Economic Theory of the Leisure Class. Nikolai Bukharin 1927
1. The Importance of the Problem of Distribution; Formulation of the Question.
2. The Concept of Capital. “Capital” and “Profit” in the “Socialist State.”
3. General Description of the Capitalist Production Process; The Origin of Profit.
We may observe in any specific branch of political economy the peculiarity that it will be developed in a direction depending on who it is that works the field; this is particularly true of the theory of distribution, and more particularly of the theory of profit. For this problem is too closely concerned with the “practice” of struggling classes; it touches their interests too strongly, and we shall naturally expect to find here a more or less crude or delicate — as the case may be — apology for the modern order of society, an apology which it is impossible to conceal. No doubt great importance must be assigned, from the standpoint of logic, to the question of distribution, which Ricardo termed one of the most essential problems of political economy. (David Ricardo: Principles of Political Economy and Taxation, Preface.) It is impossible to understand the laws of social evolution — as far as modern society is concerned — without undertaking an analysis of the process of reproduction of social capital. One of the very first attempts to grasp the motion of capital — we refer to Quesnay’s famous economic table — necessarily devoted considerable space to the plan of distribution. But even aside from the problem of grasping the mechanism of the entire capitalist production in all its compass, in its “complete social measure,” the problem of distribution as such is of immense theoretical interest. What are the laws governing the distribution of goods among the various social classes? What are the laws of profit, of rent, of wages for labour? What is the relation existing between these categories, and what is their magnitude at each given epoch? What are the tendencies of social evolution determining this magnitude? These are the fundamental questions investigated by the theory of distribution. While the theory of value analyses the comprehensive fundamental phenomenon of the production of commodities, the theory of distribution must analyse the antagonistic social phenomena of capitalism, of the class struggle, which assumes new specific forms characteristic of the commodities economy as such. It is the task of a theory of capitalist distribution to show how this class struggle has assumed its capitalist formulation, in other words, how this struggle manifests itself in the form of economic laws. To be sure, by no means all theorists conceive the tasks of a theory of distribution in this manner. Even in the formulation of the problem, two fundamental tendencies may be detected. We find here, says N. Shaposhnikov, one of the latest students in this field, “two diametrically opposed points of view, only one of which can be correct.” (Shaposhnikov, op. cit., p.80.) The difference is in the fact that one group of economists seeks to explain the origin of the so called “income without labour” by means of the eternal and “natural” conditions of human management, while the other views this phenomenon as a consequence of the specific historical conditions, or, in concrete language, as a result of the private property in the means of production. Yet a more comprehensible formulation may be given of this problem, for, in the first place, we are not dealing merely with “income without labour,” but also with “income from labour” (for instance, the concept of wages for labour is a correlative to that of profit, standing and falling with the latter); in the second place, the question as to the forms of distribution may be put in general form, i.e., it may concern not only the forms of capitalist distribution, but also the universal dependence of the forms of distribution on the forms of production. An analysis of this question yields the following result: in its functional aspect, the process of distribution is nothing more or less than the process of reproduction of the conditions of production; every historically determined form of production relations presents an adequate form of distribution reproducing the given production relation. Thus, for instance, with capital: “The capitalist process of production is an historically determined form of the social process of production in general. This process is on the one hand the process by which the material requirements of life are produced, and on the other hand a process which takes place under specific historical and economic conditions of production, and which produces and reproduces these conditions of production themselves, and with them the human agents of this process, their material conditions of existence and their mutual relations, that is, their particular economic form of society.” (Marx: Capital, vol. III, p.952.) The process of capitalist distribution, which also proceeds in quite specific historical forms (purchase and sale of labour power, payment of their value by the capitalists, origin of surplus value), is merely an ingredient, a specific phase of this process of the capitalist mode of production as a whole. While the relation between capitalist and worker is the fundamental production relation of capitalist society, the forms of capitalist distribution — the categories of wages for labour and of profit — reproduce this fundamental relation. Unless, therefore, we confound the process of production and distribution “as such” with their economichistorical forms at the moment — which determine the “economic social structure,” i.e., the provisional type of human relations — we may attain a definite result, as follows: in order to explain any concrete social structure, we must conceive it merely as a specific historically developed type of relations, i.e., as a type with historical limits and peculiarities of its own. The bourgeois political economy, by reason of its limitations, never transcends the bounds of general definitions. “Political economists have confused or confounded the natural process of production with the social process of production, which is very definitely conditioned by property in land and capital, arriving as a result at a conception of capital for which there is no parallel in the real world of political economy.” (Karl Rodbertus: Das Kapital, p.230.) Yet even Rodbertus left a little loophole for himself, when compared with the rigorous and consistent system of Karl Marx, by isolating the “logical” concept of capital as a category peculiar to all forms of economy; but this is entirely superfluous from the standpoint of terminology (since this concept is well covered by the words “means of production”) and has dangerous possibilities, since it leads not infrequently to the habit of smuggling in a solution of social problems of entirely different type under the cloak of innocent discussions as to the means of production (“capital”).
