3. The development of the Marxian project
Towards a class politics
In July 1845, shortly before starting to write The German Ideology, Marx and Engels made a six week visit to England. This trip was of particular importance to the development of Marx's theoretical and practico- revolutionary project at this time for two reasons; firstly, it gave Marx himself direct access not only to the works of English political economy unattainable in Germany, but also to the writings and influence of the socialist Ricardians, such as Bray and Hodgskin, the implications of which we shall return to in due course. Secondly, it provided Marx with direct personal contact with the leading socialists and radicals living in London and marked the beginning of his active involvement in socialist organization and politics.
It was during his stay in London at this time that Marx first met George Julian Harney, the editor of the radical journal The Northern Star. Harney was a leading figure in the radical internationalist wing of the Chartist Movement and, at the time of Marx's visit, was involved in the process of setting up an international democratic association that eventually became known as the Fraternal Democrats. The initial preparations for setting up this new international organization, which were then under way, involved bringing together the various socialist and radical democratic associations that had been formed by emigres workers living and working in London. Marx and Engels were invited to several of the preparatory meetings which sought to bring these various associations together and as a result they became acquainted with the leading members of German Democratic Society in London.
Although the Fraternal Democrats had a distinctly proletarian and socialist make up, it was primarily an organization that aimed to build a broadly based campaign to promote democratic reforms at an international level. Such an orientation meant that Marx and Engels could not hope to win the Fraternal Democrats, as an organization, over to an openly communist platform. However, the contacts made through the Fraternal Democrats no doubt stimulated Marx and Engels towards the idea of establishing an international communist organization along similar lines, through which they could spread their ideas within the working class movement, and thereby escape the now restrictive German intellectual circles which had up until then dominated their political activity.
Shortly after their return to Belgium, Marx and Engels set up the Communist Correspondence Committee, which it was hoped would serve as an initial step in establishing an international communist organization. However, the Communist Correspondence Committee met with little success. Attempts to interest leading French socialists, including the influential Proudhon, were, for the most part, rebuffed, while Engels's attempts, on his frequent visits to Paris, to build a bridgehead within the all important Parisian socialist circles by first of all winning over the immigrant German workers' education associations -- which under conditions of political repression then prevailing in France acted as centres for political discussion amongst radical and socialist workers -- ended in failure.
However, although the Communist Correspondence Committee was itself a failure, the contacts that had been made through Harney and the formation of the Fraternal Democrats began to bear fruit towards the end of 1846. Three of the leading members of the German Democratic Society, Schapper, Bauer, and Moll, whom Marx had met on his visit to London, had also been members of the conspiratorial group known as the League of the Just. This group had originally been based amongst German workers living in Paris. With the renewed political repression that followed the attempted putsch of 1839, Schapper, Bauer and Moll, along with many other leading political radicals, had been obliged to flee to London, leaving the League of the Just to go into decline. In November 1846 it was decided that the time had come to reconstitute the League of the Just on a new open and non- conspiratorial basis in London, and Marx and Engels were duly invited to join -- giving rise to what was to become known as the Communist League.
The emergence of the Communist League at last freed Marx and Engels from the limitations of the decaying Young Hegelian movement and provided them with an important opportunity with which they could begin to 'win over the European and, in the first place, the German proletariat' to their communist ideas. Indeed, their success in grasping this opportunity was marked by them being commissioned to write the manifesto for the Communist League -- The Communist Manifesto -- following its second congress in November 1847. However, it would be wrong to believe that in being commissioned to write The Communist Manifesto for the Communist League that even many of the League's members had been 'won over' completely to the political perspective of Marx and Engels. As Engels with hindsight admits, the spread of their communist perspective faced enormous difficulties at this time owing to the embryonic stage of development of the proletariat: At that time one had to seek out one by one the workers who had an understanding of their position as workers and of their historico-economic antagonism to capital, because this antagonism itself was only just beginning to develop. (MESW, p. 453) The proletariat at this time, particularly the German proletariat, was dominated by artisan and craftworkers.(1)
While such workers were increasingly threatened by the development of large scale capitalist industry they did not experience capitalist exploitation directly at the workplace. Their work was to a considerable extent under their own control and they often had close personal ties to their employers, who, as master craftsmen, owed their position as employer as much to their skill and experience in the trade as to their mere ownership of the workshop. Thus the artisan confronted capital first and foremost in the form of the banker and the merchant, outside the immediate process of production. It was when the journeyman graduated and wished to set up in business for himself that he faced the evils of capital in the form of the ruinous interest rates demanded by the bankers and the money-lenders; and it was through the demands of the merchant capitalist for faster and cheaper production, which required more intense work and lower wages for the artisan worker, that he experienced the full force of capitalist competition that was becoming ever more intense with the development of factory production.
As a consequence, craftworkers tended to perceive capital as something external to their everyday working lives; as an artificial and parasitical imposition on the natural process of labour, which was only maintained ultimately through state coercion. Thus, in opposition to capitalism, the socialism of the artisan either envisaged a return to a modified feudalism and the protection of the guild system, or else looked towards a society of free and independent craft producers. These visions were derided by Marx and Engels in The Communist Manifesto as reactionary and petit-bourgeois socialism respectively. Neither of these visions of socialism could countenance the forcible seizure of the means of production and their complete socialization, which Marx and Engels saw as the prerequisite for a communist society. And hence both of these visions of socialism presented major obstacles for the spread of communist ideas.
However, what was perhaps of more immediate importance than their ultimate vision of a socialist society was the means they envisaged to reach socialism. Here the dominance of the craftworker had given rise to three distinct perspectives, each of which stood in stark opposition to that of Marx and Engels.
Firstly, there were those who, in the tradition of the Enlightenment, sought to appeal to the common reason of humanity. They hoped that through a long and strenuous effort of education they could convince the vast majority of human beings in all social classes of the desirability of replacing capitalism by some form of socialist or communist society. Such ideas had been popularized in Germany by Weitling and had been inspirational in the development of 'true communism'. Secondly, there were those, such as Blanqui, who, inspired by the French Revolution, advocated the insurrectional seizure of power by a revolutionary conspiracy that could then overthrow the state and impose socialism. Finally, there were those who followed Proudhon and sought to set up various socialist schemes and projects which they hoped would spread by example across the whole of society thereby building the new society within the old.
Marx and Engels had already, in effect, tackled Weitling's ideas in their polemics against Young Hegelianism and their criticisms of 'true communism'. Such utopian idealism in its less elaborated form could be more readily exposed in workers' circles once measured against the practicalities of material reality and the recognition of naked class interest. At the same time, the insurrectional and conspiratorial methods advocated by Blanqui and his followers were, for the most part, out of favour in socialist 1840s due to the abortive insurrection of 1839 in France.
In contrast, Proudhon's ideas of building the new society within the old held formidable sway amongst the continental workers' movement. Indeed, Proudhon, as a self-taught worker himself, was highly respected within socialist circles since he sought to address the pressing social questions of his time with detailed economic and philosophical analysis on which he then based his 'practical proposals' for various socialist schemes and projects. Thus it was in Proudhon that Marx and Engels found their principal rival within the socialist movement. A rivalry that, as we shall see, was to last nearly two decades.
Proudhon ably articulated the view of the declining artisan. Artisans, as workers, were clearly able to identify labour as the 'true' source of value, a position defended by Proudhon. However, in confronting capital merely in the form of money-capital -- as the banker and the merchant -- capital appeared as external to the process of production. Hence the artisan saw capitalist exploitation, not in the very process of production and thus inherent in the wage-form of labour, but rather as a problem of unequal and unfair exchange, which was then attributed to the dominance of money. It was the dominance of money in the capitalist economy which allowed the monopolists, merchants and bankers to drive a wedge between the prices of commodities and their true labour-values and thereby deprive the worker of the just reward for her labour. Hence, from this perspective of the artisan, it was in the exchange of commodities that capitalist exploitation arose.
In articulating this perspective Proudhon came to advocate the dismantling of trade monopolies and the provision of interest free credit to all independent producers. Further, to ensure free and fair exchange, and to prevent the re-emergence of monopolists and usurious bankers, money based on gold would be replaced by paper money denominated in labour time. To such ends Proudhon and his followers devised numerous mutual aid schemes that aimed to eventually establish a 'people's bank' which could provide interest free credit and issue 'labour-money' to its members and thereby provide the nucleus of the new socialist economy of petty commodity producers.
Proudhon not only rejected violent revolution, but, because he saw the enemy as the monopolist and the money- lender, rather than the capitalist as such, resolutely opposed trade unions and industrial action, arguing that it was futile to push wages up since this would merely raise prices. This placed him in radical opposition to Marx and Engels, who, influenced by the development of the workers' movement in England, saw that not only was industrial action a practical necessity for factory workers that would come to dominate the ranks of the proletariat, and therefore could not be disregarded by socialists, but that industrial action and organization was the very economic imperative that would unite the proletariat against capital and provide the basis for the communist revolution.
For Marx and Engels, Proudhon's socialism threatened to inhibit the development of communist ideas amongst the working class. In representing the declining artisan and craftworker, the continuing dominance of Proudhon's socialism was irrelevant to the increasing numbers of factory workers that were, for Marx and Engels, destined to become predominant among the working class. As such it prevented the emerging industrial proletariat from recognizing and realizing communism. It therefore demanded from Marx and Engels a detailed political and theoretical engagement.
This struggle of Marx and Engels at this time against the prevalence of Proudhon's ideas within the socialist and workers movement is perhaps well illustrated by the following extract from a letter Engels wrote to the Communist Correspondence Committee concerning his efforts to win over the Parisian socialists: The Proudhon Associations' scheme was discussed for three evenings. At the first I had nearly the whole clique against me, but at the end only Eiserman and the other three followers of Grun.
The chief point was to prove the necessity of revolution by force and in general to demonstrate that Grun's 'true socialism', which has derived new life from Proudhon's panacea, is anti- proletarian... (M&ESC, p. 1) And this struggle is clearly evident in their two major works of this period leading up the revolutionary events of 1848 -- The Communist Manifesto and The Poverty of Philosophy -- both of which involve substantial polemics against Proudhon and his followers.
So, it was the struggle against Proudhonian socialism that now became a priority and hence the driving imperative of Marx's theoretical efforts, and, as we shall see, this proved to be an important catalyst in the development of Marx's theoretical project towards a critique of political economy. The implications of this theoretical and political engagement become clear once we examine Marx's detailed polemic against Proudhon that is set out in The Poverty of Philosophy.
a) The Poverty of Philosophy i) Against Proudhon As we have already noted, Proudhon's great standing amongst socialists owed much to the fact that he was a self-taught working class theoretician. Proudhon's great efforts to master philosophy and political economy in order to provide a sound 'scientific' basis for his socialism drew respect from many quarters, including that of Marx and Engels. However, such respect did not spare Proudhon from the harsh ridicule and derision with which Marx sought to expose the errors and pretensions of his theories.
In the foreword to The Poverty of Philosophy Marx declares: M. Proudhon has the misfortune of being peculiarly misunderstood in Europe. In France, he has the right to be a bad economist because he is reputed to be a German philosopher. In Germany, he has the right to be a bad philosopher, because he is reputed to be one of the ablest French economists.
(Marx, 1956b, p. 31) Proudhon had developed close contacts with the German adherents of 'true communism' which had led him to attempt a 'Hegelian mode of expression' which became evident in his major work -- Economic Contradictions and the Philosophy of Misery -- which serves as the object of Marx's critique of Proudhon that is set out in The Poverty of Philosophy. In this work Proudhon had sought to apply Hegel's method, as he understood it, to the pressing question of political economy. This clearly placed Marx on his home ground, having, as we have seen, only the year before completed his detailed critique German philosophy in The German Ideology; and he was quick to use his hard won conclusions against Proudhon.
For Marx, Proudhon, like his Young Hegelian mentors, had fallen victim of the idealist inversion of reality. Rather than seeing that principles and ideas arise from the social and material relations of society, Proudhon had sought to present social relations and material interests as expressing universal and eternal principles. Consequently, Marx argued that Proudhon's attempts to derive the categories of political economy failed to grasp their material and historical basis but instead merely portrayed them as a moving series of contradictions through which thought had sought to establish the universal principles of Justice and Equality.
But this was not all. Proudhon sought to show how each of these categories of political economy present both a 'good side' and a 'bad side'; with socialists grasping the 'bad side' while the political economists only recognized their 'good side'. Yet for Marx, Proudhon failed to see how the 'good side' of these categories of capitalism were merely the reverse side of the 'bad side'; how they were both grounded within capitalism as a single totality. Proudhon was thereby able to conclude that it was possible to keep the 'good side' of capitalism while doing away with its 'bad side' and thereby implicitly deny the necessity for its complete supersession.
