DOCUMENT 7 The Prehistory of Marxian Economics (1911-12)

Rudolf Hilferding

Source: Rudolf Hilferding, ‘Aus der Vorgeschichte der Marxschen Okonomie’, Die Neue Zeit, 29.1910-11,2. Bd. (1911), H. 43, H. 44, H. 51, pp. 572-81, 620-8,885­94, and 30.1911-12,1.

Introduction by the Editors

Rudolf Hilferding’s review of the third volume of Theories of Surplus-Value is an outstanding work of scholarship and certainly deserves to be brought to the attention of present-day readers. His account of the logical coherence of Marx’s system, and of its relation to alternative views of philosophy and polit­ical economy, is so cogently argued that one wonders how it could possibly have escaped the attention of subsequent Marxist scholars. Hilferding wrote his review with two clear intentions in mind: first, to demonstrate the systemic integrity of Marx’s work; second, to finally put to rest the long-disputed ques­tion of how Marx conceived the relation between science and philosophy.

In the first document of this collection, Marx’s Russian reviewer, Illarion Kaufman, already struggled with the relation between science and philosophy. Kaufman thought Marx imposed Hegelian terminology on a work that in fact adopted the scientific approach of the biological sciences. Almost a century later, during the 1960s, this issue reappeared in a new round of debate sparked by the French Marxist Louis Althusser. Whereas Kaufman read Marx in terms of empiricism and an affinity with the natural sciences, Althusser claimed that Marx made an ‘epistemological break’ with Hegelian philosophy but simultan­eously repudiated ‘rationalist empiricism’.^[598] The contrast between Kaufman and Althusser provides a helpful context in which to situate Hilferding’s contribu­tion.

Althusser thought Marx established a firm distinction between ‘real’ ob­jects - which exist ‘outside the head’ of the investigator - and the true ‘object of knowledge', which is ‘a thought-object'.^[599] It was this distinction that led Marx to an entirely new approach to science, which Althusser called ‘theoretical practice of a scientific character'.

Thought reconstructing itself through thought was Althusser's explanation of dialectical materialism.^[601] Since Althusser believed theoretical practice has its own ‘protocols with which to validate the quality of its product',^[602] the ‘proof' of science depended neither on social class nor on political struggle. Just as Marx thought Hegel misunderstood the true meaning of his own work, so Althusser claimed the identical conclusion applied to Marx, whose writings could only be fully understood through a ‘symptomatic' reading aimed at disclosing hidden ‘texts' that Marx himself either neglected or was unable to articulate.^[603]

Althusser's understanding of Marx would have appeared bizarre to Hilferd- ing, who began his review with two clear convictions: first, that Marx knew perfectly well what he was doing - his manuscript on ‘The Method of Political Economy' had finally been published by Kautsky in 1903 - and second, that Marx's work must be seen as a coherent whole, issuing not from any ‘epistem­ological break' with Hegel but rather from a critical reassessment.

Besides drawing upon Marx's own discussion of method, however, Hilferd- ing also relied upon a more recent philosophy of science coming from the Austrian physicist Ernst Mach. Mach's positivism contradicted the influence on Marx coming from Hegel, but Hilferding thought it offered an instructive way of conceiving the manner in which science confronts new problems. He summarised Mach's contribution this way:

Ernst Mach described the development of science as an adaptation of thought to facts and of thoughts to one another.

Borrowing Mach's ideas on how and why science progresses, Hilferding attrib­uted the disintegration of the Ricardian system - the subject of the third volume of Theories of Surplus-Value - to its inability to accommodate a fun­damentally new fact of the industrial revolution: namely, that machinery was increasingly displacing living labour. Gustav Eckstein's review of the second volume of Theories of Surplus-Value had already pointed out that Ricardo knew different combinations of labour and machinery must yield different rates of profit. Nevertheless, he treated such cases as exceptions to the general rule that profit derived solely from employment of living labour. Hilferding explains that Ricardo could not accommodate the rising organic composition of capital because he lacked a coherent concept of value that might also explain surplus value and its redistribution between competing capitals. It was precisely this issue that required Marx to begin Volume I of Capital with a fundamental rein­terpretation of the theory of value.^[604]

Since existence determines consciousness, Marx, in his account of the Ricar­dian school's disintegration, also had to specify the class interests expressed in previous theories of political economy.

Among the many thinkers whom Marx discussed in portraying the break­down of the Ricardian system, the most prominent were James Mill, John Ram­say McCulloch and Richard Jones. Hilferding surveys Marx's account of how Mill sought to restore logical consistency to Ricardo's system by explaining away new realities; how McCulloch confused the ‘actions' of machinery with living labour and ended with the fetishism of capital; and finally, how Jones criticised Ricardo's method from an historicist point of view. The first three, in Mach's terms, adjusted thought to thoughts, whereas Jones was more con­cerned with the relation between thoughts and real historical facts.

Hilferding had the highest regard for Jones, who, as a scholar of Indian affairs, clearly saw that Ricardo's theory of rent could not possibly apply in pre-capitalist circumstances. Whereas Ricardo conceived the method of polit­ical economy in terms of deductive reasoning issuing in ‘purely abstract prin­ciples', Jones recognised that patterns of social organisation differ profoundly according to historically conditioned forms of labour and property owner­ship. Emphasising Jones's pioneering work, Hilferding concluded that while Marx obviously learned much from both Hegel and Ricardo, he also drew upon Jones's inductive approach to create an entirely new point of view for interpret­ing both history and political economy.

inadequacy of the current explanations and to begin the development of science on a new basis. Until that happens, however, the mass and number of new phenomena is always already swollen, and the question arises as to what phenomena the researcher's attention should be turned to in the first place. In doing that, he is not quite free. The formulation of the problem is already a task of science, but posing it antedates that science; here its laws and rules do not apply, and the researcher is greatly influenced by his personal perceptions, his individual fate, his upbringing and occupation, his class membership'.

By breathing historical life into Ricardo's ‘abstract principles', by turning economics into history and history into economics, Marx overcame the unhistorical rationalism of the classics and the irrational conservatism of the historians, along with the utopianism of previous socialism. Eco­nomics was now no longer seen as a science of dead things, of the largest possible production or the best possible distribution. It was the under­standing of social conditions, of the relations between the classes, of the necessity of the class struggle and its outcome. The conformity to law of the self-development of [Hegel's] Idea became the conformity to law of the will of classes, as determined by their social relationships, which we learned to recognise through economic science. The idea of evolution, stripped of its idealistic form, seized the social sciences.

Rudolf Hilferding's Review of Part 3 of Theories of Surplus-Value

The development of the science [of political economy] is of interest in showing how thought extracts from the endless multitude of details with which it is initially confronted the simple principles of the thing [Sache], the understanding which works within it and controls it (see Smith, Say, and Ricardo).^[605]

The economic work of Karl Marx, which began to appear in 1859 with public­ation of A Contribution to the Critique of Political Economy, has taken 51 years to be made public - a process that now, 27 years after the author's death, has concluded with publication of the final volume of Theories of Surplus-Value.

Thus, many of the statements concerning capitalist credit in the second and third volumes of Capital have only become clear, in all their momentous significance, after being illustrated by the modern development of finance capital. And it is precisely the fifth section of the third volume of Capital - which contains the brilliant study on interest-bearing capital - that, according to Engels's testimony, has been most revised and is therefore most likely to contain subjective additions by the editor. At the same time, abridgements also had to be made here, mainly of illustrative material going beyond the scope of a readable book.

To this list should be added yet another reason for making the manuscripts accessible to a wider circle of readers. The Theories of Surplus-Value offer to their readers, particularly in those parts containing the theoretical digressions, a deep insight into the nature of Marx's thought, which overcame the most difficult problems of scientific research. It is a veritable university of thought that is opened up here, and there is no doubt that such a schooling in logic (Denklehre), which would be of incomparable educational value, could still win much from publication of the manuscripts. People would see Marx's thought at its wonderful work; they could make the attempt to follow it and learn what would be impossible to learn anywhere else. If we had academies of sci­ences deserving of their name, here would be an urgent task for them. As it is, we believe it remains a nobile officium, a noble obligation of the German party, the heir to Marx's and Engels's legacy, regardless of financial concerns, to do what, as things stand today, it alone is capable of doing and therefore bound to do. A truly scientific and complete edition of the works of Marx and Engels, for which the need is already asserting itself, would be hardy imaginable without publication of the manuscripts as well. In the meantime, however, provisions should be made to ensure that, as long as this publication has not taken place, at least a number of copies of the manuscripts are made and kept in the archives of the party and perhaps also in a few good librar­ies.

1 The Method of Writing the History of Science

I

For the objects under consideration must already be known fairly com­pletely before it can be possible to prescribe the rules according to which a science of them is to be obtained.¹⁰

The Theories of Surplus-Value are of great importance not only for the history of the development of economic thought. They are also most interesting from the standpoint of the materialist conception of history, for they show us Marx not only as an economist but also as an actor in the history of science. At the same time, these volumes are the only attempt made thus far to fathom science from the standpoint of the Marxist conception.

If we now examine the presentation of all three volumes in terms of their method, to start with we get a big surprise: this is Hegel! What Marx brings to the presentation is the self-development of economic science, as it starts with the first correct insights of Petty and Franklin (who recognised labour as the common denominator of commodities and money) and ends up in the Marxian system. And the comparison with Hegel suggests itself: for him, the history of philosophy is the self-development of the Idea, which in his own system reaches self-consciousness so that previous history is only the prehistory of Hegelian philosophy in both temporal and logical sequence.

10

Kant 1929, p. 94.

We know that this presentation follows directly from Hegel's conception of history, for which reality is nothing other than the manifestation of the abso­lute Idea, which develops out of itself in the dialectical process of thesis and antithesis into ever higher forms. We have now become foreign to Hegelian idealism; the conception of reality as a materialisation of the Idea seems to us something completely mystical and incomprehensible. To our reasoning, which springs from totally different presuppositions, his system is compre­hensible only historically, as the extreme logical consequence of idealism, as a completion of the thought structure whose basic principles were laid down by Kant, Fichte and Schelling. Let us remember, however, how great was the historical influence of this doctrine, how a whole historical era, with the most prodigious spiritual energy and effort, [confronted] all the problems of the human sciences under its inescapable spell; let us recall the fact that the spir­itual revolution associated with the names of Feuerbach and Marx had its start­ing point in this system, and we will then understand the question that was so overwhelming for Marx's contemporaries that they fell under the influence of this philosophy without resistance and with long-lasting effects.

We know that it was the idea of development, here consistently applied for the first time to all the fields of nature and society, albeit in an idealistic form, that led to the triumph of Hegel's philosophy. The idea that everything that hap­pens is not just a succession of events, but a succession of events necessarily following each other, that this succession takes place according to immanent laws underlying the development, and that only now these laws make them­selves understandable for the first time; this idea of development's intrinsic conformity to law was what the Hegelian system begat as the inalienable prop­erty of the spiritual treasure of humanity. Even if it was also an idealistic mis­understanding, it was an understanding that suddenly illuminated the hitherto inexplicable course of [historical] events.

And recognition of the self-development of the Idea, as the self-develop­ment of socialised humanity or of human society, could appear as confirma­tion of the mechanism of Hegel's mind, of the dialectic always negating itself again and again, as a Copernican revolution resulting from the most extreme idealism. [Marx] found the driving force of this development in the interac­tion between people and the real world that surrounds them, expressing itself decisively in the economic activities of humankind. In place of the dialectical self-movement of ideas he set the socially determined human being in all his reality, acting and being acted upon, changing and being changed, as the engine of his own history. And instead of the conformity to law of the absolute [Spirit], he recognised in the conformity to law that underlies [historical] development the conformity of social life to real economic laws.¹¹

But the idea of development, however far-reaching the significance of its application to history and thus to the perception of social events, did not by itself turn Hegelian philosophy into the forerunner that prepared the way for social theory.

