Economic Theory of the Leisure Class. Nikolai Bukharin 1927


1. The success of the “new” theories is therefore based on the altered condition of the social psychology and not at all on their logical perfection. One of the reasons for hostility to the theory of labour value on the part of the bourgeoisie is surely to be found in the latter’s opposition to socialism. In part, Böhm-Bawerk admits this when he says: “To be sure, I feel that the labour value theory for a number of years has rather gained in general acceptance, as a result of the dissemination of socialist ideas, but in the most recent epoch it has decidedly lost ground among the theoretical circles of all countries, and this is particularly due to the increasing importance now attached to the theory of ‘marginal utility’.” Böhm-Bawerk: Kapital und Kapitalzins, second edition, vol. I, p.444, note. (A translation of this work, Capital and Interest, by W. Smart, appeared in London in 1890. The quotations, however, are from the German original.)

2. By cosmopolitanism, Karl Knies understands the view of the classical economists, who held that the economic laws remain the same for each country and nation; on the subject of perpetualism — which is the corresponding view of the classical school with regard to the various historical epochs, see Knies: Die politische Ökonomie vom geschichtlichen Standpunkte, new edition of 1883, p.24.

3. Friedrich List may be considered the chief theoretician of the Historical School; List’s platform was that of a protectionist policy. See his Das nationale System der politischen Ökonomie, 1841.

4. Thus, A. Miklashevsky enumerates Professor Gustav Schmoller’s “accomplishments”: “It was his aim to postpone the introduction of state insurance of workers; he was opposed to an extension of protective legislation to agricultural workers and artisans ...... He considered it appropriate to apply penal law in the case of violations of labour contracts by agricultural workers; he resisted the legal competence of trade unions and workers’ associations; he was in favour of the anti-socialist laws... .” History of Political Economy. — The Philosophical, Historical and Theoretical Bases of the Nineteenth Century, Yuryiev (Dorpat), 1909, p.578 (in Russian).

5. One of the most moderate advocates of the historical school, F. Neumann, imagines, for instance, that “there is no possibility of exact laws in the economic field” (Naturgesetz and Wirtschaftgesetz, in Zeitschrift für die gesamte Sozialwissenschaft, edited by Arthur Schäffle, 1892, vol. XLVÜI, p.435). The same author, discussing the concept of the “typical,” has the following to say: “We there find [i.e., in the natural sciences. — -N.B.] typical conditions, from which in turn typical conditions may emanate and which may be studied as typical conditions. Here [in the social sciences. — N.B.] the word typical is to be assumed, i.e., pretended (ibid., p.442).

6. Schmoller emphasises three “fundamental thoughts” of the Historical School: “1. Recognition of the principle of evolution... . 2. A psychological-moral view... . 3. A critical attitude toward an individualistic interpretation of nature, as well as toward socialism.” (Op. Cit., p.123.)

7. Very appropriate is Heinrich Dietzel’s observation on this point: “It would be just as easy to speak of an ‘ethical’ anthropology, physiology, etc., as of an ‘ethical’ theory of economy or an ‘ethical’ history of economy.” (Theoretische Sozialökonomie. Cf. also Emil Sax: Das Wesen und die Aufgaben der Nationalökonomie, Vienna, 1884, p.53.) Leon Walras similarly pokes fun at “morality” in a general theory and compares this process with an attempt to “spiritualiser la géométrie.” (Léon Walras: Etude d'Economie sociale. Théorie de la répartition de la richesse sociale. Lausanne-Paris, 1896, p.40.)

8. The terminology is taken from A. A. Chuprov, Junior; cf. Chuprov’s Foundations of a Theory of Statistics (St. Petersburg, 1909, in Russian). The same terms are used with somewhat different connotation in Rickert and Windelband.

9. Particular attention was paid to handicrafts. The basis of this study is found in an explanation by Gustav Schmoller: “Only the maintenance of a ... middle class can ... guard us from ultimately heading toward a political evolution which will consist of alternating dominations by the moneyed interests and by the fourth estate. ... Only it [social reform. — N.B.] will maintain the aristocracy of mind and education at the head of the state.” (Über einige Grundfragen der Sozialpolitik und der Volkswirtschaftslehre, Leipzig, 1898, pp. 5 and 6.)

10. Heinrich Dietzel, who has no connection with socialism whatever, makes the following observation on this point: “Hohoff’s statement that the polemic opposition to the labour value theory owes its origin not to the intellect, but to the will, is entirely correct ....” (Theoretische Sozialökonomik, p.211.) On the same page, some attention is also paid to the “apologetic exercises” of Kamorschinsky and the pillar of the Austrian School, Böhm-Bawerk himself.

11. A characterization of these classes may be found in Sombart’s Luxus und Kapitalismus (published by Duncker & Humblot, 1903), particularly on pp. 103, 105, et seq. All of which does not prevent Charles Gide from maintaining that “idleness is merely a well regulated division of labour,” for “even the ancients already recognized the necessity that citizens should have their entire leisure time free for occupation with concerns of the state.” (Foundations of Political Economy, quoted from the Russian translation by Scheinis, St. Petersburg, 1898, p.288.) But the ancients considered even slavery to be an absolutely “necessary institution” and a “well regulated division of labour.” And it may be said that these gentlemen-economists of the bourgeoisie are therefore not to be outdistanced in any way, in their glorification of slavery, by the “ancients.”

12. These examples are actually taken from the illustrations Bdhm-Bawerk offers in his discussion of his theory of value.

13. Karl Marx: Capital, vol. Ü, p.133. The example of the mercantilists illustrates with particular force the connection between theory and practice; its most prominent ideologists were at the same time men prominent in practical life: Sir Thomas Gresham, for example, was an adviser of Queen Elizabeth and had direct charge of the struggle against the Hanseatic League; Thomas Mun was a member of the Board of Directors of the East India Company; Dudley North was one of the greatest princes of commerce, men who were carrying on an extraordinary international trade for that period, etc. (cf., August Oncken: Geschichte der Nationalökonomie). On the subject of exchange as a point of departure for our science, cf., Karl Pribram: “Die Idee des Gleichgewichts in der älteren Nationalökonomischen Theorie,” Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, vol. XVÜ, p.1, where a bibliography will also be found.

14. The outline given above may be considered merely as an outline, merely as a diagram presenting the types in bold relief and ignoring all subsidiary factors. T. R. Kaulla, who, in his book, Die geschichtliche Entwicklung der modernen Werttheorien (Tübingen, 1906) attempts to present among other things an analysis of the Austrian School, has completely failed to grasp the significance of the phenomenon pointed out above.

15. We are applying the terminology of Rudolf Hilferding (cf., Hilferding’s Finanzkapital, particularly pp. 282-284).

16. The reader should consult the analysis of the American economists, from the point of view of the Austrian School, in Schumpeter: “Die neuere Wirtschaftstheorie in den Vereinigten Staaten,” in Jahrbüch für Gesetzgebung, Verwaltung and Volkswirtschaft im Deutschen Reiche, edited by Gustav Schmoller, 34th year, No. 3, particularly pp. 10, 13, 15.

17. Werner Sombart: Der Bourgeois, p.193. It must not be overlooked that even very many of the American multi-millionaires are self-made men who have not yet had time to become old and decrepit in spirit.

18. L'Abbe de Condillac: Le Commerce et le gouvernement considérées relativement l'un à l'autre, Paris An ÜI (1795), pp. 6-8.

19. Consult the French translation of Comte de Verri: Economic politique ou considération sur la valeur de l'argent et les moyens d'en faire baisser les intérêts, sur les Banques, la balance de Commerce, l'Agriculture, la population, les Impôts, etc., Paris, An ÜI (particularly pp. 14, 15).

20. Jevons’ book appeared in 1871 (W. Stanley Jevons: Theory of Political Economy, London and New York); Karl Menger; Grundseitze der Volksseirtschaftslehre, in Vienna, in 1871; while that of Walras: Principe d'une theorie mathematique de l'echange, appeared in the Journal des Economistes in 1874. On the matter of priority, consult the correspondence between Walras and Jevons: Correspondence entre .M. Jevons et M. Walras, which the latter quotes in his Theorie mathématique de la richesse sociale (Lausanne, 1883, pp. 26-30).

21. In his preface to the first volume of Capital, Karl Marx designates his method as the deductive method of the Classical School. It would be absurd, furthermore, to assume, as is done by the representatives of the Historical School, that every abstract law is entirely out of all relation with concrete reality. “An exact scientific law,” says Emil Sax, one of the representatives of the Austrian School, “is an inductive conclusion of the highest and most general type; as such, and not as an a priori axiom, it becomes the point of departure for deduction.” (Conrad’s Jahrbücher für Nationalökonomie und Statistik, 1894, third series, vol. VIII, p.116.) A precise analysis of this question is given by Alfred Ammon in his Objekt und Grundbegriffe der theoretischen Nationalökonomie, Vienna and Leipzig, 1911.

22. Cf., for instance, Karl Menger: Untersuchungen über die Methoden den Sozialwissenschaften und der politischen Ökonomie insbesondere (1883, p.259), where fairly correct definitions are presented for a true theoretical point of departure. The theory of marginal utility reached its highest culmination of self-criticism in Robert Liefmann: Über Objekt, Wesen und Aufgabe der Wirtschaftswissenschaft, Conrad’s Jahrbücher, vol. XII, p.106.

23. Werner Sombart: “Zur, Kritik des ökonomischen Systems von Karl Marx,” in Braun’s Archiv für soziale Gesetzgebung und Statistik, vol. VII, pp. 591, 592. Cf. also Robert Liefmann, op cit., p.5: “The principal methodological problem in the future appears to me to be the contrast between individualistic and social modes of regarding questions, or, in other words, between the profit and the general economic point of view.” We recommend Liefmann’s work to the reader as that in which the individualistic method is most consistently and clearly carried out.