Once we have set ourselves the task, therefore, of investigating the nature of distribution in modern society, we can attain our object only by keeping sight of the peculiarities of capitalism. Marx has briefly and brilliantly formulated this view in the following sentence: “Wage labour and private land, like capital, are historically determined social forms; one a social form of labour, the other, a social form of the monopolized terrestrial globe, and both forms belong to the same economic formation of society corresponding to capital.” (Marx: Capital, vol. III, p.949.) In his theory of profit, Böhm-Bawerk, as might be expected after our investigation of his theory of value, proceeds entirely along the path of those economists who consider it appropriate to “derive” profit not from the historical conditions of social production, but from its universal conditions. This fact alone should be sufficient to condemn his “new paths”; for we might rightly say of all the economists who regard profit, land rent, and wages for labour, not as historical categories, but as “logical categories,” that they have “gone astray.” We have already seen from the preceding treatment whither Böhm-Bawerk’s unhistorical point of view in his theory of value has led him. But this same point of view leads him into still greater contradictions and conflicts with reality when he applies it in his theory of distribution, particularly in that of profit.
Böhm-Bawerk begins his analysis of the concept of capital by having his old favourite, the “isolated man,” work both “with his bare hands” as well as with means of production produced by himself. From this, Böhm-Bawerk infers that there are two modes of production in general: “Either ..... we evaluate our work immediately before its consummation .. . or we intentionally resort to a roundabout method” (Böhm-Bawerk: Positive Theorie, p.15.) i.e., we either proceed directly to the goal or engage in certain preliminary operations (the production of the means of production). Since man, in the latter case, obtains the aid of the forces of nature, “stronger than his bare hands,” it is more efficacious to resort to the “roundabout way” than to work with one’s “bare hands” alone. These general statements are a sufficient foundation, in Böhm-Bawerk’s eyes, for a definition of capital and of the capitalist mode of production.
“Production, when it resorts to wise detours, is nothing more or less than what political economy terms capitalist production, while production depending on its bare hands alone represents production without capital. But capital is nothing more or less than a general term for all the intermediate products arising at the various stages of this extended detour.” (Op. cit., p.21.) In another passage: “Capital is the general term for products serving as a means for the acquisition of goods. From this general concept of capital we may isolate that of social capital as a narrower concept. Social capital is our term for the group of products serving as a means of the social-economic acquisition of commodities; or ... since a social-economic consumption of commodities can take place only in production ... or, in brief, a general term for inter-mediate products."
