§ III. The Chief Founder of Modern Socialism, Karl Marx

KARL Marx has been dubbed by the Berlin Vorwärts (1894, No. 62) “the greatest teacher of the socialist parties in the world,” and “the giant pathfinder of socialism.”

Marx was born of Jewish parents at Treves, May 5, 1818. In 1824 the whole family embraced Protestantism. Young Marx completed his classical studies in his native town, and then took a course of law and later on of philosophy at Bonn and Berlin. In 1841 he was admitted as private professor at the University of Bonn, but already the following year he became editor of the democratic-liberal Rhenish Gazette, which was suppressed in 1843 on account of its opposition to the government. The same year he married Miss Jenny von Westphalen, with whom he moved to Paris, where he devoted himself assiduously to the study of political economy and of socialistic writings, and was soon gained over to socialist principles.

Here he also made the acquaintance of FREDERICK ENGELS,¹ who was henceforth his most intimate friend, his inseparable companion and collaborator. As the first result of their united efforts they published in 1845: “Die heilige Familie. Gegen Bruno Bauer und Konsorten.” Their inflammatory articles against absolutism caused their expulsion from France, whereupon they settled first at Brussels, and in 1848 published conjointly another book, “La misère de la philosophie, réponse à la philosophie de la misère de M. Proudhon.” The same year witnessed the appearance of the “Manifesto of the Communist” Party” drawn up by Marx and Engels at the request of the Communist Union. This manifesto contains the germs of all the leading ideas developed by Marx later on, and closes with the battle-cry of modern socialism: “Proletarians of all countries, unite!” The following year we meet Marx at Cologne editing the New Rhenish Gazette, which, however, enjoyed but a brief existence. Exiled also from Germany, Marx henceforth resided permanently in London, devoting himself entirely to study and literary occupations. The first important result of his studies was his “Criticism of Political Economy,” 1859, which was followed in 1867 by the first volume of “Capital.” The second edition of this volume appeared in 1872, and the fourth revised by Engels¹ in 1890. The second and third volumes were prepared by Engels from the literary remains of his friend. The original plan called for a fourth volume, which, however, has not been forthcoming.

¹ Born at Barmen, 1820, died in London, 1895. Principal writings: Die Lage der arbeitenden Klassen in England (1845); Der Ursprung der Familie, des Privateigentums und des Staates (2d ed., 1886); Herr Eugen Dührings

Umwälzung der Wissenschaft (2d ed., 1886); Die Entwicklung des Sozialismus von der Utopie zur Wissenschaft (4th ed., 1891).

¹ Unless the contrary is expressly stated, our quotations from the first volume of Capital are according to the fourth edition.

Translator’s Note.—Of the first volume of Capital there exists an English version published in London and also reprinted in America with different pagination. However, for the sake of greater accuracy and convenience the quotations also from the first volume are, as a rule, translated directly from the German original independently of the London edition. The numbers, therefore, refer to the pages of the fourth German edition.

To the year 1864 must be assigned the foundation of the International Workingmen’s Association, in which Marx played a prominent part. At his instigation a great convention of workingmen of different nations assembled in London to discuss the project of an international organization of workingmen and proletarians. A committee was appointed for drawing up the statutes of this international organization and for preparing the convention to be held the following year at Brussels. The first resolution of this committee was the establishment of a general council consisting of a president and one corresponding member for each of the nations concerned. Marx was chosen member for Germany. ‘The address to the workingmen proposed by him and accepted by the general council concludes with the words of the communist manifesto: “Proletarians of all countries, unite!”

The statutes and the declaration of principles drafted by Marx were also adopted. The following characteristic passages may be cited here: “In consideration that the emancipation of the working class must be accomplished by the working class itself, that the struggle for the emancipation of the working class does not signify a struggle for class privileges and monopolies, but for equal rights and duties, and the abolition of class rule; that the economic dependence of the workingman upon the owner of the tools of production, the sources of life, forms the basis of every kind of servitude; . . . that therefore the economic emancipation of the working class is the great end to which every political movement must be subordinated; . . . that the emancipation of labor is not a local nor a national, but a social problem, which embraces all countries in which modern society exists, . . . the First International Labor Congress . . . regards it as the duty of man to demand the rights of a man and citizen not only for himself, but for every one who does his duty.”¹

¹ Hillquit, History of Socialism in the U. S., pp. 177–180. (Here and throughout the book italics are ours.—Tr.) Cf. Jäger, Der moderne Sozialismus (Berlin, 1873), p. 56. This work is still one of the most reliable concerning Marx and the “International;” it also contains copious extracts from Marx’s Inaugural Address.

This platform was ratified by the Geneva convention, 1866. Henceforth an International convention took place almost every year. The Brussels convention of 1868 resolved to replace the Bible and religion by the cult of those men who had gained distinction by increasing the material well-being of mankind. The Basle convention of 1869 decided that society has a right to change private property in landed estates into common ownership by the community.