24. Cf. for example, Adam Smith: An Inquiry into the Nature and Causes of the Wealth of Nations, London, 1895, vol. I, p.129: “Equal quantities of labour, at all times, and places, may be said to be of equal value to the labourer. In his ordinary state of health, strength and spirits; in the ordinary degree of his skill and dexterity, he must always lay down the same portion of his ease, his liberty and his happiness (italics mine. — N.B.). A number of similar quotations might also be included here. For this reason it is entirely wrong for Georg Charasoff to state, as he does in his polemic against Karl Kautsky: “There can be no serious doubt in our mind of the fact that the Classical School by no means advocated in its doctrine of the laws of value an individualistic point of view, but rather a consistent social point of view, precisely as did Marx himself.” (Cf. Charasoff: Das System des Marxismus, Berlin, 1910, p.253.) On the other hand, Charasoff’s assertion that even certain Marxian studies contain a subjective interpretation of the Marxian theory, is entirely correct; but this is not the place to discuss this question.

25. Karl Marx: Capital, vol. I, p.23. The quotation is taken from a criticism by Kaufmann, which is quoted by Marx himself and with which Marx expresses himself as fully in agreement.

26. Böhm-Bawerk: “Grundzüge der Theorie des wirtschaftlichen Güterwerts,” in Hildebrandt’s Jahrbücher für Nationalökonomie und Statistik, vol. XIII, New Series, p.78; also Karl Menger: Untersuchungen über die Methoden der Sozialwissenschaften und der politischen Ökonomie insbesondere 1883; also Robert Liefmann, op. cit., p.40.

27. This circumstance alone is sufficient to destroy completely the teleological view of society as a “purposeful structure” which is found in particularly definite formulation in Stolzmann: “Just as we find completely lacking in the life of nature all definite tendency of purpose, all systematic intention, economy, husbanding of resources ..... so is the case also with the relations between humans.” (Professor Wipper: Foundations of the Theory of Historical Science, Moscow, 1911, p.162, in Russian.) Cf. also the brilliant presentation of the “independence” of the result of individual actions in Friedrich Engels: Ludwig Feuerbach. R. Liefmann, in his criticism of the “social,” i.e., the objective method, attaches himself precisely to the criticism of the teleological view, in which he claims that the latter must be accepted by everyone who consistently advocates this method. He accused even the Marxians (Hilferding, for example) of practicing teleology, and his victory over the latter is therefore comparatively easy. As a matter of fact, the Marxist theory treats society as a completely non-subjective system.

28. “In economic relations,” says Peter Struve, “the economic man is considered in his relations with other men, who are also economic men, and the intermediate economic categories [i.e., the categories of a commodities economy — N.B.] express the objective resultants (or those that are becoming objective) of such relations: they contain nothing “that is subjective” although their origin is “in the subjective.” On the other hand, they include no direct expression for the relations between economic men and nature, the external world; in this sense they include no “objective” or “natural” element. (Peter Struve: Economics and Price, Moscow, 1913, pp. 25, 26, Russian.) Struve, however, points out the naturalistic element in the value theory (“coagulated labour”) and thus builds up a contradiction between this element and the “sociological” element. With this we must compare Karl Marx’s Theorien über den Mehrwert, vol. I, p.277: “But the materialisation of labour is not to be taken in so Scottish a sense as Adam Smith takes it. When we speak of a commodity as the material exponent of labour — in the sense of its exchange value — this is of course merely an imaginary, i.e., a merely social mode of existence of the commodity, which has nothing to do with its corporeal reality.” “The fallacy in this connection is traceable to the fact that a social relation has expressed itself in the form of an object.” (p.278.)

29. Peter Struve creates a connection between a “universalistic” method of this type and a logical realism (as opposed to the “singularistic” method which is associated in logic with the so-called nominalism). “In social science,” says Struve, ‘"the realistic trend of thought evidences itself particularly in the fact that the system of the psychical relations between men, i.e., society, is regarded not only as a real unit, as a sum, or (!) system, but also as a living unit, a living creature. Such concepts as society, class, power, either appear as, or they may easily be regarded (!!!) as ‘universalities’ of sociological thought. They are easily hypostasized” (op. cit., p. XI). Struve does not adduce this opinion — as one might think — in order to prove the incompetence of the Marxian mode of investigation, which he identifies with the “logical-ontological realism of Hegel ... and the scholastic philosophers” (op cit., p.XXVI). Yet it is quite clear that Marx offers not even the slightest indication of any tendency to regard society and social groupings as a living creature (the expression “living unit” is something different and even more vague). It will suffice, in this connection, to compare Marx’s method with — let us say — the method of the “social-organic” movement which finds its latest formulation in the work of Stolzmann. Marx himself was quite conscious of the fallacies of the Hegelian logical realism. “Hegel fell into the error ... of considering the real as the result of self-coordinating, self-absorbed, and spontaneously operating thought, while the method of advancing from the abstract to the concrete is but a way of thinking by which the concrete is grasped and is reproduced in our mind as a concrete. It is by no means, however, the process which itself generates the concrete.” (Karl Marx: Introduction to a Critique of Political Economy, in Contribution to a Critique of Political Economy, Chicago, 1913, p.293.)

30. It may be pointed out that Bastiat is speaking of isolated human beings, an abstraction which he considered useful from the methodological point of view, while historically he considers this abstraction to be merely “one of Rousseau’s deceptive delusions” (see also pp. 93, 94).

31. W. Stanley Jevons: The Theory of Political Economy, London and New York, 1871, p.21. The “mathematical economists” and the “Americans” for the most part abandon this position. Cf. Leon Walras: Etudes d'économie sociale (Théorie de la réparation de la richesse sociale), Lausanne, Paris, 1896: “It should not be said that the individual is the basis and the goal of all society without adding, simultaneously, that the social condition is also the centre of all individuality” (p.90). In John Bates Clark, objectivism is dominant. But the extent to which all this thinking is unclear and undigested may be gathered, for instance, from the following definition presented by the American economist, Thomas Nixon Carver: “The method pursued is that of an analytical study of the motives which govern men in business and industrial life.” (The Distribution of Wealth, New York, 1904, p. XV.) Yet Carver himself attempts to “objectivise” the theory of value.

32. “To such totalities, constructed by ourselves, as do not exist at all outside of our consciousness, we may oppose the real totalities, constructed by life itself. Among all the infants existing in the entire territory of European Russia, there is no other relation than that set up in our statistical tables: the trees in the forests are engaged in a process of permanent mutual interaction and constitute a certain unit, regardless of whether they have been associated under a generalising concept or not.” (A. Chuprov: Foundations of a Theory of Statistics, St. Petersburg, 1909, p.76, in Russian.)

33. “Proceeding inductively from the facts, a consideration of the economic reality will bring us face to face ... with veritable mountains of facts proving to us that the individual engaged in economic practices, in spite of all his thoughts and actions, is dependent on the given state of an objective framework of the existing economic order.” (R. Stolzmann, op. cit., p. 35)

34. The point of departure of every social phenomenon is always the individual; but not the isolated individual who is investigated by the critics of Marx as well as by the students of the eighteenth century... . But the individual in his connections with other individuals, the totality of individuals ... in which the single individual himself develops a different mental life than he would in a condition of isolation.” (Louis B. Boudin: The Theoretical System of Karl Marx, German translation, Stuttgart, 1909, Karl Kautsky’s Preface, p. XÜI.) Marx himself has often depicted in very realistic form the necessity of a social point of view. “Material production by individuals as determined by society, naturally constitutes the starting point. The individual and isolated hunter or fisher who forms the starting point with Smith and Ricardo belongs to the insipid illusions of the eighteenth century.” (Karl Marx: Introduction to a Critique of Political Economy, printed with A Contribution to a Critique of Political Economy, Chicago, 1913, pp. 265-266.) “The production of the isolated individuals outside of society ... is as much a monstrosity and an impossibility as the evolution of a language occurring without individuals living together and speaking to each other” (op. cit.). Rudolf Hilferding very appropriately remarks on this point: “From the motives of the operating economic individuals, which are themselves, however, determined by the nature of the economic relations, we may never derive more than a tendency toward the setting up of an equality in economic conditions: uniform prices for uniform commodities, equal profit for equal capital, equal pay and equal rate of exploitation for equal labour. But I shall never arrive at the quantitative relations themselves in this manner, proceeding thus from the subjective motives.” (Das Finanzkapital, p.325, footnote.)

35. Böhm-Bawerk: Zum Abschluss des Marxschen Systems. (Staatswissenschaftliche Arbeiten. Festgaben für Karl Knies.) Berlin, 1896. This work was translated into English by Miss Alice Macdonald, with a Preface by James Bonar, London, 1898.

36. Of course, even the Austrians admit that they are here dealing only with an abstraction: “Man does not carry on his husbandry of resources as an isolated creature; an individual establishment in the strict sense of the word is an abstraction.” (Emil Sax Das Wesen und die Aufgaben der Nationalökonomie, Vienna, 1884, p.12.) But not every abstraction is an admissible abstraction; Böhm-Bawerk himself states on this point that “in science even the thoughts and the ‘logic’ may not be permitted to wander away from the facts in too unbridled a manner.... Only those peculiarities may be abstracted which are irrelevant to the phenomenon to be subjected to investigation, and they must be truly, actually, irrelevant to be so abstracted.” (Böhm-Bawerk: Zum Abschluss des Marxschen Systems, p.194.)