The definitions quoted above are sufficient to characterise the “foundations” of the Böhm-Bawerk theory of profit; this theory cloaks the social character of the modern mode of production and — what is worse in this case — conceals the nature of this mode of production as a capitalist production in the true sense of the word, a production based on wage labour, on a monopoly of the means of production by a specific social class; the theory thus completely eliminates the characteristic trait of modern society, its class structure, which is torn by internal contradictions, by a savage class struggle. What are the logical foundations for such a construction? Böhm-Bawerk reasons as follows: at all the stages of social evolution, there are “paths of production”; in connection with these there are many phenomena connected with the final results of production. These phenomena may, depending on the concrete historical conditions (for instance, private property), assume different forms. But we must here distinguish between the essence and the “form” of the manifestation. Precisely for this reason it is necessary, in a thorough scientific investigation, to undertake an analysis of “capital,” of “profit,” of the “capitalist mode of production,” not in their present formulation, but in the abstract. Such is Böhm-Bawerk’s point of view in general. Furthermore this is all that may be said in favour of his point of view, or of other attempts to represent capital and profit as “eternal” economic categories. Even if a distinction between the “essence” and the “form of manifestation” is perfectly proper as such, it is not in place here. In fact, the concept of “capital,” “capitalistic,” etc., is not associated with the idea of social harmony, but with that of class struggle. Böhm-Bawerk himself is well aware of this. In his criticism of the economists who include the concept of labour power in the concept of capital, he says: “The learned as well as the laity have long been accustomed to dispose of social problems under the catchword of capital, in which practice they have had in view not a concept also embracing labour, but a contradiction to labour. Capital and labour, capitalism and socialism, interest on capital, and wage labour, may certainly not be considered as innocent synonyms. They are rather the slogans of the most powerful social and economic conflicts that may be conceived." This is all very well, but a recognition of the fact should oblige one to proceed consistently and not content oneself with the “habits of the laity” and the “learned,” but to place the class contrast in a capitalist commodities economy consciously in the foreground of one’s investigations. This means that the trait of the class monopoly in the means of production, as practised under the conditions of the commodities economy, must be included in the concept of capital as its most essential constituent determining factor. Böhm-Bawerk’s concept of capital retains the old notion of the means of production (cf. his “intermediate products”) whose manifestation in present-day society is “capital.” And, therefore, the means of production monopolised by the capitalists, according to Böhm-Bawerk, are not indeed the manifestations of capital peculiar to modern society, but are capital as such; but they are a “manifestation” of the means of production as such, having no relation whatever to any concrete historical structure. The question may also be approached from another angle. If all the “intermediate” products are capital, how may the intermediate products in the modern order of economy be distinguished? Let us assume — ridiculous though this assumption may be at bottom — that profit will exist even in the “socialist state”; this “profit” would now fall into the hands of the entire society, while in the modern order of economy it accrues to a single class. This difference is more than to the point. But Böhm-Bawerk fails to furnish a word to represent “present-day” profit, although we have seen how vigorously he belabours his opponents, criticising them for being guilty of precisely his own omissions. In his criticism of the application of the concept of capital to the soil, in which he refers to the principle of the “terminological economy,” he says: “If we apply the name capital to all physical means of acquisition, then the narrower of the competing concepts, and, together with it, the corresponding branch of income, will remain nameless in spite of its great importance.” (Ibid., p.87.) Yet it is obvious that the difference between “profit” in the socialist state, which presupposes the absence of classes, and the “profit” of the present day, is far greater and more important than the difference between profit and rent. In the former case, we are dealing with the difference between a class society and a classless society; in the latter case, only with the difference between two classes in the same society, belonging, in the last analysis, to merely the same class category, namely, that of proprietors and owners. The absurdity of the Böhm-Bawerk terminology is further increased by the fact that his concept of an “uncapitalistic” production in reality corresponds to no economic fact at all; production with “one’s bare hands” is one of Böhm-Bawerk’s numerous