If reality were nothing but the objectification of the Idea, the Idea could only reach consciousness, and thus the task of philosophy could only be fulfilled, in the conceptual grasp of reality. ‘Everywhere in his works', says Lassalle in his preface to the System of Acquired Rights, ‘Hegel always emphasised tirelessly that philosophy is identical with the totality of the empirical, that nothing is more necessary for philosophy than the immersion in the empirical sciences'?² And Max Adler says the same:

If one tries to understand Hegel's philosophy from its motives, clearly developed by Hegel himself, one by no means gets the impression that it is nothing but a mere aberration of fantastic speculation. Rather, the enormous impact that Hegel's philosophy exerted on his contemporaries, and the lasting effects that it has even today, seem to lie in the fact that, despite the form in which it is constructed and its metaphysics of the absolute Spirit, in a sense it represents, vis-a-vis Fichte and Schelling's idealistic philosophy, a return to reality, a tendency to understand the laws governing experience itself, rather than a mere speculation about reality?³

Precisely that which contemporary epistemological thought considers a step backwards, was a tremendous step forward historically: while Kant focused on the problem of the forms of knowledge, and by that very fact drove investiga­tion away from all content of cognition, Hegel saw his task precisely in proving the necessity of the content of all experience, a proof he found in the identity of the becoming of experience with the self-development of the concept. Thus reality became again the subject matter of philosophy, and only in that way was it possible for Hegelian philosophy itself to be negated by science, freed from all metaphysics. In contrast to Kantianism, it is the rich content of reality ^{[607] [608] [609] in Hegel's thought that gave it such great historical effectiveness. While Kant's thought was lost to his contemporaries precisely in its most fertile kernel of truth - while in general it had a limited effect on the epistemological prob­lem and, according to Otto Bauer's expression, played, from the standpoint of general scientific methodology, a role not to be underestimated as the frontier guard against all metaphysical errors and false formulations of problems - it was from Hegel's philosophy that the tremendous progress of the humanities in our own times sprang forth.}

Therefore, by making the Idea the demiurge of reality, Hegel also created a particular method of research. And this method, once stripped of its metaphys­ical appearances, proved to be extremely fruitful, for it actually corresponded to the nature of intellectual research. We know from Marx himself how he delib­erately transferred Hegel's method to economics. In fact, this transference is not primarily to be found where it is usually sought: in the presentation of real antagonisms between classes and in discovery of the contradiction between the socio-historical limitations of the capitalist mode of production and the social need, whose bearer is the proletariat, to control the productive forces that sprang from capitalist organisation but are more and more outgrowing it. Instead, it fulfilled its specific logical role in the way in which economic con­cepts were developed and presented [by Marx].^[610] Marx explained this aspect very clearly in the Introduction to A Contribution to the Critique of Political Eco­nomy:

It would seem to be the proper thing seems to start with the real and con­crete elements, with the actual pre-conditions, e.g., to start in the sphere of economy with population, which forms the basis and the subject of the whole social process of production. Closer consideration shows, however, that this is wrong. Population is an abstraction if, for instance, one dis­regards the classes of which it is composed. These classes in turn remain empty terms if one does not know the factors on which they depend, e.g., wage-labour, capital, and so on. These presuppose exchange, division of labour, prices, etc. For example, capital is nothing without wage-labour, without value, money, price, etc. If one were to take population as the point of departure, it would be a very vague notion of a complex whole and through closer definition one would arrive analytically at increasingly simple concepts; from imaginary concrete terms one would move to more and more tenuous abstractions until one reached the most simple defin­itions. From there it would be necessary to make the journey again in the opposite direction until one arrived once more at the concept of popu­lation, which is this time not a vague definition of a whole, but a totality comprising many determinations and relations. The first course is the his­torical one taken by political economy at its inception. The seventeenth­century economists, for example, always took as their starting point the living organism, the population, the nation, the State, several States, etc., but analysis led them always in the end to the discovery of a few decis­ive, abstract, general relations such as division of labour, money, and value. When these separate factors were more or less clearly deduced and established, economic systems were evolved from which simple concepts, such as labour, division of labour, demand, exchange-value, advanced to categories like State, international exchange and world market. The lat­ter is obviously the correct scientific method. The concrete is concrete because it is a synthesis of many determinations, thus representing the unity of diverse aspects. It appears therefore in reasoning as a summing- up, a result, and not as the starting point, although it is the real point of origin and thus also the point of origin of perception [Anschauung] and imagination. The first procedure attenuates meaningful images to abstract definitions, the second leads from abstract definitions by way of reasoning thought to the reproduction of the concrete situation.^[611] Hegel accordingly conceived the illusory idea that the real world is the result of thinking which causes its own synthesis, its own deepening and its own movement; whereas the method of advancing from the abstract to the concrete is simply the way in which thinking assimilates the con­crete and reproduces it as a concrete mental category. This is, however, by no means the process of evolution of the concrete world itself. For example, the simplest economic category, e.g., exchange-value, presup­poses population, a population moreover which produces under definite conditions, as well as a distinct kind of family, or community, or State, etc. Exchange-value cannot exist except as an abstract, unilateral relation of an already existing concrete organic whole. But exchange-value as a cat­egory leads an antediluvian existence. Thus to consciousness - and this comprises philosophical consciousness - which regards the comprehend­ing mind as the real man, and hence the comprehended world as such as the only real world; to consciousness, therefore, the evolution of categor­ies appears as the actual process of production - which unfortunately is given an impulse from outside - whose result is the world; and this (which is, however, again a tautological expression) is true in so far as the con­crete totality regarded as a conceptual, as a mental phenomenon fact, is indeed a product of thinking, of comprehension; but it is by no means a product of the Idea which evolves spontaneously and whose thinking proceeds outside and above perception and imagination, but is the result of the assimilation and transformation of perceptions and images into concepts. The totality, as a conceptual entity seen by the intellect is a product of the thinking intellect which assimilates the world in the only way open to it, a way which differs from the artistic, religious and practic­ally intelligent assimilation of this world. The concrete subject remains outside the intellect and independent of it - that is, so long as the intel­lect adopts a purely speculative, purely theoretical attitude. The subject, society, must always be envisaged therefore as the pre-condition of com­prehension even when the theoretical method is employed.^{[612] [613] [614]}

Furthermore - and this reinforces the appearance of Hegel's construction - the (logically) simple categories can also have really existed historically before the more concrete ones, so that historical development at the same time appears as logical.

Money may exist, and did exist historically, before capital existed, before banks existed, before wage labour existed, etc. Thus in this respect it may be said that the simpler category can express the dominant relations of a less developed whole, or else those subordinate relations of a more developed whole which already had a historic existence before this whole developed in the direction expressed by a more concrete category. To that extent the path of abstract thought, rising from the simple to the combined, would correspond to the real historical process?⁷

We can see that what Hegel teaches as ontologyi⁸ is also, or rather is in real­ity, the method, the course [of development] of scientific thought. Once the metaphysical garb is cast off, the idea of development underlying the Hegelian conception must lead to very fruitful results, and nowhere are they more fertile than in the field of history, which, in the opinion of bourgeois rationalism of the eighteenth century, was a jumble of nonsense and fortuitous events, into which Enlightenment, for the first time, would be able artificially to introduce reason from outside, because then enlightened people would begin to ‘make history', replacing the lack of discernment [that had prevailed] in all previ­ous eras. By looking for reason in history, Hegel first formulated - if still in a metaphysical way - the problem of its necessary course [of development] in accordance with laws. Everything that is, and everything that was, is rational^[615] - this proposition, as Engels showed in Ludwig Feuerbach and the End of Classical German Philosophy, was not only revolutionary because it agrees with rational­ism, the ideology of the revolutionary bourgeoisie, in bringing everything that exists before the tribunal of reason and discarding as irrational everything that exists in the eternally renewed progress of its self-development; it also opened up the bourgeois world in general to historical understanding for the first time. Until then historical insight was much more the inheritance of classes that were threatened in their rule and invoked history in order to justify that rule,

while the revolutionary bourgeoisie, starting from natural law, rejected previ­ous history as irrational. It was generally the conservative writers who, vis-a-vis revolutionary-liberal ones, had the deeper understanding of history. Indeed rationalism, precisely because of the greater simplicity and straightforward­ness in the thought of revolutionary classes focused on their struggle, was also originally the way of thinking of the working class awakening to its emancip­atory strivings, which again and again, despite the very different approach of Marxism, strove to see socialist solutions not in their historical conditional­ity and relativity but as absolute postulates of rational thought. The insight into the historical conditionality of all social events, and therefore also into the relative necessity and the eventual demise of capitalism, as it stands in magnifi­cent simplicity in the Communist Manifesto for instance, was handed down as a direct heritage from Hegel to Marxism,^[616] and only the knowledge of economic phenomena as historical ones made possible the fruitful work of Capital.

If, however, according to Hegel, reality is the gradual realisation of the Idea, the grasping of this reality, that is science, must reflect those gradations, so that between the history of science and the real development there is a thoroughgoing parallelism. Just as in reality the Idea came to ever higher completion in objectivity, so it came, at the same time, to progressive self­consciousness in the minds of men. The writing of the history of science should therefore describe this progressive realisation, which corresponds precisely to the real development. Thus, the historical presentation of science must be able to show how the completed system arose from the first beginnings in a sequence that corresponds throughout to logical deduction.

Hegel's philosophy, therefore, naturally meant a revolution in previous his­toriography. In place of a pragmatic representation in chronological sequence, the self-development of the Idea had to be demonstrated in all areas of physical and spiritual events. Hegel himself tried his hand at the history of philosophy. The attempt failed and was bound to fail, because the ontological assumption that reality is only a product of the Idea, and that the succession of philosoph­ical systems therefore had to be the same as the sequence of logical concepts in the deduction of the Hegelian system, proved to be inappropriate, and instead of historical writing led to arbitrary constructions. As Eduard Zeller says, ‘any survey of the past will show us how impossible it is to recognise, even approx­imately, the order of the Hegelian or any other speculative logic in the order of philosophic systems, unless we make out of them something quite different from what they really are. This attempt is, therefore, a failure both in principle and practice, and the truth that it contains is only the universal conviction that the development of history is internally governed by regular laws’.^{[617] [618]}

But the question again posed itself:What is that legitimate kernel that misled Hegel in his historical writing; what is the real content underlying his illusion? And the answer to this question is all the more urgent, because it was precisely Marx’s presentation that led us back to Hegel’s historical writing. Perhaps we may come closer to the answer if we inquire into the specific conditions that the history of science imposes upon its researcher.

II

Ernst Mach described the development of science as an adaptation of thought to facts and of thoughts to one another. The adaptation of thought to facts is a biological necessity, a condition of the human vital process, in which science is also one of the weapons in the struggle for existence. Starting from this basic biological conception, in which Mach discusses the emergence and beginnings of mechanics or mathematics, he reaches conclusions similar to those of the materialist conception of history. But the adjustment of ideas to each other is a logical function of our thought, arising from its nature; it is simultaneously consequence and cause of the ‘economy of thought’ that seeks to classify all phenomena, as it were, in the most economical way possible, under the smallest possible number of concepts, and to grasp the fullness of reality under the smallest possible number of laws.22

Starting from completely different premises, Kant described the accordance of judgements with the unity of cognition as the criterion of scientific experi­ence. What Mach describes as a process, as the ever-renewing course of adapt­ations, is posited [by Kant] from the beginning as a result, as a logical condition of truth. But since the unity of cognition is again made problematic by any new knowledge, truth is also given as process, and the truth achieved every time is only a temporary moment in the eternal search for truth. But the unity of cognition, the agreement of ideas with each other, is at any given moment a requirement of our thinking.

