The Reception of Theories of Surplus-Value

The first volume of Theories of Surplus-Value was reviewed by Heinrich Cunow (1862-1936), one of the editors of Die Neue Zeit and Vorwarts, respect­ively the spd's theoretical journal and its central press organ (see Document 5).^[40] Cunow would later make a spectacular volte-face during the First World War and become a strident social-patriot, but for the moment he was a member of the ‘orthodox' camp, and in 1907 he became a lecturer at the spd party school in Berlin, teaching alongside Franz Mehring, Rudolf Hilferding and Rosa Lux­emburg. His theoretical works include several studies in anthropology, a history of the revolutionary press during the French Revolution and two pioneering analyses of imperialism, in which he emphasised the central role of banks and finance capital in imperialist expansionism^{[41] [42]}

Cunow's review summarised Marx's assessment of the English mercantil- ists,4² Physiocracy and Adam Smith, pointing out how the focus of economic inquiry had moved from the sphere of circulation in mercantilism to the sphere of production in the Physiocrats, then to the concept of productive and unpro­ductive labour in Adam Smith and, finally, to the critique of capitalism in Marx’s economic system. The only point where he differed from Marx was in his appraisal of Sir James Steuart. Cunow thought Marx’s assessment of Steuart as a late mercantilist was mistaken and that Marx had underestimated Steuart’s theoretical achievements.

But the main issue that Cunow emphasised was the distinction between pro­ductive and unproductive labour. He explained that the concept of productive labour is determined by the character of each social formation, with the result that there is no productive labour, abstractly understood, that can be treated apart from historically given modes of production. In the capitalist context, productive labour is labour purchased by a capitalist with a portion of his capital and employed in production in order to extractfrom it surplus-value, while unpro­ductive labour, on the other hand, is labour that supplies someone with services or use-valuesfor the satisfaction of his needs and is paidforfrom his income’.^[43]

The second volume of Theories of Surplus-Value was reviewed by Gustav Eck­stein (1874-1916), later a prominent member of the Kautskyist ‘centre’, whom Leon Trotsky referred to in his obituary as ‘one of the most outstanding Austro- German Marxists’.^{[44] [45] We have included Eckstein’s review because of the import­ance it attached to Marx’s critique of the theory of rent as it appeared in the works of Smith, Ricardo and Rodbertus (see Document 6).}

The Physiocrats saw agricultural labour as the only productive labour, and they therefore regarded agriculture as the source of the social surplus - al­though they also drew a progressive bourgeois corollary (advocacy of a ‘single tax’ on ground rent) from their ostensibly backward-looking analysis. Thomas Malthus had claimed that luxurious consumption by landlords was essential to ensure an adequate market for industry. Adam Smith and David Ricardo cast landlords in a different role, seeing rent as a diversion of social revenue from productive purposes. Smith wrote that ‘as soon as the land of any country has all become private property, the landlords, like all other men, love to reap where they never sowed, and demand a rent even for its natural produce’?⁵ Ricardo, in turn, derived ground rent from the diminishing returns obtained from increasingly less productive parcels of land brought under cultivation, and he explained the declining tendency of the rate of profit by means of this constantly increasing rent.

Marx criticised Ricardo for focusing on differential rent and excluding the possibility of absolute rent, a point that Gustav Eckstein elaborated in his review. Eckstein demonstrated that absolute rent, arising from the surplus­profit obtained by the excess of market prices over prices of production, pre­supposed a distinction between values and production prices not contem­plated in Ricardo's system. With free competition, capitals will typically move from branches with a higher organic composition than the average into those with a lower organic composition, in the hope of capturing a larger return of surplus value. Eckstein noted that industries ‘with low organic composition cannot, as a rule, avoid the influx of new capital and realise for themselves the surplus value exceeding the rate of profit'. However, since the owners of land enjoy a monopoly over a non-renewable means of production, the movement of capital into agriculture, with its typically low organic composition, will not occur without a ‘special compensation' being paid to landowners in the form of absolute rent; that is, an element of the total rent that cannot be explained in terms of differing productivity of the land. But this analysis also showed that absolute rent was a purely historical fact, which belonged to a certain stage of development of agriculture and could disappear at a higher stage. Eckstein remarked that this possibility was already materialising in 1906:

Before the introduction of machinery into industry, the role of living labour was even greater in industry than in primary production.