make-believes. And, on the other hand, he transforms the savage poking his stick into the ground into a “capitalist” who conducts a “capitalist” economy and even secures “profits"! But if any production (there being no production without means of production) is to be considered as “capitalist,” certain distinctions must really be drawn within the realm of these capitalist productions, for it will continue to be necessary to point out differences between the “capitalist” capitalist mode of production, the “capitalist” socialist mode of production, the “capitalist” primitive communist mode of production, etc. But Böhm-Bawerk offers us only one term for these three different varieties of “capitalist production.” An excellent illustration of the confusion which Böhm-Bawerk introduces into the science is the section entitled “Interest in the Socialist State.” Even in this “State” the principle of profit is to retain full validity, although we recognise this principle as a consequence of exploitation. Böhm-Bawerk expounds this “socialist exploitation” as follows: “Let us assume the existence of two branches of production: the baking of bread and forestry.” The yield of a day’s labour on the part of the baker is the product in bread, estimated by Böhm-Bawerk at two florins (Böhm-Bawerk assumes that the florins will also be retained by the “Socialist State”). A day’s labour on the part of the forestry worker will consist of the planting of 100 young oak trees, which after the lapse of a century will be transformed into great trees without further labour, with the result that the total value of the forestry worker’s labour will amount to 1000 florins. This fact, namely, the difference in time in production (our general appreciation of Böhm-Bawerk’s reasoning in this connection will be given below) is precisely the element Böhm-Bawerk makes responsible for the origin of profit. “But if we pay,” he says, “no more to the forestry workers than to the bakers, namely, two florins per day, we are guilty of the same ‘exploitation’ toward them as is now practiced by capitalist employers.” (Ibid., p.583.) During the lapse of one hundred years there is an increment of value, and this “surplus” “is pocketed by society and thus taken away from the workers producing it; in other words, others enjoy the fruit of labour.” “In distribution, it [the interest] accrues to persons in no way connected with those by whose labour and output it was earned ... to other persons precisely as to-day [!], who draw their claim not by the right of labour but from the claims of property, or, share in property.” (Ibid. p. 584.) This thought is wrong from start to finish. Even in a socialist society there will be no increment of value from the soil. It will be a matter of indifference to a socialist society whether labour is applied to the direct production of articles of consumption or to some “more remote purpose,” since labour in such a society is performed according to an economic plan drawn up in advance, and the various categories of labour are considered as parts of a general social labour, all of which is necessary for an uninterrupted progress of production, reproduction and consumption. Just as the products of the units of various remoteness are being consumed uninterruptedly and simultaneously, so the processes of labour, however different their goals, also proceed with the same quality of continuousness and simultaneity. All the parts of the general social labour are fused in a unified indivisible whole, in which only one factor is of importance in determining the share of each member (after deductions going to the fund of means of production), namely, the amount of labour put in. Even Böhm-Bawerk’s example will show this; in speaking of bakers, whose labour product is bread, he forgets completely that bread is by no means the labour product of the bakers only, but of all the workers, beginning with those employed in agriculture; the work of the baker is merely the final link in a long chain. When the forestry workers are repaid in products corresponding to their labour, they thus obtain social labour units of varying degrees of remoteness, i.e., their situation with regard to the other members of society is the same as that of any other labour category, for, as we have said, where there is a fixed economic plan, the importance of labour does not depend on “the remoteness of its goal.” But there is another more important phase of this question. Let us assume that the socialist society obtains a certain surplus in “value” in a given production cycle (it is of no importance to us in this case to know why it obtains it and on the basis of which “theory of value” the estimation of the product is to be made). Böhm-Bawerk agrees that this “surplus value” “serves for a general improvement of the wage quota [!] of the people’s workers.” But this obviously removes every foundation for an interpretation of the surplus obtained, as profit. Yet here Böhm-Bawerk raises the following objection: “Profit,” he says, “does not cease to be profit because it is placed in a relation with the purpose of use, for no one will venture to claim that the capitalist and his profit cease to be capitalist and profit because some business man has accumulated a fortune of millions