37. Böhm-Bawerk, ibid., p.101. Struve, who calls this mode of study scholastic (see the notes on pp. XXV and XXXII of the Russian edition) speaks in another passage of the empirically correct application of the universalist method. But this does not prevent the same author from stating that the sociological point of view which is necessary in political economy must proceed in the last analysis from the human being, from his psyche [i.e., from the “individual.” — N.B.] p 26. At the same time, Struve will assign “no particular importance to the subtleties of psychological subjectivism,” as if these “subtleties” were not necessarily and logically related with their “bases.” The reader will discern that Struve has selected a very convenient position for himself. A negative answer to Böhm-Bawerk’s question is afforded by R. Liefmann, op. cit.

38. Even John Keynes, an adherent of the theory of marginal utility, assumes that the “phenomena of industrial life in all their compass may be explained by the deductive method alone, beginning with a few elementary laws of nature.” (The Object and the Method of Political Economy, quoted from the Russian translation edited by Manuilov, Moscow, 1899, p.70.)

39. See Tugan-Baranovsky: Grundlagen der Nationalökonomie. It must be noted in this connection, however, that while the Physiocrats really had a correct understanding of capitalism, of which they were quite unconscious, Tugan-Baranovsky makes every effort to understand it but sets up only the most meaningless formulas. (Cf., N. Bukharin: “Eine Ökonomie ohne Wert’,” Die Neue Zeit, 1914, pp. 22, 23.)

40. The quotation is taken from a review by Kaufmann, cited by Marx in the preface to the second edition of Capital (vol. I, pp. 22, 23).

41. Even the “benevolent” critics fail to understand this; cf. George Charasoff, op. cit., pp. 260, 261.

42. In his Geschichte der Nationalökonomie, Professor August Oncken distinguishes three methods: the exact or philosophical method the historical or rather the historical-statistical method; the historical-philosophical method, which is synthetic in character (p.9). Furthermore: “In the field of socialism, the historical-philosophical method has been advocated on the one hand by Saint-Simon and, later, in the extremely materialistic sense, by Karl Marx and Friedrich Engels .... It [historical materialism. N.B] can be effectively combated only on the same, i.e., historical-philosophical ground” (op. cit.). This amounts precisely to a recognition of the fruitfulness of the Marxian method, which must, to be sure, according to Oncken, be united with the idealism of Kant in order that the disastrous effect of the materialistic theory may be better combated.

43. It is natural that Bulgakov should entirely fail to grasp this. See Bulgakov’s criticism of the Marxist prognosis in his Philosophy of Economy, in Russian.

44. “Natural law phenomena of the present-day type ... not met with until all forms of isolation, including that of local inaccessibility, had become matters of the past. (Neumann: “Naturgesetz and Wirtschaftsgesetz,” in Zeitschrift für die gesamte Staatswissenschaft, edited by Artur Schäffle, 1892, 48th year, No. 3, p.446.) Mr. Struve praises Marx highly for his analysis of the fetishism of commodities, yet he believes that Marx as well as the entire school of scientific socialism was guilty of an error in ascribing an historical character to this phenomenon. But this circumstance does not prevent the same writer from associating this fetishism closely with the commodities economy, which represents, in his view, an historical category (see Struve: “Wirtschaftssystem,” in op. cit.).

45. Karl Marx: Introduction to a Critique of Political Economy, Chicago, 1913, p.269. Although written in the year 1859 these words are perfectly applicable now.

46. A complete statement of Marx’s methodological views will be found in his Introduction to a Critique of Political Economy, frequently quoted by us. With regard to the historical and unhistorical “conditions of production,” Marx summarises his ideas as follows: “To sum up: All the stages of production have certain destinations in common, which we generalize in thought; but the so-called general conditions of all production are nothing but abstract conceptions which do not go to make up any real stage in the history to production.” (Ibid., p.274.)

47. Böhm-Bawerk: Kapital und Kapitalzins, 1909, vol. II, part I, pp. 54, 55. Peter Struve, who served his apprenticeship in the Marxian school, likewise advocates this extremely superficial point of view: ‘"Pure economic activity,” he writes, “also recognises such categories, as production costs, capital, profits, rents” (op. cit., p.17); by pure economic activity he means “the economic relation of the economic man to the external world” (op. cit.). A more delicate variant of the same thought may be traced back to Karl Rodbertus, who distinguishes between the logical and the historical conception of capital. In reality this terminology serves as a cloak for the apologetic tones of the bourgeois economists, for in its essence it is completely superfluous, since there exists a term for the “logical categories,” for instance, means of production. Further details under this head will be found below, in the analysis of the theory of profits.

48. “In the first stone which he (the savage) flings at the wild animal he pursues, in the stick that he seizes to strike down the fruit which hangs beyond his reach, we see the appropriation of one article for the purpose of aiding in the acquisition of another, and thus discover the origin of capital.” (Sir Robert Richard Torrens: An Essay on the Production of Wealth, pp. 70, 71; cf. Karl Marx: Capital, vol. I, p.205, footnote.) The Böhm-Bawerk definition of capital as a “collective concept of intermediate products” therefore coincides perfectly with the view of Torrens, which Marx ridiculed in the first volume of Capital. (Cf. Böhm-Bawerk: Kapital und Kapitalzins, vol. II, part I, p.587.)

49. Marx’s critics often ignore this point; see for example, Franz Oppenheimer: Die Soziale Frage and der Sozialismus, particularly the section, “Robinson — Kapitalist.”

50. Cf. R. Stolzmann, op. cit., p.26, and John Keynes, op. cit., p.66: “Even the law of diminishing returns of the soil considered as a natural phenomenon, cannot be regarded as an economic law strictly speaking.”

50. “The point of departure, the basis of the ‘system’, is the analysis of the elementary phenomena of the entire field of man’s economic activity in abstracto, disregarding, therefore, the idiosyncrasies of the social relations.” (Emil Sax: Das Wesen und die Aufgaben der Nationalökonomie, p.68.)

51. Friedrich Engels: Herrn Eugen Dührings Umwülzung der Wissenschaft, Third Edition, Stuttgart, 1894, p.150. The unhistorical character of the objectivism of the “mathematicians” and the “Anglo-Americans” causes them to accept a purely mechanical view which in reality does not recognize society at all, but only a congeries of moving objects.

53. R. Stolzmann, op. cit., preface, p. 2: cf. R. Liefmann, op. cit., p.5: “The so called social method of observation ... which was applied ... fully half a century ago by Karl Marx.” In this passage, Liefmann emphasizes quite correctly the peculiarities of the Marxian method.

54. Stolzmann considers it necessary to regard social phenomena as social-ethical phenomena. In this connection, he confuses ethics considered as a totality of standards serving as a point of view for a study of the economic reality, with ethics as a fact closely related with the fact of the economic phenomena. To speak of political economy as an ethical science in the former case would mean nothing more nor less than changing this science into precepts; if we should follow Stolzmann’s example in the second case, we might speak with equal right of political economy as a philological science, and the “sufficient reason” for this assumption would be that the phenomena of language likewise bear a relation to the economic life. How great is at times the insipidity of the “ethics” of these “critics” may be shown by the following passage: “Wages constitutes a moral quantity” (Der Lohn bedeutet eine moralische Grösse, p.198; italics mine. — N.B.). Wages are not determined by custom and law only, “but also by the voice of conscience and an inner compulsion, i.e., by the peculiar imperative of the heart.” (Sondern auch durch die Stimme des Gewissens und den Zwang von innen, l.h. durch den eigenen Inperativ des Herzens, p.198.) Similar sweet sentimentality may be encountered in other passages also (cf. pp. 199, 201, etc.). The “practical understanding” of Mr. Stolzmann induces him to protect men from the embraces of socialism (see p.17). With this goal in view, he is not indisposed even to resort to demagogy: “Of course,” is Stolzmann’s utterance against the Marxists, “it is by far simpler and less responsible to content oneself with a discrediting of the existing order and, by offering to the starving stones instead of bread, to console them with the prospect of the impending upheaval ..... Yet the worker will not enjoy waiting so long,” etc. This sad stuff has evidently also been inspired in Privy-Councillor Stolzmann by the “imperative of the heart.” Wherever Stolzmann is interesting, it is because of his understanding of the Marxian theory and method; but his much inflated ethics can entice only such persons as Bulgakov, Frank, and Tugan-Baranovsky.

55. Jevons also says: “Political economy must be founded upon a full and accurate investigation of the conditions of utility: and, to understand this element, we must necessarily examine the character of the wants and desires of men. We, first of all, need a theory of the consumption of wealth.” (The Theory of Political Economy, 1871, p. 46 [italics mine. — N.B.].) Léon Walras: Etudes d'économie sociale, p.51, assigns only the consideration “de la richesse” to pure economics, while he considers the analysis of production to belong to the field of applied economics (économie politique appliqués). In Thomas Nixon Carver, we find a further approach to the point of view of production, in which Carver agrees with Marshall: “In other words, economic activities, rather than economic goods, form the subject matter of the science” (xi). In another passage, Carver arranges these “activities” in the following order: production, consumption and valuation. (The Distribution of Wealth, New York, 1904.) In all these authors, we find various shades of eclecticism, sometimes with regard to Marx, sometimes with regard to Böhm-Bawerk.

56. Kautsky is right in his observation that the Austrian School even improves on the Robinsonades of the eighteenth century in having Robinson not construct his articles of consumption by his own labour, but receive them as a gift from heaven. (Louis B. Boudin, The Theoretical System of Karl Marx, Karl Kautsky’s preface to the German edition: Das Theoretische System von Karl Marx, p.X.) The well known exchange equations of Léon Walras are completely in agreement with the Austrian standpoint (Léon Walras: Principes d'une théorie mathématique de l'échange, p.9): “Given the quantities of merchandise, to formulate the system of equations of which the prices of the merchandise are the roots,” such is his formulation of his task. The reader will note that here again there is no thought of production.