Marx points then points out the 'petit-bourgeois' implications of such reasoning: He [Proudhon] wants to soar as the man of science above bourgeois and the proletarians; he is merely the petty-bourgeois, continually tossed back and forth between capital and labour, political economy and communism. (Marx, 1956b, p. 141) So, for Marx, Proudhon not only fell foul of the Hegelian error of idealism but further compounded this error by failing to grasp the one great strength of Hegel, his conception of the developing totality and the relation of this totality to its parts.(2)
For Hegel, Proudhon's 'series of economic contradictions' would have seemed little more than a case of 'bad infinity -- an endless series of particulars with no relation to the universality of a totality. By taking each category of political economy in isolation, Proudhon was unable to explain the simultaneous existence of all these categories in political economy. Each of them remained ungrounded in the overall unity of the system and its movement. It is then, as a means to sustain the logical succession of these categories, that Proudhon was obliged to introduce a principle of movement outside these categories themselves. He had to create an ideal history in search for the eternal truths of Equality and Justice through which each category could in turn come to the fore and then pass over into its successor.
Against both Proudhon's idealism and his failure to grasp the question of history and totality Marx had only to counterpose the method of historical materialism. Yet while Proudhon's philosophical efforts were easy prey for Marx, it was his forays into the details of political economy that were now of utmost importance.
Implicitly drawing on Hegel, Proudhon opened his attack on the political economists by arguing that the value of a commodity was the outcome of the contending wills of the buyer and the seller.(3) He then proceeded to argue that while value should, as a matter of Justice and Equality, equal the labour embodied in the commodity, the independent power of money allowed prices to diverge from such 'true' labour-values. It was this privileged status of money as the exclusive equivalent of exchange that was, for Proudhon, the root cause of capitalist exploitation.
Against such contentions advanced by Proudhon, we find Marx increasingly siding with the bourgeois political economists. Having refuted Proudhon's absurd assertion that the political economists had failed to recognize the distinction between use-value and exchange value, Marx proceeds to defend from the very beginning the classical political economists' objectivist and determinist theory of value against Proudhon's 'voluntarist' theory of contending wills of the buyer and seller. As Marx writes: The consumer is no freer than the producer. His judgement depends on his means and his needs. Both of these are determined by his social position, which itself depends on the whole social organisation.
(Marx, 1956b, p. 45) He then proceeds to dismantle Proudhon's proclamation that labour, as a matter of Justice and Equality, should determine the value of commodities.
Measuring Proudhon up against Ricardo and bourgeois political economy, Marx finds him seriously wanting: Ricardo takes as his starting point from present- day society to demonstrate to us how it constitutes value -- M. Proudhon takes constituted value as his starting point to construct a new social world with the aid of this value. (Marx, 1956b, p. 53) Whereas Proudhon argued for the determination of prices by the labour required to produce commodities as the basis for social justice, and hence for a future socialist society, Ricardo, for Marx, had demonstrated that this was in fact the essential basis of existing society. Furthermore, as Marx goes on to press home, labour, as wage-labour, must itself become a commodity, and, like any other commodity, its value will be reduced to the barest minimum required for its reproduction.
As Marx had made clear already in the 1844 Manuscripts, wage-labour was the very basis of alienation. In being reduced to the one-dimensionality of value the richness of concrete labour is reduced to simply a matter of abstract time. Time becomes everything and the worker nothing. Hence far from being the formula for liberation of the proletariat, and the basis of a new society, as Proudhon would have it, the labour theory of value was, for Marx, the very 'formula for their enslavement'.
For Marx, then, Ricardo, and the classical political economists in general, had the merit of understanding what capitalism essentially is, which Proudhon then proceeded to elevate into an ideal principle for socialism. To this extent Proudhon had fallen below the political economists, just as he had fallen far below Hegel. Yet the full implication of these theoretical shortcomings only becomes blatantly apparent once Marx turns to make his critique of Proudhon's theory concerning the determination of the wage.
Since for Proudhon profits arose from the independent power of money in exchange and did not have anything to do with the intrinsic value of the commodity, which was determined by the labour required to produce it, any general rise in the level of wages -- the money-price of labour -- could only lead to a general rise in the money prices of commodities. Thus this nominal rise in the level of wages would be cancelled out by the consequent rise in the price of the commodities the workers needed to buy. Hence, for Proudhon, attempts by trade unions or combinations of workers to raise wages were futile.
Against this politically vital point of contention Marx first of all responds by putting forward the argument of Ricardo that a general rise in wages will not raise prices but rather depress profits; adding along the way that in those industries which employ relatively few workers relative prices may actually fall. Having, with the aid of Ricardo, demonstrated the immediate practicality of industrial action and trade unions for the everyday welfare and survival of the working class Marx then proceeds to argue that it is through these very actions and organizations that the proletariat must produce itself as a revolutionary class capable of overthrowing capitalism.
It is here that we find Marx sketching out how he envisaged the practical realization of his thematic of capitalism and its overthrow. How, in stark contrast to the utopian reformism of Proudhon, Marx looked towards the overthrow of capitalism through proletarian revolution arising out of the very material conditions engendered by capitalism itself. As Marx puts it: Economic conditions had first transformed the mass of the people of the country into workers. The combination of capital has created for this mass a common situation, common interests. This mass is thus already a class against capital, but not yet for itself. In the struggle, of which we have noted only a few phases, this mass becomes united, and constitutes itself as a class for itself...
(MECW Vol. 6, p. 211) and further: ...the antagonism between proletariat and the bourgeoisie is a struggle of a class against a class which carried to its highest expression is a total revolution. (MECW Vol. 6, p. 212) ii) Marx as a Ricardian Socialist
In The Poverty of Philosophy Marx remarks of Proudhon that he is beneath the economists, since as a philosopher he believes he can dispense with economic details. In some ways this remark can be seen to reflect on Marx's own previous theoretical development. In the 1844 Manuscripts Marx had been content to simply counterpose the empirical materialism of the political economists to the speculative idealism of German philosophy with regard to the 'social problem'. Against the political economists Marx had only advanced the rather general criticism of their ahistoricism. He had not attempted to explore in any detail the implications of their ahistoricism for the theory and categories of political economy itself.
Thus, despite the fact that the very ontology of human praxis set out in the 1844 Manuscripts pointed towards the adoption of a labour theory of value, Marx came to submit to the emerging economic orthodoxy which was, by that time, coming to reject Ricardo's labour theory of value. Indeed, it may be said that the Marx of 1844 was still very much a philosopher who lacked a detailed grasp of economics with which to refute the economists and assert a commitment to a labour theory of value.(4)
With The Poverty of Philosophy Marx could now declare himself an 'economist'; but as such he could no longer dispense with 'economic detail'. As an 'economist' Marx was now a Ricardian committed to a labour theory of value. To this extent Marx was no doubt greatly influenced by the Ricardian Socialists of the 1820s who still held considerable sway amongst English working class radicals. These Ricardian socialists had turned Ricardo's labour theory of value against Ricardo and the bourgeois political economists. Unlike Proudhon, who insisted that the value of commodities was not determined by the labour required to produce them, although it should be, the Ricardian socialists had argued in accordance to Ricardo's doctrine, that value was determined by labour but that the capitalist exploited the worker in production by appropriating surplus labour. The same position which, as we have seen, Marx advanced against Proudhon.(5)
However, there were certain vital weaknesses in Ricardian Socialism that Marx had yet to solve. Firstly, the question arose as to why the worker did not obtain the full value of her labour and, thus, how it was the capitalist was able to extract surplus labour from the worker. As we shall see, Marx was to find a solution to this problem with his distinction between labour and labour-power that he first set out ten years later in the Grundrisse.
The second problem was that raised by the criticisms of the Ricardian labour theory of value that were being advanced by contemporary economists. These criticisms arose most clearly in the very question of the relation of wages to prices. As with Proudhon, but this time from the perspective of the bourgeoisie, contemporary political economists had sought tp deny the efficacy of industrial action by arguing that rising wages only led to rising prices, thereby making industrial action futile. For this they had to refute Ricardo's labour theory of value.
As we have seen, for Marx, and indeed for Ricardo, a general rise in wages would lead to a fall in the rate of profit rather than a general rise in prices. Indeed, as we have noted, Marx pressed this point home against Proudhon by pointing out that in capital intensive industries relative prices might actually fall. However, this additional point is rather dishonest since, as Marx fails to mention, at the same time relative prices in labour intensive industries will tend to rise! This had been the very point that had proved the fatal flaw in the Ricardian theory of value. If wages were determined solely by labour-time embodied in production how could they also be determined by the level of wages!?
There is little doubt that Marx had been aware of such criticisms of Ricardo's labour theory of value, and they probably played a part in his initial reluctance to accept it in 1844. Having now committed himself to a labour theory of value, Marx had to refute such criticisms: it was not sufficient merely to rely on his opponents' lack of grasp of 'economic details'. However Marx was still a long way from finding a solution to this problem. A solution that was to require several years of extensive research into the details of political economy, as we shall see.
iii) Conclusions on the context of Marx's polemic
In making a practical and theoretical intervention in radical working class politics, Marx and Engels were making an intervention in both the socialist and working class movements at a still embryonic stage in their development. An undeveloped stage which, as we have seen, was fully reflected in the predominance of the aritsanal socialism of such writers as Proudhon against which Marx and Engels launched their political and theoretical polemics.
Proudhon's socialism had, however, gone beyond the purely utopian visions of socialism that had been put forward at the turn of the century by such writers as Goodwin and Fourier in that it had sought the practical foundations of socialism in present society. But, in doing so, it had ended up with the simple abstract ideal of bourgeois society itself. A utopian vision of a society of equally alienated independent commodity producers. At the same time, Proudhon shared the earlier utopian socialists' voluntaristic vision of how socialism could be achieved; that is through the sheer will and effort on the part of socialists.
Along with the earlier utopian socialists, and against Proudhon, Marx saw communism as a distinct break with existing bourgeois society, yet communism could only come about out of the contradictions of existing bourgeois society. Thus against the utopians, and alongside Proudhon, he had to root communism in present society. However, the fundamental contradiction that Marx identified as the basis for the communist revolution -- namely the class conflict between the industrial proletariat and the bourgeoisie -- was as yet far from being fully formed. This contradiction that could only arise with the maturity of the capitalist mode of production; a maturity which, even in the most advanced of capitalist economies such as England, there was only in prospect.
Hence, against voluntarism and utopianism of Proudhon, Marx had to above all stress the historical and economic necessity of the development of capitalism and its contradictions. An emphasis that propelled Marx to understand the objective economic laws of the capitalist mode of production, at the expense, perhaps, of the questions of class subjectivity and organization.
But what is more, in the heat of his polemics in the 1840s Marx and Engels came to foreshorten such historical developments to the point of imminence. Yet, at the same time, once Marx and Engels confronted immediate political issues, they recognized that there was still a long way to go in the development of bourgeois society. Not only was the industrial proletariat still a minute part of the population throughout most of Europe but the bourgeoisie had yet to wrestle political power from the landed interests, even in England. It was first necessary to defeat the reactionary class interests of the landed classes before the ultimate class struggle between the bourgeoisie and the proletariat could fully develop.
This contradiction between their polemics within the still tiny and ineffectual socialist movement and their orientation to the pressing political issues of their day led to a fundamental disjunction in the theory and practice of Marx and Engels at this time. A disjunction that is clearly evident in The Communist Manifesto.
In The Communist Manifesto we find, in the opening sections, a broad sweep of the historical development of capitalism that will lead to the growing class antagonism between the bourgeoisie and the proletariat, and ultimately communism. It is on the basis of this outline of the historical development of capitalism that Marx and Engels then launch their attack on the various forms of artisanal socialism. However, as many commentators have observed, once Marx and Engels turn to consider the immediate political tasks in their conclusion, they put forward a programme that fell far short of communism, being little more than radical bourgeois demands.
This disjuncture becomes even more evident in Marx and Engels's involvement in the 1848 revolutions, as we shall now see.
b) 1848 -- The year of revolutions and its aftermath
The insurrection of February 1848 in France sparked a wave of revolutionary events across continental Europe, which, within a matter of weeks, opened the way for Marx's return from exile. With his return to Germany, however, Marx was immediately confronted by the relative backwardness of German capitalism. Both the bourgeoisie and the proletariat were still relatively weak compared with the landed aristocracy that commanded the state apparatus, and the resulting revolution in Germany was far less explosive and ambitious than its French counterpart.
For Marx the best hope lay in the success of a bourgeois- democratic revolution that could unite the petty states of Germany into a single democratic republic which could then be pressed to implement the minimum social democratic reforms that he had outlined only a few months earlier in The Communist Manifesto. Through such a radical bourgeois-democratic revolution the power of the landed aristocracy could be finally destroyed, thereby clearing the decks for the ultimate class struggle between the bourgeoisie and the proletariat. On his return to Germany, Marx's initial political aim had therefore been to orientate the German workers' movement towards a tactical alliance with the more progressive and radical bourgeois factions within the democratic movement so as to force the democratic-bourgeois revolution that was then in progress to its most radical conclusion.