and then disposes of it in public benefaction.” (Ibid., p.583.) This “objection” at once reveals the basic fallacy of Böhm-Bawerk’s position. Why will no one “venture to maintain” that profit ceases to exist merely because capitalists are addicted to charitable donations? The reason obviously is that such cases are isolated, have no influence at all on the general structure of the social-economic life. They do not destroy the class nature of profit, they do not destroy the category of income, appropriated by the class as a result of its monopoly of the means of production. No doubt the case would be different if the capitalists as a class should renounce their profits and expend them in works of public interest. In this — entirely impossible — case, the category of profits would disappear and the economic structure of society would assume a different aspect from that of capitalist society. The monopolisation of the means of production would entirely lose its meaning from the point of view of the private employer, and capitalists as such would cease to exist. This brings us face to face once more with the class character of capitalism and of its category — profit. And it requires an incredible daltonism to prevent one from grasping this class character and to enable one to say such things as: “Even the lonely economy of Robinson Crusoe could not be completely lacking in the fundamental trait of interest.” (Böhm-Bawerk: Positive Theorie, p.507.) How shall we explain this daltonism? Böhm-Bawerk himself affords an excellent explanation . “Even in our circles” [i,e., among bourgeois economists — N.B.], he says, “we are much addicted to covering up uncomfortable contradictions, to passing carelessly over thorny problems.” This open confession best reveals the psychological basis on which it is possible to escape recognising the contradictory social economy and to seek refuge in artificially devised constructions dragged in by the hair, in order to justify present-day reality. “Even Böhm-Bawerk’s theory of interest on capital,” says Heinrich Dietzel, “which arose on the basis of the theory of marginal utility, is intended not only to explain the phenomenon of interest, but also to contribute material for refuting those who attack the institution of interest.” (Heinrich Dietzel: Theoretische Sozialökonomik, p.211.) This apologetic activity induces Böhm-Bawerk to behold cases of interest even where there are neither classes nor an exchange of commodities (Robinson Crusoe, the socialist state); it induces him to derive the social phenomenon of interest from the “universal qualities of the human mind.” We shall now proceed to an analysis of this remarkable theory, the success of which can be explained only by assuming a complete demoralisation of bourgeois political economy.
As we have already seen, Böhm-Bawerk defines as capitalist production a production achieved with the aid of means of production, or, to use his language, “proceeding along a round-about path.” This “capitalist” mode of production presents both an advantageous and a disadvantageous aspect; the former consists in its producing a greater number of products; the latter is due to the fact that this increase is connected with a greater loss of time. As a consequence of preceding operations (the production of means of production and of all intermediate products in general), we do not obtain articles of consumption at once, but after a comparatively long time: “The disadvantage associated with the capitalist mode of production lies in the loss of time. The capitalist detours are profitable but time-consuming; they furnish more or better consumption articles, but they furnish them later.” This theorem is one “of the fundamental pillars of the entire theory of capital.” Böhm-Bawerk: Positive Theorie, p.149.) Italics mine. — N.B.] This embarrassing “difference of time” obliges us to wait: “In the overwhelming majority of cases, we must resort to roundabout paths in production under such technical conditions as oblige us to wait for a time, often a very long time, for the achievement of the final product capable of consumption.” (Ibid., p.149.) This peculiarity of the “capitalist mode of production,” according to Böhm-Bawerk, is the basis for the economic dependence of the workers on their employers; the workers cannot wait while the “roundabout path” is being taken, until the consumption products are delivered; on the contrary, the capitalist can not only wait, but under certain circumstances may even advance the articles of consumption to the workers — directly or indirectly — in return for the commodity in the possession of the workers, which is labour. The entire process is as follows: the employers acquire commodities of the “more remote order” (raw materials, machines, the use of the soil and real estate, and particularly, labour), and transform them by means of the process of production into commodities of the first order, i.e., into goods ready for consumption. In this process, the capitalists, after deducting payment for their own labour, etc., still retain a certain surplus in value, the magnitude of which usually corresponds to the amount of capital invested in the enterprise. This precisely is the “original interest on capital” or “profits.” (Ibid., p.502.)