57. “Production thus produces consumption: first, by furnishing the latter with material; second, by determining the manner of consumption; third, by creating in consumers a want for its products as objects of consumption.” Karl Marx: An Introduction to a Critique of Political Economy, ibid, p.280.

58. According to Karl Marx, production is “the actual starting point and is, therefore, the predominating factor.” (An Introduction to a Critique of Political Economy, ibid., p.282.) The connection between the economic theory of Karl Marx and his sociological theory is here clearly expressed and should be noted by those who consider it possible to declare their “agreement” with one phase of the Marxian doctrine while they reject the other phase.

59. Herr Frank does not understand why labour should be singled out from among the remaining “conditions of production”; for is not the possession of real estate not only a specific form of the distribution of products, but also an “eternal necessity for mankind"? It remains undemonstrated why precisely labour should serve as a constituent stigmatum of the economic phenomena. (G. Frank: Die Werttheorie von Marx und ihre Bedeutung, pp. 147, 148.) The forms of distribution are the quantity derived from the “mode of production”; as for real estate ownership, the merely static element “of the possession of the soil” cannot explain any changes, any dynamics.

60. George Charasoff: Das System des Marxismus, Berlin, 1910, p.19. Leon Walras’ “exchange equations,” already mentioned, are static. Similar is the fallacy of Vilfredo Pareto, “Cours d'economie politique, tome premier, Lausanne, 1896, p.10.

61. This holds true also for Tugan-Baranovsky, who is considered an “authority” in the field of the theory of crises.

62. “In a state of society, however, in which the industrial system is founded entirely on purchase and sale ..... the question of value is fundamental. Almost every speculation reflecting the economical interests of a society thus constituted implies some theory of value: the smallest error on that subject infects with corresponding error all our other conclusions.” (John Stuart Mill: Principles of Political Economy, one-volume edition, London, 1923 p.436.) To be sure, voices have recently been heard, inspired by Mr. Peter Struve, to the effect that the problem of value has no relation with the problem of distribution, while David Ricardo, for instance, considers the problem of value as the fundamental problem of political economy. (David Ricardo: Political Economy.)

The same position is taken by Tugan-Baranovsky, even though the latter’s “theory of distribution” is in every way the most serious argument against this “innovation.” Struve imparts a clearer logical form to the question, which makes the formulation of a theory of distribution an impossibility. The same remark applies also to Shaposhnikov (see his Theory of Production and Distribution, Moscow, 1912, p.11, in Russian).

63. The only exception is Peter Struve’s theory of value, which explains value as due to an average price determined by statistical method. Yet this in reality is equivalent to the annihilation of all theory. Bulgakov, in his Philosophy of Economy (in Russian) reproaches Marx for having transferred the problem of labour and its function “from the exalted position of a principle to the mercantile practice of the market” (p.106); Bulgakov considers this to be a point of view informed only with a specious principle: the obverse of vulgarity, so to speak. The same “critic” writes: “Is a general theory of capitalist economics of any use? I believe it is... . Yet can we grant the same utility to the individual theories, those on value, profit, capital? ... I believe not... . “ (p.289.) Our erudite professor obviously considers it possible to present a general theory of capitalism without a theory of “value, profit, capital.”

64. We here refer to the fact that prices do not coincide with value, do not even fluctuate around value, but rather approximate the so called “production prices.”

65. Böhm-Bawerk: Grundzüge, etc., p. 4. Similarly Karl Menger says: “Value is not ... a peculiarity inherent in goods, a quality of goods, but rather merely the significance which we immediately assign to the satisfaction of our needs, or attach to our lives and our well being, and, more remotely, to the economic goods as their exclusive causes.” (Grundsätze der Volkswirtschaftslehre, Vienna, 1871, p.81, footnote.) “Value is a judgment” (der Wert ist ein Urteil, op. cit., p.86) ; cf. Friedrich von Wieser, who considers value as a human interest conceived as a condition in the object. (Ursprung des Wertes, p.79)

66. Böhm-Bawerk: Grundzüge, etc., p.4. Cf. also Böhm-Bawerk: Kapital and Kapitalzins, vol. II, second edition, Innsbruck, 1909, p.214.

67. Böhm-Bawerk, ibid., p.5. Menger’s terminology is different (cf. his Grundsätze, etc., pp. 214, 215).

68. Neumann remarks in this connection: “It is subject to dispute whether, following the analogy of purchase and yield value, we may also speak of heating value, nutrition value, fertilisation value, etc., in our science.” (“Wirtschaftliche Grundbegriffe,” in Handburch der politischen ökonomie, edited by Schönberg, fourth edition, vol. I, p.169.) J. Lehr expresses himself more specifically; Lehr objects to confusing concepts in this manner and thinks that political economy “must not lose sight of the fact that value exists always for and through man.” (Conrad’s Jahrbücher für Nationalökonomie und Statistik, New Series, vol. XIX, 1889, p. 2.) Cf. also H. Dietzel: Theoretische Sozialökonomik, pp. 213, 214. It is considered fashionable among bourgeois scholars and their adherents to point out that Karl Marx in his theory of value rather crudely concocted a mechanistic-materialistic brew. Yet there is materialism and materialism. In so far as the Marxian materialism is expressed in Karl Marx’s economic system, it not only fails to lead to a fetishism of commodities, but on the contrary it makes possible for the first time a surmounting of this fetishism. Particularly, in Karl Marx, value is one of the “forms of thought expressing with social validity the conditions and relations of a definite, historically determined mode of production, viz., the production of commodities.” (Capital, vol. I, p.87.) But “objectively” here does not mean “physically.” It would be just as reasonable to regard language as a physical thing. Cf. Capital, vol. I, p.85, also R. Stolzmann: Der Zweck in der Volkswirtschaftslehre, 1909, p.58.

69. Many eclecticists found in this statement a pretext for assuming that the theory of the classical economists as well as that of Karl Marx were not in “contradiction” with the Austrian School, but merely “complemented” the latter. For example, cf. Heinrich Dietzel: Theoretische Sozialokonomik, Leipzig, 1895, p.23. These persons do not even understand that there is not a single thought to be found in Karl Marx that has any analogy whatever with the subjective concept of value of the Austrian School. On this point, consult the excellent pamphlet of R. Hilferding: Böhm-Bawerks Marx-Kritik, Vienna, 1904, pp. 52, 53, et seq. Particularly amusing in this connection is Tugan-Baranovsky, who, in his Foundations of Political Economy (in Russian) finds it possible to apply a law of proportionality between labour value — which after all has no significance except in relation to the entire society, and which cannot possibly be applied to an isolated science — and the marginal utility, which is “suited,” on the contrary, only to the evaluations of the individual and lacks all meaning with regard to “political science,” even from the point of view of Böhm-Bawerk.

70. Böhm-Bawerk: Grundzüge, etc., p.9. This is particularly important for the Austrians. “Its [i.e., the marginal utility theory’s. — N.B.] cornerstone is the distinction between usefulness in general and the very specific concrete utility which depends in a given economic situation, on the control exercised over the goods to be evaluated. Böhm-Bawerk: “Der letzte Masstab des Güterwertes,” Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, vol. III p.187.

71. Böhm-Bawerk: Ibid., p.13. “All goods have usefulness, but not all goods have value. In order that value may exist, rarity (Seltenheit) must be associated with usefulness, not absolute rarity, as compared with the requirements for goods of the kind in question.” (Böhm-Bawerk: Kapital and Kapitalzins, vol. II, “Positive Theorie des Kapitals,” third edition, Innsbruck, 1912, p. 224.) Similarly, Karl Menger: “For instance, if the demand for a goods is greater than the available supply of it, it is simultaneously apparent that even though a portion of the indicated requirement be left unsatisfied, the available quantity of the goods in question may not be reduced by any perceptible fraction without causing a condition in which some need or other, previously provided for, may now be satisfied either not at all, or at least less adequately than would have been the case had the above-mentioned condition not been met with.” (Karl Menger: Grundsätze der Volkswirtschaftslehre, Vienna, 1884, p.77.)

But the originators of the theory of marginal utility have no right at all to maintain that this thesis is original with them. We find it already in the Comte de Verri (Economic politique, etc., Paris, An VIII) in objectivised form, to be sure: “What are, therefore, the elements which form the price? Surely the latter is not based on utility alone. To be convinced, one has only to reflect that water, air, and sunlight have no price — yet, is there anything more useful and more necessary than these things; ... mere utility, therefore, cannot impart price to an object. Yet, it is its rarity only that gives it its price” (p.14). “Two principles, in their combination, determine the prices of objects: need and rarity” (p.15). Similarly also Condillac (Le Commerce et le gouvernement, considérés relativement l'un a l'autre, Paris, An III, 1795, vol. I), while Condillac formulates the question subjectively (“nous estimons,” “nous jugeons”; “cette estime est ce que nous appelons valeur,” etc.).

In the elder Walras (M. Auguste Walras: De la nature de la richesse et de l'origine de la valeur, Paris, 1831), the factor of rarity is closely related with that of property, which is again connected with the capacity for exchange and the (objective) value of the article of consumption. (They “sont naturellement bornés dans leur quantité.”) Leon Walras, in his “Principes d'une theorie mathématique de l'échange,” gives a clear formulation: “Ce n'est donc pas 1'utilité d'une chose qui en fait la valeur, c'est la rareté” (see pp. 44, 199, et seq.). Vilfredo Pareto (Cours d'economie politique, tome I, Lausanne, 1896) makes use of the term ophelimité (from the Greek for useful, affording assistance) instead of the term utility, for “utility” is an antonym of “injury,” while political economy also recognizes “noxious utilities” (tobacco, alcohol, etc.).