But soon dissensions, owing in great part to national jealousies, sprang up principally concerning the powers of the general council. The federalists or anarchists under the leadership of Bakunin were loth to bear the dictatorship of the general council and felt jealous at the prominent position occupied by a German, K. Marx.

The latter’s adherents, called centralists, were of opinion that only a strong general council vested with almost unlimited powers was able to lead the labor party to victory. This dispute between federalists and centralists had the effect that no more conventions were held after 1873 and that the general council, which had been transferred from London to New York, was soon dissolved. Although at present there exists no international organization of workingmen, yet the ideas which gave it birth are still continually at work. It is also since 1864 that the division of the proletariat into anarchists and socialists has become distinctly marked.

After the disruption of the International Workingmen’s Association, Marx never again appeared before the public, but devoted himself exclusively to literary work until his death, March 14, 1883.

The foundations of modern socialism are partly historical, partly theoretical. It may be asked in the first place: What are the causes which occasioned and promoted the rise and spread of socialistic ideas? In the second place we may ask: What arguments are adduced by socialism to establish the theoretical justice or necessity of its demands? The answer to the first question will give us the material and historical foundations of socialism; the answer to the second will point out its theoretical basis.

The historical foundations of socialism have been briefly sketched above (p. 21). They are embedded in the conditions of modern civilization. Socialism had already penetrated far and wide before any scientific demonstration of its theories was attempted or even thought of. It is now almost universally acknowledged that it was Marx who placed socialism on a scientific basis, and therefore he is looked up to by socialists with a quasi-religious veneration.

But which are those fundamental tenets discovered and formulated by Marx, on account of which he is reputed to be the founder of “scientific” socialism ? The answer to this question is given by Fr. Engels. “Two great discoveries, the materialistic conception of history and the revealing of the secret of capitalist production by means of surplus-value; these discoveries we owe to Marx. Through them socialism has become a science.”¹

¹ Engels, Die Entwicklung des Sozialismus von der Utopie zur Wissenschaft (1891), p. 26.—In his preface to the second edition of Capital Engels seems to grant that the theory of surplus-value was advanced previous to Marx by some English socialists, notably William Godwin, Charles Hall, and William Thompson.

What is meant by the materialistic conception of history on the part of socialists? It is briefly this: The entire history of mankind with its political, religious, and moral phenomena is but the grand process of evolution, wherein nothing is stable and immutable except the one constant law of perpetual change, and wherein all progress is accomplished only by the formation of economic contrasts and of the class wars resulting therefrom.

This is the Marxian system in a nutshell. In this system the most heterogeneous elements are cemented into unity. In the preface to the first edition of his work on the development of socialism (1882) Engels glories in the fact that German socialists are proud to be the descendants not only of Saint-Simon, Fourier, and Owen, but also of Kant, Fichte, and Hegel. Of Kant indeed there are but scanty traces, but of the others, all have furnished stones for the erection of the Marxian edifice.

In Marx’s system three points must be distinguished, the method, the contents, and the aim, or in other words, the conclusions arrived at.

Marx’s method, the so-called dialectic method, has been taken over from Fichte and Hegel. According to Hegel the absolute idea is developed in this order of succession: thesis, antithesis, synthesis. That which exists is annulled by something else the germ of which was contained in the first; this first negation is annulled again by a second negation—the so-called negation of negation—and thereby there is produced a more perfect form of that which was annulled at first.

An example will render more intelligible what is here expressed in characteristically Hegelian obscurity. A grain of barley falling “upon favorable soil will be affected and changed by the influence of heat and moisture; it sprouts; the grain as such disappears, it is annulled, in its stead there arises from it a plant which is the negation of the grain. What, however, is the normal life-history of this plant? It grows into flower, is fertilized and finally produces other grains of barley. As soon as these are ripe the plant withers and is annulled in its turn. The result of this negation of negation is again a grain of barley but multiplied twenty or thirty fold.”¹

¹ Engels, Herrn E. Dührings Umwälzung der Wissenschaft, 2d ed., pp. 126, 127.

The grain of barley, therefore, is the thesis, the resultant plant is the antithesis, the multiplied grains of barley the synthesis. But, you object, at the conclusion of the process this example shows but a multiplication of barleycorns, it is not a process of transformation. To this objection Engels replies by another example illustrating the transformation of the species. “Take some docile flowering plant, e.g., a dahlia or an orchid, treat its seed and the plant springing from it with the skill of an experienced gardener, and the result of this negation of negation will be not only a greater quantity of seed, but also an improved quality capable of producing more beautiful flowers, and every repetition of this process, every new negation of negation, will result in still greater improvement.”¹

¹ Ibid., p. 127.

A similar process is said to be observed in history. This Engels illustrates by another example. “Every civilized nation begins with public ownership of land (?). As soon as the nation has progressed beyond a certain stage, the development of agriculture causes this public ownership to be felt as shackling production. It is abolished, annulled, and after shorter or longer intermediate stages it is changed into private ownership. But, after private property in land has produced a higher degree of development, it becomes in its turn a shackle hampering production, as is the case at present not only on small but also on extensive estates. The necessity of abolishing it and of changing it back to public property has become imperative. But this necessity does not imply the restoration of public ownership as it existed originally; it means the establishment of a far higher and more perfect form of common ownership which, far from hindering production, will give it free scope and allow it to utilize to the full the chemical discoveries and mechanical appliances of modern times.”²

² Ibid., p. 129.