Now, how shall we explain the origin of profit? Here is Böhm-Bawerk’s answer: “I must begin my explanation with a reference to an important fact. Goods of the more remote order are, though already present in their physical state, really future goods as to their economic nature.” (Ibid., p.503.) Let us dwell for a moment on the concept of a “present” and “future” goods, which is one of Böhm-Bawerk’s innovations and plays an extremely important role in his “system.” The needs which determine the value of commodities may be divided into various epochs; they are either concerned with the present, in which case they are felt directly and with great acuteness (“feelings of the immediate moment”) or with the future for obvious reasons we omit a discussion of the past). Those goods which satisfy present demands Böhm-Bawerk calls “present goods,” while those which satisfy demands in the future he calls “future goods.” For instance, if I have a certain sum of money at present, with the aid of which I may duly satisfy my current requirements, this sum is accounted by Böhm-Bawerk as a “present possession.” But if I cannot obtain an equivalent sum until a certain time has passed, I may not use it for satisfying my present requirements, since it can only serve to satisfy future requirements; therefore this sum of money is “future goods.” Present and future needs, whether they be distributed over any period whatsoever, must be compared with each other; therefore the value of the present and future goods may also be compared. We arrive at the following law: “Present goods are as a general rule worth more than future goods of the same type and number.” (Ibid., p.426.)
“This theorem,” Böhm-Bawerk goes on to say, “is the nucleus and centre of the theory of interest which I have to expound.” (Ibid., p.426.) Applying this doctrine to the relations between capitalists and workers, we obtain the following condition. Capitalists purchase, among other means of production, also labour. But labour, like any other means of production, is, “in its economic nature,” future goods; its value is therefore less than the goods it — labour — will produce. Assuming that X units of labour produce Y units of commodity a, whose present value is A. the value of Ya, in the future, separated from the present by the entire length of the production process, will be less than A; it is this future value of the product which is equivalent to the present value of the labour.
If the labour, therefore, is purchased now, wherefor its value is expressed in present florins, we shall pay a smaller sum of florins for it than is obtained by the employer himself on the sale of his products, i.e., after the conclusion of the production process. “This and no other is the reason for the ‘cheap’ purchase of the means of production and particularly of labour, which the socialists rightly designate as the source of profit for capital, but wrongly designate as a fruit of the exploitation of the workers by the capitalists.” (Ibid., p.504) In other words, it is the exchange of present goods for future goods that results in profit. The transaction of exchange itself does not yet involve profit, for the employer has purchased the labour according to its full present value, i.e., the value of the future product. “For his future commodity is gradually maturing during the progress of production into a present commodity and thus ultimately acquires the full value of a present commodity.” ( Böhm-Bawerk : Positive Theorie, p.505) Precisely this increment in value, achieved in the process of the transformation of future goods into present goods, of means of production into articles of consumption, is the profit of capital. The main cause for this profit is therefore to be found in the varying estimation of present and future goods, which in turn is a consequence of the “elemental facts of human nature and of the production technique” and not at all of the social relations peculiar to the modern structure of society.
So much for the fundamental outlines of Böhm-Bawerk’s theory of profit. Its essential phase is the justification of the theory of future goods as compared with present goods, which phase has been exhaustively elaborated by Böhm-Bawerk and will be expounded and analysed by us later on. For the present, let us devote a few introductory remarks of a general nature to this subject. We have already seen that the notion of the necessity of waiting, of postponing the act of consumption, is one of the theorems constituting the “fundamental pillars of the entire theory of capital,” because the “capitalist mode of production” postpones the delivery of the finished product for a comparatively long time. According to Böhm-Bawerk, this conditions the economic dependence of the workers on the capitalists. But in reality we need neither to “wait” nor postpone consumption, for the simple reason that the social product, whatever may be the section of production we are considering, is present simultaneously in all the stages of its manufacture, if we are dealing merely with a social production process. Marx already pointed out that the division of labour replaces the “succession in time” by a “succession in place.” Karl Rodbertus describes the process as follows: “In all the ‘enterprises’ of all the branches of all stages of production, simultaneous uninterrupted labour is going on. While in the production establishments of the branches of raw production, new raw