72. Even Böhm-Bawerk was obliged to recognize this; in his Grundzüge der Theorie des wirtschaftlichen Güterwerts, he formulates the question at issue in a rather peculiar manner, maintaining that in the division of labour the evaluation of the sellers “is usually very low,” p.521. [Italics mine.- N.B.] Cf. also Böhm-Bawerk: Positive Theorie.: “At the present time ... most sales take place through the agency of professional producers and traders, who possess a surplus of their goods which is far too great for their own consumption. In their case, therefore, the subjective use-value of their own goods is, in most cases, very close to zero: it follows that their ‘evaluation figure’ . . will continue to decline almost to zero.” (Kapital und Kapitakins, vol. II, part I, pp. 405, 406.) Yet even this formulation is wrong, for the evaluation by the purchasers is not based on usefulness at all (the latter being not “approximately” but actually zero).

73. “But the exchange of commodities is evidently an act characterized by a total abstraction from use-value.” (Karl Marx: Capital, vol. I, p.44.)

74. Karl Marx: Capital, vol. I, p.177. Ferdinand Lassalle also brilliantly ridiculed this theory: ‘"Herr Borsig,” says Lasalle, “first proceeds to produce machines for his family use; the surplus machines he then proceeds to sell. The establishments that sell widow’s weeds are in the first place operating judiciously in anticipation of deaths in their own families, and then, since the latter are too infrequent, have a large surplus of mourning styles to exchange with other persons. Herr Wolff, the proprietor of the great telegraph agency in our country (Germany) first has telegrams forwarded to him for his own instruction and amusement; whatever remains after he has sufficiently sated himself in this occupation, he proceeds to exchange with the wolves of the stock exchange and the editorial offices of newspapers, who compensate him with their surplus news items and shares of stock.” (Ferdinand Lassalle: Reden and Schriften, published by Vorwarts, Berlin, 1893, vol. III, p.73.) In the precursors of the Mathematicians (Léon Walras), the exchange of surpluses is also taken as the point of departure. (“Principes d'une théorie mathématique de 1'échange,” Journal des Economistes, 1874.)

75. In his Kapital and Kapitalzins, Böhm-Bawerk says that the whole Marxian argumentation on this point is “fallacious.” He considers that Marx has confused an “independence of a circumstance in general, with an independence of the specific modalities in which this circumstance is manifested” (first edition, 1894, p.435). Hilferding appropriately answers as follows: “If I make an abstraction of the specific modality in which the use-value may appear, in other words, of the use-value in its concreteness, I have, as far as I am concerned, made an abstraction of use-value altogether... . It will be of no avail to declare that use-value consists in the capacity of this commodity to be exchanged against other commodities. For this would mean that the magnitude of the ‘use-value’ was now given by the magnitude of the exchange-value, not the magnitude of the exchange-value given by the magnitude of the use-value” (op. cit., p.5). Further details will be found below in our analysis of “substitution value.”

76. This is the so-called “Gossen Law.” Gossen’s formulation is as follows: “I. The magnitude of one and the same enjoyment — if indulged in uninterruptedly — will progressively decrease until satiety is attained. — II. A similar decrease in the magnitude of the enjoyment will ensue if we repeat an enjoyment previously experienced, not only in the sense that the enjoyment is smaller to the extent above noted, with each repetition, but that the magnitude of the enjoyment, at its inception, will also be less, and the duration of time during which it is experienced as an enjoyment will decrease with repetition; satiety will ensue at an earlier stage, and both the initial magnitude and the duration of the enjoyment will decrease the more, the more rapidly the repetitions are undertaken.” (Hermann Gossen: Entwicklung der Gesetze des menschlichen Verkehers und der daraus fliessenden Regeln für menschliches Handeln, Braunschweig, 1854, p.5.) Friedrich von Wieser declares, in connection with this law, that “it holds good for all impulses, from hunger to love.” (Der natürliclie Wert, Vienna, 1889, p.9.)

77. The interruptions in the vertical series are concerned with needs in which a successive partial satisfaction is not altogether, or not at all, possible (Böhm-Bawerk). It is quite admissible, in the nature of the case, to assume an uninterrupted course of the functions of utility, since “that which is correct only with regard to the uninterrupted functions may also be correct as an approximation in the case of the functions of uninterrupted type.” (N. Shaposhnikov: The Theory of Value and of Distribution, Moscow, 1912, p.9; in Russian.)

In Léon Walras we find a mathematical expression of the same thought, but in objectivised form (“uneven prices,” depending on the relation between demand and supply). A still more elaborate objectivised formulation of the “diminution of urgency” of a given requirement as it achieves satisfaction may be found in the Americans. Thomas Nixon Carver designates utilities as the capacity to satisfy demands, etc. (“Utility is the power to satisfy a want or gratify a desire, but value is always and only the power to command other desirable things in peaceful and voluntary exchanges,” p.3).

According to Carver, price is the expression of value in money. Price varies with “utility” and relative “scarcity.” Yet, Carver speaks of the wants not of the evaluating individual but of society (“wants of the community,” p.13). Carver calls the law of satiation the “principle of diminishing utility” (p.15), and moves the social “standpoint” into the foreground (p.17). The diminishing utility is considered as a social category (p.18). The economic theory of the leisure class is here obviously transformed into an economic theory of the trust promoter.

78. The magnitude of the want value ... depends on the type of the want, but, within a specific type, always depends in turn on the degree of satiation achieved in each case.” (Friedrich von Wieser, op cit., p.6.)

79. The designation “marginal utility” was first introduced by Friedrich von Wieser, in his work Der Ursprwng des Wertes. The same concept is found in Gossen as the “value of the last atom”; in Jevons as the “final degree of utility,” “the terminal utility”; in Walras, as the “intensité du dernier besoin satisfait” (rareté). Cf. Friedrich von Wieser, Der natürliche Wert. Von Wieser proposes to make use not of the method of deterioration but of the method of growth, which does not involve any essential difference. (Der natürliche Wert appeared in English translation by C. A. Malloch in London in 1893; the quotations are from the German original.)

80. Ibid., p.52. Von Wieser does not agree with Böhm-Bawerk on this point: “Any stock of goods at all has a value equivalent to the product of the number of items (or the number of partial quantities) and the specific marginal utility” (Der natürliche Wert, p.24). Von Wieser’s reasoning is this: Let us assume the maximum marginal utility of a goods to be equal to ten; by increasing the number of units to eleven we obtain the value of the supply, and indeed, for a possession of

Equal to1×102×93×84×75×6 
Or1018242830Value units
And for678910goods
Equal to6×57 x48×39×210×1
or3028241810value units

(ibid., p. 27)

From this point of view, the stock has no value after it attains a specific number of specimens. But this contradicts the theory and the definition of subjective value. Indeed, if we consider the entire totality of goods as a unit, we are no longer in a position to satisfy the needs connected with this type of goods. Cf. Böhm-Bawerk: Grundzüge, etc., p.16; also, Kapital und Kapitalzins, vol. II, pp. 257, 258, footnote.

81. As to the indefiniteness of the unit of measure, cf. GustavCassel: “Die Produktionskosten-Theorie Ricardos und die ersten Aufgaben der theoretischen Volkswirtschaftslehre,” Zeitschrift für die gesamte Staatswissenschaft, vol. LVI, pp. 577, 578.

82. See Wilhelm Scharling: Grenznutzentheorie and Grenznutzenlehre, Conrad’s Jahrbücher, Third Series, vol. XXVII (1904), p.27. We are here not speaking of the “discounts” given on great purchases; these are based on entirely different psychological pre-suppositions, and should not be treated here.

83. Böhm-Bawerk: Op. cit., p.39. “The purchasers,” says Scharling, “determine the price which they wish to give for the commodity, not according to their own evaluation of its utility, but according to the conjectured price which it is expected the consumer shall pay” (op. cit., p.20).

84. Böhm-Bawerk has the following to say concerning another theoretician of the theory of marginal utility, Friedrich von Wieser, who does not analyze the conditions of the exchange economy: “Von Wieser’s theorem (Friedrich von Wieser: Ursprung and Hauptgesetze des wirtschaftlichen Wertes, p.128), to the effect that the marginal utility always belongs ‘to the utility sphere of the same class of goods’ may therefore be maintained only with the modifying clause added by von Wieser himself, to the effect that no attention is being paid to the existence of an exchange traffic” (Böhm-Bawerk: Grundzüge, etc., p.39). We therefore find in von Wieser no explanation of the exchange process; Böhm-Bawerk attempts to give such an explanation but at once strikes a snag. Verily, we are here dealing with an apt application of the Russian proverb: “The snout is saved, but the tail goes down; the tail is saved, but the snout goes down.” Cf. also Leon Walras: Principes d'une théorie mathématique de l'échange, chapter III, paragraph Courbes de demande effective, pp. 12, 13, 14. Walras’ formulas are in their essence nothing more than plain tautologies. Cf. p.16, op. cit.

85. Böhm-Bawerk: Grundzüge, etc., p.516; cf. also Kapital and Kapitalzins, vol. II, part I, p.497.

86. Böhm-Bawerk: Grundzüge, etc., p.519. We shall again encounter the concept of subjective exchange value in the later course of our discussion, which will provide an exhaustive criticism of this notion.