Such is the Hegelian dialectic method adopted by Marx and Engels. It is “but the science of the general laws of motion and of development in nature, in human society, and in thought.”³

³ Ibid., p. 133.

Ancient philosophy—the metaphysical mode of thought, as Engels calls it—started from the supposition that there are a number of ideas and principles not subject to change or modification, independent of time or space and in thus far eternal. The new philosophy fathered by Hegel—the dialectic mode of thought— knows nothing of unchangeable concepts and principles except in the realm of mathematics. Not only the visible universe, but also mankind, its thought, volition, and action, are supposed to be in a continual process of development, wherein nothing is permanent except an eternal coming into existence (das ewige Werden).

The Hegelian system, Engels tells us, “was the first to interpret the whole of the material, historical, and intellectual world as a process of everlasting motion, change, transformation, and evolution, the first to make the attempt of pointing out the internal correlation of this motion and development. From this point of view the history of mankind no longer appeared as a senseless jumble of violence and bloodshed, . . . but as the natural evolution of the human race; and henceforth it became incumbent on the philosopher to trace this gradual development through all the mazes of error, and to prove that, in spite of external appearances pointing to its being the product of chance, it has followed certain well-defined laws.”¹

¹ Engels, Die Entwicklung des Sozialismus, p. 22.

But Hegel failed to accomplish the task incumbent on him. He was an “idealist, i.e., the concepts of his brain were not regarded by him as the more or less abstract representations of external realities and occurrences; on the contrary, things and their development were for him but the materialized images of the ‘idea’ existing somehow or other already before the world. Thereby everything was turned topsy-turvy and the actual condition of the world completely inverted. ... The Hegelian system as such was a misbegotten monster—but it was also the last of its kind.”¹

¹ Ibid., p. 23.

Moreover, this system was subject to an intrinsic contradiction. “On the one hand it necessarily presupposed that historical conception according to which the history of mankind is but a process of evolution which by its very nature cannot have its intellectual termination in the discovery of so-called absolute truth; and on the other hand it (Hegel’s system) poses as the very cream of this same absolute truth. A comprehensive system of conceiving nature and history, which is to be complete once for all, is incompatible with the first principles of the dialectic mode of thought.”²

² Ibid., p. 23.

This conviction on the part of Marx and Engels that German idealism is radically wrong led to the adoption of materialism.

The idea of constant dialectic evolution was taken over from Hegel. But what is the thing evolved, and what determines the direction to be taken by the process of evolution? Convinced of the errors of Hegelian idealism, Marx and Engels became converts to FEUERBACH'S historical materialism. Feuerbach once for all did away with the “dualism” of spirit and matter and categorically proclaimed the sovereignty of materialism.

Engels thus speaks of his own “conversion”: “Then came Feuerbach’s ‘Essence of Christianity.’ At one blow it shattered the contradiction (of Hegelianism) by unceremoniously raising materialism to the throne again. Nature exists independently of philosophy; it is the basis upon which mankind, itself a product of nature, has grown up; beyond nature and man there is nothing, and those higher beings created by our religious fancy are but the fantastic reflections of our own being. The spell was broken; .. . only he who has experienced the liberating influence of this book can have any conception of it. Enthusiasm was catching; for the nonce all of us were disciples of Feuerbach. How Marx grew enthusiastic over this new idea, and how much he was influenced by it notwithstanding his critical demurs, may be seen by reading his ‘Holy Family.’ ”¹

¹ Engels, Ludwig Feuerbach, 2d ed., pp. 10, 11.

According to Feuerbach ‘matter is not the creation of the spirit, but the spirit itself is but the highest product of matter. This, of course, is materialism pure and simple.”² Feuerbach’s materialism, however, was mechanical, anti-dialectic. It assumed that nature is in motion, but this motion was conceived to be going forever in a circle, “and therefore it never advanced, it always produced again the same results.”³ This view was wrong. “We are living not only in nature but also in human society, and society no less than nature has an evolution of its own with a corresponding science.”⁴

² Ibid., p. 18.

³ Ibid., p. 19.

⁴ Ibid., p. 22.

There was now question of determining, on a materialistic basis of course, those laws of motion according to which the history of mankind has been evolved. Marx and Engels boast of having solved this problem by their materialistic conception of history. It is not by abstract ideas, they say, that the process of evolution is started and directed in its course, but the decisive influence is exercised by the conditions of production.

Marx has presented the best summary of his materialistic theory of history in the preface to his “Criticism of Political Economy.” Bernstein declares that this preface, together with the third chapter of Engels’ “Socialism, Utopian and Scientific,”¹ is the most remarkable presentation of historical materialism. Says Marx:

¹ Engels’ Die Entwicklung des Sozialismus von der Utopie zur Wissenschaft, already repeatedly quoted, is published in English under the above title.