On arriving back in Germany Marx settled in the industrial town of Cologne where a large and influential workers' association, which was led by members of the Communist League, had already become well established. However, Marx failed to gain much influence within this organization and soon found himself in strong disagreement with its leading members who still adhered to many of the conceptions of 'true communism'. Facing this immediate theoretical and practical backwardness of the German workers' movement, Marx was soon obliged to abandon all hopes of the emergence of a distinct proletarian tendency in the revolutionary democratic movement. As a consequence, Marx turned towards the progressive and radical middle class circles which, at that point, possessed a far more practical political orientation than the workers of the Cologne Workers' Association. Announcing unilaterally the dissolution of the Communist League, Marx, along with Engels, then set to work on launching a new national journal -- the Neue Rheinsche Zeitung.
With the Neue Rheinsche Zeitung Marx and Engels sought to establish a popular journal that would give voice to the most progressive wing of the bourgeois-democratic revolution. However, despite the efforts of Marx and Engels, the bourgeois-democratic movement proved too timid to carry through a successful political revolution. Through all the political turmoil and the numerous uprisings across Germany, which reached their peak during the Summer of 1848, the German bourgeoisie dismally failed to overturn, even briefly, the entrenched status quo. The power of the reactionary landed aristocracy remained intact and Germany retained its medieval political partitions.
By the Autumn of 1848 the Neue Rheinsche Zeitung had begun to include articles with a more explicitly communist outlook that would have been rejected only a few months earlier for fear of frightening its bourgeois and middle class supporters. This marked shift in editorial policy reflected the realization by Marx and Engels that the German bourgeoisie was too weak to carry out its own democratic political revolution, and their conclusion that the only hope was for the proletariat to awaken and carry out this great historical task itself. However, this renewed faith in the immediate revolutionary potential of the German working class did not reflect any radical change in the working class movement over the previous six months, but merely the dismal revolutionary performance of the German middle classes.
By the turn of the year the revolutionary events were more or less over and the period of reaction was beginning to set in. In May, Marx was forced once more into exile and left briefly for Paris before settling in London, where he found that the Communist League had been reconstituted in his absence.
The events of the previous year had confirmed the possibility of revolution and most socialists now believed that the current period of reaction would not last long before another revolutionary wave would sweep across Europe, a wave that would go much further than the limited revolutions of 1848. This view was no doubt shared by Marx and Engels who had now come to the conviction that any revolution, even one limited to bourgeois-democratic reforms, would have to be led, at least in Germany, by the proletariat, despite its present theoretical and practical weaknesses.
Hence, once more Marx sought to exert his influence within the working class movement by plunging into an intense period of political activity through the newly reconstituted Communist League. A political activity that imposed the political imperative on Marx's theoretical efforts of providing an indepth understanding of the events of 1848 and its aftermath so as to equip the communist movement for the anticipated resurgence of revolution. An understanding that was set out in a series of articles for the Neue Rheinsche Zeitung -- Politisch-Oekonomisch that were later collected together and published as The Class Struggle in France, and a later set of articles published in the New York journal Die Revolution which were then published together as The Eighteenth Brumaire of Louis Bonaparte.
However, as the months turned into years and the period of reaction persisted, it became increasingly clear that revolution was no longer on the cards in the immediate future. With the growing doubts as to the imminence of revolution Marx became less involved in the day to day politics of the Communist League which, as a consequence of the waning of revolutionary anticipation, was in the process of decline. Now the pressing question was no longer the political failings of the revolutionary events of 1848 but what was the underlying cause of such revolutions in the first place, and hence what was the cause of political and social revolution in general.
It was no longer sufficient for communists and socialists merely to have faith that revolution would somehow happen out of the blue; it was necessary to be able to give an understanding of the necessary preconditions for revolution. Without such an understanding the prolonged period of reaction would remain incomprehensible and this could only lead to complete demoralization within the socialist and workers' movements. Hence it was towards an answer to this vital question of the day that Marx now turned.
As we saw in chapter 2, Engels had already, in 1844, put forward economic crisis as the fundamental precondition for political and social revolution, which he had then sought to show was an inevitable feature of the development of the capitalist economy with his underconsumptionist theory of crisis. The idea that economic crisis was a major cause of revolution, which Marx came to adopt from Engels was by no means a new one, and it was not hard for Marx to find the evidence to link the 1848 revolutions to the general economic crises of the mid 1840s. The problem was that on closer inspection Engels's underconsumptionist theory of the inevitability of crisis was far from convincing.
All the early critics of bourgeois classical political economy, from Sismondi to Malthus, had tended to base their criticism of capitalism on what seemed its obvious tendency for generating a crisis ofunderconsumption due to the contradiction between its rapid development of the productive forces and its restriction of the purchasing power of the wage. Yet such theories had run into ground in the face of 'Say's Law', which had argued that since every sale was at the same time a means for purchase, each value produced created a counter-value with which it could be consumed. What the underconsumptionist had failed to recognize was that wages were not the only form of consumption, but that part of the capitalists' profits which was invested also created demand for the 'productive consumption' of new means of production.
Of course, such underconsumptionist theories did have an element of truth in grasping the nature and necessity of capitalist economic crisis, and indeed we can see elements of Engels's underconsumptionist theory reappearing later in Marx's own theory of the overaccumulation of capital. However, there was still much work to be done to answer the formidable objections the bourgeois political economists had advanced to deny the inherent tendency of capitalism towards crisis.
So, Marx now had two closely connected tasks. Firstly he had to begin a long and detailed study of economic conditions so as to be in a position to grasp the connection between economics and crisis. Secondly, he had to develop his critique of political economy far beyond the outlines offered by Engels. Hence Marx began his period of intense study of the 1850s. He had now to truly become an 'economist'; but as such he had to grasp this subject in all its intricate detail.
c) Marx the 'economist'
Throughout the 1850s, despite recurrent illness and poverty, Marx spent long hours in the British Museum studying political economy and wading through vast amounts of economic statistics in governmental reports and in numerous economic journals. Even in his breadwinning articles for the New York Tribune Marx took care to include ample economic data and information on each question at hand to support his reports. But in order to make sense of such vast quantities of data and the commentary made upon them Marx had to constantly refer to the major writers of political economy -- particularly Ricardo. It is during this period that Marx's eventual critique of political economy began to become fully formed.
Whereas in The Poverty of Philosophy Marx had sided with Ricardo and the Classical Political Economists against Proudhon, and came to criticize Ricardo only insofar as he conceived bourgeois social relations as somehow natural and thus eternal, Marx now was obliged to take a much closer look at the limitations of Ricardo and classical political economy. He now had to confront the very weaknesses and errors thrown up as a result of the eternalization and naturalization of bourgeois social relations.
As we have already noted, Marx must have been well aware of the weaknesses of Ricardo's labour theory of value, which had been exposed by those bourgeois political economists making their retreat from Ricardo. But, alongside this vital weakness, Marx was also drawn to confront two further important chinks in the armour of Ricardian political economy which were thrown into sharp relief by the question of crisis. The first of these concerned Ricardo's theory of rent and, with this, his theory of the falling rate of profit. The second was that concerning his theory of money.
As we shall see in more detail later, Ricardo had argued that, due to diminishing marginal returns in agriculture, rents on land will tend to rise; this would then squeeze profits and reduce the accumulation of capital and with it economic growth. In the long term this would eventually lead to complete economic stagnation. This theory of the falling rate of profit, together with his theory of comparative advantage in foreign trade, formed the twin pillars upon which the industrial bourgeoisie used Ricardo as their champion in their efforts to repeal the corn laws that had restricted the import of cheap foreign corn into England during the early nineteenth century.
By repealing the corn laws, it was argued that, not only would the resulting free trade allow the full benefits indicated by the theory of comparative advantage to be reaped to the benefit of all, but it would also have the effect of diminishing returns in agriculture, and hence the prospects of economic stagnation would be deferred almost indefinitely. Rents and profits would no longer be determined by the least fertile land on the margins of cultivation in England but by least fertile land in use through out the world as a whole.
With the repeal of the corn laws in England the issue became controversial with regard to similar protectionist measures operating throughout the continent of Europe in the 1840s. At that time Marx had intervened in the debate in rather general terms in order to define a distinctively proletarian position on the issue against the attempts by various factions of the propertied classes to solicit the political support of the working class.
Against the protectionist argument that the flood of cheap foreign corn would ruin farmers and cause a depression and mass unemployment, Marx had argued: The preservation, the conservation of the present state of affairs is accordingly the best result the protectionists can achieve in the most favourable circumstances. Good, but the problem for the working class is not to preserve the present state of affairs, but to transform it into its opposite.
(MECW Vol. 6, p. 280) While against the free traders' arguments that free trade would reduce prices and stimulate economic growth Marx argued: We accept everything that has been said of the advantages of Free Trade. The powers of production will increase, the tax imposed upon the country by productive duties will disappear, all commodities will be sold at a cheaper price. And what again says Ricardo? That labour being equally a commodity sell at a cheaper price' -- that you will have it for very little money indeed, just as you have pepper and salt. (MECW Vol. 6, p. 290) Here we see Marx of the 1840s, like a true Ricardian socialist, wholeheartedly accepting Ricardo's theory and then turning its honest conclusions against its bourgeois advocates.
But what now in the light of crisis? For Ricardo it was the natural limitations of the fertility of land, which were external to the bourgeois relations of production, which would eventually lead to falling profits and economic stagnation. Yet with free trade this ultimate barrier to the accumulation of capital could at least be delayed more or less indefinitely. Thus for Ricardo, the economic crisis implied by this eventual economic stagnation need only be some far off distant prospect. Hence, Ricardo raised the prospect of the crisis of capitalist production only then to deny it as something internal to specifically capitalist relations of production, and to defer it to some distant future.
This denial of crisis could no longer pass unnoticed by Marx for whom crisis had now to be understood as something inherent in the historically specific form of capitalist production and, in the light of the recurrent economic crises of the early nineteenth century, had to be situated as imminent in its very development, rather than deferred to some distant future.
As early as 1851 Marx had begun to cast doubt on the empirical validity of Ricardo's law of diminishing returns, and with it Ricardo's entire theory of rent.(6) Now, in the light of the question of crisis, such criticisms had to be developed further. A development that was later to have a decisive importance in Marx's critique of political economy.
The second crack in the edifice of Ricardian political economy exposed by the question of crisis was that of money. As recurrent economic crises became ever more apparent in the course of the nineteenth century they increasingly manifested themselves in the form of financial crises. Each crisis was heralded by the widespread failure of banks and the flight from credit into hard cash. Ricardo's theory of money proved insufficient to deal with such events -- as we shall see when we consider this in more detail in chapters 8 and 10. Because Ricardo could only see money as some neutral means for the exchange of commodities, because he failed to grasp its independent existence and movement as capital, he was unable to understand its role in crisis. Indeed, as we shall now see, it is through this very question of money and crisis that Marx sets out on his critique of political economy that we find in the Grundrisse.
d) The Grundrisse So, it was through the anticipation of crisis, the prerequisite for social and political revolution, that Marx was driven to deepen his understanding of 'economics'. It was through such anticipation that Marx plunged into the detailed study of economic conditions and political economy; and it was through bourgeois political economy's denial of crisis, implicit within its very eternalization and naturalization of bourgeois relations of production, that Marx was obliged to develop his critique of political economy.
Indeed, throughout the 1850s Marx, in his overeagerness, had repeatedly predicted the onset of economic crisis, only to be proved wrong. But finally, in 1857, the long awaited crisis made its appearance. Convinced that the economic slump spreading throughout Europe would open the way for a fresh revolutionary wave which would require the utmost theoretical clarity on the part of all communists, Marx began an intensive and sustained effort to draw together the results of his extensive work on political economy of the preceding decade into a coherent critique of political economy.
The first tentative step towards such a critique was an incomplete review of two contemporary economists: the French economist Basiat, and the American economist Carey. The ideas of both these economists had an important influence at this time since, while they accepted the empirical reality of existing capitalism, they suggested that, in its pure form, capitalism was a harmonious economic system in which there was no need for class conflict. For these two bourgeois economists, the evils of the present capitalist system were simply due to the remains of feudalism that prevented the full realization of a free and pure capitalism.
For Carey, the Americas held up the prospect of making a fresh start. It was in America, where there were no vestiges of the class antagonisms and restrictions of feudalism, that the utopia of pure capitalism was in the process of being built. This vision had considerable appeal to many working class radicals in Europe upon whom any coming revolution may have had to depend. After nearly a decade of failing hopes of a revolution in Europe, many looked to America for a better life. For them Carey's ideas would have been particularly seductive as they considered the option of emigration to the 'New World'. But not only did such ideas threaten to carry off the best class militants from Europe to America, they also threatened to blunt the criticisms of capitalism of those they left behind.