materials are being won from the earth, the production establishments in the branches of intermediate products are simultaneously transforming the raw materials of the preceding epoch into intermediate products; while the tool-producing factors are replacing tools that have been used up, and while, finally, at the last stage of production, new products are being turned out for immediate consumption.” (Karl Rodbertus: Das Kapital, p.257. Berlin, 1884.) As the production process goes on without interruption, so does the process of consumption. In modern society we need not wait for our “consumption” of goods until the “roundabout path” has been travelled, since the production process neither begins with the winning of raw materials and the various “intermediate products” nor concludes with the manufacture of articles of consumption; on the other hand, this process is an aggregate of all the partial processes at work at the same time. An investigation of the modern economy will of course show that we are dealing with an already developed system of social production; this presupposes a social distribution of labour and the simultaneous availability of various phases of the production process. The entire process as expounded by Karl Marx is as follows: Let us assume the constant capital (in simple reproduction) as equal to 3c, of which one third, c, is annually transformed into articles of consumption. Let us designate the available capital circulating within the year as v, and the annually accruing surplus value as s. The annual product will then have a value equivalent to c + v + s, while the new value annually produced will only be equal to v + s; c is not reproduced at all but merely added to the product; it is only the yield of an earlier production of the past year or of preceding years. A portion of c therefore “matures” annually into “consumption goods” but the number of hours of labour (v + s) is decreased annually by c hours for the production of means of production. We thus find that any given production cycle simultaneously embraces both the production of means of production as well as of articles of consumption; that, furthermore, consumption need not be “postponed” to a later epoch; that the production of means of production has not the character of an introductory operation, but that the processes of production, consumption, and reproduction are constantly going on without interruption. Böhm-Bawerk’s idea of a necessity of “waiting,” which seems to have some relation with the old notions of abstinence, is therefore not tenable. We have still to consider the bearing of this idea in connection with Böhm-Bawerk’s appreciation of the social nature of profit. We have already seen that Böhm-Bawerk considers this necessity of waiting as the cause of the economic dependence of workers on employers. “Only because the workers,” he says, “cannot wait until the roundabout path, inaugurated by them in the winning of raw materials and the production of instruments, delivers its mature fruit for consumption, that they become economically dependent on those who already possess these intermediate products in the finished state, on the ‘capitalists’.” But we already know that the workers need not “wait,” in fact, they may sell their intermediate products immediately, without waiting for the “mature fruit for consumption,” and thus evade economic dependence. The essence of the matter is not at all in the fact that the workers must “wait” for their enjoyment of the goods, but in the fact that they have at present no opportunity at all to produce independently, for two reasons. In the first place, a “production without capital” is a technical absurdity in a capitalist economy. In order to produce so much as a single plough with the aid of one’s bare hands alone, one would need a period of time far exceeding the age of man (for which reason a second Böhm-Bawerk might perhaps conclude that the cause of the economic dependence of the workers and of the origin of profit is the short duration of human life). In the second place, a “production for the moment, completely without capital,” as, for example, the collecting of roots for food, or other such work, is likewise impossible, since the soil under the capitalist society is by no means a res nullius, but very definitely bound by the fetters of private property. It is, therefore, not the fact of “waiting,” but rather the monopoly in the means of production (including the soil and real estate) by the class of capitalist proprietors, which is the basis for the “economic dependence” and the phenomenon of profit. But the theory of “waiting” cloaks the historical character of modern relations, the class structure of modern society, and the social class character of profit. Let us now consider another point in this theory. “The essence and nucleus of the theory of interest,” according to Böhm-Bawerk, is to be found in our lower evaluation of future goods as compared with present goods. Wilhelm Roscher’s famous savage will return 180 fish at the end of the month for 90 lent him at its beginning, and has still a considerable surplus of 720 fish. And he estimates the “present” 90 fish as of greater value than the “future” 180. Approximately the same occurs in modern society; only, the value difference, according to Böhm-Bawerk, is not so great. But what determines this difference? Böhm-Bawerk offers the following answer: “They [the value differences. — N.B.] are