“In the social production of their means of subsistence men enter upon certain necessary relations independent of their will, relations of production corresponding to a certain stage of development in their material productive forces. The sum total of these conditions of production forms the economic structure of society, the real basis upon which is raised an ethical and political superstructure, and to which correspond certain forms of social consciousness. The method of production in our material life shapes and determines also our entire social, political, and intellectual process of life. It is not the mind of man which determines his life in society, but, on the contrary, it is this life which determines his mind. In a certain stage of development the material productive forces come in conflict with the then existing conditions of production, or in other words, with the conditions of ownership, within which production had moved hitherto. From being forms of development these conditions change to shackles fettering the productive forces. ‘Then there occurs an epoch of social revolution. With the transformation of its economic basis the whole gigantic superstructure is overturned more or less rapidly. In the consideration of such revolutions it is necessary to make a clear distinction between the revolution in the material economic conditions of production, which is easily ascertained by science, and the ethical, political, religious, artistic, or philosophical, in brief the ideological forms, in which mankind becomes conscious of this conflict and fights it out... . No form of society will perish before all the productive forces for which it affords room are fully developed, no new conditions of production will take their place before the material conditions necessary for their existence have been hatched in the bosom of the society preceding them... .The bourgeois conditions of production are the last antagonistic form preceding the process of social production, antagonistic not in the sense of individual antagonism, but of an antagonism arising from the conditions of the social life of individuals; but the productive forces developing in the bosom of bourgeois society at the same time create the material conditions requisite for the final resolution of this antagonism. With this form of society we have reached the last stage antecedent to the ideal human society.”¹

¹ Kritik der polit. Oekonomie, preface, pp. xi, xii.

Kautsky is pleased to call this Marxian summary “a classical production.” Masaryk in his noteworthy criticism of Marxism² does not like this epithet, since the chief qualities of a classical production are wanting: precision and clearness. In fact, in Marx’s way of putting things there is much to be criticised. Yet his main principle is clearly expressed. The whole of ideology, he wishes to tell us, i.e., the whole of our moral, religious, ethical, philosophical, and political ideas, is conditioned by the manner of production and of exchanging the products; as this manner changes, so also the ideology based upon it is changed. The latter has no independent existence, it is but the reflection in the human mind of the exterior conditions of production. Exactly the same idea we find expressed, e.g., in the following sentence of “Capital”:¹ “Technology reveals the active relation of man to nature, the immediate process of production going on in his life and thereby also in his social conditions and in the resulting intellectual concepts.”²

² Die philosophischen und soziologischen Grundlagen des Marxismus (Vienna, 1899), p. 94.

¹ Vol. I. p. 336.

² Cf. also Capital, vol. III. part II. p. 324.

The following is from the pen of Engels, the most authoritative exponent of Marxian ideas:

“At the root of the materialistic conception of history there is the proposition that production, and next to production the exchange of products, forms the base of social order; that in every society known to history the distribution of products and the corresponding social distinction of classes and states of life is conditioned by the objects and the manner of production. Accordingly, the ultimate causes of social changes and of political revolutions are not to be looked for in the brains of men and in their growing comprehension of eternal truth and justice, but in the changes affecting the manner of production and exchange; they are to be looked for not in the philosophy but in the political economy of the epoch in question. If at any time the conviction begins to be prevalent that existing social institutions are unreasonable and unjust, that reason has changed to nonsense, and benefit to annoyance, it is but an indication of the fact that the methods of production and exchange have been silently transformed so as no longer to tally with the social order which had been adapted to former economic conditions. This means at the same time that also the remedies for these discrepancies must be contained more or less perfectly developed in the changed conditions of production. These remedies, however, are not to be drawn from an imaginative brain, but by using our brains they are to be discovered in the existing material facts of production.”³

³ E. Dührings Umwälzung der Wissenschaft, 2d ed., p. 253; Entwicklung des Sozialismus, 4th ed., p. 27.

Again, at the grave of his life-long friend Engels thus expounded Marx’s leading idea: ‘Darwin discovered the law of evolution in organic nature, Marx in the history of mankind. He disclosed the simple fact hidden hitherto by ideological excrescences, the fact that above all else men stand in need of meat and drink, of shelter and clothing, before they can engage in politics, science, art, religion, etc., that therefore the production of the immediate material means of life and the corresponding stage of economic evolution of a nation or epoch forms the foundation from which the civil institutions of the people in question, their ideas of law, of art, of religion even, have been developed and according to which they are to be explained—and not the reverse, as has been done heretofore.”¹

¹ Mehring, Die Lessing Legende (1893), p. 434.

These words are not to be taken in the sense that the production of the material necessaries of life is an indispensable prerequisite for a higher spiritual life; in this sense the “ primum vivere dein philosophari” of the ancients is the merest truism having no need of being discovered by Marx. What is meant is rather that the form of production generates and determines the higher social life of a nation in its entirety, its notions of law, morality, philosophy, religion, art, etc. ‘That this is the only correct interpretation is sufficiently evident from the passages quoted above.