So, a critical review of these two 'harmonizers', particularly Carey, was of significant political importance at this juncture. However, perhaps more importantly in the long term, in making this critical review, Marx came clearly to set out the conclusions of his long research into the history of bourgeois political economy and, in doing so, secured the ground upon which he could launch his critique against bourgeois political economy in general. Indeed, it was with this critical review of Carey and Basiat that Marx comes to confirm his conclusion that since Ricardo there had been little progress in bourgeois political economy; that since the 1820s political economists had increasingly retreated from the scientific heights achieved by Ricardo to become little more than bourgeois apologists -- mere 'prize fighters' -- praising the 'inherent harmonies' of bourgeois society.
For Marx, with the new generation of economists, so ably represented by both Carey and Basiat, this retreat from Ricardo had gathered pace. Whereas previously political economists had still operated within the broad framework bequeathed by Ricardo and classical political economy -- and therefore, if only implicitly, still recognized capitalism as a class society -- Marx identified the work of such writers as Basiat and Carey as a sharp break from this tradition. A break which was finally to substitute the ideology of economics for the science of political economy; and which was later to become consolidated with the rise of marginalism and neoclassical economics in the 1870s.
However, for Marx, this retreat and final break with the scientific insights of classical political economy was by no means the result of some change in intellectual whim or fashion, but was, on the contrary, a result of the material and social development of the capitalist mode of production itself. Indeed, we can see, through this critical review of Carey and Basiat, Marx making a methodological and epistemological point that was vital for the further development of a general critique of political economy and its relation to the understanding of capitalist society.
As we seen, central to historical materialism is the thesis that ideas are determined by material and social conditions that exist prior to thought. This was indeed the central thesis that we saw advance by Marx and Engels against classical German philosophy in The German Ideology. It follows from this that the underlying social and material conditions can be revealed through a critical appropriation of the ideas that they produce. That is, the ideas of any epoch will bear the imprint of the social and material conditions that serve to produce them and of which they are an integral part.
However, ideas are not necessarily a direct and complete reflection of their the underlying material and social conditions, since they are a part of these very conditions themselves. Indeed, insofar as ideas emerge as a means to justify and perpetuate particular class interests -- that is insofar as they are ideological -- they will tend to produce a one-sided, mediated and distorted reflection of the totality of the material and social reality. It is for this reason that, in order to understand the social and material reality of the capitalist mode of production, it was insufficient to take bourgeois political economy at face value. It was necessary to appropriate it critically. But to make such an critical appropriation, to make a critique of political economy, it was necessary to discern the ideological distortions inherent in bourgeois political economy's reflections on capitalist social relations, which are a product of the historical development of these social relations themselves. With his review of Carey and Basiat we find Marx bring these distortions into sharp focus.
For Marx, it was the rise of capitalism and the bourgeoisie in the seventeenth century that brought with it the rise of political economy. Indeed, political economy was the very thought of the bourgeoisie -- the economic class par excellence. In its formative period it was vital for the bourgeoisie to recognize itself as a distinct class in its struggle with the old landed aristocracy, and it was vital for it to understand the realities of the emerging capitalist economy from which it drew its power, so as to press its claims against the old feudal order.
Of course this political economy of the bourgeoisie had certain ideological limitations, but its ideological distortions concerning the workings of the economy were minimized with the increasing ascendancy of the bourgeoisie as an economic class. As capitalism developed, bourgeois political economy was able to gain a more developed understanding of the essential features of the capitalist mode of production, reaching its height at the beginning of the nineteenth century with the classical political economy of such writers as Smith and Ricardo.
For Marx, however, the very success of capitalism, and with it the triumph of the bourgeoisie, brought with it the rise of a new enemy, the proletariat, and the new challenge of socialism and communism. The ideological interests of bourgeois thinkers then began to prevail over their scientific insights, so as to deny the exploitative and class character of bourgeois relations of production, and hence justify and perpetuate the rule of the bourgeoisie. With Carey and Basiat the point had been reached where capitalist society was presented as being virtually classless; a society consisting of nothing other than a collection of atomized individuals brought together in harmony through the free and equal operation of the market. The class divisions, so evident in classical political economy, now vanished in the 'harmonies' of vulgar economics.
Thus, in the face of Carey and Basiat, it was clear for Marx that the point of departure for his understanding of what capitalism is had to be Ricardo, the culminating figure of classical political economy, and the bourgeois theorist who had reached the most scientific, and least ideological understanding of the capitalist economy. All subsequent political economists could be dismissed as, at best, simply elaborating on Ricardo, or, at worst, following Carey and Basiat in the retreat from classical political economy to the depths of vulgar economics.
This clarification may be seen as merely affirming the position Marx had held ten years before in The Poverty of Philosophy where he had held up Ricardo against the economic errors and pretensions of Proudhon and the socialist critics of political economy. But now, after ten years research into bourgeois political economy, Marx could be sure that it was with Ricardo, rather than his critics or subsequent political economists, that he should locate his point of departure; and now he had the means to go beyond Ricardo to grasp the essential laws of the capitalist mode of production. But the question that now arose was: where was Marx to begin the critique of Ricardo and classical political economy?
i) A beginning for a critique of political economy A month or so after breaking off from his critical review of Basiat and Carey Marx began to sketch out his critique of political economy in a series of hastily written notebooks that have become known as the Grundrisse. In these notebooks Marx assembled and worked through the vast amount of theoretical material that he had gathered over the previous decade. Despite numerous asides and deviations, the Grundrisse, to a large extent, prefigures the line of argument that was to be finally presented in the three volumes of Capital. Indeed, as both Nicolaus, in his foreword to the English translation of this work, and Vygodski, in his commentary on the development of Marx's critique of political economy, have pointed out, the Grundrisse can be seen as Marx's laboratory where he worked through on paper the raw material provided by classical political economy so as to produce the lines of argument and categories necessary for the presentation of his critique of political economy that were to finally find their polished form in Capital ten years later.
As we shall see in more detail in subsequent chapters, the distinction between the method of investigation (Forschung), that we find in the Grundrisse, and the method of presentation (Darstellung), that we find set out in Capital, is of vital importance for both the full understanding of Marx's critique of political economy and its relation to the two-fold closure that we shall identify in Marx's broader thematic. More of this later; for now we shall confine ourselves to briefly outlining what we find in these notebooks that together make up the Grundrisse, and how they reveal the development of Marx's critique of political economy as such.
Let us begin with the Introduction.
ii) Introduction As we have already noted, as early as The Poverty of Philosophy Marx had been able to advance the basis of his critique of the political economists which was that they had naturalised, and thereby eternalized, the historically specific relations and categories of the bourgeois mode of production. Furthermore, we have seen how Marx came to recognize the various weaknesses in Ricardian political economy which had arisen from this naturalization and eternalization of bourgeois economic relations, and that had ultimately led it into an impasse.
The problem was how, despite all the honesty and perceptiveness of their scientific enquiry, Ricardo had allowed himself to be led into such an impasse with a good conscience. The answer, it seemed, would lie in his very methodology that imposed an a priori eternalization and naturalization of the categories of political economy before any enquiry began. Hence in his proposed Introduction Marx begins by seeking to ground the errors of the political economists in the very methodology through which political economy came to be constructed. Indeed, as Nicolaus in his foreword to the Grundrisse points out, Marx in the Introduction grapples with two fundamental problems of method: 1) Where to begin? and 2) How to proceed?
These two questions underlie the entire text of the Introduction and repeatedly surface to interrupt Marx's train of thought. In order to find a satisfactory starting point and method of procedure Marx is repeatedly forced to confront the problem of how to set his materialist dialectic in motion without, on the one side, collapsing back into Hegelian idealism or, on the other side, falling foul of the ahistorical and uncritical materialism of the political economists themselves.
Marx makes a tentative start with the general conception of 'material production', echoing, in materialist form, the Hegelian starting point of the Indeterminate Being. Which he is then quick to qualify as social production. Marx then seeks to counterpose this conception of 'social production in general' with the eighteenth century antecedents of the classical political economists who took as their starting point the isolated individual abstracted from society.
By this means Marx sought to avoid the trap of methodological individualism that simply led to the reduction of bourgeois society to a simple aggregation of isolated and otherwise asocial individuals. But in starting with simply 'material production' or 'production in general', even if qualified as social production, Marx still runs the danger of simply projecting capitalism into an indefinite past. It is a starting point which fails encompass the historical specifity of the capitalist mode of production. Hence, in this opening section to the Introduction we find Marx rapidly running into a dead end.
In the second section we find Marx abruptly changing tack in order to consider the relations between the various distinctions made between the categories of production, consumption, exchange and distribution, which were often drawn up by the political economists in their preliminary discussions before their analysis proper. Marx turns over these distinctions as he seeks to explore the implications of the usual staring point of the political economists. But, as Nicolaus observes, in doing so he gives: An earnest imitation of this standard text book opening, and a mocking parody of it. (Grundrisse, p. 36) Yet, while simply following this standard approach of political economy, which soon becomes a 'mocking parody', Marx's exposition in this second section does offer some important methodological insights that were subsequently to structure his critique of political economy.
Firstly, Marx is able to make clear to himself the necessity of viewing the capitalist economy as being constituted as an organic structure of three interacting moments: production, circulation/exchange and distribution. A conception which, as we shall see, is reflected in the overall structure of the three volumes of Capital. Secondly, Marx is able to at least indicate how production is the essential moment of this threefold organic structure; that is how production comes to structure the whole. As a consequence Marx is able to develop his critique in terms of the essential relations and categories of production and their necessary appearance in the forms of exchange and distribution, which, as we shall see, becomes vital in the further development of his critique of political economy.
In section three Marx then turns to explicitly address the problem of 'how to proceed' by raising the question of the correct method of abstraction. It is here that he underlines and clarifies several important methodological principles that were to govern his exposition.
Firstly, Marx sought to apply the dialectical method he had appropriated from Hegel to his critical appropriation of political economy. But this dialectical method required a double theoretical movement of abstraction. Firstly there was the moment of analysis in which the immediate complexity of the concrete could be broken down into simple abstract categories. Secondly, and counterposed to this initial moment, was the moment of synthesis in which from these simple abstract categories the complexity of the concrete could be reproduced in thought.
However, as Marx makes clear to himself, the first moment of analysis had already been undertaken by political economy itself. It lay ready to hand as the raw material from which Marx could develop his critique which should take the precise form of a movement of synthesis. It was this reversal of method, which stands opposed to the analytical and empiricist method of the political economists, that would then serve as the methodological basis for Marx to go beyond bourgeois political economy: ...if I were to begin with the population, this would be a chaotic conception [Vorstellung] of the whole, and I would then, by means of further determination, move analytically towards ever more simple concepts [Begriff], from the imagined concrete towards ever thinner abstractions until I had arrived at the simplest determinations. From there the journey would have to be retraced until I had finally arrived at the population again, but this time not as a chaotic conception of a whole, but as a rich totality of many determinations and relations. The former is the path historically followed by economics at the time of its origins...
(Grundrisse, p. 100) But Marx was well aware that in turning the Hegelian dialectic against the analytical method of bourgeois political economy he had to be careful not to fall into the trap of Hegelian idealism. It would, as he warns himself, be all to easy to fall into the illusion, which Hegel held to, that this movement from the abstract to the concrete is the actual process through which the concrete comes into existence, rather than being the process through which thought comes to understand this concrete reality. In order to avoid this danger Marx had then to clarify the relation of this process of abstraction in thought to the historical processes of concrete reality which it sought to apprehend.
As Marx seeks to make clear with the example of the simple abstract category of 'labour-in-general', categories can only be grasped once they have reached a certain degree of actuality. As Marx points out, the category of 'labour-in-general', which had become central to classical political economy and its theories of value, and which had appeared to them as simply a rational abstraction made in the mind to simplify their analysis of the complexity of the economic world, was in fact a real abstraction. That is, it was an abstraction that had emerged out of the historical processes of the real concrete world.
The notion of 'labour-in-general' had only become possible once the exchange of the products of labour had become sufficiently generalized throughout the society that the vast array of different types of concrete labour could be considered as being commensurate with each other and thereby reduced to the common substance of 'labour-in- general'. Indeed, 'labour-in-general' was a category that was unknown prior to the emergence of capitalism and the generalization of commodity exchange. The abstraction of 'labour-in-general' from the vast diversity of concrete labours was therefore not simply an abstraction made by the mind which the political economists happened to have made; but was a real abstraction made everyday through the actual exchange of commodities, which was then reflected in the abstractions made within the analysis of bourgeois political economy.
