Karl Marx and Friedrich Engels

International Revolutionary Socialism:

Karl Marx and Friedrich Engels

For a generation, Karl Marx was the undisputed leader in Socialistic thought, and his chief work, Das Kapital (Capital), 1867, came to be called the Bible of the "scientific" Socialists. If it is now true that its prestige has been somewhat shaken by "higher criticism," at the beginning of the twentieth century it was still the leading source from which the great mass of intelligent Socialists drew.

Karl Marx was born in 1818 at Treves, Rhenish Prussia. He studied philosophy and history at Bonn, and became intimately acquainted with Hegel's thought. He was also influenced by Lorenz von Stein in regarding the social movement as an evolu­tion. Marx became a radical editor, was driven from Germany to France and thence to Belgium, finally taking up his residence in London, where he lived until his death in 1883. The spirit of the generation in which Marx lived was largely his, and it has been well characterized as "the irreverent and revolutionary spirit of what was once known as Young Germany; the spirit of a race of disillusioned men, without belief in God or unsen-suous good; a hypercritical, cynical, and often scurrilous spirit. In passing into its latest or Germanic stage, Socialism gained intellectually, but lost morally."

With Marx, Socialism took on a purely materialistic garb, and became international or cosmopolitan in its scope as con­trasted with the national industrialism or associationism or State Socialism of his various predecessors. Marxianism is the classicism of Socialistic thought, — abstract, deductive, cos­mopolitan. Rodbertus was an idealist. So were the earlier French writers who clung to the institution and believed in the innate goodness of man. But Marx was in fierce revolt against institutions, including the existing states, and was far from believing that good predominates in mankind. Accordingly he put Hegel's dialectic upon a materialistic basis, and made social evolution a matter of material and economic forces. To Marx "the ideal is nothing else than the material world reflected by the human mind."

Indeed, one of the things ordinarily associated with the name of Marx is his materialistic interpretation of history, and especially his analysis of the existing capitalistic stage. These ideas, together with that of class struggle, are the essen­tial basis of revolutionary international Socialism.

Marx wrote: "The mode of production in material life deter­mines the general character of the social, political and spiritual processes of life." He holds that all social institutions are determined and conditioned by economic circumstances, and especially the conditions of production. These economic cir­cumstances change with developments in technique, inventions, discoveries, and the like, while institutions become fixed and thus lag behind. The latter thus get out of harmony with indus­trial technique, and have to be shaken off by revolution.
He describes the transition from the domestic system of production to the factory system, and proceeds to argue that, under the factory system (with private property), the advan­tages of large-scale production will have the following conse­quences: small-scale employers will be eliminated, and capital and land will become increasingly concentrated in the hands of a few. The middle class will become merged into the labor class, and the masses of the people will be employed by a small capitalist class. The latter cannot consume the increased pro­duction, but reinvest their gains in production goods, thus further increasing the output. The labor class, being exploited and weighed down by an "industrial reserve army" of unem­ployed, cannot provide an adequate market, because of lack of purchasing power.

Therefore, Marx concludes, crises will become increasingly severe. Eventually the labor class will rise, cast off their chains, and seize control of the capitalist state, — the expropriators will be expropriated. Finally, Socialism will be established by and for the proletariat.

Several others of the Socialists had analyzed the development of society into stages, with more or less elaboration of their material characteristics. It remained for Marx, however, to develop the idea that all social changes have their ultimate causes in the modes of production and exchange, or that eco­nomic factors dominate all history and determine social organi­zation, classes, and class interests. In the present stage of history, capital — which he, like Rodbertus, regards as an "historic concept" — stands opposed to labor, the latter being exploited. Here Marx presents an acute analysis of industrial conditions, which has its value, even though largely vitiated by a warped point of view.

It is essential to understand his notion of capital, for it is not the ordinary one. To Marx, circulation of commodities is the starting point of capital, and he dates the "modern" history of capital from the sixteenth century, when a world commerce arose. "As a matter of history, capital, as opposed to landed property, invariably takes the form of money; . . . the first form of appearance of capital is money." Then by pur­chasing labor power for less than it is worth and retaining the surplus, money is converted into capital. "By turning his money into commodities that serve as the material elements of a new product, and as factors in the labour-process, by incor­porating living labour with their dead substance, the capitalist at the same time converts value, i.e. past, materialized and dead labour into capital, into value big with value, a live monster that is fruitful and multiplies," — a "vampire" that sucks the blood of labor. Capital is wealth used to exploit labor.

Thus Marx's idea of capital as an "historic concept" is part and parcel of the idea of a surplus value that labor creates and capital appropriates. The idea of surplus value is his most famous contribution. It demands attention next.

In the first place, it will be remembered that most of the earlier Socialists had the same general idea, and that the Eng­lishman, Thompson, had a very definite one. Such originality, then, as Marx has, must lie in his formulation and attempt at proof.