The adaptation of thoughts to each other thus appears as a vehicle of sci­entific progress, resulting from the nature of thought itself and following from pursuit of the unity of cognition. What in Hegel is the self-development of the Idea, appears here as a biological-natural property of thought that constitutes a condition for scientific progress.

In reality, however, the adaptation of ideas to facts and the adaptation of thoughts to one another are quite different processes, and have a com­pletely different significance for the development of science. The adaptation of thoughts to one another is the common condition of scientific thought in general; it is a logical prerequisite for scientific thought to be possible at all. The logical power of individual thinkers is certainly different, and therefore one researcher may discover in the complex of thoughts logical inconsisten­cies that another had overlooked. And thus within a scientific system, by purely logical work, there develops a tighter systematisation and an adjustment of the individual elements of thought, a progress towards greater consolidation. An example: Adam Smith determined the value of commodities by the amount of labour required for their production. This determination is mixed up and replaced by him with another, according to which the value of commodities is determined by the amount of commodities (e.g. corn), with which a def­inite amount of living labour can be purchased. He even lets the value of a pair of shoes be determined by the 10 hours of labour that their production required; then again, he determines the value of these hours of labour by a bushel of corn, the wage of a worker for a 10-hour working day. The second determination is logically mistaken, because it lets value be determined by value, and therefore includes a circular argument. It is also, at the same time, mistaken in reality, because the worker in capitalist society (although not in simple commodity production, from whose conditions Smith's illusion arose)^[619] does not receive for 10 hours of labour the value of 10 hours. Ricardo demon­strated this logical fallacy and thus eliminated the erroneous equation of the determination of value by labour time with its determination by the ‘price of labour'. He retained, however, the category ‘value of labour', and with it the logical inconsistency according to which the value, for example, of 10 hours of labour is precisely 10 hours, but the worker receives for them less value, otherwise no surplus value would be possible. This logical contradiction was then removed by Marx, who showed that the ‘value of labour' has no economic reality at all, and that it is only the expression for the value of labour power, which is determined by the labour time required for its production. The capit­alist buys the labour power, whose production costs, for instance, the 5 hours of labour required to produce the necessities consumed by the worker, while the worker works, for example, 10 hours, during which he produces a value of 10 hours, for whose appropriation the capitalist must pay wages worth only 5 hours.

By disclosing this appearance, Marx also discovered the foundations on which he could build his theory of surplus value, which is much more devel­oped vis-a-vis Ricardo's. From the outset, Marx's economic thought began with the adjustment of economic thought, as formulated in classical theory, to facts with which it evidently no longer agreed. And here again, his cardinal problem was the question of how the equality of the profit [rate] of capital is compat­ible with the validity of the law of value. Ricardo himself had already seen the problem, but he referred to the deviation of prices from values, result­ing from the equalisation of profits, as an occasional deviation from the law of value, as an exception to the rule. What was intellectually still tolerable in Ricardo's time, when differences in the organic composition of capitals were relatively unimportant - even though the contradiction arose immediately - had already become unbearable in Marx's time and led to abandonment of the foundations of the theory. The new facts, which economic development had brought into being, called for the adaptation of thought, and this again made that which previously still seemed logically possible now appear inadequate or irrelevant. To solve the problem of [the equalisation of] the rate of profit, the deeply penetrating analysis and renewal of the theory of value, contained in the first volume of Capital, became necessary. That this was in fact the psy­chological course of development of Marx's thought is already evident, apart from methodological considerations, in the formulation of the problem in the Critique of Political Economy (2nd edition, p. 44ff.). But it also follows from the way in which all these problems appear as logical problems, as tasks of adapt­ation.

But, at the same time, from this also follows the insight that the decisive thing for scientific progress is new facts. If, in the field of natural sciences, these facts are above all the new problems posed by technology, in the social sciences they are the new social facts created by economic development. The adapta­tion of thoughts to one another is only the condition of scientific progress; the adaptation of thought to facts, however, is progress itself. At the same time, in the fulfilment of this condition [i.e. in the adaptation of thoughts to one another], appear the personal, individual barriers represented by the thinking power of the individual researchers, so that in the same objective conditions, i.e. in presence of the same complexes of facts, advances in knowledge are made possible by the fact that the greater thinker still carries out adjustments of thought processes to one another, whereas the weaker thinker considers the problems already solved. This distinction between subjective and object­ive thought conditions is an important problem for Marxist historical writing, a warning against simplifying too much in deriving ideological phenomena [from material conditions], thus running the risk of overlooking the independ­ent part played by conscious processes in scientific progress.

This adjustment, however, can also be of a different kind. It is possible for the scientific acquisition of new facts to make the previous views completely impossible, either causing the scientific system to break down completely or else removing, extending, modifying and restricting only parts of it, while leav­ing the foundations untouched. Now, economic theory - to the extent that Marx considers it in the Theories of Surplus-Value - is the explanation of capit­alist society, whose basic fact is commodity production. This basic organisation of economic life, which remains constant despite all the colossal and tem­pestuous development, explains why economic theory also reflects this devel­opment, why it retains the basic laws already discovered very early on, just developing them further without ever completely giving them up. The actual development of capitalism thus corresponds to the logical development of the theory. From the first formulation of the law of labour value, in Petty and Frank­lin, to the subtlest remarks of the second and third volume of Capital, a logical development thus arises. And this is, on the one hand, really so and cannot be otherwise, since science is only the conceptual grasp of reality (which can only be understood as a development from simple commodity production to the capitalist world market), whose foundations were thus already revealed in its simplest and most general connections by the first thinkers. On the other hand, however, it is also mere appearance.

As Marx looked in economics for the internal law of motion of society, so also in presentation of the theory he also looked for the internal course of development, which alone offers the correct understanding. This internal path is, however, the unfolding of the labour theory of value; everything that leads away from this is irrelevant for development of the theory and does not come into consideration for its real history. As history in Hegel only begins with the building of the state, and stateless nations have no history, so for Marx economic theory begins with the first discovery of labour as a measure of value. Except that this position is just as arbitrary as, for instance, that of modern chemists, who date the history of modern chemistry from the discovery of oxygen and recognition of its importance for the combustion process. Of course, in this case too there is a difference between the history of the social sciences and that of the natural sciences. A history of mechanics, for example, showing us the development of knowledge from its beginnings to the present, would essentially contain the presentation of real scientific progress, and in this way it would satisfy our historical interest. The listing of all the countless mistakes that unscientific speculation brought to this area lacks scientific-historical interest, even if they possess antique charm or if, from a very different standpoint, some of their assumptions may interest the cultural historians. It is different with the history of economics; here the opposition to scientific ideas, the holding of opinions unscientific in the strict sense, if only they were widely held, is historically important - though certainly not for the development of pure economic theory - because particular political opinions were hiding within them. Thus, the opinions of Malthus against the labour theory of value are, at the same time, a defence of aristocratic and high-church interests against liberal-bourgeois industrial demands. But the inclusion of all these doctrines, leading away from development of the labour theory of value, would immediately have destroyed the image of logical development, as it now unfolds for us in the Theories of Surplus-Value. Marx, however, did not omit them for constructive purposes, but because in fact they have no interest for writing the history of political economy, only for a history of sociological opinions foreign to pure economics. The opinions at variance with the development of the labour theory of value are explained by economic- political interests; they are therefore at odds with scientific impartiality, in contradiction with the inner necessity of scientific development, and thus fall outside the framework of an account that wants to show only that inner necessity.

What Marx offers us, then, is not a history of economic theory in its his­torical and sociological significance - that is, above all, in its significance for practical economic policy - but rather the discovery of its inner development, which presents itself naturally as a logical sequence. He thus made possible, for the first time, a real understanding of the course of development of the theory, which now appears not as a random sequence of hypotheses and doc­trines but as a natural system of thoughts that [not only] follow each other but also emerge from each other. The disturbing accessories of elements for­eign to this development, even if they had very great appeal in their time, are removed [by Marx]. Of course, such historical writing, which does not proceed pragmatically-chronologically but only reveals the hidden layout of the struc­ture, is only possible from a specific standpoint.^[620] The history of economics, as Marx writes it, is at the same time the phylogenetic and partly also the onto­genetic developmental history of the Marxian system. But it is a silly claim that it should be otherwise. Such a demand would mean nothing less than that eco­nomic theorists should relinquish what constitutes precisely the criterion of any scientific insight, the universal validity of its results. If they are asked to do that, they should consider the results of their research only as a subjective, more or less probable conviction, rather than as an objective, that is generally valid, scientific statement - an unreasonable demand that can only be made by someone who denies the possibility of social science in general.

This is the case because, in writing the history of economics, as with any other science, what Zeller said about writing the history of philosophy applies:

Whether in regard to the history of Philosophy it is necessary or even advantageous for the writer to possess any philosophic conviction of his own, is a question that would scarcely have been raised had not the dread of a philosophic construction of history caused some minds to overlook the most simple and obvious truths. Few would maintain that the history of law, for instance, would find its best exponent in a person who had no opinions on the subject of jurisprudence; or political history, in one who embraced no theory of politics. It is hard to see why it should be otherwise with the history of Philosophy. How can the historian even understand the doctrines of the philosophers; by what standard is he to judge of their importance; how can he discern the internal connection of the systems, or form any opinion respecting their reciprocal relations, unless he is guided in his labours by fixed philosophic principles? But the more developed and mutually consistent these principles are, the more must we ascribe to him a definite system; and since clearly developed and consistent prin­ciples are undoubtedly to be desired in a writer of history, we cannot avoid the conclusion that it is necessary and good that he should bring with him to the study of the earlier Philosophy a philosophic system of his own. It is possible, indeed, that his system may be too contracted to interpret for him the meaning of his predecessors; it is also possible that he may apply it to history in a perverse manner, by introducing his own opinions into the doctrines of previous philosophers, and constructing out of his own system that which he should have tried to understand by its help. But we must not make the general principle answerable for these faults of individuals; and still less can we hope to escape them by entering on the history of Philosophy devoid of any philosophic conviction. The human mind is not like a tabula rasa, the facts of history are not simply reflec­ted in it like a picture on a photographic plate, but every view of a given occurrence is arrived at by independent observation, combination, and judgment of the facts. Philosophic impartiality, therefore, does not con­sist in the absence of all presuppositions, but in bringing to the study of past events presuppositions that are true. The man who is without any philosophic standpoint is not on that account without any standpoint whatever; he who has formed no scientific opinion on philosophic ques­tions has an unscientific opinion about them. To say that we should bring to the history of Philosophy no philosophy of our own, really means that in dealing with it we should give the preference to unscientific notions as compared with scientific ideas. And the same reasoning would apply to the assertion that the historian ought to form his system in the course of writing his history, from history itself; that by means of history he is to emancipate himself from any preconceived system, in order thus to attain the universal and the true. From what point of view then is he to regard history, that it may do him this service? From the false and narrow point of view which he must quit that he may rightly comprehend history? Or from the universal point of view which history itself must first enable him to attain? The one is manifestly as impracticable as the other, and we are ultimately confined within this circle: that he alone completely understands the history of Philosophy who possesses true and complete philosophy; and that he only arrives at true philosophy who is led to it by understanding history. Nor can this circle ever be entirely escaped: the history of Philosophy is the test of the truth of systems; and to have a philosophic system is the condition of a man's understanding history. The truer and the more comprehensive a philosophy is, the better will it teach us the importance of previous philosophies; and the more unintel­ligible we find the history of Philosophy, the greater reason have we to doubt the truth of our own philosophic conceptions. But the only con­clusion to be drawn from this is that we ought never to regard the work of science as finished in the historic any more than in the philosophic domain. As in a general manner, Philosophy and Experimental Science mutually require and condition one another, so it is here. Each forward movement of philosophic knowledge offers new points of view to his­toric reflection, facilitates the comprehension of the earlier systems, of their interconnection and relations; while, on the other hand, each newly attained perception of the manner in which the problems of Philosophy have been solved or regarded by others, and of the internal connection and consequences of their theories, instructs us afresh concerning the questions which Philosophy has to answer, the different courses it may pursue in answering them, and the consequences which may be anticip­ated from the adoption of each course.^[621]

We must therefore also consider the new light that the Theories of Surplus-Value has cast upon previous economic research as an indirect proof of the truth of Marx's economic concepts.