87. The difference is merely this: Roscher considers pre-social man as a proletarian, while Böhm-Bawerk considers the proletarian a pre-social man

88. “The attempts of the critics of this theory” [i.e., the theory of marginal utility. — N.B.], says Tugan-Baranovsky, “are in most cases so weak that they require no serious refutation. The principal objection raised against this theory, namely, to the effect that the magnitude of satisfaction we obtain from economic goods permits of no quantitative comparison, was already refuted by Immanuel Kant.” (M.J. Tugan-Baranovskv: Foundations of Political Economy, second edition, St. Petersburg, 1911, p.50, in Russian.) But we by no means consider this objection as one of the “chief objections,” on the contrary it may be considered as one of the least important. It is quite noteworthy, however, that Tugan-Baranovsky entirely ignores the other objections, for instance, those raised by R. Stolzmann, both of whose works must be accessible to Tugan-Baranovsky.

89. “In order to carry out the investigation of the problem of value to its conclusion, it is necessary to attain clarity on ... how it comes about that certain articles of utility are produced in small quantities while others are produced in large quantities.” (Tugan-Baranovsky, op. cit., p.46.) Yet the reader would seek in vain for an answer to this question from the theoreticians of marginal utility.

90. “We may already state that, in the illustrations chosen by Böhm-Bawerk, we miss that earmark of economic life which is indispensable to any economy, namely, the activity of the economic subject... . A supply of goods is possible, both in the case of man as well as in the case of any other living creature, only as the result of a certain application of activity.” (Alexander Schor: Kritik der Grensnutzentheorie, Conrad’s Jahrbücher, vol. VIII, p.248.) Cf. also R. Stolzmann: Der Zweck in der Volkswirtschaft, p.701: “Only as a result of the magnitude or the paucity of the given stocks, i.e., in the long run, of the productiveness of the rudimentary prime factors, soil and labour, ... do we obtain the volume of the possible supply, do we obtain the number of specimens of each goods to be brought to the spot in question, and only then do we attain an effective expansion of the possible consumption.”

91. As is rightly observed by Zheleznov, the Austrians forget ‘"that men in their economic activity seek to overcome quantitative defects in nature’s gifts by exceptional exertions, thanks to which man’s degree of dependence on the material world becomes more elastic and is being expanded more and more” (Zheleznov: Foundations of Political Economy, Moscow, 1912, p.380, in Russian.)

92. “Its relative scarcity makes it [the commodity — N.B.] subjectively an object of evaluation, while objectively — from the point of view of society — its scarcity is a function of the expenditure of labour and finds its objective measure in the magnitude of this expenditure” (Rudolf Hilferding: Böhm-Bawerk’s Marx-kritik, p.13).

93. In another section of his work, Böhm-Bawerk recognises the significance of this factor, but this merely illustrates his inconsistency, since the costs of production are, according to him, dependent only on the marginal utility. This is the origin of his circulus vitiosus; but we shall say more on this below, in another connection. Thomas Nixon Carver by no means contents himself with viewing meteors that have fallen from the skies, but analyses, above all, goods that have been produced (cf. Carver: op. cit., pp. 27-31).

94. Let us point out also the following circumstance. Böhm-Bawerk previously maintained (in his effort to free himself from the contradictions of the theory of substitution utility) that price could not constitute a controlling principle, since the price paid by the specific individual has already been shaped with the active participation of this individual in the market; but he seems to have forgotten all this now.

95. With regard to the “direct” and “indirect” satisfaction of wants, it should be noted that Böhm-Bawerk here deviates from Karl Menger’s terminology: “The value in the former [i.e., in an economy in kind. — N.B.] and the value in the second case [subjective evaluation of exchange value. — N.B.] are ... merely two different forms of the same phenomenon of economic life. But what bestows its specific character on the phenomenon of value in each of the two cases is the circumstance that the goods attain the significance which we call their goods value in the eyes of the economic man who has control of them, in the former case by reason of their direct use, and in the second case by reason of their indirect use. We therefore call the value in the former case use-value, but in the latter case exchange value” (Karl Menger: Grundsätze der Volkswirtschaftslehre, Vienna, 1871, pp. 53, 54).

96. “Rightly viewed,” says Wilhelm Scharling, “the subjective evaluation of the condition of the goods appears then [in indirect evaluations. — N.B.] by reason of this ‘subjective exchange value’, to be the subordinate element” (Professor Wilhelm Scharling, op. cit., p.29.)

97. Interestingly enough, Karl Menger, in a lengthy article dealing particularly with money (see “Geld” in the Handwörterbuch der Staatswissenschaften, vol. IV) presents practically no theoretical analysis of money.

98. “The use-value of the money commodity becomes twofold. In addition to its special use-value as a commodity (gold, for instance, serving to stop teeth, to form the raw material of articles of Luxury, etc.), it acquires a formal use-value originating in its specific social function” (Karl Marx: Capital, vol. I, p.102).

99.. Gustav Eckstein: “Die vierfache Wurzel des Satzes vom unzureichenden Grunde der Grenznutzentheorie. Eine Robinsonade.” Die Neue Zeit, vol. XXII, Second Half, p.812. The Russian literature has also made reference to this fact: cf., for instance, A. Manuilov: The Concept of Value according to the Theory of the Economists of the Classical School, p.26, in Russian.

100. One of the latest advocates of the Austrian School, a specialist in the theory of money, Ludwig von Mises, admits, in his book, Theorie des Geldes und der Umlaufsmittel, that the Austrian money theory is not satisfactory. His words are as follows: “A study of the subjective value of money is impossible without dwelling on its objective exchange value; as opposed to commodities, we are dealing, in the case of money, with the existence of an objective exchange value, a purchasing power, the indispensable condition for utility. The subjective money value is always to be traced back to the subjective value of the other economic goods obtained in exchange for money; it is a derived concept. He who wishes to estimate the significance attaching to a specific sum of money by reason of its power to satisfy a certain requirement, can approach the task in no other way than by resorting to the aid of an objective exchange value of money. Every estimation of money is, therefore, based on a specific view of its purchasing power” (cited from a review by Hilferding in Die Neue Zeit, vol. XXX, Second Half, pp. 1025 et seq.). Mises attempts to eliminate this circulus vitiosus historically, somewhat after the same fashion as Böhm-Bawerk does in the section on substitution value, and of course with the same success. On this point cf. Rudolf Hilferding, op cit., pp. 1025, 1026.

101. Cf. Grundzüge, etc., p.62; Kapital und Kapitalzins, vol. II, part I, p.28, footnote: “The physical share could hardly be calculated for the most part ... and is, furthermore, of no interest at all. On the other hand, it could in most cases be easily determined what quantity of utility or value would have to be dispensed with if one should not have been in possession of a specific single factor — and this quota, determined by the possession or the existence of a single factor, I term its economic share in the total product.”

102. “If one may judge from the economic practice, there exists a rule for distribution. No one, in practice, will stop with the fact that the yield is to be credited to all the productive factors together. Every one understands and applies — with greater or less accuracy — the art of distributing the yield. A good business man must and does know what a good worker is worth to him, how well a machine pays for itself, how much he must charge to raw materials, what is the yield of this parcel of land or that. If he were ignorant of these facts, if he could only make general and inclusive comparisons of investment and yield of production, he would be left entirely without information if ever the outcome should be found wanting as compared with the outlay” (Friedrich von Wieser, Der natürliclie Wert, pp. 70, 71).

103. With the modification that this is true only insofar as we are concerned with the individual psychology of the producer of commodities. The question becomes quite different as soon as we assume a social point of view. Then the entire “economic assignment” (imputation) must refer to social labour alone. These two points of view are sharply distinguished by Karl Marx (cf. for instance, the calculation of profit on the entire invested capital, not only on its variable section). It appears to us that J. H. (Parvus) neglects this fact in his acute criticism of Böhm-Bawerk’s theory of interest. See Parvus: “Ökonomische Taschenspielerei,” Die Neue Zeit, vol. X.

104. “Yet there is nothing in the economics of traffic which could correspond to such a social marginal utility.” Josef Schumpeter: “Bemerkungen über das Zurechnungs-problem,” Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, vol. XVIII, p.102.

105. The differences of opinion between Friedrich von Wieser and Eugen von Böhm-Bawerk as to this question of imputation are based for the most part on their differing attitudes on the question of the totality value of goods, of which we have already spoken. Cf., on this point, Böhm-Bawerk: Kapital und Kapitalzins, vol. II, part II, Exkurs VII. A similar criticism of von Wieser, in connection with a criticism of the concept of “totality value” is also given by Joseph Schumpeter in his already cited Bemerkungen, etc. (Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, vol. XVIII.)

106. By “commodities related in production,” Böhm-Bawerk means such commodities as are produced by the same means of production (op. cit., p.70).

107. We are here concerned with the reproducible “goods. The theory of non-reproducible goods (and their price, not their value, to make use of the Marxian terminology), would require separate study. In our opinion, precisely the value theory of freely reproducible goods is of great importance, since it is here that the course of the entire social evolution is reflected, and since the ascertaining of the laws inherent in this evolution is precisely the principal task of political economy. As an example of a price theory for non-reproducible goods we may mention the Marxian theory of rent as connected with the question of the cost of real estate.

108. The complete text of this interesting passage is as follows: “Yet I have intentionally spoken above of ‘causes’ ‘which become operative on the side of the productive goods’, and not of ‘causes’ which become operative on the side of the value of the productive goods. For it appears to me that even though the causal impetus may have proceeded from circumstances accomplishing themselves on the side of the productive goods, the further causal chain is of such nature as to place the value of the productive goods in the chain not before, but behind the value of products. The greater number of a productive tool is (indirectly) the cause for the lesser value of the product; but the lower value of the productive tool, which is likewise an indirect result of this condition, is nevertheless not a cause, but a consequence of the lesser value of the products. The causal chain is as follows: the increased quantity of (copper ores and) copper results in a greater quantity of copper products. This produces a more pronounced satiation of the requirements to be satisfied with products of this kind; in this manner, a less important need advances to the position of the ‘dependent wants’, thereby the marginal utility and the value of the copper products, and, in the sequel, the marginal utility and the value of the productive goods, copper, as affected by the formal value, become depressed” (Böhm-Bawerk: Kapital and Kapitalzins, vol. II, part II, Exkurs VIII, p.257).