This begins with his theory of value. Marx starts with an abstraction. The "use-value" of commodities is distinguished from their "exchange value," or value, for short. We are then told that "if we abstract their use-value," there remains only the quality of value in exchange. Since Marx thinks that labor produces all value — capital being nothing but stolen labor — it follows that this abstract value quality exists "only because human labor in the abstract" has been embodied in goods. Value is "a mere congelation of homogeneous human labour" — "crystals" of a "social substance." All this concerns the qualitative aspect of value, a phase which Marx thinks the economists had unduly neglected.

The value of a commodity being thus "abstracted" from all relation to its form or use, it remains to discuss its deter­mination in exchange, or the quantitative aspect. Assum­ing the existing social order, Marx concludes that the quantity of value in a commodity is determined by the socially necessary labor-time, — the time spent by the average laborer under existing social conditions. If it requires x labor hours to make the linen and 2 x labor hours to make a coat, the coat has a value twice as great as that of the linen.

Marx criticizes economists for not analyzing separately the qualitative and quantitative aspects of labor as entering value, and for not reducing labor to abstract social labor.

It is obvious that certain difficulties are inherent in the attempt to reduce labor to an abstract fund, owing to the differing character and intensity of labor, — to say nothing of the differing utilities of products, which Marx "abstracts," although Aristotle had made utility the very standard of value. These difficulties Marx in part recognizes. He attempts to get around them (1) by conceiving of all labor power and all values as funded into homogeneous social aggregates, divisible into equal units; (2) by limiting his conclusion to "normal conditions of production" and "the average degree of skill and intensity prevalent at the time."

Having thus defined value and based it upon labor time, Marx proceeds to argue that capitalists, in hiring labor, secure a surplus of value. In itself an old idea, Marx elaborates its argument somewhat. Assuming that the exchange value of a day's labor power is a certain sum, determined by the fact that the means of subsistence required for the day cost half a day's labor, he argues that this does not prevent his working a whole day, nor determine the value of the laborer's daily product. The capitalist, in short, buys of the laborer the "use-value" of a day's labor power for its exchange value or cost, and the difference is his surplus, or "profits."

Criticism of the main points in Marx's economic theories must be adverse. To begin with, his underlying philosophy of history is indisputably one-sided. Too many things occur for reasons not entirely economic, or even not economic at all. The economic interpretation of history must be incom­plete, but if such an interpretation is also materialistic, it is doubly limited. Marx was grossly materialistic in his eco­nomic thought, and herein lay his fundamental error. There is an element of truth in his position that economic forces are very important factors in shaping history. This it was well to emphasize. But others had done this, notably Comte; and Marx's countryman, Lorenz von Stein, may have given him some of his ideas.

His chief historical conclusion immediately concerns capital. One must feel that here, as elsewhere, his desire to prove surplus value and exploitation, rather than historical study, influenced him. To say that capital has not always existed where men use tools to aid in production is only possible when a peculiar and question-begging definition of capital is adopted.

Moreover, it is contrary to his own method of historical interpretation to overlook the social services and the eco­nomic function of the capitalist class. Its initiative was largely instrumental in overthrowing feudalism; its enterprise and management are of value today.

But the element in Marx's thought which gave his "sci­entific socialism" its peculiar form, and shaped the policies which he advocated, was his theory of value and the related doctrine of surplus value. There was no theory of value in the Communist Manifesto, — but neither was there a definite con­tent given to the general idea of Socialism. Marxian Socialists sought to remedy certain evils in a certain way. These evils center in exploitation; exploitation, in turn, consists in the appropriation of surplus value; and the concept of surplus value depends upon the theory of value. Other Socialists, as Proudhon, had other explanations. While Marx propounded his theory of value as a scientific explanation of how values are determined, his theory shaped his practical program: Marxian economics is vitally connected with Marxian Socialism. The econ­omist's criticism of the Marxian theory of value, therefore, bears in an important way upon the essential logic of Marxian Socialism.

(1) That theory of value is unsound, in the first place, in its vicious abstraction of utility. This unfits it for a general ex­planation of the source of value. Regardless of form or use, things would be valued in Marx's scheme according to abstract labor-time. As a result of such a theory the gifts of nature could have no value; and so with anything that has not cost labor. Marx here tries to meet the difficulty by drawing an inconsistent and illogical distinction between value and price, stating that such things may have a price but not a value! On the other hand, there is this question: Are all things that have involved labor valuable? Marx admits that such things may not have value. He says that they must be socially useful to acquire exchange value. But where such is the case he seems arbitrarily to regard the labor involved as being useless, overlooking the fact that it is primarily the utility of the commodity that is decisive.