However, the logical presentation hides, on the other hand, the contrast between Marx and his predecessors arising from their sociological positions and, what is more important, from the fundamental dissimilarity of their social-theoretical views. What distinguishes Marx from all his predecessors is the social theory underlying his system, the materialist conception of history. Not just because it implies the realisation that economic categories are also his­torical - this insight alone is not the essential thing - but rather because only discovery of the contradictory character of social life made possible discovery of the development mechanism and the description of how economic categor­ies arise, change and cease to exist, and how all this takes place according to certain laws. This was possible only through the discovery of socialised man and the type of social relations [in which he is embedded] as the reality behind the material appearance of economic relations, so that in economics the gen­eral ideas underlying the materialist conception of history about social man, as the motive force of history, were demonstrated in particular, thus destroying the material appearance, the economic fetishism, and revealing the actions of living men behind the price movements, the turnover of commodities and so on.

Precisely this peculiarity of Marxism remains in the dark in the logical presentation of Theories of Surplus-Value, so that Marx himself appears only as someone who rounds off rather than revolutionises his science. But the underlying causes in the development of previous economics also do not at first appear in Marx's historical writing. The reason is as follows.

Often what appears as a logical adaptation of thoughts to each other is in fact first triggered by the emergence of new facts and the need to explain them. But if this new fact is not particularly emphasised as the cause of the specific formulation of the problem, because in the intellectual context it is not the fact but the solution of the problem that appears as the essential thing, the appearance can easily arise that a new logical conclusion has simply emerged from the existing ideas because the logically perfect and consistent thought has only now come into (logical) contradiction with the other thoughts, causing a new adaptation of thoughts to one another. Thus arises, once again, the appearance of a purely logical development of systems of ideas in a science.

Now, that is the way Marx proceeds in the main in Theories of Surplus­Value. Materialist historical writing should proceed historically-genetically; it should show, on the basis of the presentation of the stage of economic and historical development already reached, what problems were actually posed to economic thinking; how, for instance, to single out one case very generally, due to the devaluation caused by the influx of precious metals following the discovery of America, and as a result of the debasement of coin by the princes, the problem of the relationship between commodity and money arose; how this issue gained new urgency and demanded a more accurate formulation due to the state experiments with paper currency and its devaluation (which, for example, induced Ricardo to undertake his investigations [of the currency issue]); [or] how the introduction of machinery led to a distinction between the material and personal components of capital and brought to the centre of economic research the problem of the equalisation of the rate of profit, which seemed inconsistent with the labour theory of value. And next to this objective emergence of the problems, a historical-genetic exposition must also show how the attempted explanations of the economists were conditioned by the subjective opinions of the authors as representatives of certain economic- class interests, and how economic-policy motives and interests influenced economical-theoretical views. The rule of the mercantilists, the Physiocrats, the theories of Adam Smith and Ricardo, and the break-up of these theories in the conservative reaction of Malthus, on the one hand, and the ethical-socialist opposition of the Socialists, on the other hand, are indeed only the expression of the economic rule first of commercial and then of industrial capital, and of their being challenged by the conservative-agrarian strata, on the one hand, and by the emerging proletariat, on the other.

The presentation of all these moments, which would prove the history of political economy to be only an ideological reflection of real economic devel­opment - since the retroactive effect of ideology [on the economy] would again be particularly posed - does not appear in the Theories of Surplus-Value. This can be explained only partly due to the plan of work, as we know it from A Con­tribution to the Critique of Political Economy. There, Marx first gave the theoret­ical development of economic categories, for instance, commodity or money. The theoretical presentation was then followed by an historical account of the development of the concept in previous economics. From the beginning, all the emphasis was placed on proving the logical (scientific) development of the concept, while the psychological explanation as to why the authors arrived at their conceptualisation due to concrete economic conditions faded into the background, although it was often masterfully sketched with some strokes. In Theories of Surplus-Value, the logical interest comes to the fore even more strongly than in A Contribution to the Critique of Political Economy. But that is totally correct; in the history of any science, real understanding first requires the presentation of what Marx calls its internal course of development. Only in this way can the essential [phenomena], which are really relevant for the development [of that science], be separated from the inessential and irrelev­ant. Presentation of the logical development is thus the preparatory work that must be performed in order to proceed to the historical-genetic explanation.

Precisely the Theories of Surplus-Value are a proof of how fruitful this prepar­atory work is, indeed, how it is the really essential thing to be accomplished. The chaos of innumerable economic doctrines is organised for the first time. And the ordering principle is nothing arbitrary, brought into the course [of devel­opment] of the science from outside. Rather, the inner link, binding all the thoughts essential for the progress of knowledge, is made visible. In this case, too, Marx proves to be the great realist who spotted, behind the bewildering variety of phenomena, the law of their becoming.

But from the nature of the represented object also follows another [thing], which at least partially annuls what we have just come to know as a defect. We know that economic theories are based on recognition of the conformity of social life to law, but this conformity to law must be researched in order to reg­ulate social life on the basis of this knowledge; theory is in the service of policy, just as science in general is in the service of practice, which does not change the fact that the ideal of every scientific worker must be to pursue science for science's sake, as long as he just pursues scientific research. But since econom­ics serves economic policy, the economists are motivated or determined in their scientific statements by economic-policy ideals and interests. These are expressed consciously or unconsciously in their scientific opinions. But what in the historical-genetic study, through which the researchers have arrived at their results, would be a prerequisite, appears in the economic system itself as a result, as a postulation of the economic policy of the researcher. By analys­ing the economists, often pursuing the economic-policy consequences of their systems to the last detail, Marx lays bare in a most surprising way the class influences from which the system grew and the practical impulses behind the theoretical opinions. This task is indisputably carried out most masterfully in the examination of the Physiocrats, where the presentation of practical policy reveals all the mysteries in the theory that so often led previous researchers astray.

But the fact that such historical-genetic knowledge can be gained directly from the logical examination of the system is accounted for by the nature of social science. Social thought is determined by social being, which again includes within itself the thinking people. What determines man appears to him as a goal of his will, because will can only be determined by awakening certain goals in the willing subject. Only by his pursuit of those goals, by acting in a purposeful way, can necessity come into being. That man has a goal, and that therefore the act can only be realised by him as an agent, gives man consciousness of his free will; but that he must have that goal accounts, for the outside observer, for the necessity of human history and the possibility of its knowledge. But in his economic policy the economic researcher sets for himself those goals, whose knowledge at the same time betrays his motives to the outside observer. By upholding in their policies the goals of industrial capital, the Physiocrats, who seemed in theory to appear as representatives of landed property, revealed themselves to us as spokesmen of the capitalist class, and the knowledge of their motives explains also the peculiarity of their theoretical position.

2 From Ricardo to Jones

The appearance of the third volume of Theories of Surplus-Value also defin­itely documents and puts an end to an old legend. When the third volume of Capital appeared, bourgeois economists argued that the explanation of the equalisation of the profit rate stands in contradiction with the labour theory of value in the first volume. [They argued that] Marx had actually been unable to explain the problem on the basis of his theory of value - something that he, the strong logician, must have been conscious of. But since he had announced the solution, whose impossibility he must surely have felt in the course of his investigation, he pretended to offer a sham solution with the help of the dia­lectical art of the third volume. The discoverer’s glory for this profound view belongs to the Italian University Professor [Achille] Loria. Mr. Bohm-Bawerk freely translated it into German, and for a while it was the communis opinio, the common opinion of many professors of economics. Certainly the study of the three volumes [of Capital], which together revealed Marx’s economics for the first time - whereas on the basis of the first volume alone, ideas had to arise that were necessarily incomplete and even mistaken - had to make every unbiased student realise that the entire work, in all its individual investigations, in the exact analysis of surplus value and its rate, in the distinction between constant and variable and between fixed and circulating capital, in the observation of the conditions of circulation, was precisely aimed at the solution of the prob­lem, which had already been posed by Ricardo and around which the whole post-Ricardian economics turned to a large extent. But the allegation that Marx himself had refuted the first volume by means of the third was too cosy; because of its sociological consequences, the labour theory of value was too much hated by bourgeois economics for logical proof alone to be able finally to put an end to the legend. And even the passing remark by Engels in the preface to the third volume of Capital, indicating that already between 1863 and 1867 Marx not only had the first volume ready for printing but had also completed the two last books of Capital in outline, attracted no attention. Now, however, Kautsky is able to provide irrefutable detailed evidence, from the manuscript of Theories of Surplus-Value, that the leading ideas of the second and third volumes of Cap­ital were developed in manuscript by Marx before the publication of the first volume. Specifically, Kautsky has published in the preface [to the third volume of Theories of Surplus-Value], from a manuscript found in a notebook of the year 1862, the plan that Marx outlined for those analyses that today make up the third volume of Capital. And this puts an end, once and for all, to the chat­ter according to which Marx's most brilliant accomplishment, the explanation of the equalisation of the profit rate on the basis of the labour theory of value, which freed the theory of a contradiction that had repeatedly put it into ques­tion, was only a kind of subterfuge and a white lie. Kautsky summarises in this way what has now been irrefutably established on the basis of the sources, even for the most finicky critics:

In any case, the layout of the first and third volume is already enough to show that at the time of its drafting the plan of Capital had already been settled upon by Marx in all its principles... At that time (1862), five years before the appearance of the first volume, the whole of Capital was thought out to the end, not only as regards its general train of thought, but also as regards the planned structure with which it was finally pub- lished.^[622]

Useful as this evidence is, because its cogency does not require any insight - which unfortunately is rare - into the course of development of economic theory in general and of Marx's economic theory in particular, the study of the volume that we will now discuss in more detail^[623] would be more than enough to demonstrate how much the problem of the profit rate has occupied economic thought since Ricardo.

The third volume of Theories of Surplus-Value covers the period from Ricardo to Marx. The historical account is much more cohesive than in earlier volumes, because there are no detailed theoretical deductions. And the writers dealt with are particularly interesting, because they mark the transition to economic Marxism on the one hand, and to vulgar economics on the other. This interme­diate period in the history of economics is all the more interesting because it has almost completely fallen into oblivion, so that is presentation partly sheds an entirely new light on the development since Ricardo.

Marx's formulation of the problem is directly linked to Ricardo, and here the focus of the question is: how can we explain, on the basis of the theory of value, the equality of the profit rate, which completely contradicts the propos­ition that labour determines value? The volume under consideration provides detailed proof that this was precisely the problem whose solution Marx himself posed as a task in his critique of previous economics. The problem itself was already present in Ricardo, but he again pushed it aside unresolved. What was it?