Here then, in the case of the real abstraction of 'labour-in-general', Marx shows how the process of thought comes to reflect the material process of reality. But this should not be taken to mean that for Marx the process of thought is simply an unmediated reflection of the historical and material processes of reality. Indeed, Marx proceeds to clarify this point with example of the category of money.
As Marx points out, the logical derivation of a category such as money is not necessarily the same as its historical derivation. Money had existed long before capitalism made its appearance, but in order to understand money's role within the developed capitalist economy it was not sufficient, nor even necessary, to simply trace out the historical development of money. On the contrary money could only be fully understood as part of the totality of bourgeois economic relations. An historical derivation of the category of money could at best only reveal certain of its aspects and in no way could reveal how these aspects were organized or developed as a functional part of the capitalist system as a whole.
As Marx himself concludes: It would therefore be...wrong to let the economic categories follow one another in the same sequence as that in which they were historically decisive.
Their sequence is determined, rather, by their relation to one another in modern bourgeois society, which is precisely the opposite of that which seems to be their natural order or which corresponds to historical development. The point is not the historic position of the economic relations in the succession of different forms of society. Even less is it their sequence 'in the idea'...Rather, their order within modern bourgeois society. (Grundrisse, p. 105) Thus, for Marx, it was necessary to maintain the vital distinction between the historical derivation of categories, how they actually came into being, and their logical derivation, how they are reproduced in thought to reconstruct the world as a concrete totality. This distinction, as we shall see in later chapters, is central to any understanding of Marx's method and the formation and exposition of his critique of political economy.
So, with these points of clarification that we find in the Introduction to the Grundrisse we can see Marx seeking to resolve the problems of applying his dialectical method to the critical appropriation of political economy. Yet it can be said that Marx fails to resolve the complex problems of 'where to begin' and 'how to proceed'. In fact the entire Introduction to the Grundrisse can be seen as a false start -- although a fruitful one in that it did clarify some important questions of method, although it came no closer in finding the correct point of departure. By the time he came to present his findings a year later in the Contribution Marx had decided to drop this Introduction altogether. The problems of 'where to begin' and 'how to proceed' were then left to be resolved within the very exposition of the critique of political economy itself.
iii) The main text
So, in the course of the Introduction Marx found himself at an impasse. Yet the urgency of his task of making his critique of political economy before the expected revolutionary 'deluge' demanded that he waste no time with preliminary discussions on method. As a consequence, Marx broke off from writing the Introduction mid way through its fourth section and plunged into a detailed polemic against Darimon's analysis of the French banking crisis of 1855 which was to serve as the starting point for main text of the Grundrisse -- the 'chapter on money'.
As we have already noted, it was with the question of money and crisis that the weaknesses of classical political economy were most readily exposed and it is therefore of little surprise that during the French banking crisis of 1855, the French Proudhonist, Darimon, took the opportunity to launch a detailed attack on economic orthodoxy and to advance his proposals for socialist reform.
For Darimon, in line with Proudhonist thinking, the basic cause of the banking crisis had been the dominance of gold-money as the exclusive general equivalent of exchange. Gold had usurped the functions of money and had thereby subordinated all other commodities. It was through this subordination of all other commodities, and with them their producers, that gold had come to confer monopoly powers on the banks and the money-lenders; monopoly powers that became most manifest at times of crisis. As Darimon complains, it is just at times of crisis, when people need money the most, that bankers and money-lenders restrict its supply by raising interest rates and shortening repayment times.
But while such monopoly powers become most manifest at times of economic crisis they are not just confined to such periods. It is gold-money that allows prices denominated in terms of gold to diverge from the just prices of commodities which should be determined by their 'true' labour-values, and it is this that makes it possible for capitalists to exploit the labour of the workers by buying commodities at below their true labour- values and selling them at prices above such values. Hence, the solution Darimon proposed to both capitalist crises and exploitation was the replacement of gold-money by paper money denominated in labour time. If all commodities were obliged to exchange in accordance to the labour required for their production there would be no room for exploitation and the domination of gold, which was the root cause of crisis.
Here then we find Marx once more returning to his battle with Proudhon, but now directly in terms of the question of crisis. In renewing his attack on Proudhonism in such terms we find Marx making an important theoretical advance. How is this?
As Marx proceeds to show, even in Darimon's own analysis of the French banking crisis, the cause of crisis was not gold-money as such; rather it was the crop failure that preceded it and which caused a loss of real production and wealth. Neither gold-money, nor the monopoly powers it conferred on the banks and money-lenders, were the cause of the crisis but rather the phenomenological expression of such crisis. Indeed, as Marx presses home, the bankers and money-lenders acted like any other commodity-owners whose commodities were in short supply; they exploited their position by restricting supply further so as to raise prices. In fact, if the banks were to protect their cash reserves they had little option other than raising interest rates and restricting credit.
For Marx, it then becomes clear that Darimon's theory of crisis fails to strike home against bourgeois political economy because it fails to penetrate to the essential causes of capitalist crisis. This is further confirmed when Marx proceeds to consider the proposed solutions to the problem of capitalist crisis and exploitation.
As Marx comes to demonstrate, the Proudhonist proposal for labour-money is, in itself, no solution at all. Either the real value of labour-money would come to diverge markedly from its nominal value, thereby acting in just the manner as gold-money, or else the 'people's bank' that was entrusted to issue such money would have to increasingly regulate production to the point where commodity production would have become completely abolished. The reason for this is that it is only through the continuing oscillation of money prices around 'true' labour-values that a society based on private disassociated commodity production could be regulated. It was only through the divergence of money-prices from 'true' labour-values that a society with no social plan of production can equate production and consumption and resolve the contradiction between privately performed labour and the necessary social division of labour.
Hence, the theory of money, crisis and exploitation put forward by both Darimon and Proudhon was superficial. It failed to recognize that money, crisis and exploitation could only be understood as being inherent in the relations to a society based on generalized commodity production. Instead of penetrating to these essential relations of bourgeois production, the theory of Darimon and Proudhon remained content to stay at the surface with the relations of commodity exchange. As a consequence, such socialist critiques of capitalism failed, for the most part, to strike home; and when they did strike at the essence of capitalism they did so only inadvertently.
Marx sums up Darimon and Proudhon's efforts quite amusingly as follows: One or another kind of artful tinkering with money is...supposed to overcome the contradictions of which money is merely the perceptible appearance.
Equally clear that some revolutionary operations can be performed with money, in so far as an attack on it seems to leave everything else as it was, and only rectify it. Then one strikes a blow at the sack, intending the donkey. However, as long as the donkey does not feel the blows on the sack, one hits in fact only the sack and not the donkey. As soon as he feels it, one is striking the donkey and not the sack. (Grundrisse, p. 240) Form this Marx could conclude that it was insufficient merely to confine the critique of capitalism to its immediately apparent form as a market economy. Simply denying that free and equal exchange exists, and protesting at the existence of monopolies and unfair competition, merely led to the demand for a more perfected capitalism rather than its overthrow. It played in to the hands of the 'harmonizers' such as Basiat and Carey for whom the problem was not capitalism as such but the freeing of capitalism from the artificial constraints of the remnants of the old feudal order.
As Marx proceeds to show7, it is from this very semblance of capitalism as nothing more than a market economy that bourgeois apologists draw their most compelling arguments in favour of capitalism as a system that best promotes the freedom and equality of the individual. Indeed, freedom and equality is the very truth of the market and the sphere of capitalist exchange. For Marx, the immediate task confronting a critique of bourgeois political economy was not that of pointing out the readily apparent exceptions to the rule of freedom and equality in the market, as the socialists sought to do. For Marx, such exceptions did indeed 'prove the rule'; as a market economy it was true that capitalism promoted freedom and equality -- if only formally -- and it was this moment of truth in the apologetics of bourgeois political economy and vulgar economy that demonstrated capitalism's advance over feudalism. But this truth was not the whole truth. It denied and ignored the exploitative and alienating conditions of capitalist production which the market and capitalist exchange necessarily presupposed.
The immediate task facing a critique of political economy was therefore to show how this semblance of freedom and equality of the market was based on the alienation and exploitation inherent in the capitalist relations of production. Marx had to accept, at least provisionally, the 'truth' of the market as presented by bourgeois political economists so as to follow them below to unearth the essential relations of production. Hence, Marx came to affirm, at least provisionally, his adherence to the bourgeois political economists against Proudhon and the socialists as a methodological necessity.
Of course, in provisionally siding with Ricardo and political economy did not mean that Marx denied once and for all the exceptions and failures that were manifest in the market. Indeed, as we shall see in more detail in subsequent chapters, through his engagement with Darimon and Proudhon on the question of money and crisis, Marx came to develop both his own labour theory of value and his own theory of money which, by preserving the possibility of crisis which Ricardo's theories intrinsically denied, went well beyond Ricardo. But the problem was not so much demonstrating the possibility of crisis and market failure, but ultimately to demonstrate how crisis necessarily arose from the inherent contradictions of the capitalist mode of production. But such a demonstration first demanded that the essential relations and laws of capitalist production are understood in themselves and this, as we shall show later, demanded that Marx provisionally attenuate the exceptions to the truth of the market such as crisis.
For Marx, the chief merit of Ricardo was that he recognized the realm of exchange as one of appearance and as a consequence was able abstract from such 'aberrations' as monopoly and unfair competition to penetrate to the essential laws of the capitalist mode of production. As Marx comments: ...to presuppose, as does Ricardo, that unlimited competition exists is to presuppose the full reality and realisation of the bourgeois relations of production in their specific and distinct character. Competition therefore does not explain these laws; rather it lets them be seen...
(Grundrisse, p. 552) It was this that allowed Ricardo to consistently defend labour embodied in the commodity during its production as the sole source of its value which appears in the market place. But if labour was the sole source of value then it would seem that the entire value of a commodity should belong to the workers. A point well noted by the Ricardian socialists as we have already mentioned. How could this be squared with the existence of profit and rent and the free equal exchange of commodities?
As Marx points out, Ricardo's labour theory of value implied that capital must appropriate a part of the value created by labour without exchange -- that is, it implied the expropriation of surplus-value from the worker -- but Ricardo, due to his bourgeois perspective, was unable to ask how this arose and how, if labour was taken to be a commodity like any other, such expropriation could be made consistent with the free and equal exchange of commodities evident at the level the market. As Marx argues: Capital is represented as appropriating a certain part of the ready and available value of labour (of the product); the creation of this value, which it appropriates above and beyond the reproduced capital, is not presented as the source of the surplus-value. This creation is identical with the appropriation of alien labour without exchange, and for that reason the bourgeois economists are never permitted to understand it clearly. (Grundrisse, p. 553) In drawing out the implications of Ricardo's labour theory of value Marx was able to make, what Vygodski has fittingly called, his great discovery; the vital distinction between labour and labour-power which then opened the way for Marx's theory of surplus-value, which was to be his decisive advance over both Ricardo and the Ricardian socialists.
We shall have cause to return to consider Marx's theory of surplus-value and its importance in more detail later, but at this point we should perhaps briefly outline this 'great discovery' and indicate its significance.
As Marx demonstrates in great detail in his later works - such as his Theories of Surplus-Value -- the classical political economists failed to make the crucial distinction between labour-power and labour that was central to understanding the appropriation of surplus- value and its distributional forms such as rents and profits. As Marx points out, what the worker sells the capitalist on the labour market is not labour as such, but her capacity to labour -- that is her labour-power. Thus, when he talked about labour being like any other commodity having a value determined by the labour required to reproduce it, Ricardo was talking not about labour as such, but about labour-power. Indeed, to talk about the value of labour was simply nonsense if labour was taken to be value itself, since it would be the same as talking about the value of value.
The value of labour-power is determined by the value of the means of subsistence required to reproduce the workers' capacity to work. However, this not the same as the value that worker produces for the capitalist once she is set to work in the process of production. The capitalist will seek to ensure that the worker performs an amount of labour beyond that necessary merely to create a value equal to the value of her labour-power. It is this extra value created and embodied in the final product by the labour of the worker above and beyond the value of her own labour-power that the capitalist appropriates as surplus-value.
The importance of this is that, even though the worker may sell her commodity -- labour-power -- at its 'true' value in the labour market, she will still find herself exploited in the process of production. Marx is thereby able to show how the exploitative relations of capitalist production are quite consistent with the freedom and equality evident in the market, and so lauded by bourgeois apologists.