In some of his letters, written after the death of Marx, Engels has somewhat restricted the determining influence of the conditions of production upon the “ideological superstructure.”

Thus in 1890 and again in 1895 he writes that the production and reproduction of real life is ultimately the determining factor of history, but it is not the only one. The state of political economy is indeed the basis, but the different elements of the superstructure—the political, religious, and philosophical ideas of the people in question—also exercise their influence upon the course of development. ‘The political, ethical, philosophical, religious, literary, artistic, etc., development is based on the economic. But all of them react on one another and on their economic basis.”²

² Cf. Bernstein, Die Voraussetzungen des Sozialismus (1899), p. 7.

It is beyond doubt that according to Marx and Engels a multiplicity of factors influence the development of society. But the ultimate source of all these factors is the method of production. Production, i.e., productive labor in its widest sense, determines the conditions of property, and from them results the moral, political, and philosophical superstructure. This superstructure, of course, is supposed to react again upon its foundations, i.e., the conditions of production.

According to this conception of history, political economy is the basis and starting-point of social science. The course of the world’s history and the development of civilization is determined, not by moral or philosophical notions, but by economic conditions. Law, politics, religion are but the superstructure erected on this economic basis and partake in its gradual transformations. Each new economic era produces its corresponding superstructure of law and politics, and this it does—according to the dialectic method—by the formation of contrasts. The economic conditions are gradually modified, whilst the state of property and of the entire social superstructure remains as yet unchanged. Thus the conditions of production gradually come in conflict with the social and political institutions, especially with the conditions of property. The resultant class differences become more and more acute until a social revolution introduces a state of society in accordance with the new conditions of production.

The theory of history which we have just now expounded serves Marx as an explanation of modern economic development, whereby he intends to show that our modern capitalist society must needs bring forth as its natural result the socialistic order of society. In order to grasp the force of his argument we must take a look at his second great “discovery,” which, in the opinion of Engels, has effected the transition of socialism from the utopian to the scientific stage. This discovery is the doctrine of surplus-value, based on the Marxian doctrine of value.

1. Value—In capitalistic society every kind of produce partakes of the character of merchandise. In every class of merchandise a twofold value may be distinguished, the value in use and the value in exchange. Bread may serve as food, there you have its value in use; it may also be sold or bartered for other goods, there you have its value in exchange. Marx defines use-value as the utility of an object in satisfying human wants, a utility derived from its chemical and physical properties; but exchange-value, he says, consists in the ratio according to which different kinds of use-values may be bartered for each other. If I know, eg., that 20 Ibs. of yarn may be bartered for two pair of shoes, both objects have for me the same exchange-value, however different their use-values may be. Exchange-value, however, accrues to merchandise only on account of the human labor expended on it, and the measure of labor embodied in the merchandise determines also its value in exchange. Two kinds of merchandise embodying the same amount of necessary co-operative labor are also of the same exchange-value. This is Marx’s famous law of value. Goods are bartered for each other according to the ratio of the average necessary labor embodied in them.

In a later chapter this theory will be examined and expounded more fully in the words of Marx himself. What has been said so far may suffice for the present.

2. Surplus-value. The Secret of Surplus-making.— From his doctrine of value Marx deduces his doctrine of surplus-value by applying what has been said in general about exchange-value also to man’s labor capacity, Modern conditions have reduced the labor capacity of workingmen to the rank of mere merchandise. The laborer is personally free, but, not possessing the means of production, he is forced to offer his labor capacity for sale. Thereby capitalists are enabled to get rich at the expense of their workingmen. But let Marx himself explain his ideas:

In every kind of merchandise, also in labor capacity, there is a distinction between use-value and exchange-value. The exchange-value of labor capacity is determined by the average quantity of labor it represents, or by the price of victuals ordinarily required for its sustenance.¹ In labor capacity there is, however, also a certain use-value, a gift of nature, ‘without cost to the laborer, but very remunerative for the capitalist.”

¹ The value of labor capacity is similar to that of any other merchandise and is determined by the labor time required for the production or reproduction of the article in question... . The value of labor capacity is equivalent to the value of a certain amount of victuals. (Capital, vol. I. pp. 133, 134.) Whenever Marx speaks simply of value he always means exchange-value.

The value (exchange-value) of labor capacity is therefore quite a different thing from its exploitation in actual work (its use-value).