We know that, in the various branches of production, the composition of the capital that Marx called organic is very different. In one branch of production, an enterprise of one million marks may spend 800,000 marks in buildings, machinery, raw materials, etc. and 200,000 marks on wages for 2,000 workers; in another branch of production, alternatively, only 200,000 marks may be required for the physical capital, whereas 8,000 workers are employed, who earn 800,000 marks in wages. It is now an immediate conclusion from the theory of value that, with the same degree of exploitation of labour (i.e. if, for example, in both branches of production each worker works an equal length of time to reproduce the value of his wages and to produce surplus value for the capitalist), the surplus value generated by 8,000 workers will also be four times as large as that produced by 2,000 workers. But then the [rate of] profit, that is, the surplus value calculated on [i.e. divided by] the total capital of one million, will be different in the same proportion, which contradicts the proposition that capitals of the same size must yield the same profit. Marx solved this problem by showing, in the third volume of Capital, how the competition of capitals for their spheres of investment brings about such a distribution of capital among the various branches of industry that the commodities are sold not at their value but at their prices of production. At the end of the period of production, capitalist I in our example would have a value of 1,200,000 marks, while capitalist ii would have 1,800,000 marks; the first would realise a profit of 20 percent, the other of 80 percent. But that would only have the effect of a number of capitalists I transferring their capitals to the second sphere of production; thus, in the first sphere of production a reduced supply would arise and in the second an increased supply; and this would go on until both capitalists have the same valorisation (exploitation) conditions for their capital. That would be the case if the total surplus value of one million marks produced by them were spread equally over the total capital of two million; and this happens if both sell their commodities at 1,500,000 marks; then they would both obtain from their equal capitals of one million the same profit [rate] of 50 percent.

Ricardo paused at the fact of the equal [rate of] profit. He explained the deviations of prices [from labour values] as mere exceptions to the rule of the law of value. Hence, he totally failed to explain how such an exception, which logically was the very opposite of the rule, could come into being. For that very reason, the exception had to appear as a contradiction, as an abol­ition of the rule; and all the more so because, with the unfolding industrial revolution, the organic composition of capital was steadily rising, and the dif­ference between the organic composition in the different branches of produc­tion was becoming increasingly large, so that the deviation from the law of value, not its validity, appeared to be the rule. The law of value simply did not regulate prices and was therefore generally wrong. Thus profits could not, or not solely, originate in labour; they had no direct relation to it, but some­how came evenly from capital, whether from its material components or from labour.

If a thinker poses himself his task only incompletely, if he is not totally con­scious of the problem to be solved, the premises remain incomplete and imper­fect; because the process of actual thought is different from what it appears to be in the scientific presentation. In the latter, the inferences arise out of a series of premises in a deductive process. Actual thought proceeds from the consequences given in reality, in order to find from there the conditions of their occurrence. In the thought process premises and consequences, which are sep­arated in the presentation, are united, and only if the thinker is aware of all the consequences - and these are precisely the phenomena to be explained, and therefore the problem - does thought arrive at the totality of the premises. In thought, the formulation of the problem and its solution are therefore inter­dependent, and if the problem is recognised only incompletely, the premises also remain incomplete and faulty. And this, again, in a double sense: since the statement of the premises and their splitting into the separate logical links is incomplete, not all the conclusions implicitly contained in them are drawn. This is the case with Ricardo: by leaving the problem of the transformation of values into prices of production unresolved, his theory of value and surplus value also remained incomplete and therefore still contradictory. Only when Marx formulated the problem of the explanation of real prices, not as excep­tions to the theory of value but as something to be explained on its basis, was it possible to eliminate the contradictions in the theory of value, develop it fully and discover all the intermediate links explaining the transformation of values into production prices. The problem itself, however, was posed by the develop­ment of technology and by the resulting enormous expansion of the constant, and especially the fixed, capital in relation to the variable. It is to this new fact that economics had to be adapted.

But it was precisely Ricardo who formulated the problem for his successors by postulating, in his unwavering love of truth, actual price formation as an exception to his theory of value, thus showing it to be contradictory. Oppon­ents and students built upon it. With Malthus began the reaction. But scientific reaction consists in not really overcoming the logical contradictions of a sci­entific system, whether it is a contradiction of thoughts among themselves or a contradiction between thoughts and facts (which, as known facts, are likewise thoughts), but in concealing them. The difficulties are only appar­ently removed by shifting them into a different chain of thoughts in which they disappear - only in order to give way, to be sure, to larger contradic­tions, which, however, are still not recognised as such or appear habitual and natural to unscientific thinkers. Malthus is typical of such a scientific reaction­ary. He proceeds correctly from Ricardo's inconsistencies - not, however, in order to eliminate those inconsistencies, but to do away with Ricardo's correct premises.

Ricardo's theory of surplus value suffered from the contradiction of letting capital, that is, accumulated labour, be directly exchanged with living labour. The capitalist pays to the worker the ‘value of labour'. The value of a 10-hour work is obviously the value of 10 hours. But if the capitalist pays to the worker the value of his labour, there is no room for surplus value. Marx proved that the worker does not sell his labour but his labour power, whose value is equal to the value of the labour contained in the worker's means of subsistence. If the worker needs for his upkeep means of subsistence worth 5 hours of labour, but works in the service of the capitalist for 10 hours, he produces a value of 10 hours, from which the capitalist receives 5 hours as unpaid surplus value.

Ricardo had already construed the ‘value of labour' as the value of the means of subsistence of the worker, but without eliminating the contradiction of his formulation. Here Malthus appeared.

The points of departure for Malthus' attack are, on the one hand, the origin of surplus-value and [on the other] the way in which Ricardo con­ceives the equalisation of cost-prices in different spheres of the employ­ment of capital as a modification of the law of value itself [as well as] his continual confusion of profit with surplus-value (direct identification of one with the other). Malthus does not unravel these contradictions and quid pro quos but accepts them from Ricardo in order to be able to overthrow the Ricardian law of value, etc., by using this confusion and to draw conclusions acceptable to his protectors [namely, the landowners and their appendages - r.h.].^[624]

Thus Malthus arrives at denial of the [labour] theory of value and reverts to the mercantilist notion that profit comes only from the price addition that the capitalists make to the production costs. The workers can therefore buy with their wages only a part of the commodities from the capitalists, because the capitalist adds his profit to the wages. If the wages are worth 100, the capitalist sells the commodities at 110, and 10 remain in his hands unsold. It would not help him if he were to sell them to other capitalists. For if capitalist A sells to capitalist B a commodity worth 100 at 110, B will also sell his commodity with the same surcharge to A. Malthus solves the difficulty by introducing a class of buyers who pay for the commodities at their nominal values without, in turn, selling goods. The profit is realised by selling as little as possible of the total product back to the workers and as much as possible to this class that pays in cash without itself selling, and that buys in order to consume. The landowners, receiving rents and buying with them commodities from the capitalists, are therefore unproductive consumers. But those landlords are not enough; recourse must also be had to artificial means. These consist of high taxes, a mass of state- and church-sinecure holders, a significant national debt and, from time to time, costly wars. These are Malthus's ‘remedies' [to the problem of underconsumption].

Marx describes the economic motives that determined Malthus's theory as follows:

Malthus correctly draws the conclusions from his basic theory of value. But this theory, for its part, suits his purpose remarkably well - an apolo­gia for the existing state of affairs in England, for landlordism, ‘State and Church', pensioners, tax-gatherers, tenths [tithes], national debt, stock­jobbers, beadles, parsons and menial servants (‘national expenditure') assailed by the Ricardians as so many useless and superannuated draw­backs of bourgeois production and as nuisances. For all that, Ricardo championed bourgeois production insofar as it [signified] the most un­restricted development of the social productive forces, unconcerned for the fate of those who participate in production, be they capitalists or workers. He insisted upon the historical justification and necessity of this stage of development. His very lack of a historical sense of the past meant that he regarded everything from the historical standpoint of his time. Malthus also wishes to see the freest possible development of capitalist production, however only insofar as the condition of this development is the poverty of its main basis, the working classes, but at the same time he wants it to adapt itself to the ‘consumption needs' of the aristocracy and its branches in State and Church, to serve as the material basis for the anti­quated claims of the representatives of interests inherited from feudalism and the absolute monarchy. Malthus wants bourgeois production as long as it is not revolutionary, constitutes no historical factor of development but merely creates a broader and more comfortable material basis for the ‘old' society.^[625]

Malthus's own teachings were easily dismissed by the followers of Ricardo. His theory of profit is dispatched by one of them as follows:

We are continually puzzled, in his (Malthus's) speculations, between the object of increasing production and that of checking it. When a man is in want of a demand, does Mr. Malthus recommend him to pay some other person to take off his goods?^[626]

But the inconsistencies in Ricardo's theory, which Malthus inveighed against, were more difficult to eliminate. And on this attempt the Ricardian school finally foundered, but not without having made in the process a number of findings that allowed the eventual solution of the problem. Marx describes the procedures of these Ricardians in the example of James Mill.

Mill was the first to present Ricardo's theory in systematic form, even though he did it only in rather abstract outlines. What he tries to achieve is formal, logical consistency. The disintegration of the Ricardian school ‘therefore' begins with him. With the master what is new and significant develops vigorously amid the ‘manure' of contradictions out of the con­tradictory phenomena. The underlying contradictions themselves testify to the richness of the living foundation from which the theory itself developed. It is different with the disciple. His raw material is no longer reality, but the new theoretical form in which the master had sublimated it. It is in part the theoretical disagreement of opponents of the new theory and in part the often paradoxical relationship of this theory to reality which drive him to seek to refute his opponents and explain away reality. In doing so, he entangles himself in contradictions and with his attempt to solve these he demonstrates the incipient disintegration of the theory which he dogmatically espouses.^[627]

These comments are also an excellent characterisation of the doctrinal dog­matism to which the vulgarisers of any groundbreaking theory so easily suc­cumb.

The main difficulties faced by Ricardo's school were these: first, to explain how the exchange of capital and labour takes place in conformity with the law of value, a difficulty that neither the bourgeois nor the socialist Ricardians were able to overcome. The problem was first solved by Marx, who showed that not capital and labour but rather capital and labour power are exchanged. The second difficulty was that capitals of equal size, whatever their organic composition, always yielded the same profit. This problem of the general [or equal] rate of profit is also the problem of how values turn into prices of production.

The difficulty arose because capitals of equal magnitude, but of unequal composition - it is immaterial whether the unequal composition is due to the capitals containing unequal proportions of constant and variable capital, or of fixed and circulating capital, or to the unequal period of circulation of the capitals - set in motion unequal quantities of imme­diate labour, and therefore unequal quantities of unpaid labour; con­sequently they cannot appropriate equal quantities of surplus-value or surplus product in the process of production. Hence they cannot yield equal profit if profit is nothing but the surplus-value calculated on the value of the whole capital advanced. If, however, the surplus-value were something differentfrom (unpaid) labour, then labour could after all not be the ‘foundation and measure’ of the value of commodities.

The difficulties arising in this context were discovered by Ricardo himself (although not in their general form) and set forth by him as exceptions to the law of value. Malthus used these exceptions to throw the whole law overboard on the grounds that the exceptions constituted the rule. Torrens, who also criticised Ricardo, indicated the problem at any rate when he said that capitals of equal size set unequal quantities of labour in motion, and nevertheless produce commodities of equal ‘values’, hence value cannot be determined by labour. Ditto Bailey, etc. Mill for his part accepted the exceptions noted by Ricardo as exceptions, and he had no scruples about them except with regard to one single form. One particular cause of the equalisation of the profits of the capitalists he found incompatible with the law. It was the following. Certain commodities remain in the process of production (for example, wine in the cellar) without any labour being applied to them; there is a period during which they are subject to certain natural processes (for example, prolonged breaks in labour occur in agriculture and in tanning before certain new chemicals are applied - these cases are not mentioned by Mill). These periods are nevertheless considered as profit-yielding. The period of time during which the commodity is not being worked on by labour [is regarded] as labour-time (the same thing in general applies where a longer period of circulation time is involved). Mill ‘lied’ his way - so to speak - out of the difficulty by saying that one can consider the time in which the wine, for example, is in the cellar as a period when it is soaking up labour, although according to the assumption this is, in point of fact, not the case. Otherwise one would have to say that ‘time’ creates profit and [according to Mill] time as such is ‘sound and fury’. McCulloch uses this balderdash of Mill as a starting-point, or rather he reproduces it in his customary affected, plagiarist manner in a general form in which the latent nonsense becomes apparent and the last vestiges of the Ricardian system, as of all economic thinking whatsoever, are happily discarded.^[628]

McCulloch tried to solve the contradiction by calling the ‘actions' of the means of production labour, and making them produce value just like human labour. He therefore identified the natural properties of use-values, such as the mechanical labour performed by a machine, with the social relations between men, as they appear in their activities in the production process.