Eckstein concluded that, ‘as regards methodological clarity, the presentation of ground rent, and particularly of absolute rent, is superior in this work compared to the third volume of Capital’.

The third volume of Theories of Surplus-Value was reviewed by Rudolf Hil- ferding in a tour de force of theoretical penetration and conceptual clarity (see Document 6). Since Ricardo did not distinguish between constant and variable capital, he could not develop the concept of what Marx called the organic com­position of capital, i.e. the ratio between the constant and variable elements. Borrowing the Austrian physicist Ernst Mach’s ideas on how and why science progresses, Hilferding attributed the eventual 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 and pro­ducing a rising organic composition of capital, which in turn implied a falling rate of profit since only living labour can produce surplus value.

Among the thinkers whose work Marx reviewed in portraying the break­down of the Ricardian system, the most prominent were Thomas Malthus, James Mill, John Ramsay McCulloch and Richard Jones. Hilferding surveyed Marx’s account of how Mill sought to uphold the logical consistency of Ricar­do’s system by explaining away new realities; how McCulloch confused the ‘actions’ of machinery with living labour and fetishised capital; and finally, how Jones criticised Ricardo’s method from an historicist point of view.

Hilferding considered Richard Jones (1790-1855), an Anglican priest and politically conservative lecturer at Cambridge University, to be ‘one of the most important precursors of the materialist conception of history¹. Of all the econom­ists who preceded Marx, ‘Jones was the one who most clearly recognised and enunciated the historical character of capitalism’. Jones wrote that ‘the gen­eral principles of political economy have hitherto been laid down by English writers with an especial and exclusive view to the peculiar form and structure of society existing in Great Britain’ - a society characterised by the fact that the majority of labourers, in both industry and agriculture, were wage-workers, employed by a class of capitalists owning the means of production and differ­ent from the possessors of the soil.^[46] Such a disposition of classes, Jones argued in 1833, could be seen only in England and the Low Countries, and in certain places in Western Europe and America. It did not describe the social structure of humanity during most of its history and certainly not that of most of the globe at the time when he was writing.

In his commentary on Jones in Theories of Surplus-Value, Marx wrote that ‘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’^[47] In Hilferding’s terms, this meant that

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.^[48]

Hilferding shared Kautsky's conclusion that ‘Karl Marx starts where Richard Jones stopped', to which he added that ‘Marx also begins where Ricardo stops'.

The next document in this collection is an overview of all three volumes of Theories of Surplus-Value by Otto Bauer, who in 1910 wrote that only after a lapse of 51 years ‘do we get to know the final part of the work - the part that Friedrich Engels intended to publish as a fourth volume of Capital - whose first part Karl Marx published in 1859'. As in his previous essay marking the fortieth anniversary of the first volume of Capital (Document 2), Bauer explored the relation between Marx and Hegel, in this case between Theories of Surplus-Value and the method Hegel employed in his Lectures on the History of Philosophy:

Just as Hegel arranges all the older philosophical systems as integral parts of his own, as phases of its development, identifying this development with the self-development of Spirit in general, so Marx looks not only for the basic ideas of his theory, but also for each one of its component parts in the economists of the two preceding centuries, and he shows the internal development of those elements until their systematic organisa­tion in his own doctrine reflects the development of bourgeois society^[49]

Whereas Cunow, Eckstein and Hilferding had explored particular authors and specific theoretical problems, Bauer summarised the whole of Marx’s history of political economy by explaining how the key issues were integrated in Marx’s fundamental concepts of historical materialism:

The development of the productive forces finds its specific economic expression in the progress to a higher organic composition of capital. Thus theory passes over from the old static problem of value distribution to the problem of exploring the laws of motion of the capitalist economy. The problems of accumulation and the rate of profit, already posed by the older economists, now took on new shape.

As contradictions and antagonisms developed together with the productive forces, the analysis of the capitalist mode of production turned into its criticism and led to the discovery that capitalist relations must be replaced by other relations of production. In this connection, Bauer concurred with Hilferding in his assessment of Richard Jones, who

regarded the capitalist mode of production as a transient phase in the development of mankind, a stage of development that can be followed by another in which the workers themselves will be the owners of the means of production and of the stocks necessary for labour. As he surveyed the changes in the productive forces and in the relations of production, he also recognised that the Ideological superstructure changed with them. Thus Jones already enunciated the fundamental ideas of the materialist conception of history.