This difference in values is the object which the capitalist has in view when purchasing “labor capacity.” The capitalist pays merely for the exchange-value of labor capacity, but what he aims at obtaining is its specific use-value, namely, its power of producing values exceeding its own. For this specific purpose it is employed by the capitalist, who acts therein according to the immutable laws of exchange. In fact, the seller of labor, as of any other commodity, realizes no more than its exchange-value, yet he disposes of its use-value—i.e., he is paid for the exchange-value only of his labor, and yet surrenders its entire use-value to the purchasing capitalist. He cannot receive the price for the former without surrendering the latter. The use-value of his labor, namely, the work actually done, belongs to the seller no more than the use-value of oil sold belongs to the oil-dealer. The capitalist pays for the daily value of labor capacity and then claims the use of it during the entire day, or the work of a whole day. The fact that the daily sustenance of a man’s labor capacity costs but half a day’s work, whilst the man is able to work during the entire day, that therefore the value created by his labor in a day is twice as great as its own daily value, is, of course, very fortunate for the purchaser, but not at all unjust toward the seller. The capitalist has, of course, foreseen this enjoyable circumstance. Therefore the workingman finds in the shop the means of production sufficient not merely for six but for twelve hours’ work.¹

¹ Capital, vol. I. pp. 156–157.

Suppose the workingman needs three shillings for his ordinary daily support. This is the exchange-value of his labor and therefore also the wages he receives. A part of his working time, let us say six hours, is expended in producing again in a different shape the value which he has received in money— three shillings. This part of the working time is called by Marx the necessary time. But the workingman is required to work beyond this time even up to twelve hours. If his activity did not extend beyond the necessary time there would be no surplus-value for the capitalist, who would but get back in a different shape what he paid as wages to his workingmen. Therefore, it is in the interest of capitalists to prolong the hours of work beyond the strictly necessary time. This second working period, says Marx, in which the workingman is toiling beyond the requirements of strict necessity, implies indeed work and expenditure of strength, but it produces no value for him. It forms the surplus-value which has for the capitalist all the attractiveness of a creation from nothing.² This surplus-value is appropriated by the capitalist without expense and, according to the prevailing “bourgeois” standard of right and law, also without the appearance of injustice. For, labor is supposed to belong to the owner of the materials upon which it is expended, and in our present-day society this owner is not the producer (the workingman), but the capitalist.

² Ibid., p. 178.

3. Transformation of the Surplus-value into Capital; the Accumulation of Capital and the Industrial Reserve Army.—We have heard the Marxian explanation of the origin of surplus-value. In an order of society in which the means of production are monopolized by a certain class, surplus-value can be created only by exploiting the labor of others. Surplus-value is essentially “a value acquired without compensation, the product . . . of the unremunerated labor of others.”¹ The surplus-value thus acquired is employed in its turn to facilitate production and to obtain other and greater quantities of surplus-value and is thus transformed into capital. Capital is the sum total of all the means of production owned by private individuals and employed for the acquisition of surplus-value, i.e., for the exploitation of labor; it is simply value or money accumulating, or, as Marx terms it, “value hatching surplus-value.”

¹ Ibid., pp. 533, 179.

The transformation of the means of production, and especially of money, into capital presupposes that “the owner of money finds free laborers for hire, free in the sense that as individuals they are at liberty to dispose of their labor,” and that, on the other hand, they have no means of production of their own.²

² Ibid., p. 131.

The owners of these means will, of course, employ them for further production only with the supposition that from the process they may expect surplus-value, and thus effect a new appropriation of the work of others. ‘Value now becomes value in process, money in process, and, as such, capital. It comes out of circulation, enters into it again, preserves and multiplies itself within its circuit, comes back out of it with expanded bulk, and begins the same round ever afresh.”³

³ Ibid.

The capitalist is forever forced to increase his business and to utilize every technical advance, else competition will push him to the wall. Enlarged business facilities involve more “surplus-value” but also more misery among the proletariat. “He who was but the owner of money is now strutting about as capitalist, the possessor of labor capacity follows him as his hired laborer; the one with knowing smiles wreathing his face, full of bustle and business; the other shy and demurring, as if he had offered his skin for sale and now but expected to be flayed.”¹

¹ Capital, vol. I. p. 130.

4. Amount of Surplus-value; its Relation to Profit. The total capital employed in the production of surplus-value may be divided into two parts, constant capital and variable capital.

Constant capital is the amount expended in the acquisition or improvement of raw materials, machines, buildings, etc., because of itself this property is not productive of surplus-value. For, exchange is always between equivalents, and the machines are not able to create surplus-values, since whatever they bestow on the manufactured products they lose themselves. Of course, all this is true only in the Marxian theory of values.

Variable capital, on the other hand, is that part which “is exchanged for labor capacity,” in other words, the amount paid in wages to the workingmen. This amount changes its size, because it realizes not merely an equivalent but something beyond it, the so-called surplus-value. The relation of surplus-value to variable capital is called the ratio of surplus-value or of exploitation.² This ratio increases with the increasing number of wage-earners employed and with the excess of the daily working hours beyond the necessary working time (Capital, vol. I. p. 267).

² Marx is fond of clothing his ideas in a mathematical garb. Let the total capital advanced by the contractor be called C, its constant part c, the variable part v, then at the beginning of the job C=c+v. After the process of production is finished we have an amount of manufactured goods with a total value C₁=c+v+m. In this equation m stands for the absolute surplus-value consisting of unpaid labor. To determine the ratio of increase in the capital it is necessary to abstract from c, or in other words to make c=0, since it represents that part of the capital which is constantly recurring in the product, and to consider only the ratio between m and v (m/v). This is the ratio of surplus-value.