Like all economists worth naming, [including] Adam Smith (although in a fit of humour he once called the ox a productive labourer), [says Marx, perhaps projecting a bit too much his own more developed and more clear insight into the consciousness of his predecessors - r.h.] Ricardo emphasises that labour as human activity, even more, as socially determined human activity, is the sole source of value. It is precisely through the consistency with which he treats the value of commodities as merely ‘representing' socially determined labour, that Ricardo differs from the other economists. All these economists understand more or less clearly, but Ricardo more clearly than the others, that the exchange-value of things is a mere expression, a specific social form, of the productive activity of men, something entirely different from things and their use as things, whether in industrial or in non-industrial consumption. For them, value is, in fact, simply an objectively expressed relation of the productive activity of men, of the different types of labour to one another.^{[629] [630]}

McCulloch, by regarding ‘labour in general' - regardless of whether it is mech­anical, animal or human - and therefore all the actions of the means of pro­duction, as equally value-creating, mixed up the natural properties of things with the social determination of commodities, confusing use-value and value, and thus fell into the fetishism that underlies the pseudo-science of vulgar eco­nomics.

Marx mentions John Stuart Mill as the last Ricardian. He, too, failed because of the confusion between surplus value and profit. His attempt to prove Ri­cardo's doctrine - that the level of profit stands directly in inverse proportion to the level of wages - led Marx to investigations that belong to the theory of combination, which we shall discuss in another context.3⁴

Simultaneously with the development of bourgeois economics arose its negation in the socialist and communist systems. The plan of Marx's work, however, includes only that group of socialists who, remaining on the grounds of Ricardo's teachings, sought to develop from their results socialist, or at least proletarian, consequences. Marx mentions three of them: the writer of an anonymous pamphlet, published under the title The Source and Remedy of the National Difficulties in London 1821 [CharlesWentworth Dilke], Ravenstone and Hodgskin. Marx outlines the following characteristics of this group:

The opposition evoked by the Ricardian theory - on the basis of its own assumptions - has the following characteristic feature.

To the same extent as political economy developed - and this develop­ment finds its most trenchant expression in Ricardo, as far as fundamental principles are concerned - it presented labour as the sole element of value and the only creator of use-values, and the development of the productive forces as the only real means for increasing wealth; the greatest possible development of the productive power of labour as the economic basis of society. This is, in fact, the foundation of capitalist production. Ricardo's work, in particular, which demonstrates that the law of value is not inval­idated either by landed property or by capitalist accumulation, etc., is, in reality, only concerned with eliminating all contradictions or phenomena which appear to run counter to this conception. But in the same meas­ure as it is understood that labour is the sole source of exchange-value and the active source of use-value, ‘capital is likewise conceived by the same economists, in particular by Ricardo (and even more by Torrens, Malthus, Bailey, and others after him), as the regulator of production, the source of wealth and the aim of production, whereas labour is regarded as wage-labour, whose representative and real instrument is inevitably a pauper (to which Malthus's theory of population contributed), a mere production cost and instrument of production dependent on a minimum wage and forced to drop even below this minimum as soon as the existing quantity of labour is ‘superfluous' for capital. In this contradiction, polit­ical economy merely expressed the essence of capitalist production or, if you like, of wage-labour, of labour alienated from itself, which stands con­fronted by the wealth it has created as alien wealth, by its own productive power as the productive power of its product, by its enrichment as its own impoverishment and by its social power as the power of society. But this definite, specific, historical form of social labour, which is exemplified in capitalist production, is proclaimed by these economists as the general, eternal form, as a natural phenomenon, and these relations of production as the absolutely (not historically) necessary, natural and reasonable rela­tions of social labour. Their thoughts being entirely confined within the bounds of capitalist production, they assert that the contradictory form in which social labour manifests itself there, is just as necessary as labour itself freed from this contradiction. Since in the self-same breath they pro­claim on the one hand, labour as such (for them, labour is synonymous with wage-labour) and on the other, capital as such - that is the poverty of the workers and the wealth of the idlers - to be the sole source of wealth, they are perpetually involved in absolute contradictions without being in the slightest degree aware of them. (Sismondi was epoch-making in political economy because he had an inkling of this contradiction.) Ricardo's phrase ‘labour or capital' reveals in a most striking fashion both the contradiction inherent in the terms and the naivety with which they are stated to be identical.

Since the same real development which provided bourgeois political eco­nomy with this striking theoretical expression, unfolded the real contra­dictions contained in it, especially the contradiction between the growing wealth of the English ‘nation' and the growing misery of the workers, and since moreover these contradictions are given a theoretically compelling if unconscious expression in the Ricardian theory, etc., it was natural for those thinkers who rallied to the side of the proletariat to seize on this contradiction, for which they found the theoretical ground already pre­pared. Labour is the sole source of exchange-value and the only active creator of use-value. This is what you say. On the other hand, you say that capital is everything, and the worker is nothing or a mere production cost of capital. You have refuted yourselves. Capital is nothing but defrauding of the worker. Labour is everything.

This, in fact, is the ultimate meaning of all the writings which defend the interests of the proletariat from the Ricardian standpoint basing themselves on his assumptions. Just as little as he [Ricardo] understands the identity of capital and labour in his own system, do they understand the contradiction they describe. That is why the most important among them - Hodgskin, for example - accept all the economic pre-conditions of capitalist production as eternal forms and only desire to eliminate capital, which is both the basis and necessary consequence [of these preconditions].^[631]

At the same time, these writings also meant a step forward for economic theory. The pamphleteer [Charles Wentworth Dilke] consequently resolved surplus value into surplus labour, in contrast to the opponents and successors of Ricardo, who clung to his confusion of surplus value and profit. He drew the conclusion that capital is superfluous and surplus labour must be elimin­ated. ‘The next consequence therefore would be, that where men heretofore laboured twelve hours they would now labour six, and this is national wealth, this is national prosperity’.^[632]

Ravenstone further identified relative surplus value, which depends on the degree of development of the productive force of labour. He drew from it the conclusion that growth in the productivity of labour only increases the alien wealth that controls labour, namely capital.

Hodgskin, finally, upheld the proposition that capital is unproductive. [Ac­cording to him,] the productivity of labour does not depend on the available mass of capital. He sought to prove that the effects attributed to circulating capital, a stock of goods, are actually the result of ‘coexisting labour’. Albeit in unclear form, he already anticipated, in embryo, an understanding of the fetishism that attributes to things the effects that correspond to social relations.

Among the socialists, Marx includes a group of three authors - George Ramsay, [Antoine-Elisee] Cherbuliez and Richard Jones - whose common denominator is that, unlike the classics, they do not take the capitalist mode of production, and therefore capital, for an absolute form of production, but merely as a ‘fortuitous’ historical condition. Ramsay has the merit of having drawn a clear distinction between constant and variable capital, a distinc­tion of fundamental importance for recognition of the origin of surplus value. But he still assigned to these capital components the name of fixed and cir­culating capital, a difference arising in circulation. He remained in the dark concerning the creation of surplus value and did not succeed in developing the transformation of surplus value into profit or, consequently, that of val­ues into production prices. Ramsay declared the means of production and the raw materials (which he called fixed capital), on the one hand, and living labour, on the other hand, to be necessary conditions of production. By con­trast, it was merely due to the ‘deplorable poverty of the mass of the people’ that the worker’s means of subsistence should in general assume the form of ‘circulating capital’. Labour is a condition of production, but not wage­labour.

Ramsay attempts in earnest, and not merely in words as the other eco­nomists do, to reduce capital to ‘a portion of the national wealth, em­ployed, or meant to be employed, in favouring reproduction' (op. cit., p. 21); he therefore declares wage-labour and consequently capital - that is the social form which the means of reproduction assume on the basis of wage-labour - to be unimportant and due merely to the poverty of the mass of the people.^[633]

Similar in his critical performance is Cherbuliez, who, influenced by Sismondi, makes a series of excellent observations, particularly on the tendency towards concentration and on the equalisation of profit rates. The most important of this group, and one of the most interesting post-Ricardian economists in general, is Richard Jones. He is also the immediate precursor of Marx in his conception of history. We must therefore speak in more detail about him and his relationship to Marx.

3 RichardJones

Richard Jones was born in 1790. In 1816 he left the University of Cambridge [where he studied law at Caius College until ill health intervened. He then took orders and for several years held curacies in Sussex and Kent.] His main work, An Essay on the Distribution of Wealth and on the Sources of Taxation, Part 1: Rent, was published in 1831 in London. Soon after [in 1833], he became professor of political economy at the newly founded King's College, where he delivered his inaugural lecture, the Introductory Lecture on Political Economy, on 27 February 1833. In 1835 he was appointed successor of Malthus [in the chair of political economy and history] at the East India College of Haileybury. He died on 20 January 1855. His writings, with the exception of the first book, have been collected under the title Literary Remains: Consisting of Lectures and Tracts on Political Economy of the late Rev. RichardJones, ed. by William Whewell^[634] The editor of the volume was John Cazenove.

Marx praised Jones's first book because it was characterised by what is lacking in all English economists since Sir James Steuart, namely, a sense of the historical difference in modes of production. Whereas Ricardo gave the finishing touches to deductive political economy, Jones himself celebrated his friend Whewell, the famous author of the History of the Inductive Sciences (1837), as the founder of the inductive system of political economy. Considering the further fact that Jones showed little interest in specifically theoretical problems, he can be rightly regarded as the father of the historical school.^[635]

Jones was a member of the established Church of England and had close relationships with the Archbishop of Canterbury and the Bishop of London. As their agent, and as representative of the ecclesiastical (and conservative) interests, he was a member of the commission set up to oversee the redemption of tithes. Representing the Archbishop, he was one of three commissioners who supervised the substitution [of monetary payments for tithes in kind, stipulated by the Tithe Commutation Act of 1836].

If this shows his political stance, it is also relevant for his scientific views that he was bound by personal friendship with Malthus. All his writings show a great respect for the scientific importance and the personality of Malthus. There is no doubt that Jones placed Malthus above Ricardo, as in fact did many of his contemporaries. Even more important, however, was the close relationship that united him with such distinguished naturalists as John Her­schel and Whewell. Jones sought with full awareness to transfer the inductive method of the natural sciences, which he considered the only legitimate one, to economics. He anticipated, for the most part, the whole subsequent dis­pute on method,^[636] which the German historical school waged with so much pleasure and so few results. Already in his book on rents, he printed in the appendix, as an illustration of his method, a passage from Herschel’s Study of Natural Philosophy.^[637] The main and ultimate source of our knowledge is experience, which people acquire through observation and experiment. In the introduction to Text Book of Lectures on the Political Economy of Nations, etc., he sharply counterposed his method, which proceeded from history and obser­vation, to the dominant method (i.e. Ricardo’s), which sought to derive eco­nomic laws from purely abstract principles, and he did likewise in many other places.