Marx again glides over the utility difficulty by assuming a "social process" by which labor is directed and equated, a process which, when it is analyzed, is seen to operate through utility. One cannot get away from the question, Why do men work? Why do they devote labor-time to cotton rather than to linen?
(2) But in the second place, even assuming that cost alone can explain exchange value, it is not true that costs can all be reduced to labor. The claims of capital must be met even in a collective state, they being based primarily on the economics of the situation. Marx did not go back far enough here. His assumption of the sufficiency of his "historic concept" of capital was made to serve. If labor alone made the spindle, the ma­chinery that, in turn, helped make it, and finally the metal and the mine appliances, how were these last made? The element of saving and waiting is there and it must be a cost, whether private ownership exists or not. Marx assumes that his surplus is produced by labor. This, however, cannot be proved; and unless it is, it does not necessarily indicate any exploitation of labor.

(3) The reasoning concerning abstract labor-power units breaks down before insuperable differences in the quality of labor. We are virtually told that as entering value determina­tion the labor of the artist may be equated with that of the hod-carrier by merely taking one day of the former's exertion to equal twenty or thirty of the latter's. As well think of an ounce of canvas from the masterpiece as equal to so many pounds of mortar! Labor is exerted on different planes. It can be reduced to a common basis and funded only by eliminating a large part of the laborers, or by performing the impossible feat of adding art or skill to brute force to get "congelations" and "crystals."

(4) Finally, the reasoning of Marx concerning "surplus value" fell before the same difficulty which caused Ricardo to qualify his labor-cost theory of value, namely the time element in capital. Marx assumed that the rate of surplus value always equals the rate of profits, an assumption which can be true only when the composition of the capital used in different in­dustries is the same as to the proportion of fixed and circulating elements. He admitted that only "variable capital" yields "surplus value," for it alone employs labor. Therefore, while the absolute amount of "surplus value" increases with the amount of variable (circulating) capital, the rate of profit de­pends upon the total capital employed, and must vary with the proportion of circulating to fixed capital. Thus Marx's logical chain is broken by the fact that profits and surplus value depend in part upon capital. If a manufacturer employs only a few laborers, but gets a large income by using much plant and equipment ("constant capital"), is he exploiting "living labor"? Or is a manufacturer who employs much "living labor" necessarily one who makes a proportionally large profit? In fact, the rate of profits (interest) tends to be equal­ized among different industries.

In the face of these difficulties, Marx was compelled to resort to an explanation which was a confession of failure: His theory of value, he wrote in the third volume of Capital, was intended to explain only total value, and proves only that the value of all goods combined must equal total labor-time. Prices of par­ticular goods, he admits, rise and fall not as a result of labor-time value changes, but from the effect of the credit system, competition, and so forth! In a word, like Ricardo, he was forced to admit that the time element (interest rate) is after all a factor in the determination of value.

Karl Marx cannot stand as an original thinker. Both in economics and philosophy he took from others. From Smith and Ricardo he took his ideas of value and capital. From the same source, supplemented by Lorenz von Stein and others, came his doctrine of class struggle. His analysis of economic processes came largely from Thompson and Rodbertus. What one of his theories cannot be found definitely stated in the publications of his predecessors?

More than that, none of his theories has stood the test of logical examination; his philosophy has been found unreal and one-sided; his prophecies have not been verified.

Yet Marx lives, and no one has so influenced the development of Socialism as he. He found Socialists disorganized and in­effective; he gave them a purpose and a philosophy — a spirit — which have made their movement a great force. How can this be? Perhaps it is not entirely explicable, but the following points are worthy of note:

(1) Marx came at the right time — a time of organized labor in England, the Revolution of 1848 in France, and intolerable conditions in Germany. The factory system had become fully
(2) He provided a militant negative or revolutionary body of doctrine, which was in accord with the sentiment of great masses of suffering or discontented men. The immediate need was to pull down or destroy.
(3) His thought was cloaked in "scientific" terms. This both heartened his followers and challenged the attention of their critics. As economic "scientists," the Socialists gained a new standing! It has taken many years to refute the errors, and the tradition remains.
(4) He gave a group of phrases and slogans which was effec­tive. As is sometimes the case, a terminology plays an im­portant part — the same phenomenon appears in the case of Veblen and "Institutionalism."
(5) Last, but not least, Marxian Socialism, despite its ma­terialistic setting, and its appeal to revolution, is built upon unreal assumptions, and in the last analysis holds out the hope of an ideal state. It provides an idealized villain in the shape of the vampire, "Capital." Then, when "the knell of capitalist private property sounds," and "the expropriators are expro­priated," will not all be well? Instead of synthesis of the ma­terial and the ideal, Marx provides a practically effective mix­ture of material means to an ideal, if vague, goal. Like the founder of some religious sect, he provides something to do in the way of proselyting and "saving," and then-—some sort of heaven.

The foregoing is but the barest sketch of the leading ideas in Marx's economic doctrines. It is, however, sufficient for a general history of economic thought as distinguished from Socialistic thought. Marx was a learned and ingenious writer, and possessed of a good deal of dialectical skill. But he was filled with a preconceived idea which led him into question-begging assumptions and one-sided analyses. He took certain ideas from Smith and Ricardo, for whom, of all economists, he had the most respect, and, robbing them of the qualifications made by those writers, applied them in an even more abstract way than they had done.