109. To be precise, it is not a cause, but a condition. Failure to understand this results in the same kind of confusion as is produced in sociology by the theory of mutual interaction. Cf., for example, Heinrich Dietzel: “This alternative [namely, as to which is to be considered as the cause: the value of the production costs or the value of the product. — N.B.] does not exist, however. On the other hand, the value of the productive goods and the value of the marginal goods mutually condition each other. No productive goods has economic value whose products (articles of consumption) are merely worthless — useless and superfluously abundant objects. Thus the value of the product appears as a cause of the value of the productive goods” (Heinrich Dietzel: Zur Klassischen Wert- and Preistheorie in Conrad’s Jahrbücher, Third Series, vol. I, p.694.)

110. “Böhm-Bawerk ... imagines it is not its value, but the plentifulness of a means of production which, in such cases ('indirectly’) decreases the value of the product. This is a very neat thought. But it can hardly be considered more correct than the theorem: It is not the value of the product, but the demand for the product, which reacts on the value of the means of production. Surely the opposition between value and plentifulness does not appear very cogent. The plentifulness of production goods will have an influence on the presumable prospective value of the product — and, indeed, on its presumable quantity — only if it has already exerted an influence on the value of the means of production, or, at least, if this influence may be adjudged in advance. It will not have such an effect, if this effect on the value of the means of production has been frustrated by a cartel or by an increased demand in some other field in which this means of production may be utilized.” (Dr. Karl Adler: Kapitalzins und Preisbewegung, published by Duncker & Humblot, München and Leipzig, 1913, pp. 13, 14, footnote.)

111. Exkurs XIII (“Wert and Kosten”) p.258, footnote.

112. Wilhelm Scharling: Grenznutzenthrorie and Grcnzwertlehre, Conrad’s Jahrbüchcr, Third Series, vol. NXVII, p.25: “The entire chain will be too long to enable one to carry out the calculation.”

113. Böhm-Bawerk: Grundzüge, etc., p.538: “Die Höhe des Marktpreises, den jeder Produzent für sein Produkt erlangen kann, ist massgebend für die Rohe des subjektiven (Tausch-)Wertes, den er auf dasselbe legt ...,” which, translated into English, is: “The magnitude of the market price capable of attainment for his product by each producer, is decisive in fixing the magnitude of the subjective (exchange-) value assigned by him to it... .”

114. Cf. Shaposhnikov: The Theory of Value and Distribution, in Russian, pp. 37, 38; the references to Stolzmann and Manuilov will also be found in this passage.

115. Cf. Gustav Eckstein, in Die New Zeit, vol. XXVIII, part I, p.37. Böhm-Bawerk himself says: “A lumber dealer who wishes to buy lumber for manufacturing staves for barrels will quickly conclude his calculation as to the value the lumber has for him: he will estimate how many staves he can make of the lumber and he knows what the staves are worth according to the present market conditions; he needs to consider no other factor.” Grundzüge, etc., p.65. No doubt the lumber merchant will soon have finished his calculations and “needs to consider no other factor”; unfortunately Böhm-Bawerk feels obliged to consider the other factors also.

116. Ibid., p.500. By “accepted for exchange” Böhm-Bawerk means the relation between the goods to be acquired and the goods in one’s own possession. “Es ist also, allgemein gesagt, derjenige Tauschbewerber der tauschfähigste, der sein eigenes Gut im Vergleich zum einzutauschenden fremden am niedrigsten, oder was dasselbe ist, der das fremde Gut im Vergleich zu dem dafür hinzugebenden eigenen Gut am höchsten schätzt.” (Ibid. p.491.) Merely in order to give an idea of the confused and stilted language employed at times by Böhm-Bawerk, we are here appending an English translation of the above quotation: “Generally speaking, therefore, that applicant for exchange will be most capable of effecting the exchange who estimates his own goods, as compared with the goods in another’s possession to be obtained in the exchange, at the lowest value, or, what amounts to the same thing, who estimates the other man’s goods, as compared with the goods to be given in exchange, at the highest value.”

117. Peter Struve makes the difficulty of the task an excuse for not attempting it. See his article “A Contribution to the Criticism of the Fundamental Concepts ... of Political Economy” in the Russian periodical Zhizn; see also N. Shaposhnikov, op. cit., Preface. A similar scientific scepticism with regard to the theory of distribution may also be found in Eduard Bernstein: “The distribution of social property has at all times been a question of might and organization”; [is it possible?] or: “the problem of wages is a sociological problem which can never be explained by economics alone”; Eduard Bernstein: Theorie und Geschichte des Sozialismus, 4th edition, pp. 75. 76; cited by Lewin, op. cit., p.92.

118. Böhm-Bawerk says concerning his theory: “While in the remaining sections of this work [i.e., Kapital und Kapitalzins. — N.B.] I have on the whole been able to follow the lines of previous theory, I am in a position to expound a theory explaining the phenomenon of capital interest which is an entirely new one.” Positive Theorie, first half-volume, p.18.

119. Shaposhnikov, op. cit., p.81. Although Shaposhnikov formulates the problem correctly, he loses his way in the mazes of eclecticism. “Although we,” he says, “do not hold their [i.e., the aforementioned economists. — N.B.] fundamental point of view, we yet [!] recognize that they have offered such arguments in their principles of self-denial, ascription, and marginal utility as must be given serious consideration.” Shaposhnikov entirely fails to see that these “principles” are indissolubly connected with the unhistorical standpoint, which is the point of the whole business.

120. Op. Cit., p.54. Böhm-Bawerk also calls capital “earning capital” or “private capital”; social capital, on the other hand, might very aptly be termed “productive capital” (op. cit., p.55). It results that the concept of social capital is narrower than that of individual capital (earning capital equals private capital); furthermore, the concept of the “acquisition of goods” is of entirely different nature in the two cases. On this point see R. Stolzmann: Der Zweck in der Volkswirtschaftslehre. We are pointing out this confusion though it is of no importance in our present discussion.

121. Cf., for example, Böhm-Bawerk: Positive Theorie, p.587, footnote; here Böhm-Bawerk reproaches R. Stolzmann for not distinguishing between the essence and the manifestation, between a “profit as such” and present profit.

122. Böhm-Bawerk: Positive Theorie, p. 82. A similar formulation of the question is also to be found in the Americans; cf., J. B. Clark: The Distribution of Wealth, New York, 1908; also Thomas Nixon Carver, op. cit. It seems the Americans have reached a different solution of the question of profit.

123. In order to avoid misunderstanding, let us explain: Though we are here speaking of value in a socialist society, we must under-stand a specific category by this word, which is different from the concept of value in the commodities economy. In both cases, labour is the determining factor. But while in the socialist society the estimation of labour constitutes a conscious social process, it constitutes in present-day society an elemental basic law of prices, in which the genuine element of (labour) valuation is lacking.

124. Not to mention the fact that the socialist society presupposes the elimination of narrow specialisation.

125. It is interesting to note that even economists who distinguish between “purely economic” and “historic-legal” conceptions of capital, have eyes only for private capital and ignore entirely the fact of the class monopolization of capital. To a certain extent this is true even of Rodbertus. Adolf Wagner gives the following definition of capital: “Capital, as a pure economic category, considered independently of the existing legal conditions for the possession of capital, is a stock of such economic goods as may serve as technical means for the manufacture of new goods in an establishment: it is a stock of means of production or a ‘national capital’, or respectively, a section of the latter. Capital, in the historical-legal sense, or possession of capital, is that section of the total fortune of a single person (the italics are the author’s own) which serves this person as a means of acquisition in the gaining of an income from the capital (rent, interest), in other words, is owned by this person for this purpose, a ‘rent fund’, ‘private capital'” (Adolf Wagner, Grundlegung, second edition, p.39, cited from Böhm-Bawerk’s quotation, pp. 124, 125). In general, Böhm-Bawerk’s frivolous attitude toward the historical phase of the question is very striking: on page 125, for instance, he remarks that of course everything is historical in character; machines did not arise before the eighteenth century; books have only begun to appear since the invention of printing, etc. He never suspects for a moment that he is dealing with entirely different types of economic structure. Böhm-Bawerk can see in the Marxian point of view only the fact that Marx regards capital as “exploitation capital” (see p.90).

126. “Merely for the reason that the workers cannot afford to wait until the roundabout course begun by them, in the winning of raw materials and the manufacture of implements, has achieved its final fruition, they become dependent economically on those who possess the above-mentioned intermediate products in the finished state, in other words, on the ‘capitalists"” (Ibid., p.150).

127. It is for this reason that Macfarlane designated the Böhm-Bawerk theory of profits as an “exchange theory”; Bdhm-Bawerk himself considers it more appropriate to call it an “Agio theory”; cf., Böhm-Bawerk: Kapital and Kapitahins.

128. An American advocate of this theory, S. N. Macvane, even supposed that the word “abstinence” might be replaced by the word “waiting”; cf. Böhm-Bawerk: Kapital und Kapitalzins, appendix: Macvane himself attempts to distinguish carefully between his theory and that of abstinence.

129. With his stock of ninety fish, he can make nets and thus increase the productivity of his fishery operations; furthermore, Böhm-Bawerk, as is quite natural for a leisured professor, terms this category of profits “interest.”

