The Reception of the Third Volume of Capital (1894)

The third volume of Capital was reviewed in Die Neue Zeit by none other than the future theoretician of revisionism in the spd, Eduard Bernstein?⁴ His long commentary, published in seven separate instalments, emphasised that the transformation of values into production prices was not only a categorical stage in Marx's analysis but also an actual historical stage in the development of commodity production, marking its transition to fully developed capitalist production?⁵ In the final paragraph of his review, Bernstein wrote:

When the first volume of Capital appeared, someone who personally was thoroughly opposed to Marx and had been bitterly criticised by him - Johann Baptist von Schweitzer - had to say to himself after reading that work: socialism is a science.

Despite this positive summary, however, only two years later Bernstein com­mented in a letter to Kautsky, written on 1 September 1897, that he had long entertained some doubts regarding Capital and that the third volume was ‘the last straw': ‘It is an anti-climax vis-a-vis the first volume, not only as regards the form, but also because of its content'?⁷ Although Bernstein was close to Engels at the time, Engels had his own misgivings and spoke of Bernstein's review as being ‘very confused'?⁸ Much of Bernstein's work consisted of lengthy quota­tions from Marx, and he neglected even to consider the final chapters on the theory of ground rent, which he promised to deal with in a subsequent essay.

A much more substantive review of the third volume of Capital came from Werner Sombart, one of the most prominent economic sociologists of the day and a leader, together with Max Weber, of the third generation of the German ‘historical school’ of political economy.

When Sombart’s article appeared in 1894, Eugen von Bohm-Bawerk, then the most famous proponent of the Austrian School of marginalist economic theory, considered it to be an apology for Marxism.^[29] From a political point of view this was nonsense: Sombart was never a socialist, and his later works were extensively criticised by Rosa Luxemburg, Ernest Belfort Bax and Max Adler.^[30] Yet Bohm-Bawerk’s reaction was quite understandable, coming from a representative of the subjective theory of value, for Sombart spoke of political economy as being divided into ‘two worlds of. thought [that] exist side by side, almost independently of each other; two kinds of scientific observation, which have nothing more than the name in common’.

On the one hand, the subjectivist school concentrated on price determ­ination through individual judgements of utility in the act of exchange, an approach that Sombart said ‘naturally empties into psychologism’. Marx’s eco­nomic system, on the contrary, was characterised by an extreme objectivism, with the result that ‘all the partial and complete, more or less justified, more or less clear, more or less hackneyed contradictions in our schools, which have come up for discussion so often lately, will ultimately resolve themselves in this methodologically paramount opposition of objectivism and subjectivism’^[31]

Sombart noted that, in contrast to Bohm-Bawerk and the subjectivist school, Marx emphasised the ‘economic conditions which are independent’ of the individual’s will, in order to determine what ‘goes on behind his back, by virtue of relations independent of him’:

[Marx’s] train of thought was this: prices are formed by competition...

Sombart’s review included a detailed - and, according to Engels, ‘quite excel­lent’^[32] - rendering of the main arguments in the third volume of Capital. Where Sombart differed from Marx was in regarding value (and therefore sur­plus value) as merely a heuristic concept intended to ‘give to the technical concept of productivity, or productive power, an adequate economic form, thus making it suitable for economic thinking’. According to Sombart, ‘the value of the commodities is the specific historical form in which the social productivity of labour, determining all the economic processes, ultimately asserts itself’ in a soci­ety based upon exchanges between private producers. While Engels thought highly of Sombart’s review in general terms, he rejected his conclusion that Value is not an empirical but a conceptualfact?^[33]

Sombart’s tendency to regard value as a theoretical construct was also evid­ent in his view of the equalisation of the rate of profit by competition among capitals: ‘Those “equalisations” of high and low rates of profit, among capitals of different organic composition, into an average rate of profit are mental oper­ations, but no events of real life’^[34] In his letter of response, Engels pointed out that Marx had in mind neither heuristic concepts nor mental operations but a real historical process:

How has the equalisation been brought about in reality?... When com­modity exchange began, when products gradually turned into commod­ities, they were exchanged approximately according to their value.

Engels insisted that ‘The law of value has a far greater and more definite importance for capitalist production than that of a mere hypothesis, let alone a necessary fiction’.^[35] The transformation of values into production prices involved ‘not just a logical process but a historical one, and its explanatory reflection in thought, the logical following-up of its internal connections’^[36] Engels summarised this way:

... Marx’s law of value applies universally, as much as any economic laws do apply, for the entire period of simple commodity production, i.e. up to the time at which this undergoes a modification by the onset of the capitalist form of production. Up till then, prices gravitate to the values determined by Marx’s law and oscillate around these values, so that the more completely simple commodity production develops, the more do average prices coincide with values for longer periods when not interrup­ted by external violent disturbances, and with the insignificant variations we mentioned earlier. Thus the Marxian law of value has a universal eco­nomic validity for an era lasting from the beginning of the exchange that transforms products into commodities down to the fifteenth century of our epoch. But commodity exchange dates from a time before any written history, going back to at least 3500B.C. in Egypt, and 4000B.C. or maybe even 6000B.C. in Babylon; thus the law of value prevailed for a period of some five to seven millennia^[37]