a physiological fact that they are functions of the human organism, and that each such function, whatever may be its nature or its form, is essentially the expenditure of human brain, nerves, muscles and sense organs.[697] But if one understands labour physiologically - and Liebknecht argues that one should regard this principle as underlying the whole system - one can only eliminate differences between various kinds of labour by reducing them to their physiological common measure; that is, to energy that is originally accumulated as potential energy in the human body through metabolism and then becomes fluid energy through labour. Accordingly, the value of a product depends solely upon the amount of energy spent upon its production, which in turn is evidently determined by two factors: the duration and the intensity of labour. Skilled labour is more value-creating than simple labour only if it is also more intensive, which tends to be correct in general terms. [But] we believe that this view is based upon a fundamental mistake. If labour is to be postulated as the value-principle, the question under consideration is not physiological but economical. It is difficult to see how the physiological concept of labour - incidentally, a view of labour in terms of mechanics would have fit Liebknecht’s presentation better - can explain any economic phenomenon at all. Physiologically, animal labour is just the same as human labour, which is why Adam Smith once declared the labour of domestic animals to be as value-creating as that of field workers, an opinion that one should not counter with the objection that for people only their labour comes into consideration, because with this appeal to human interest one immediately gives up the objective standpoint. Liebknecht’s quotation from Marx, so often misunderstood, refers only to the content of the concept of value, i.e. it merely states the natural fact that goods must be produced, that they are the products of labour. But if I consider that labour from a mechanical, physiological, technical or some other point of view, it will never be an economic category, and only as such can labour be the starting point of economic analysis - i.e. become the value-principle. Production and the labour spent upon it must be regarded not as a natural but as a social fact. But labour is a social and especially an economic category only when individual labour is regarded in its specific social form, in its social function. This happens when the total labour of society is regarded as a unit, of which each individual labour represents only the aliquot part. Only as part of a unit, of the total labour, are the individual labours mutually comparable; and their common measure is simple average labour - an historically, not a physiologically, determined magnitude, which changes with alterations of the historical circumstances. The introduction of public elementary school reduces the level of many previously skilled labours to simple average labour. On the other hand, capitalist development, when accompanied by physical degeneration of the population, brings previously simple labour, requiring great physical strength and dexterity, back to the level of skilled labour. And skilled or complicated labour is many times simple labour in a proportion determined not physiologically but economically; that is, in proportion to how much simple labour must be applied to generate complex labour through an educational process, which again must be regarded only from an economic and not from a physiological or psychological point of view. This is so because simple average labour, in its historical determination, is at the disposal of society for its production, but skilled labour is itself first a product of society. Its production involves the expenditure of a series of labours that produce complex labour; labours whose value-creating force exists in a latent form in complex labour and first becomes available through its expenditure.[698] But it is an unsupported claim to say that the value of complex labour power and its products stands in a certain proportion to physiological performance. A hard-working agricultural labourer certainly does not consume less energy than a Lancashire frame tenter [who looks after spinning frames], despite the great difference in both their wages and the value of their products. But we cannot refer to education, higher living standards and the like without returning to social factors, thus departing from the physiological point of view. That standpoint, however, is not only methodologically flawed; it is also entirely inappropriate for explaining economic phenomena in general. Instead of looking for the equality of qualitatively different labours in their character as parts of total social labour, it seeks to resolve their differences into mere differences of intensity, an attempt that must fail if only because an accurate measure for intensity exists only with qualitatively equal labours and consists of the amount of products they produce. But this objection to Liebknecht’s attempt to solve a problem, which is one of the most controversial issues in economic theory, does not affect the value of his study. Its historical part successfully fills a gap in the literature, and its criticisms are highly stimulating even where one cannot always agree with him on particulars.