The ratio of surplus-value is not the same as the ratio of profit. The latter is the proportion between the surplus-value and the total capital—variable and constant—being equal to m/(c + v). If, e.g., the constant capital amounts to $4000, the variable capital to $1000, and the surplus-value to $1000, then the ratio of surplus-value is 100%, the ratio of profit only 20%. But the composition of different capitals is very different, and as the value of machines and raw materials, together with the quantity used on any working day, is very variable, Marx must needs concede that capitals having the same ratio of surplus-value may yet have different ratios of profit.

The capitalist looks principally to profit, therefore it must be his endeavor to attain the greatest surplus-value with as little capital as possible. He will see to it that the workingmen are kept at work as long as possible beyond the necessary time; it will be in his interest to employ the cheaper labor of women and children; and finally his attention will be directed toward increasing the output by means of mechanical appliances.¹

¹ By way of illustration a somewhat longer passage of Marx's Capital may be cited here verbatim. “In as far as machinery renders muscular strength superfluous it renders possible the employment of laborers without muscular strength or full bodily development, but endowed with deftness and dexterity. The employment of women and children was therefore the first step of the capitalist after the introduction of machinery. This powerful substitute for labor and laborers at once became a means of increasing the number of wage-earners by making every member of the workingman’s family regardless of sex or age directly tributary to the dominion of capital. Forced labor on behalf of the capitalist usurped the place of childish games as well as of work performed in the domestic circle and within the limits of morality on behalf of the family. Before this time the value of labor capacity was determined by the working time required for the sustenance of the individual adult laborer as well as for the sustenance of his family. But in as far as machinery brings every member of the family upon the labor market, it distributes the value of the father's labor capacity over the whole family. Thus his own labor is depreciated. To purchase a family comprising, let us say, four members capable of work is perhaps more expensive than it was formerly to purchase the labor of its head; but to make up for this four working days take the place of one and their price decreases in the same ratio as the excess of surplus work of four people exceeds the surplus work of one. To sustain the family four of its members must not only work, but they must furnish surplus work on behalf of capital. Thus from the very outset machinery not only widens the circle of human material to be exploited, but it also raises the degree of exploitation.” (Capital, vol. I. pp. 358, 359.)

This is a good sample of Marxian argumentation. Statements without proof, arbitrary generalizations and exaggerations clothed in Hegelian phraseology.

This last circumstance, coupled with the increasing technical perfection of machinery, is rendering the workingman more and more superfluous. In a former period organized industry dislodged the independent artisan, but on account of the imperfection of its machinery it required for its extensive operations the services of an increasing number of wage-earners; but in a more advanced stage the contrary takes place. Industry seeks to intensify production, to attain the greatest results with the least expense of labor, and wherever possible by mechanical appliances to supersede labor altogether. On account of technical improvements one mill-hand is at present enabled to perform with the same amount of labor one hundred times as much work as in the beginning of the nineteenth century. In this manner more and more laborers are superseded by machinery. There is formed an army of wage-earners exceeding the industrial demand for labor. This is the so-called “industrial reserve army” always at the disposal of capital. When industry is working at high pressure this army is called into action, at the succeeding crisis it is again “thrown on the streets.”

This reserve army reduces wages to a level corresponding to the demands of capital. ‘The law,” says Marx, “ which keeps the relative excess of population or industrial reserve army in constant equilibrium with the extent and energy of the accumulation (of capital), rivets the laboring man closer to capital than Prometheus was riveted to the rock by Vulcan. It necessitates an accumulation of misery corresponding to the accumulation of capital. ‘The accumulation of wealth at one pole is at the same time an accumulation of misery, tortures, slavery, ignorance, bestialization, and moral degradation at the opposite pole, i.e., on the part of that class of society which produces as [an increase of] capital [that which ought to be] its own product.”¹ Already in their communist manifesto Marx and Engels maintained: “Instead of rising with the advancing progress of industry, the modern laboring man sinks more and more below the condition of his own class. The laborer becomes a pauper, and pauperism develops much faster than population and wealth.”

¹ Capital, vol. I. p. 611.

5. The End of the Capitalist Method of Production — In keeping with his materialistic conception of history Marx finally explains the transformation of present society into the socialistic state of the future:

The same laws of evolution which at present enable the capitalist to oppress and exploit the laboring man will also cause him to be replaced by a higher order of society. The number of competitors is gradually narrowed down, “one capitalist kills a good many others,” their power is becoming more and more oppressive, whilst on the other hand the disinherited are growing in numbers and wallowing deeper in misery. Financial crises multiply and thus prove that the conditions of production have outgrown the present order of society. The concentration of manufacture, the formation of co-operative societies, and the training of organized labor will soon advance so far as to burst the shackles of monopolized capital. Then “the expropriators shall be themselves expropriated,” individual property shall be restored, but “on the basis of the attainments achieved during the capitalist era, namely, the co-operation of independent workingmen and the common ownership in land and in the means of production acquired by their labor.”² “The change from scattered private property based on the work of the individual to capitalist ownership is of course a tedious, cruel, and difficult process, by far more so than the transformation into social property of whatever is owned by private capitalists, whose wealth is already actually based on the co-operative exploitation of the instruments of production. In the former case, there is question of a few usurpers expropriating the mass of the people, in the latter case a small number of usurpers are expropriated by the mass of the people.”