With this distinction between labour and labour-power, with which Marx then develops his theory of surplus- value, Marx makes his decisive advance over classical political economy, and it is from this vantage point that he is able to make his critique of political economy. It is the drawing out of the implications of this 'great discovery' for the nature of capitalist production, showing how surplus-value both substantiates capital as self-expanding value -- the self-mediating power of alien and dead labour -- and how surplus-value comes to take on the more complex distributional forms of rent and profit, which, as we shall see, takes up the remaining bulk of the Grundrisse, and eventually the corresponding part of the three volumes of Capital.
e) The Contribution and the Theories of Surplus-Value By the Spring of 1858 the manuscripts that make up the Grundrisse had grown to immense proportions after months of intensive labour. For Marx it seemed time was fast running out. It was necessary to at least put something into print before it was too late. As a consequence, Marx broke off from his work extending these manuscripts and began to prepare the notebooks comprising the first chapter on money of the Grundrisse for publication. This resulted in A Contribution to a Critique of Political Economy which was first published in 1859, and which Marx had originally hoped would be accompanied by a further volume containing remainder of his critique of political economy which he was still developing in the Grundrisse.
However, this second volume of the Contribution never actually appeared as such; instead it was eventually incorporated into Capital. By the time the Contribution was published the economic crisis had passed without any serious revolutionary repercussions. The political imperative that had propelled Marx to plunge into his critique of political economy with the utmost urgency had now dissipated and Marx became distracted by other concerns.
However, it was not simply the question of the political urgency to put his critique into print that led Marx first to abandon his research work on the Grundrisse in favour of preparing the initial notebooks for print and then to abandon this work on his critique of political economy in 1859. Marx at this time can be seen to have reached an important theoretical impasse in his research. This impasse is set out by Vygodski as follows:
The crux of the matter was that the theory of surplus-value, in the form in which it had been elaborated in the Grundrisse, could not be regarded as complete. With the discovery of surplus-value, marx had got the most profound secret of capitalist economics. Having got this far he had, however, to retrace his steps and demonstrate how surplus-value 'regulates' all other categories of the capitalist mode of production: profit, average profit, land- rent etc. This had to be done because on the surface of bourgeois society there is neither value nor surplus-value. There is a question of market prices, prices of production, profit and so on. It had to be shown how these categories acting on the surface of bourgeois society are regulated by value and surplus-value. Only after this could the theory of surplus-value be regarded as complete and the law of motion of capitalist society as adequately substantiated. In short, the theory of surplus-value had to be supplemented by the theory of average profit and the price of production.
This was the task Marx performed in the course of his work the Theories of Surplus-Value." (Vygodski, 1973, p. 72) It had been this very problem of showing how value regulated prices that had led to the downfall of Ricardo's labour theory of value. It was all important, if Marx's own labour theory of value was to hold, for him to find a solution. But it was a formidable problem that Marx had yet to surmount in the Grundrisse, and, as Vygodski observes, it was not until Marx began work on his Theories of Surplus-Value in 1861 that he found the solution.
Ricardo, through the incisiveness of his analytical method, had come to identify the simple abstract category of labour-in-general as the common substance of all production and thus as the sole source of its value. He had then sought immediately to relate such value to the prices of commodities evident in exchange. Hence, for Ricardo, the categories of price and value, as well as profit and surplus-value, became conflated with each other. This meant that as soon as Ricardo was forced to concede that certain other factors, such as the composition and durability of capital, entered into the determination of price he found himself facing insurmountable problems in sustaining his adherence to a labour theory of value.
Marx, however, realized, as we have seen in our discussion of the Introduction to the Grundrisse, that the moment of analysis was in itself insufficient. It was necessary to proceed by a movement of synthesis towards the concrete, grasping all the necessary mediations on the way. Thus for Marx, value was not identical to price; rather price was the phenomenological form of value that was mediated by a complex secondary set of determinations.
But while this method was clear to Marx it was not so clear how he should set out to determine these mediations between value and its expression in the form of price. In fact it was not by directly considering this 'transformation problem' of values into prices that Marx reached a solution, but through a critique of Ricardo's theory of rent which he came to develop in the Theories of Surplus-Value. Let us briefly consider this.
In the series of manuscripts written between 1861 and 1863 that have subsequently become known as the Theories of Surplus-Value, and which have often been regarded as the 'fourth' volume of Capital, Marx sets out a critical review of the history of political thought from the vantage point of his own theory of surplus-value. A central contention in this work was that all the political economists had failed to understand the relation between surplus-value and the forms of profit and rent within which it becomes expressed. Thus, for example, he remarks: All economists share the error of examining surplus- value not as such, in its pure form, but in the particular forms of profit and rent. (TSV I, p. 40) For Marx, as with the categories of value and price, the category of surplus-value had become conflated with those of rent and profit.
Consequently, an important part of the Theories of Surplus-Value was devoted to the evolution of the theory of rent in political economy which culminated with that of Ricardo. It is with Marx's specific critique of Ricardo's theory of rent that we find him making his all important breakthrough.
Ricardo's theory of rent, like his theory of value, was intrinsically connected with his championing of the cause of the capitalist against the interests of the land owningclasses. Indeed, we can see in Ricardo's theory of rent an attempt to sustain the contention that arose with his labour theory of value that the sole source of value, and hence the principal creator of wealth, is the labour employed and supervised by the productive capitalist. If the capitalist was to be shown to be the principal producer of wealth of the propertied classes, while the landowner was to be cast as the idle consumer of such wealth, it was necessary to show that despite the payment of land-rent in agricultural production, the value of agricultural commodities was still determined by the labour time required to produce them.
To this end Ricardo developed his theory of differential rent. According to Ricardo's labour theory of value the price of the agricultural commodities, like their manufactured counterparts, should be determined by the labour embodied in their production. For Ricardo, this was indeed true for those commodities produced on the least fertile land which had to be brought into cultivation to satisfy existing demand. However, on more fertile plots of land the labour required to produce the same amount of produce as that on the least fertile land would be less due to the assistance given by the greater fertility of land. As a consequence the individual values embodied in the cultivation of such land would be less than that of the least fertile land. However, if existing demand was to be met, the least fertile land had to be kept in cultivation, and for this to occur the price ruling on the market had to be equal to the value embodied in production on the least fertile land. But this meant that for all plots of land, other than the least fertile, prices would be above their individual labour-values.
Hence, for Ricardo, the labour theory of value still held. In the special case of agriculture, it was the labour employed on the least fertile land that determined prices, while the excess of price over the labour-values embodied in the cultivation of more fertile plots was pocketed by the landowner as differential rent, as a payment for the extra assistance given by the 'natural and indestructible powers of nature' incorporated in such land.
With this theory of differential rent Ricardo, unlike Adam Smith, did not have to concede that rent made the same contribution to the formation of value and prices as the labour employed by the capitalist. Labour was the absolute determinant of value/price; rent was merely a payment made for the relative fertility of the land that allowed less than the maximum amount of labour to be employed on more fertile plots than those on the margin. However, this could only be sustained if, as Ricardo maintained, no rent was paid for the least fertile land. If such rent was paid then it could only be as a payment for the absolute fertility of the soil which would therefore make a contribution to the formation of values and prices in its own right. Hence, Ricardo was obliged to deny the existence of such absolute rent. He therefore had no theory of absolute rent.
For Marx, Ricardo's error was once more his naturalization, and hence eternalization, of the historically specific social relations of the capitalist mode of production. Ground rent was specific to the capitalist mode of production and as such it was radically distinct from the forms of tribute and rent that may be found in earlier modes of production. It did not arise, as Ricardo contended, simply from the 'original and indestructible powers of nature', but from the forms of private property specific to the capitalist mode of production which Ricardo took as self-evident.
The landowners are able to charge rent because their ownership of land allows them to exclude the capitalist, and her capital, from a particular form of production that requires such land. This is evident in the case of differential rent. Here capitalists will compete to gain the most fertile land so as to obtain the advantage of lower labour costs and hence higher profits, given that the ruling price is determined by the labour employed on the least fertile land. But to gain access to the more fertile land and these extra-profits they are obliged to pay rent to the landowners, as a consequence rents become bid up until the point where any extra profits owing to the relative fertility of land are appropriated as differential rents by the landowners. Rents any higher would make the cultivation of the land not worth while to the capitalist since they would be below those obtaining elsewhere in the economy; rents any lower would invite competing capitalists to offer the landowner a higher rent to gain access to the extra-profits.
For Marx then, rent is paid due to the private ownership of land, rather than as a payment for either its relative or absolute fertility. The question is not therefore whether the fertility of land makes an equally important contribution to the production of value, but it is rather how this private ownership of land determines how surplus- value becomes divided between rent and profit. This becomes clearer, as Marx recognized, once the question is generalized. But this itself required a clarification of Marx's labour theory of value.
Firstly, as Marx had already made clear in the Grundrisse, value was not determined by the labour that is technically required for the production, or, more precisely, the reproduction of a commodity, as Ricardo tended to see it, but rather by the amount of socially necessary labour required for its reproduction. Value, for Marx was not a technical relation but a social relation of production. While the actual amount of concrete physical or mental labour embodied in production was a necessary prerequisite of the value of a commodity, before this labour could become value it had to be validated as socially necessary labour through the process of exchange and competition. Therefore there was no direct and unmediated relation between the actual concrete labour embodied in a commodity and that particular commodity's value.
So how is actual concrete labour reduced to socially necessary labour? We shall examine this question in great detail both in chapter 8 and in chapter 10, but let us briefly sketch out Marx's answer here.
In any particular industry the labour employed by the various individual capitals that together comprise that industry will be of a similar type and will therefore be directly commensurate with each other. Furthermore, due to the competition between these individual capitals, the commodities they produce must sell at a common market price. They will have a single market value.
However, as we have seen, in the case of agriculture different capitals are obliged to operate under different conditions of production. This means that different amounts of labour will be required to produce the same agricultural output on different plots of land in accordance with their fertility. As a result there will be varying individual values for the same commodity which will be different from the single market value that becomes established.
But, as Marx came to realize, this did not only apply to agriculture but to all capitalist industries. In all industries individual capitals will have differing conditions of production; either due to superior production methods or else due to fortuitous circumstances. Thus in all industries individual values will in general diverge from the common market value and, as a consequence, some capitals will enjoy extra profits due to the difference between their lower individual labour-values and the market values at which they are able to sell. Indeed it is in the ceaseless search for such surplus-profits that capitalists are driven to continually revolutionize the process of production so as to increase the productive power of their labour and drive down their individual values with respect to the ruling market value.
What makes agriculture a special case is that, firstly, due to the private ownership of land by a distinct class of landowners who stand outside the immediate process of production, these surplus-profits are pocketed in the form of ground rent by the land-owner, rather than simply as surplus-profits by the capitalist; and secondly, the market value is determined not by some average of the individual capitals, but by those cultivating the least efficient land (other things being equal, of course).
Here then we can see how through their private ownership of land the landowners are able to appropriate a part of the surplus-value produced within a particular industry in the form of differential rent. But what of the case of absolute rent? Unlike Ricardo, Marx did not need to deny the existence of absolute rent in order to sustain his labour theory of value, since again he saw it as arising, not as a payment for the natural fertility as such, but from the private ownership of such natural properties of land. Indeed, it is through his very analysis of absolute rent that we find him discovering the second, and most important step in solving the transformation problem -- the transformation of market values into production prices.
For Marx, landowners are able to appropriate a part of the surplus-value produced in agriculture as differential rent because they are able to restrict the competitive transfer of capitals within this industry. That is, the capitalist farmer cannot obtain access to more fertile land which offers the prospect of above average profits without paying a differential rent to landowner. In the case of absolute rent, the appropriation of surplus-value arises due to the ability of the landowning class to restrict the competitive transfer of rent between agriculture and all the other branches of industry.
As we shall see in chapter 10, and as Marx came to realize in the course of his investigations into absolute rent, if commodities sold strictly at their values then the rate of profit across the economy would vary between industries in accordance with variations in the labour intensity of the production process they employed. In labour intensive industries, like agriculture, the greater amount of labour employed would create a correspondingly greater amount of surplus-value and thus a higher rate of profit; while in more capital intensive industries, less surplus-value would be expropriated and the rate of profits would be lower. However, the competitive transfer of capital between industries in search of higher profits would lead to equalization of the rate of profit across different industries. Yet for such a equalization to occur commodities would have to sell at production prices that were above market values in capital intensive industries and below their market values in labour intensive industries. In effect the surplus-value created in production would be redistributed in the process of exchange from the more labour intensive to the more capital intensive industries.
But this process of redistribution of surplus-value depends on the free and unrestricted movement of capital between industries. With their private ownership of land, the landowning class, as Marx recognized, were in a position to restrict the movement of capital into agriculture which would otherwise depress production prices below market values. The surplus-value that would otherwise have flowed out of agriculture into more capital intensive industries is thereby appropriated by the landowning class as absolute rent.
So, in order to show how surplus-value -- a category specific to the capitalist mode of production -- took the form ground rent, Marx had to show how the process of value and price formation in agriculture was simply a special case of the general formation of value and price that arises within the capitalist economy due to the private ownership of land by a distinct class outside the immediate process of production. Yet in doing so Marx came to solve, not only the problem of how surplus-value takes up its particular phenomenal form of rent, but also the crucial, but intrinsically connected, problem of the transformation of values into prices that had been the achilles heel of Ricardian political economy and its labour theory of value.