If Jones adopted his method from the then mightily developing natural sci­ences, his historical-critical attitude towards absolutising the capitalist mode of production in Ricardo’s system was apparently elicited by his study of India’s social conditions, especially its landed property system, which was particularly familiar to him as lecturer at the East India College. In India he discovered both the shortcomings of Ricardo’s ‘abstract principles’ and generalisations and the historical contingency of capitalist laws of distribution, as they appear in Ricardo’s theory of rent and profit. There was, however, yet another imme­diate practical-political reason that made him take a stand against Ricardo. Jones, like Malthus, was a conservative. However, there is no trace in him of that coarse material interestedness, which again and again shines through Malthus’s sanctimonious and good-natured phraseology. His friendship for Malthus certainly did not hinder him from criticising the disastrous ‘con­sequences and excesses’ resulting from Malthusian population theory, thereby actually criticising Malthus’s theory itself. In particular, Jones’s short treatise on the theory of population^[638] showed very well the superiority of his histor­ical method vis-a-vis the alleged ‘conformity to natural law’ of the Malthusian theorems. Even if, unlike Marx, he did not reach the conclusion that every particular social order has its own population law, and that social causes are therefore decisive for the actual course of population growth (given unchan­ging natural-biological foundations), he sharply emphasised the social factors vis-a-vis Malthus’s allegedly natural law. And he took the sting out of the anti­labour consequences of Malthus’s doctrine, which legal practice followed at the time in the Poor Law, by emphatically refuting Malthus’s observation that the misery of the workers was the main factor preventing their too rapid pro­liferation, and by arguing that it was precisely an improved standard of living of the working masses that would bring about a ‘moral check’, i.e. would create social factors that would prevent a harmfully excessive demographic increase. In contrast to Malthus's theory and to the doctrine of the ‘iron' law of wages, it follows directly from Jones's view that he sees improvement of the workers' living conditions as both possible and desirable.^{[639] [640]}

But if Jones was a stranger to any anti-labour tendency, he still felt hurt in his conservative disposition by the unbiased ruthlessness of Ricardo's teach­ings, because they clearly showed the antagonism between the major classes of bourgeois society. According to Ricardo, profit and wages were inversely pro­portional; one could only rise at the expense of the other. Ground rent was just a surplus profit and, as such, a tribute that the landowners levied upon the productive classes, upon industrialists and capitalists, by virtue of their monopoly of the land. With the progress of society, increasingly less fertile soils must be brought into cultivation in order to satisfy the [growing] demand for food, thus raising ground rent. With the rise in food prices, however, wages must also increase and, as a result, profits must fall. But the falling rate of profit hinders or slows down further accumulation, which is the precondition of any social progress. Thus the landowners' interests are totally opposed to social progress. And these theoretical teachings had already condensed into practical demands. Radical Ricardians called for the abolition of landed prop­erty as an unnecessary barrier to capitalist development, while the socialists, based on the antagonistic relationship between profit and wages, demanded the elimination of capitalist relations. Jones defended the harmony of interests of all classes vis-a-vis this proclamation of class antagonisms. If he rejected the anti-labour consequences of Malthus's [theory], he was no less opposed to the socialist claims of Godwin, that ‘ingenious, but incautious, speculator’,44 and to the Ricardians' hostility towards landed property. Against the Ricardians' pess­imism concerning the fall in the rate of profit, he proclaimed the optimistic theory that a rise in labour productivity would increase the share of all classes in the social product - a view, however, which implies a confusion of use-value and value. Jones was everywhere motivated by these political considerations of the conservatives against Ricardo and his radical followers. These polemical- conservative considerations also limited Jones's historical understanding, occa­sionally misleading him into making the opposite mistakes from the ones the classics had made. If the latter transferred capitalist ideas to pre-capitalist con­ditions, Jones sometimes sought, on the contrary, to draw material from pre­capitalist conditions for his polemics against Ricardo's laws.

If Jones here again proved correct against Ricardo on many points, it was because the relationships between the classes in capitalist society are in fact more complicated than they appear in the almost mathematically simplified form that Ricardo gave them. Insofar as Jones, apart from the historical quali­fications he made to Ricardo's laws, was correct against Ricardo, he owed that to his emphasis on the social cohesion of the capitalist classes [i.e. the landlords and capitalists] as against the factors separating and opposing them.

Of all the economists before Marx, Jones was the one who most clearly recognised and enunciated the historical character of capitalism. In his book on rents, he showed that capitalist rents, to which alone Ricardo's laws apply to a certain extent, presuppose capitalist landed property, and that this in turn presupposes capitalist industry, the transformation of the labourer into a wage­worker, the appearance of an independent capitalist class, and equalisation of the rates of profit. Following rents in all their transformations, from their crudest form as forced labour to modern monetary rent (farmers’ rent), he set earlier forms of society against capitalist social relations and everywhere found that a specificform of labour and its conditions corresponded to a certain form of rent, i.e. to a certain form of landed property. In all previous forms, the landlord was the direct appropriator of the surplus labour; only in capitalist society does the capitalist take his place.

Marx discussed in detail the corrections that Jones made to Ricardo's the­ory of rent. Important and interesting as these observations are for rent theory (for example, Jones's polemic against the ‘law' of diminishing returns in agri­culture), we omit them here in order to proceed to Jones's historical standpoint. Jones is serious about the conception of capital as an historical category. Cap­ital is no longer a sum of means of production and foodstuffs, but rather a particular form of the labour fund, a certain way in which the means of labour and the articles of personal consumption are provided to the workers, a social relationship emerging late in history. The whole economic structure of society revolves around the form of labour, i.e. the form in which the worker acquires his means of subsistence, or the portion of his product that sustains his liveli­hood. In the Introductory Lectures he states:

... by economical structure of nations, I mean those relations between the different classes which are established in the first instance by the institution of property in the soil, and by the distribution of its surplus produce; afterwards modified and changed (to a greater or less extent) by the introduction of capitalists as agents in producing and exchanging wealth, and in feeding and employing the labouring population.^[641]

With great clarity Jones highlighted the different forms of labour as the distin­guishing characteristic of societies. In the Text Book of Lectures on the Political Economy of Nations, for example, he said wage-labour is ‘the great distinctive phenomenon of our actual economical condition’^[642] Jones also suggested, at least, the origin of capital, the separation of workers from their means of pro­duction, when describing the appropriation of common lands by the landown­ers. He not only saw in that [process] a social cause of the intensification of religious disputes; in the workers set ‘free’ he also saw the proletarians, who filled the streets as beggars and tramps until they were gradually absorbed by the emerging manufacturers. Our presentation, Jones concludes in this section, has thus reached the point from which we date the emergence in England of a class of capitalists, as represented by our modern tenants^[643]

But what gives Jones’s historical observations their importance is the fact that they flow from an insight into the relationship between economics and history that makes him one of the most important precursors of the materialist conception of history. Marx quoted the following paragraphs from his Text Book of Lectures on the Political Economy of Nations:

As communities change their powers of production, they necessarily change their habits too.^[644]

During their progress in advance, all the different classes of the com­munity find that they are connected with other classes by new relations, are assuming new positions, and are surrounded by new moral and social dangers, and new conditions of social and political excellence^[645]

Great political, social, moral and intellectual changes, accompany changes in the economical organization of communities, and the agencies and the means, affluent or scanty, by which the tasks of industry are carried on. These changes necessarily exercise a commanding influence over the dif­ferent political and social elements to be found in the populations where they take place; that influence extends to the intellectual character, to the habits, manners, morals, and happiness of nations.^{[646] [647] [648] [649]}

These paragraphs could easily be multiplied. For instance, Jones believed that differences in race and temperament played only a small part in [influencing] the differences of accumulation among various peoples, because ‘great bod­ies of men are very much the creatures of circumstances, and of the educa­tion which those circumstances give^,.5¹ In this regard, he also shows that, with advancing accumulation, the legal obstacles opposing capitalism must fall, and bourgeois liberty and equality must take their place. ‘It is the distribution of its wealth', he says in another place, ‘which determines always the social, and most often the political, relations of human society; and until we analyzed it, we cannot understand their internal mechanism'.5² The subordination of labour to capital, he says in the Lectures on Labour and Capital, has ‘social and political consequences [that] have been not less important than its economical ones, and they react upon each other'.5³ And elsewhere Jones ridicules the ideolo­gical view of Montesquieu, who ascribed the landed aristocracy's resistance to monarchical absolutism to its sense of honour, while much more obvious reasons (economic ones, of course) were available, especially considering that, despite its sense of honour, the aristocracy had failed to protect its peasants against oppressive taxation.

Jones expressed his views most extensively in the following passage of the Text Book of Lectures on the Political Economy of Nations:

We have before us the wide scene of the nations of the earth earning, by the decree of heaven, their daily bread by labour, and man is con­nected with man by ties which grow and are formed by their fellowship in the task. Those ties and relations extend from the monarch on the throne, through all the varied division of the population of nations, to the labourer at his work.

Out of these physical conditions and moral ties spring the most exalted virtues, public and private, which can adorn or protect society. We must not despise those ties, nor let the physical wants of men, and these their first social consequences, seem alien to the loftier parts of our nature. As well might we despise the precious brilliant [i.e. diamond] because it is elaborated in the mine from the lowest earthly elements.

We shall speak hereafter, no doubt, and that without at all diverging from our proper path, of laws and legislators, - of the voice and arm of justice embodied in sacred institutions, - of the influence of self-imposed restraint on the lower appetites of our nature, and we shall see how the manners and the morals, and the most precious energies of nations, receive their polish and their strength from the struggle. We shall trace the history of opinions and see how the strength and the aberrations of human intellect have influenced, in their turn, the fate of generations and nations. Our subject will lead us necessarily into the region of such inquiries. But if we are to treat them as philosophers, we must be patient and learn their inner nature as we learn a language, by dwelling on and dissecting its humblest elements. Such primary elements in economical and political philosophy are the needs and wants of man, and the ties and duties which arise during his efforts to supply them. Let us but be content to track these things carefully and steadily among the varied people which are about to present themselves to our observation, and I venture to promise that you shall not be discontented with the loftiness or dignity of the views of men and communities, of the moral government of God, and the varied career of nations, at which we shall arrive before our course is over.^[650]

Jones never tired of writing variations of those passages in his works, which, unfortunately, are almost all sketches or fragments. To be sure, alongside those passages are others in which Jones wants to trace the prosperity of England back to its liberal institutions, but those paragraphs remain isolated.^[651] That he did not reach complete methodological clarity regarding the relation between economics and politics is also shown by his frequent appeals to the category of interaction. Thus he says, for example, in a characteristic way: ‘There is a constant interaction between the political and economical condition of a people..., the multiplication of orders, and the modification of aristocratic power by the introduction of the democratic element into the government of nations'.-^{[652] [653]}

And Jones remains, despite his aversion to socialism, impartial enough to accept historical development not only in the past but also for the future, in contrast to those representatives of the historical school, to whom history only shows its a posteriori.

The first capitalist employers - those who first advance the wages of labour from accumulated stock, and seek a revenue in the shape of profits from such advance - have been ordinarily a class distinct from the labour­ers themselves: a state of things may hereafter exist, and parts of the world may be approaching to it, under which the labourers and the owners of accumulated stock, may be identical; but in the progress of nations, which we are now observing, this has neveryet been the case. This [separation of the worker from the means of production] may not be as desirable a state of things as that in which labourers and capitalists are identified; but we must still accept it as constituting a stage in the march of industry, which has hitherto marked the progress of advancing nations. At that stage the people of Asia have not yet arrived.’⁷

Marx comments on this passage:

Here Jones states quite explicitly that capital and the capitalist mode of production are to be ‘accepted’ merely as a transitional phase in the devel­opment of social production, a phase which, if one considers the devel­opment of the productive forces of social labour, constitutes a gigantic advance on all preceding forms, but which is by no means the end result; on the contrary, the necessity of its destruction is contained in the ant­agonism between ‘owners of accumulated wealth’ and the ‘actual labour­ers’.^[654]

Before we proceed to the ultimate answer to the question of Jones’s role in economics and his relationship to Marx, we want to reproduce Marx’s opinion:

The sentence: ‘Capital, or accumulated stock, after performing various other functions in the production of wealth, only takes up late that of advancing to the labourer his wages’ (p. 79) is the most complete expres­sion of the contradiction; on the one hand, it expresses a correct historical conception of capital, but, on the other hand, a shadow is cast over it by the narrow-minded notion of the economist that ‘stock’ as such is cap­ital. Hence ‘the accumulated stock’ becomes a person who ‘performs the function of advancing wages’ to men. Jones is still rooted in economic prejudice when he solves [the problem], a solution becomes necessary as soon as the capitalist mode of production is regarded as a determinate historical category and no longer as an eternal natural relation of produc­tion.