² Ibid., pp. 728, 729.

6. Future Society according to Marxian Ideals— The passage just quoted is of special importance in affording us a glimpse at the future socialistic order of society, as it existed in the mind of the “pathfinder of socialism.” A comparison of this passage with others in his “Capital” will show that Marx advocated the following institutions in the socialistic order of society:

(a) Collective ownership of all the means of production brought about by the expropriation of the usurping capitalists, by means of democracy established by the people.

(b) Common exploitation of the productive forces on the basis of free co-operative labor, i.e., the official organization of labor on a democratic basis.¹

¹ Cf. the following passage from Capital, p. 45: “Let us imagine a union of free human beings working with their means of production owned collectively, and consciously expending their individual forces in co-operative labor. There will then be reproduced all the conditions in which Robinson Crusoe was working, only now the work will be social instead of individual. One other essential difference there will be. Robinson’s products were exclusively his own and for his own immediate use. The total product of our union, on the other hand, would be a co-operative product. A certain part of it would have to serve again as means of production and would remain common property. The other part would be for the consumption of the members. Therefore it would have to be distributed. The manner of distribution would vary according to the special organism of co-operative production and according to the corresponding degree of development in the producers. Only as a parallel to the production of merchandise do we suppose that each producer’s share will be determined by the time of his work. The time of work will therefore play a double part. On the one hand its distribution on a co-operative plan will maintain the right proportion between the different functions of labor and the different requirements of the community. On the other hand the time of work will serve for measuring the share of the individual producer in the co-operative labor and in that part of the common product destined for individual consumption.” Cf. also Capital, p. 493.

(c) The output will be considered as a common co-operative product. Part of it will serve as means for further production. The rest destined for consumption will be distributed and become private property. This is “the private property based on one’s own labor” of which Marx speaks repeatedly.

(d) With regard to the distribution of the co-operative products Marx distinguishes two periods or phases of communism.

(a) In the first period of communist society, when it is but newly hatched from the egg of capitalist society and still bears traces of the old shell, labor time must serve as a standard of distribution. ‘In accordance with this principle each producer (i.e., laborer, in contradistinction to capitalists who do not produce) will receive—after deduction has been made for the needs of the society—exactly what he has contributed to it. His contribution is his individual share of labor. The social working day consists of the total of the individual hours of labor; the individual labor time of each producer is the part of the social working day furnished by him; it constitutes his share. The society will give him a certificate that he has furnished a certain quantity of work—after deducting his work for the common fund—and by showing his certificate he will draw from the society’s stores an amount of provisions equivalent in value to his work. The amount of work given to the society in one shape is received again in another.”

“The ruling principle is here evidently the same as in the exchange of merchandise, in as far as it is an exchange of equivalents. Form and contents are indeed different, since under the then circumstances no one will be able to give anything except his work, and because nothing can become personal property except the articles intended for individual consumption. As to the distribution of the latter among the several producers the same principle will be applied as in the exchange of equivalent commodities, equal amounts of work in different shapes will be exchanged for each other.”¹

¹ Marx in the Neue Zeit, 9th year, I. pp. 566, 567.

From all this Marx concludes that in the first communist period there will be no possibility of perfect equality. There will be indeed no class distinctions, because each one will be a workingman like all the rest; but “different individual talents and capacities will be acknowledged as privileges of nature.” “In substance as well as in their nature rights will be unequal, . . . but these inconveniences are unavoidable during this first period of communist society which, after long travailing, is just then issuing forth from the womb of capitalist society. Right can never be superior to economic conditions and to the development of civilization determined by them.”²

² Capital, vol. I. p. 567.

(8) In a later and more perfect period “individual labor will exist as an integral part of the total work,”³ i.e., the individual as such will have no special title to the products of co-operative labor, but each one will receive according to his needs. ‘In a higher phase of communist society, after the slavish subordination of the individual under the divisions of labor, and consequently the opposition between mental and bodily work has disappeared; after labor has ceased to be merely the means of sustaining life, but has become an urgent desire; after the individual has become more perfect in every respect, increasing thereby also the productive forces and giving full play to the fountains of co-operative wealth—then only the narrow ordinary barriers of right and justice can be demolished, and society may inscribe upon its banner: Each one according to his abilities, to each one according to his needs.”¹

³ Ibid., p. 566.

¹ Capital, vol. I. p. 567.

The reader is requested to note this remarkable passage; we shall have occasion to revert to it in a later chapter.