greatest with persons who live from hand to mouth... . The difference ... is less ... with persons who already possess a certain supply of goods.” (Böhm-Bawerk: Positive Theorie, pp. 471, 472.) But since there is “an extraordinarily great number of wage labourers,” since, by reason of their “numerical preponderance,” the price is so constituted as to yield a certain commission as a result of the subjective evaluations, which amounts to profit, the following circumstance becomes clear. Even if we assume that the higher evaluation of present goods as compared with future goods is one of the indirect causes for the origin of profit, the difference in economic situation of the various classes remains the nucleus of this “fact.” The difference in the evaluations here also inevitably presupposes the “social difference.” Yet Böhm-Bawerk makes every effort to shut out the idea of the social basis of profit. “Of course,” he says, “there may be causes, besides those causes of apparently cheap purchases [of labour, — N.B.] that have been developed in the text, of an isolated occurrence of other reasons for a truly abnormally cheap purchase: for example, skilful utilisation of a favourable business situation, usurious oppression of the seller, particularly the worker.” (Böhm-Bawerk: Positive Theorie, p. 505, footnote.) But these cases, Böhm-Bawerk thinks, must be considered abnormal; the profit thus obtained is “an extra profit” — not to be confounded with the category under discussion — based on a different basis and possessing a different social-political significance. Yet, a closer view will show us that the differences involved are not differences of principle. In both cases, “profit” or “interest” is the result of the exchange of present goods for future goods, a result of the sale of labour; in both cases the overestimate of the present goods as compared with the future goods plays a part; in both cases this overestimate is conditioned by the social situation of the buyers and sellers; “the skilful utilisation of a favourable situation” may in this case constitute a new factor as little as the usurious oppression of the seller. For the capitalists are always trying to utilise the situation, which is always “favourable” for them and “unfavourable” for the workers. On the other hand, it is quite unclear what must be considered as “usurious” and what “non-usurious” oppression; we completely lack any motives of economic type; we also cannot see why in one case the purchase of labour should be “apparently” cheap while in the other case it is “truly” cheap. In the case of “usurious oppression,” Böhm-Bawerk’s theory represents the facts precisely as in the case of the “normal” process of formation of profit; the difference is only that in the former case the worker overestimates the present goods by fifteen per cent as compared with the future goods, for example, while in the second case his overestimate extends only to ten or five per cent; Böhm-Bawerk offers no other difference, no difference of principle. If he maintains that the “social category” plays no part in his normal cases, he is exposing only his own inconsistency in dropping this assumption in his explanation of the “abnormal deviations.” But he is constantly guided by a sure instinct: a denial of social oppression, even in the “abnormal cases,” would obviously reduce the whole theory ad absurdum. We have analysed the general thesis of Böhm-Bawerk’s theory of profit and found that he seeks to avoid any contact with the social side of the reality which he is interpreting. Our object has been merely to illuminate the theoretical back-ground on which Böhm-Bawerk projects his outlines. It may be inferred either that the fundamental presuppositions of his theory are in direct contradiction with reality (the “waiting argument”), or that the social factor is being with difficulty concealed and smuggled in (the evaluation of future goods as dependent on the economic position of the evaluator). For this reason, as Charasoff says, “labour always has lower value ..... than the present wages. This by no means denies the fact of surplus labour, it is merely equivalent to furnishing the latter with a logically untenable explanation, or rather with the pretence of justification.” (G. Charasoff: Das System des Marxismus, p. XXII.) Parvus also, indulges in this delicate irony: “Present value and future value: what could not be proved with their aid! If a man takes money from another with the threat of violence, what shall we term this act? Robbery? No, would be Böhm-Bawerk’s reply. It is a legitimate exchange: the robber prefers the present value of the money to the future value of eternal bliss; the robbed prefers the future value of his life retained to the present value of his money!” But alas! Even with the aid of the most neatly constructed reasoning concerning present and future values, Böhm-Bawerk has not succeeded in clarifying the problem. If even the fundamental ideas of his structure present elements that are absolutely incompatible with a scientific theory of profit and of distribution, these defects will necessarily recur again and again in the questions taken up by him and here analyzed by us; they cannot possibly fail to present themselves. Let us therefore now devote our attention to the internal (as it were) constitution of Böhm-Bawerk’s theory, particularly to a criticism of his proofs of the predominant weight attached to present goods.