With the solution to this problem the way was now open for Marx to set about presenting his critique of political economy. However, events now conspired both to delay Marx's efforts in this direction and, at the same time, to renew the urgency of the political imperative to put his 'economics' into print. These events were those of the formation of the International Workingmen's Association, or, as it has since become known, the First International.
Capital and the early years of the First International i) The First International(8)
Throughout the 1850s industrialization had proceeded at a rapid pace both in Britain and on the continent. The British trade unions and workers' combinations, whose flimsy and faltering emergence Marx and Engels had held as the way forward against the mutualist ideas of Proudhon in the late forties, had now grown into strong, permanently based craft unions. While on the continent the dominance of artisan production was more and more being overtaken by large scale factory production, bringing with it a vast increase in the ranks of the fully industrialized and urban proletariat. The broad outlines of social development that Marx and Engels had identified in the 1840s were being confirmed across the principal centres of Europe. European industrial capitalism was rapidly approaching maturity.
By the early 1860s the growing power of the British craft unions had led employed to adopt the tactic of drafting in foreign labour to break strikes. This, combined with the economic impact of the American Civil War, had led British trade unionists to take both a more political and a more international perspective. The growing political intervention by British trade unionists, particularly those involved in the London Trades Council, in the international issues and controversies surrounding events in Poland, Italy and America brought them into close contact with representatives of the continental workers' movements, particularly those from France. The outcome of all this was the formation of the International Workingmen's Association.
Marx was one of the 34 elected to the General Council of the First International at its inaugural meeting in 1864 and was subsequently appointed as its German Correspondence Secretary. In this position, which was to take up a considerable amount of his time during the remainder of the decade, Marx's tireless efforts established him as a leading figure within the International. Indeed, it was to Marx that the General Council looked to draft the 'Inaugural Address' and the International's Provisional Statutes that were later adopted at the Geneva conference of the International in 1866.
With the 'Inaugural Address', clearly reflecting Marx and Engels's orientation to the re-emergence of overt international working class politics after more than decade of repression and defeat, we find a distinct shift in attitude compared with that of the 1840s. Before, Marx and Engels could only stress the prospect of the emergence of a fully industrialized proletariat across Europe which, in coming conscious of itself, would serve as the means for the revolutionary overthrow of capitalism. It was enough for Marx and Engels to sketch out the broad outlines of the development of capitalism and its own negation in crisis and the proletariat in their hard fought polemics against their Young Hegelian and socialist opponents. Once the industrial proletariat had come sufficiently into being, Marx and Engels could rest content that somehow economic crisis would serve as the spark for the proletarian revolution.
Indeed, as we have seen, with the failure of the revolutions of 1848 to repeat themselves in the 1850s Marx had not sought to examine how revolution emerged from economic crisis but rather how economic crisis was inherent to capitalism. It had been this problem that had provided the theoretical imperative within which Marx's critique of political economy came to be developed - culminating with the Grundrisse and the Contribution.
But the failure of revolution to follow the economic crisis of the late 1850s demanded a reappraisal of the relation between crisis and revolution. A reappraisal that led Marx and Engels to conclude that it was vitally important to build a mass working class movement that could be in a position to exploit the onset of crisis as an opportunity to overthrow capitalism once and for all. This task could not, it now seemed, be achieved over night, but required a long and sustained political and organizational effort. The foreshortening of the prospect of communism that was so evident in their optimistic polemics of the forties now had to give way to a more 'realistic' and cautious approach.
Now, after such a long wait, the prospect of a mass international workers movement was becoming a reality. In the face of this Marx had the awesome task of helping to draw together the various and often conflicting strands and tendencies of this nascent movement.
Yet while he had at first to be cautious in not excluding the numerous tendencies and factions that went to make up the International, Marx soon found himself in conflict with those ideas that for him threatened to hold the full development of the organization back. The first of these conflicts arose directly from his position as the German Correspondence Secretary and involved the followers of the recently deceased Ferdinand Lassalle.
Lassalle had played a major role in drawing together the numerous Workers' Education Associations into a unified working class organization and as a result had become a respected figure with the emerging German workers' movement. However, due to the continuing political weakness of the German bourgeoisie Lassalle had been all too easily led to pursue an alliance with the landed interests that still dominated the Prussian State in return for limited, but for Lassalle valuable, political and economic reforms.
This opportunistic realpolitik, which sought to ally itself with such reactionary forces as those represented by the Prussian State for short term political advantage, and the vision of a nationally orientated state socialism that went with it, could only be in radical opposition to Marx's hopes of an international working class movement that would have global communism as its ultimate goal. Hence Lassallean socialism soon drew the sharpest of criticisms in Marx's correspondence with the representatives of the German workers' movement.
However, while the figure of Lassalle dominated the German workers' movement, it was that of Proudhon that still dominated the rest of the continental workers' movements. Thus once more, but on the larger and far more important stage of the rapidly growing International, Marx and Engels found themselves in combat with the ideas of their old adversary. The most pressing point of issue that arose in this conflict was the old Proudhonist contention that industrial action was futile. An issue that united both the Proudhonists with Lassalleans of the continental workers' movements and pitted them against the British trade unionists on the General Council. It was as a result of the heated debates on this issue on the General Council that Marx was obliged to advance a brief summary of his 'economic analysis' that was later published as Value, Price and Profit.
Confrontations such as these with both the Lassalleans and the Proudhonists at this time only served to confirm the political imperative for Marx to present his critique of political economy in print. It became increasingly clear to Marx that the international working class movement could only progress towards its communist goals if it had a proper understanding of bourgeois society and this depended first and foremost on an understanding of the capitalist economy. Hence, at this time, Marx became increasingly concerned to take time off from his immediate political commitments to the International to prepare his critique of political economy for publication in a form that would be readily accessible to the working class. As a consequence the first, and perhaps the most important volume of Capital came to be published in September 1867.
ii) Capital As we have already noted, Capital has the same overall structure, and covers broadly the same line of argument of the Grundrisse9. Indeed it is only with Volume III, and Marx's theory of the transformation of values into production prices, that Capital makes an advance over the Grundrisse. Yet nevertheless there exist important differences both in form and in content between these two works of Marx's critique of political economy.
The Grundrisse was written within the prospective imminence of revolutionary crisis. It was a work whose political imperative was to act as a bolt of theoretical clarity with which to light up the revolutionary storm that, for Marx, was about to break. As such it was a work that was intrinsically connected with a much larger theoretical project that was to have comprised of six books culminating with that concerning the world market and crisis. A project that would realize in theory the practical tasks of the imminent revolutionary conjuncture. With Capital the imminence of revolution has dissipated, and the further development of Marx's theoretical project evident in the original plan for six books had become deferred. The task had instead become that of equipping the newly emerging mass working class movement for the long haul towards communism. Hence, in contrast to the Grundrisse, Capital stands far more as a popular scientific treatise: a work of reference for the emerging workers' movement in its long struggle against the ideological hegemony of bourgeois political economy.
Such differences in style and form between Capital and the Grundrisse, which stem from changes in the political context, and, as we shall see in chapter 6, were reinforced by the changes in intellectual climate brought about by the rise of positivism and the influence of the natural sciences, serve to emphasize the differences that arise between the Grundrisse as a work of investigation (Forschung), and Capital as a work of presentation (Darstellung). In the Grundrisse, as commentators such as Rosdolsky and Nicolaus have observed, Marx's appropriation of the Hegelian method in the development of his critique of political economy is readily evident on the surface of his analysis. Here we can see just how Marx came to develop his critique of political economy through his appropriation of the Hegelian dialectic, a point that we shall consider in more detail in subsequent chapters.
But along with this readily apparent importance of Hegel in the Grundrisse, we can also see the continuing importance of the question of alienation. With the Grundrisse it is clear that the in his critique of political economy Marx is in the process of showing how human alienation arises and is produced by the capitalist mode of production; how capital is nothing other than the movement of alienated human labour over and against the will and desires of human subjects. Hence, in the Grundrisse it can be readily seen how the Young Hegelian thematic of human alienation and human liberation is not only superseded but preserved within Marx's critique of political economy.
It was Marx himself who first pointed out the difference between the work of Forschung and Darstellung, which separates the Grundrisse from Capital, when he wrote in the Postface to the second edition of Volume I of Capital: Of course the method of presentation must differ in form from that of inquiry. The latter has to appropriate the material in detail, to analyse its different forms of development and to track down their inner connection. Only after this work has been done can the real movement be appropriately presented. If this is done successfully, if the life of the subject-matter is now reflected back in the ideas, then it may appear as if we have before us an a priori construction. (Capital *I, p. 102) Here we find Marx defending the apparently Hegelian mode of presentation of some the earlier chapters of Capital from certain positivist critics by stressing that it is a result of a long period of empirically based research. Yet even here in the face of stern criticisms of his positivist contemporaries, Marx does not discard Hegel as a 'dead dog', nor does he discard the importance of his dialectical method. Indeed, in this very Postface he proceeds to declare himself as a devoted pupil of Hegel and proclaims the need to place Hegel's dialectic on a materialist footing.
Marx took particular time and trouble to present the vitally important opening chapter of Capital in a form accessible to his readers, who would by that time have been unacquainted with a dialectical mode of presentation. This is witnessed by the correspondence between Marx and Engels concerning the proofs to the first edition of Volume I. In a letter dated 22nd of June 1867 Engels wrote to Marx with regard to the fourth section of chapter 1 concerning the value-form: In these more abstract developments you have committed the great mistake of not making the sequence of thought clear by a large number of small sections and separate headings...The thing would have looked rather like a school-book, but it would have been made much more easily comprehensible to a very large class of readers.
For the populace, even the learned section, is no longer at all accustomed to this kind of thinking and one must facilitate it for them with every possible kind of help. (M&ESC, p. 220) Marx heeded Engels's advice by adding an appendix in this manner to the first German edition. An appendix that was later abandoned in later editions after a substantial reworking of the first chapter. Elsewhere in Capital Marx was able to dispense with the necessity of an apparently 'Hegelian mode of expression'. Thus we find, as a concession to his contemporary readership, particularly that amongst the working class, ignorant of Hegel and dialectical thought in general, the appropriation of Hegel far less evident in Capital than it is in the Grundrisse.
But not only this, in burying Hegel, Capital becomes presented as far more an objective and scientific text. A text of economic laws in which the questions of class subjectivity and human alienation become suppressed. This too was a concession to his readership, that was in awe of the advance of the natural and positivistic sciences, as well as a reflection of his current concerns. As Marx had pointed out in the German Ideology, the ruling ideas of any epoch were the ideas of the ruling class. In the absence of a revolutionary situation Marx had to fight on the terrain of the bourgeoisie whose thought at that time was dominated by positivism and scientism, the dominance of which was consequently accepted to a large extent even by the most militant members of the working class, and perhaps to a lesser extent by Marx and Engels themselves.
As we shall see, these differences between the Grundrisse and Capital are vital in are understanding of how Marx came to impose a provisional closure both within his critique of political economy and within his broader thematic of capitalism and its overthrow. But further, the political context and intellectual climate within which this provisional closure was made also served to translate this provisional two-fold closure into a final closure within Marxism that began to develop in the final decade of Marx's life.
The final years So, after more than twenty years in the writing, the first and most important part of Marx's critique of political economy finally appeared in print with the publication of Volume I of Capital. There was at this time still far more of this monumental work yet to be transcribed into a publishable form contained in the vast manuscripts that Marx had accumulated since the early sixties, and which were eventually to form the basis for the second and third volumes of Capital; but with the publication of Volume I, Marx had laid out the essence of his critique of political economy and had revealed the 'inner laws of motion' of the capitalist mode of production.
The mere promise of the future publication of these further volumes could then suffice for the time being. The principle task was to ensure the widest dissemination of the results of this first volume by means of its translation from German into the main European languages. Hence in the years immediately following the publication of Volume I Marx delayed further work on preparing the rest of his manuscripts for publication and concentrated his efforts to arranging translations and further editions of this first volume. A delay exacerbated by the course of political events that were to follow the publication of Volume I of Capital.
No sooner had Capital's first volume appeared in print than major political shifts began to occur within the International and the various workers' and socialist movements in the continental Europe. A wave of bitter and often violent strikes swept various countries on the continent and, in particular France. Greatly influenced by the growing reputation of the International, striking workers proclaimed themselves as part of the International Workingmen's Association and called upon its General Council for aid.
In the face of such developments the largely pacific and anti-strike sentiments of the Proudhonist tradition began to become seriously discredited in favour of notions of class conflict and revolution. The dominance of Proudhonism amongst continental socialists, which had existed for more than twenty years, and against which Marx had been impelled to develop his critique of political economy, was now at an end. However, in its place there arose a new socialist opposition to Marx, an opposition that was all the more formidable -- the rise of the anarchist insurrectionalism of Mikhail Bakunin.