One can see what a great leap forward there was from Ramsay to Jones. Ramsay regards precisely that function of capital which makes it cap­ital - the advancing of wages - as accidental, due only to the poverty of the people, and irrelevant to the production process as such. In this narrow circumscribed manner, Ramsay denies the necessity for the cap­italist mode of production. Jones, on the other hand, (strange that they were both priests of the Established Church. The ministers of the Eng­lish Church seem to think more than their continental brethren) demon­strates that it is precisely this function that makes capital capital and gives rise to the most characteristic features of the capitalist mode of produc­tion. He shows how this form occurs only at a certain level of development of the productive forces and that it then creates an entirely new mater­ial basis. Consequently, however, his comprehension of the fact that this form ‘can be superseded' and of the merely transitory historical necessity for this form, is quite different from that of Ramsay and more profound. [...]

One can see here how the real science of political economy ends by regarding the bourgeois production relations as merely historical ones, leading to higher relations in which the antagonism on which they are based is resolved. By analysing them political economy breaks down the apparently mutually independent forms in which wealth appears. This analysis (even in Ricardo's works) goes so far that:

1) The independent, material form of wealth disappears and wealth is shown to be simply the activity of men. Everything which is not the result of human activity, of labour, is nature and, as such, is not social wealth. The phantom of the world of goods fades away and it is seen to be simply a continually disappearing and continually reproduced objectivisation of human labour. All solid material wealth is only transitory materialisation of social labour, crystallisation of the pro­duction process whose measure is time, the measure of a movement itself.

2) The manifold forms in which the various component parts of wealth are distributed amongst different sections of society lose their ap­parent independence. Interest is merely a part of profit, rent is merely surplus profit. Both are consequently merged in profit, which itself can be reduced to surplus-value, that is, to unpaid labour. The value of the commodity itself, however, can only be reduced to labour-time. The Ricardian school reaches the point where it rejects one of the forms of appropriation of this surplus-value - landed property (rent) - as useless, insofar as it is pocketed by private indi­viduals. It rejects the idea that the landowner can play a part in capitalist production. The antithesis is thus reduced to that between capitalist and wage-labourer. This relationship, however, is regarded by the Ricardian school as given, as a natural law, on which the pro­duction process itself is based. The later economists go one step further and, like Jones, admit only the historical justification for this relationship. But from the moment that the bourgeois mode of pro­duction and the conditions of production and distribution which correspond to it are recognised as historical, the delusion of regard­ing them as natural laws of production vanishes and the prospect opens up of a new society, [a new] economic social formation, to which capitalism is only the transition.^[655]

What is Jones's relation to Marx? There is no doubt that, of the precursors of Marx, he is the one who came closest to the materialist conception of history. To be sure, this conception is not yet systematically developed in Jones. He is not clearly aware of the materialist conception of history as the general law of motion of historical events; and recognition of class struggles, as the form of motion of social formations based upon private property, is completely lacking in him. Jones nowhere goes beyond a general formulation [of the materialist conception of history]; moreover, in the historical parts [of his works] a sys­tematic application [of those concepts] to the various stages of development is missing. But Jones already distinguished himself from most other writers who came close to materialist historical formulations, because he arrived at his conception of history from economics and not, like the others, either from an indeterminate theory of environmental determinism or from the generalisa­tion of obvious political or social antagonisms (such the contradiction between rich and poor, workers and idlers, urban and rural residents, landowners and manufacturers) as a cause of historical events. Jones starts directly from the form of labour that determined property relations, upon which the various relationships between the social classes then arose, in turn determining their legal relations, feelings and thoughts. But this recognition - important as it is in itself, and important as its economic-historical results are vis-a-vis the non- historical view of the classics - remains completely barren for economic theory. And if Kautsky rightly says in the preface [to the third volume of Theories of Surplus-Value] that Marx begins where Jones ends, to this should be added that Marx also begins where Ricardo stops.

And this is the fundamentally new element in Marx: that he attempts to com­bine the historical conception that Jones counterposes to Ricardo's ‘abstract method' with the latter, and in that way to complete it and revolutionise it. Jones is the simple negation of Ricardo, the purely external contradiction. He does not care any further about Ricardo's theory, except where he corrects or completes individual results, especially in the theory of rent. Jones continues to operate silently with Ricardo's or even Malthus's theory of value, without wor­rying much about their differences, which seem to him irrelevant. He has no explanation for complicated phenomena such as crises. Nowhere did he try to go beyond historical description to theoretical comprehension. That is precisely Marx's achievement: that he placed recognition of the historical and social character of economic categories at the service of transforming [economic] theory. The problem presents itself for Marx at the point where Jones either accepts or rejects the results of previous theories. The realisation that eco­nomic relations are social relations led him to discover the fetishism of the con­cepts of commodity, money and capital. Labour appeared to him in its [histor­ical] determination as wage-labour in its socially necessary form; the economic production process [appeared to him] in its double form as the labour process and the valorisation (exploitation) process, the commodity as use-value and as value. Capital is no longer a material stock [of goods], but the social relation­ship in which wage-labour is in opposition to the monopoly of the means of production. The worker sells his labour power; the product belongs to the cap­italists, on whom the surplus labour devolves. The magnitude of the surplus labour, i.e. the surplus value, is determined by the division of the newly created value between workers and capitalists, i.e. by the amount of wages or variable capital. The distinction between variable and constant capital is thereby given, and in the development of this ratio of the organic composition of capital Marx found capitalism's most important law of motion. The differences in form between fixed and circulating capital, originating in circulation, was recognised as secondary vis-a-vis the distinction between constant and variable capital, arising from the valorisation process. The competition between capitalists for spheres of investment brings about equalisation of the different rates of profit into the average profit rate, which determines the transformation of values into prices of production. The historical-social view of economic categories des­troyed their fetish character and led to solution of the problems upon which Ricardo and his followers foundered. The economic theory of scientific Marxism grew out of the specifically Marxist union of the ‘inductive method’ of Jones and the abstract method of Ricardo.

And the economic categories, once discovered, remained historical; their operation did not suddenly stop after they were discovered, nor will it be sud­denly terminated by force, as utopian socialism wanted, thinking that it could substitute categories concocted in its imagination for the real ones. The distin­guishing feature of scientific socialism is precisely that socialism is nothing but the result of the full development of the capitalist economy. It is not discovery of the rules for establishment of socialist societies, but rather explanation of the laws of the capitalist world that turns socialism into a science, demonstrat­ing its inevitability as a necessary stage in social development. By breathing historical life into Ricardo's ‘abstract principles', by turning economics into his­tory and history into economics, Marx overcame the unhistorical rationalism of the classics and the irrational conservatism of the historians, along with the utopianism of previous socialism.^[656] Economics was now no longer seen as a science of dead things, of the largest possible production or the best pos­sible distribution. It was the understanding of social conditions, of the relations between the classes, of the necessity of the class struggle and its outcome. The conformity to law of the self-development of [Hegel's] Idea became the con­formity to law of the will of classes, as determined by their social relationships, which we learned to recognise through economic science. The idea of evolu­tion, stripped of its idealistic form, seized the social sciences.

We have reached the end. With Jones, political economy arrives at the point where its previous conscious or unconscious assumption - the necessity, or the implicitly assumed existence, of the bourgeois form of production - had to be dropped in order to make possible further progress of the science. It is the point from which economics goes backwards towards vulgar economy or forwards to scientific socialism. In the final chapter [of the third volume of Theories of Surplus-Value], Marx offers a brilliant description of vulgar economy's relapse into the worst fetishism.

It is a splendid irony. Since the first volume of Capital appeared, countless attempts have been made to discover the precursors of Marx's ideas. A whole literature has developed, and now all the pundits must see that they were on the wrong track, that only in his posthumous work did Marx point them in the right direction. They were on the wrong track because the history of scientific socialism’s development is much more the development of science than the development of socialism. German philosophy, French historiography, English political economy - consolidated in their aggregate results and united in the irresistible drive to find a scientific solution to the great problems posed by the revolutionary era - tantae molis erat [so great was the effort]^[657] to establish the foundations of scientific socialism. Is it any wonder that it has remained so steadfast, that the task of science continues to be not the laying of new found­ations, but only the continued building [on the foundations of Marxism]?

Like no other thinker before him, Marx wrote the history of his predecessors with care and accuracy. If the work remained a torso, still all the essential moments in the development of science are emphasised. Equally true for this historical work is what Ernst Mach, another great researcher and historian of his science, mentioned in his introduction to The Science of Mechanics as the reason of his enterprise:

We now propose to enter more minutely into the proposed subject of our inquiries, and, at the same time, without making the history of mechan­ics the chief topic of discussion, to consider its historical development so far as this is requisite to an understanding of the present state of mech­anical science, and so far as it does not conflict with the unity of treat­ment of our main subject. Apart from the consideration that we cannot afford to neglect the great incentives that it is in our power to derive from the foremost intellects of all epochs, incentives which taken as a whole are more fruitful than the greatest men of the present day are able to offer, there is no grander, no more intellectually elevating spec­tacle than that of the utterances of the fundamental investigators in their gigantic power. Possessed as yet of no methods, for these were first cre­ated by their labours, and are only rendered comprehensible to us by their performances, they grapple with and subjugate the object of their inquiry, and imprint upon it the forms of conceptual thought. They who know the entire course of the development of science, will, as a matter of course, judge more freely and more correctly of the significance of any present scientific movement than they who, limited in their views to the age in which their own lives have been spent, contemplate merely the momentary trend that the course of intellectual events takes at the present moment.^[658]

But the history of the development of science is not always the simultaneous history of the rising awareness of the individual thinker. A detailed study of the theories certainly indicates that Marx first discovered many elements of his thought in his predecessors only after his system as a whole had been com­pleted. But those details are at most of psychological or philological interest, for what a colossal work has Marx accomplished! Very few achievements in the history of science can be placed on the same level with it, even if he placed all the accumulated labour of previous thinkers at the service of his work. Speak­ing of Adam Smith, Jones offers these beautiful words:

None but those ignorant of the ordinary march of knowledge will think it derogatory to the great Economist that he did not create all the light he used; that he seized the trembling and imperfect beams which, in the general progress of thought, many other intellects had begun to emit, and knit them with a strong hand into a perfect ray; which sheds a light upon the path of nations that can only disappear with the disappearance of the accumulated knowledge of our race. Such is the appointed task of all great leaders, in both moral and physical science; and such are the achievements which leave the human race their everlasting debtors^{[659] [660]}

But about Marx we must say - now that we have learned from him personally how his economic system has become the dazzling conclusion of a brilliant development - that he accomplished something even greater. He not only collected and knit, but infinitely increased the intensity and fire of the light. He has accomplished the work that Hegel demands from a great man: ‘He who expresses the will of his age, tells it what its will is, and accomplishes this will is the great man of the age. What he does is the essence and inner content of the age, and he gives the latter actuality^

Thus Marx has fulfilled the promise he made in Rheinische Zeitung: to sub­ject to a thorough critique the communist ideas that, in the form they took in those days, could not even be granted theoretical objectivity.^{[661] [662] He fulfilled the promise, driven by the desire for spiritual power and imbued with the firm con­viction that}

the real danger lies not in practical attempts, but in the theoretical elabor­ation of communist ideas, for practical attempts, even mass attempts, can be answered by cannon as soon as they become dangerous, whereas ideas, which have conquered our intellect and taken possession of our minds, ideas to which reason has fettered our conscience, are chains from which one cannot free oneself without a broken heart; they are demons which human beings can vanquish only by submitting to them.66