130. See Böhm-Bawerk: Positive Theorie, pp. 539 et seq. Further details will be found below.

131. R. Stolzmann: Der Zweck in der Volkswirtschaftslehre, p.288. “... For, what else is the ‘detaxation’, the ‘agio’ of the profit on capital, than the utilisation of an advantage accruing to the capitalist by reason of his happening to be the ‘happy possessor’, who occupies a peculiar status which he enjoys by reason of the property and distribution functions of the present order of society, a status to which the designation of ‘surplus value’, if we may use Böhm-Bawerk’s own words, ‘applies even more appropriately than could even have been dreamed of by the socialists who invented this terminology’.”

132. J. H. (Parvus): “Ekonomische Taschenspielerei: Eine Böhm-Bawerkiade,” Die Neue Zeit, Jahrg. 10, vol. I, p.556.

133. “As a general rule, present goods have a higher subjective value than future goods of the same type and quantity. And since the resultant of the subjective evaluations determines the objective exchange value, as a general rule the present goods will also have a higher exchange value and a higher price than future goods of the same type and quantity” (Positive Theorie, p.439).

134. In the last analysis, Bdhm-Bawerk traces back expenditures in the purchase of means of production to expenditures for the acquisition and the use of the soil and of labour. “For the sake of simplicity,” he pays no attention to the former.

135. “Then the present goods will also be reserved for the latter [the future goods. — N.B.] and will derive its value from it, it then happens to be equal in value to a future goods that might serve the same use” (Positive Theorie, p.442).

136. “The future goods which can derive its own [value. — N.B.] only from ... a future (the italics are the author’s own) use” (Böhm-Bawerk: Positive Theorie, p.442).

137. Friedrich von Wieser: Der natürliche Wert, p.17, cf. also Ladislaus von Bortkievitz: Der Kardinal fehler der Böhm-Bawerkschen Zinstheorie, p.949.The fact that cases of the opposite type are by no means rare militates against Böhm-Bawerk’s assertion that a predisposition to underestimate the value of future goods is of very general occurrence.” The same point is raised by Stolzmann: op. cit., pp. 308, 309.

138. Wilhelm Lexis: Allgemine Volkswirtschaftslehre, p.72. Cf. also Parvus, op. cit., p.550: “The present value of labour for the worker is a fiction: it can at most be spoken of mathematically as a quantity equal to zero.”

139. Cf. also p.461 of the same work. Here Böhm-Bawerk determines, among other things, the value of the aggregate as the individual value multiplied by the number of individuals, which is in contradiction with his own theory. He attempts in vain to extricate himself from his contradiction on pp. 461, 462. Furthermore, this question really is of a different order and was already discussed by us in the appropriate portion of Chapter I.

140. The difference between Table IV and Table I is merely that Table I gives its figures in products, while Table IV gives its figures in values.

141. Positive Theorie, p.462. In order to elucidate Bdhm-Bawerk’s position, we must point out that his concept of the “production period” is essentially different from the usual understanding of the term. According to him, this period is not the entire duration of time embracing all operations, including preparatory operations, for, in our epoch, in which “production without capital has almost entirely disappeared ... such a strict calculation would be obliged to start the production period of almost every article of consumption in some long-past century” (p.156). “It is more important and more correct, however, to consider the epoch that elapses, on an average between the expenditure of the successively applied productive forces, the labour, the utilisation of the soil, on a certain task, and the completion of the ultimate articles of use. That production method is more pronouncedly capitalistic which as an average rewards more tardily the expenditure of original production forces upon it” (p.157). If the production of a unit of goods on an average requires an expenditure of one hundred days of labour, and if, furthermore, the completion of the process would require one day of labour to be performed ten years before such completion, and one day each in the ninth, eighth, seventh, sixth, fifth, fourth, third, second, and in the last year preceding completion, while the remaining (ninety) days must be put in just before the completion of the entire process, the first day of labour would be rewarded in ten years, the second day in nine years, etc. The average reward for all ten days would be:

10 + 9 + 8 + 7 + 6 + 5 +4 + 3 + 2 + 1 = 55

100 100

i.e., approximately in one-half year. This is the production period, i.e., a unit of the means of production of one hundred days would be expended in the production process, whose production period is one-half year. The longer the production period, the greater the yield of production, the greater therefore “the productivity of capital.” Lewin excellently characterises the complete confusion and folly of this notion: “First and foremost, we cannot understand how and why Böhm-Bawerk arrives at this average in the calculation of the production period. The tool produced in the above example, ten years ago, and which was necessary for the production of the now completed article of use, belongs entirely and not only one-tenth to the production of this commodity; the other intermediate products may also not be credited only as applications. In calculating costs, only a certain appropriate portion of the means of production may be considered; in determining the duration of production, on the other hand, each means of production must be considered as a whole” (op. cit., p.201). The concept of the production period, on which Böhm-Bawerk’s calculations are based, is therefore completely nonsensical; even Böhm-Bawerk does not attempt to apply this definition at all places.

142. A similar interpretation of this point is given by Shaposhnikov, op. cit., p.120. As a matter of fact, the relation between the duration of the production process and the supply in stock is more complicated in Böhm-Bawerk (cf. Positive Theorie, pp. 532-536); yet this is of no import to us at this moment.

143. For the sake of simplicity, we are assuming the same degree of diminution as is taken by Böhm-Bawerk to be the result of the first two causes, i.e., the series: 5, 3.8, 3.2, 2.2, etc.

144. Among other things, Böhm-Bawerk fails to consider in his tables the diminution of the value of the product, as its quantity increases, i.e., he ignores the most important postulate of the theory of marginal utility.

145. Bortkievitz, op. cit., pp. 957, 958: “Yea, the technical superiority of present production goods is supposed, indirectly, to result in a value agio in favour of present articles of consumption, since the availability of the latter is said to ‘liberate’ certain means of production in favour of ‘a technically more profitable service of the future’. Here the argumentation is moving in a circle. For as a matter of fact an excess in value held by present productive goods over future productive goods can exist only as the result of a variation in the estimation of articles of consumption separated by an interval of time, and now this difference in the evaluations is to be explained, in its turn, by the value relation between present and future productive goods!”

146. As we have already learned from the chapter on value, it is very important, from the point of view of the Austrian School, to know not only the quantity of the goods supplied and demanded (the “volume” of supply and demand), but also the subjective evaluations of each unit on the part of both parties concerned (“intensity”). Definite prices can only be arrived at as a result of the ratio between these two quantities.

147. Op. Cit., p.538; Böhm-Bawerk therefore admits in this passage that the capitalists do not estimate their present goods as higher than future goods.

148. Op. Cit., p.541; the competition among the capitalists as a result of the production credit, is therefore here considered to be the chief cause for the formation of profit.

149. Karl Marx: Capital, vol. II, pp. 421, 422; see also, in the same work, the section on Adam Smith’s resolving of the exchange value into v + s, op. cit., p.427 et seq.

150. Cf. for example, the Positive Theorie, pp. 541, 542, 543, 544. We are ignoring the arguments concerned with such persons as seek consumption credit, for Böhm-Bawerk ascribes practically no importance to these arguments; see Positive Theorie, p.296, footnote.

151. An old, now almost forgotten economist, N. F. Canard, excellently formulated this Marxian thought, at any rate he formulated it at least as well as the much vaunted Rodbertus; see N. F. Canard: Principes d'economie politique, Paris, An×(1801) ; in this book, which was couronné par l'Academie, the author says: He owes it, therefore, only to his industry and his labour, that there exists such a wide difference between civilised man and natural or wild man” (page 3). “We must therefore distinguish, in the case of man, between the work necessary for self-preservation, and superfluous work” (page 4). It is only by accumulating a quantity of superfluous labour that man has been able to emerge from the savage state and to create for himself, in succession, all the arts, all the machines, and all the means of multiplying the product of labour by simplifying the labour” (p.5).

152. The destruction of capitalism, which has already been achieved in Russia, and is beginning all over Europe, is now assigning the objective physical quality of the product to a role of principal importance and relegating to the background the product considered as value; of course, from the point of view of capitalism, this is only another phase of the “abnormality” of the situation.

153. This article was originally written as a contribution to the Marxian Journal Prosvyeschenye (“enlightenment”) ; it contains an analysis of the eclectic theory of the principle of coalition as applied to the theory of value. It is therefore an appropriate appendix to our present book. Of course, certain passages in this essay, which have no direct bearing at all on the logical side of the theory of Tugan-Baranovsky, which is now out of date, have been outdistanced by the facts. Yet we are leaving the entire article in its original form, the more since certain predictions in the article have been literally fulfilled. Thus, for example, Mr. Bulgakov has taken the veil, while Tugan-Baranovsky has succeeded in becoming a minister in the counter-revolutionary cabinet. It is also interesting to note that Mr. P. P. Maslov is now attempting to emulate Tugan-Baranovsky’s practices.

154. To be more precise, it must be equal at the margin.

155. In order to avoid misunderstandings, let us point out expressly that we are for the present not directing our criticism against Tugan-Baranovsky’s terminology, and are using the terms “value” and “labour costs,” in the same sense as they are found in Tugan-Baranovsky.

156. Tugan-Baranovsky refers here to Sombart’s article: “Zur Kritik des ökonomischen Systems von Karl Marx,” see Braun’s Arckiv, vol. VII.

157. We are here speaking of the social “costs”; as we shall see below, this designation is very important.

158. Op. Cit., p.70. We shall mention another point, although it has no direct connection with the question; Mr. Tugan-Baranovsky does not understand (pp. 68, 69) the importance of exchange value in Marx; we are therefore glad to elucidate this concept for him. In the course of his analysis, Marx is occasionally obliged to assume that the commodity is sold according to its cost of production (value). In this case, costs would be equivalent to exchange value; this means that Marx is not speaking of the absolute, but of the relative quantity.

158. Tugan-Baranovsky: See page 55..