Although temporarily united within the revolutionary excitement and expectations generated by the Paris Commune, the conflict between Marx and Bakunin proved to be irreconcilable, and it was with defeat of the Paris Commune that the two opposed views within the International which these two figures most forcefully represented came to a head.
The anarchists saw in the very outbreak of the Paris Commune the immediate possibility of a communist revolution. For them any involvement on the established political terrain could only at best be a diversion of the vital energies of socialists and revolutionaries, and, at worst, end in them being seriously compromised. The pressing task of all revolutionaries was to arouse all the oppressed to insurrection.
Whereas the Bakuninists saw in the Paris Commune the return of revolution, Marx saw in its defeat a renewed confirmation of the continuing need to build a mass workers' movement based upon the discipline of the emerging industrial proletariat. For Marx, the proletarian revolution was nowhere imminent. Indeed, the task of finally vanquishing the power of the reactionary landed classes, so as to clear the way for the ultimate struggle between the bourgeoisie and the proletariat, still remained and demanded that the proletariat take independent political action to advance its own distinct interests.
However, it was over the question of organization, both of the present revolutionary movement and of the future communist society that finally led to break up of the International. This significance of this final controversy has been well summarized by Debord as follows: In effect, the quarrel between the Marxists and the Bakuninists...was two-edged, referring at once to power in the revolutionary society and to the organisation of the present movement, and when the positions of the adversaries passed from one aspect to the other, they reversed themselves. Bakunin fought the illusion of abolishing classes by the authoritarian use of state power, foreseeing the reconstitution of a dominant bureaucratic class and the dictatorship of the most knowledgeable, or those who would be reputed to be such.
Marx...denounced Bakunin and his followers for the authoritarianism of a conspiratorial elite which deliberately placed itself above the International and formulated the extravagant design of imposing on society the irresponsible dictatorship of those who are most revolutionary, or those who would designate themselves as such. (Debord, 1967, Thesis 91) Faced with the prospect of the Bakuninists gaining control over the International, Marx used his remaining influence within the General Council to officially transfer its operations to the inaccessible location of New York, thereby sabotaging the International as a functioning organization.
For Marx and Engels, the International had anyway lacked the disciplined organization that for them had now become necessary to advance the working class movement. Spread thinly over Europe and America, branches of the International would no sooner be established than they would vanish. Only the trade unionists in London had given it any solidity. In answer to such problems of organization Marx and Engels now turned towards his native Germany where the rapid industrialisation that had gathered pace following the Franco-Prussian War and German unification had brought with it a growing organised mass workers' movement.
Here they placed their hopes in the merger of the two German workers organizations -- the General Association of German Workers, which had been founded ten years earlier by Lassalle and his supporters, and the Social Democratic Workers' Party, whose leaders. Bebel and Liebknecht, had close ties with Marx and Engels -- which together came to form the German Social Democratic Party (SPD). A party which was soon to become the world's first mass workers' party, and the largest political party in Germany.
While Marx and Engels privately expressed detailed criticisms of the Lassallean elements so evident in the Gotha Programme upon which the SPD was founded, they failed to make them public at the time. This failure to make their criticisms of the Gotha Programme more widely known at the time was later explained by Engels as follows: The whole thing [i.e. The Gotha Programme] is disorderly, confused illogical and discreditable.
If the bourgeois press possessed a single person of critical mind, he would have taken this programme apart phrase by phrase, investigated the real content of each phrase, demonstrated its nonsense with utmost clarity, revealed its contradictions and economic howlers...and made our whole party look frightfully ridiculous. Instead of that the asinine bourgeois papers took this programme quite seriously, read into it what it does not contain and interpreted it communistically. The workers seem to be doing the same. It is this circumstance alone that made it possible for Marx and me not to dissociate ourselves publicly from such a programme. So long as our opponents and likewise the workers view this programme as embodying our intentions we may allow ourselves to keep quiet about it. (MESC, p. 298) The 'two old men in London' felt content that the course of history was moving in their direction so that their ideas would necessarily become ascendant in the mass working class movement. Such complacency meant they did little to combat the incorporation and consolidation of the statist aspects of Lassallean socialism into German social democracy and even less to correct the over objectivist and deterministic interpretations of Marxism from which the economism and scientism of the ideology of the Second International were later to arise.
As we have argued before, against the idealism of the Young Hegelians and the utopianism and voluntarism of the early socialists, Marx had been led to emphasize the objectivist and deterministic side of historical materialism. For Marx it was necessary to make clear that although 'men made history' they only did so from given historical and economic conditions. It is an emphasis that, as we have noted, clearly marks Marx's greatest work, Capital. This emphasis, however, became further entrenched in the bitter struggle against the insurrectional romanticism of the Bakuninists. A entrenchment that to some extent Marx, and perhaps even more so Engels, fell victim to.
Marx did not heed Bakunin's warning that the scientism of Marxism would lead eventually lead to the dictatorship of the 'most knowledgeable' or those who considered themselves as such. Nor was he able to foresee how, as Rosa Luxemburg was to write with the ultimate betrayal of the 1918 revolution by German social democracy, 'the troops protecting the old order would not intervene under the insignia of the ruling class, but under the flag of the Social Democratic Party'.
Yet in his final few years, in response to the controversy over the inevitability of capitalism in Russia, we find Marx beginning to correct the over- deterministic emphasis of his Marxist followers. In Capital Marx took England as an example of the general development of the capitalist mode of production. As he seeks to press home in the Preface to the first volume to his German readers, it is to England that they must look to see their own future. Yet by the end of the 1870s Germany, the USA and much of Western Europe was catching up with England's capitalist development. While England had shown the general laws of capitalist development, the question of the particular development in particular countries, and with it the possibility of avoiding such capitalist development altogether in such cases as Russia and Asia, came to the fore.
This, as we shall see in a little more detail in chapter 7, led Marx into an in depth study of landed property and agriculture. A study which was never completed and that, together with his declining health, prevented the publication of the final two volumes of Capital in his own lifetime.
Conclusion Lenin once remarked that Marxism was the product of three intellectual sources: German philosophy, English political economy and French socialism.(10) Of course one may quibble with this simple statement by pointing out the French contributions to political economy or the else the English contributions to socialism that must have influenced Marx; or it may be objected that one of the principal political economists that Marx identified, Adam Smith, was Scottish. However, in so far as it goes, this statement stands as a succinct summary of the principal intellectual sources of Marx's thought.
Yet, unless we are to take Marx's theory as simply a 'scientific' discovery of an immutable and objective reality -- as something that is simply true -- such a statement is far from sufficient. It is necessary to situate Marx in his historical context and to locate the development of his theoretical project in and against the historical, political and intellectual circumstances of his time. It is only then that we can discern to what extent Marx was limited by his own epoch; and to what extent his theoretical project, by grasping the real development of its own time, points beyond itself.
As we have briefly traced out in this chapter, following his distinct break from classical German philosophy Marx was propelled towards a critique of political economy which culminated in the three volumes of Capital. Such a critique was a necessary first moment in his new thematic of 'capitalism and its overthrow', and one that was driven forward by the political imperative that arose with his confrontation with Proudhon and the artisanal socialism of the mid-nineteenth century workers' movement.
Yet at the same time this critique of political economy that sought to grasp the 'inner laws of motion of the capitalist mode of production' was only made possible by the current stage of capitalism's development. A stage of development that exposed in all their starkest clarity the objective laws of the capitalist mode of production, unclouded by the impositions of proletarian struggle. It had been an earlier stage of this development of capitalism that had made the scientific insights of classical political economy possible, and it was its further development that had exposed its weaknesses, both for the bourgeoisie and for the proletariat, and which had opened the way for Marx's own critique.
However, these very historical circumstances which made possible the development of Marx's theoretical project towards a critique of political economy also served to restrict it. The limited development of industrial capitalism meant that Marx came to develop his critique of political economy within and against the voluntarism and utopian reformism of Proudhon and an embryonic workers' movement. As a result, the political imperative within which this critique was developed came to emphasize the objective and necessary laws of capitalist development.
As we shall see, it was this that led to the closure in the further development of Marx's theoretical project that we find in such works as Capital. A closure that then became consolidated in the over-determinism and scientism of classical Marxist interpretations of Marx.
Notes
1. 'There were, in fact relatively few factory workers on the continent in 1848...There was approximately 400,000 factory and mine workers in France at the outbreak of the [1848] revolution -- at most a tenth of all manufacturing workers. Some estimates put the corresponding percentage in Prussia a bit higher, but in no case did factory industries employ more than a small minority of the lower urban classes.' (Stearns, 1974, . 17). The bulk of the urban working class were artisans working in small workshops. Even in England this was true, albeit to a lesser extent, and this was reflected in the make up of the Chartist movement of this time, see for example, the discussion on this issue in Thompson (1984).
2. We shall consider the importance of the appropriation of Hegel's notion of totality and the dialectic for Marx's critique of political economy in the following chapter.
3. As we shall argue in chapter seven, by approaching the question of price and value as a matter of opposed wills Proudhon, at least implicitly, sets out on his confrontation with political economy in terms of class antagonism. As such Proudhon can be seen, albeit obliquely, to take up the immediate perspective of the proletariat of his time. In siding with the political economists, in adopting what we shall term the critical perspective of the bourgeoisie, Marx is able to stress the objective force of the laws of political economy. But, as we shall argue in Chapter Twelve, although this provisional adoption of the critical perspective of bourgeoisie was a necessary stage in understanding the essential laws of capitalism, and in overcoming the voluntarism of the early workers' movement, it was to impose a closure in Marx's thought that was to have serious implications in terms of overly deterministic and objectivist readings that we find in orthodox Marxism.
4. For a detailed account of the evolution from Marx's initial 'rejection' of a labour theory of value to his critical acceptance, see Mandel (1977).
5. The importance of the Ricardian Socialists in the development of Marx's crtique of political economy becomes evident in the third part of the Theories of Surplus-Value where Marx devotes an entire section to them.
6. See Engels letter to August Bebel of the 12th of October 1875.
7. See the section on 'Money as capital', (Grundrisse, pp. 239-250).
8. For a detailed account of the First International, see Stekloff (1968).
9. See Rosdolsky (1977, p. 56).
10. Lenin puts forward this view in his 'Three Sources and Three Component Parts of Marxism' where he states: '...[Marxism] is the legitimate successor to the best that was created by mankind in the nineteenth century in the shape of German philosophy, English political economy and French socialism.' (Lenin, 1956, p. 78)
Comments
"Proudhon . . . saw the
"Proudhon . . . saw the enemy as the monopolist and the money- lender, rather than the capitalist as such"
Utter rubbish, as Proudhon consistently attacked the capitalist as employer of wage labour and argued, from the start, that wage-labour had to be ended.
According to Marx: “[Proudhon’s] whole system rests on the labour commodity, on labour which is trafficked, bought and sold…” (63) Proudhon repeatedly contrasts the associated (self-managed) workplaces of mutualism with capitalist firms with their “hierarchical organisation” (Chapter IV: section II) in which wage-workers toil “under a master” (Chapter XI: section III) after they “parted with their liberty” and “have sold their arms” to a boss who appropriates both the “collective power” (Chapter VI: section II) and the “surplus of labour” they create (Chapter XI: section IV).
So much for Proudhon not being against the capitalist "as such"!
"Having refuted Proudhon's absurd assertion that the political economists had failed to recognize the distinction between use-value and exchange value"
Shame that Proudhon never made that "absurd assertion"... Marx asserted he did, but he did not as is clear from "System of Economic Contradictions"
"Since for Proudhon profits arose from the independent power of money in exchange and did not have anything to do with the intrinsic value of the commodity"
Utter rubbish, as Proudhon explicitly argued that profits came from the capitalist appropriating the "collective force" and "surplus" produced by workers in the production process. That was why he argued against wage-labour and for workers' associations.
"Unlike Proudhon, who insisted that the value of commodities was not determined by the labour required to produce them, although it should be, the Ricardian socialists had argued in accordance to Ricardo's doctrine, that value was determined by labour but that the capitalist exploited the worker in production by appropriating surplus labour. The same position which, as we have seen, Marx advanced against Proudhon."
Again, utter rubbish as Proudhon explicitly argued that labour was exploited in production, as a direct consequence of being employed by a capitalist. Indeed, his account of exploitation prefigured Marx's in all its essential aspects.
For those actually interested in the facts, in what Proudhon actually wrote, may I suggest the appendix on "The Poverty of Philosophy" in my new Proudhon anthology. I've also footnoted its extracts from "System of Economic Contradiction" to compare what Proudhon wrote and what Marx claimed he wrote...
I just hope that the analysis of Marx in this book is better than the one of Proudhon!