Marx, Classical Political Economy and the Problem of Dynamics - Henryk Grossman 1941


The dominant view of Marx is to regard him as a student of and successor to the Classical economists; as an economist who 'completed' that work.[1] The result is a precisely formulated conception: the labour theory of value, as expounded by Smith and Ricardo, in essence leads on to socialism - a consequence left unstated by the theory's founders. Marx was the first to think Ricardo's theory through to its conclusion, completing the latter's final unstated words, as it were.[2] However, this interpretation begins to look extremely questionable when it is viewed from the vantage point provided by the critique of political economy, which posits that 'the development of political economy and of the opposition to which it gives rise keeps pace with the real development of the social contradictions and class conflicts inherent in capitalist production'. [3]


Marx distinguishes four phases in the development of political economy: the first embraces the period of 'Classical political economy', and the remaining three the various stages of 'Vulgar Economics'. For Marx, the factor which unites the representatives of Classical political economy into one intellectual school is the basic similarity of their historical situation, despite their sometimes great individual differences, e.g. between Petty, Hume and the Physiocrats, and between the latter and Smith or Ricardo .[4] This period was that of the coming into being of modern capitalism, hence the modern working class, and consequently a time in which the 'class struggle . . . was as yet undeveloped'. [5] Classical political economy is the expression of industrial capitalism during its rise and struggle for power; its theoretical and practical thrust is not directed against the proletariat, which is still weak, but against the representatives of the old society, the feudal landowners and outmoded usurers. The feudal -forms of ground-rent and 'antediluvian' interest-bearing capital, 'must first be destroyed as independent forms and subordinated to industrial capital'.[6]


Ricardo's theory of ground-rent, as Hume's critique before it,[7] was aimed directly at feudal land-ownership; at the same time Ricardo's theory of value did, in theory, announce the possibility of a struggle between capitalist and wage-labourers. The industrial bourgeoisie and its theory are still 'naive', and can afford to engage in the pursuit of truth without regard for the possible dangers and consequences, as yet unsuspected, which follow from its own principles. The Classical economists consequently expound the labour theory of value without any fear of theoretically raising the contradictions between the working class and the propertied class which can be derived from it,[8] or of establishing the distinction between productive and unproductive labour - which for them was chiefly meant to embrace the representatives of the feudal occupations.


According to Marx, 'Classical' is a term which applies to those authors who make up this 'battle-front', such as John Locke in his polemic against 'unproductive' feudal land-ownership and ground-rent, which in his view, 'does not differ at all from usury. The position adopted by the Classical economists becomes particularly clear in their doctrine of 'productive and 'unproductive' labour which serves to clarify the relationship of the rising bourgeoisie to the preceding classes and ideologies. The doctrine is in stark contradiction both to the view held in the ancient world, 'in which materially productive work bore the stigma of slavery and was regarded merely as a pedestal for the idle citizen' and to that of the social classes and occupations of the feudal period, which were declared to be unproductive.


In Marx's view the language of Classical political economy is, 'the language of the still revolutionary bourgeoisie which has not yet subjected to itself the whole of society, the State etc. All these illustrious and time-honoured occupations sovereign, judge, priest, officer etc. -with all the old ideological professions to which they give rise, their men of letters, their teachers-and priests, are from an economic standpoint put on the same level as the swarm of their own lackeys and jesters maintained by the bourgeoisie and by idle wealth -the landed nobility and idle capitalists. They live on the produce of other people's industry'[9]. As long as the bourgeoisie has not yet confronted the 'really productive' workers in conscious and openly hostile antagonism, a class which could equally, well claim that 'they (the bourgeoisie) live from the produce of other people's industry, it can still face the 'unproductive classes' of the feudal period as the 'representative of productive labour'.


When the bourgeoisie has consolidated its power in the course of economic development, partly assumed dominance over the state, and partly concluded a compromise with the feudal classes and the 'ideological professions', and in addition once the proletariat and its theoretical representatives arrive on the scene and deduce egalitarian and socialist conclusions from the Classicals' labour theory of value (the right of the working class to the full fruits of its labour), 'things take a new turn', and political economy 'tries to justify "economically" from its own standpoint, what at an earlier stage it had criticised and fought against' .[10] At this point Classical political economy disappears from the historical stage, and the hour of Vulgar Economics is at hand; Chalmers, MacCulloch, J.B. Say and C. Harnier -the second phase of political economy. The Vulgar Economics of the 1820s and 1830s -the 'metaphysical period' of political economy[11] -was the expression of the victorious, and hence now conservative, bourgeoisie. Apologetically seeking to obscure the true nature of the prevailing order, this class found its theoretical representative in England in Thomas Malthus. He opposed any tendency in Ricardo's work which was 'revolutionary against the old order'.[12] Like Ricardo, Malthus did indeed wish to have' bourgeois production', but only as long as 'it is not revolutionary . . . but merely creates a broader and more comfortable material basis for the "old society"', a society with which the bourgeoisie had negotiated a compromise.[13]


This was accompanied by an abandonment of the distinction between productive and unproductive labour -out of fear of a proletarian critique which had already made its demands known,-which was replaced in Say and Malthus, for example, by the view that all work is equally productive. The real meaning of Ricardo s theory of ground-rent, originally directed against the land-owners, was similarly turned into its direct opposite by Malthus, who introduced the problem of the disposal of the product under capitalism. Although Malthus does in fact point to the inevitability of generalised overproduction, affecting all branches of the economy, he only does so in order to prove the necessity of unproductive consumers and classes, i.e. 'buyers who are not sellers', so that the sellers can find a market where they can dispose of their supply of goods. Hence the necessity of waste and profligacy (including war).[14] Finally. Ricardo's labour theory of value is also abandoned. By conceiving of wages as a proportion of the total social product (relative wages). Ricardo simultaneously states the existence of the class relation which is inherent to capitalism .[15] The development of the real contradictions of capitalist production is accompanied by a polarisation of the theoretical class antagonism contained, in embryonic form, in Ricardo's labour theory of value. The theoretical opposition 'to political economy has (already) come into being in more or less economic, utopian critical and revolutionary forms.'[16]


Thompson (1824), Percy Ravenstone (1824) and Hodgskin (1825, 1827), the theoretical representatives of the working class in England, used Ricardo's labour theory of value to derive egalitarian conclusions and demands.[17] In the face of such demands-as a text by Malthus from 1832 openly admits[18]-the classical labour theory of value was progressively abandoned, and transformed into a meaningless theory of costs of production: the specific value-creating role of labour was utterly obliterated. Land and capital were now attributed with their own productivity -creation of value! -and labour was recognised as simply another factor of production alongside them. This in turn led to the overthrow of Ricardo's conception of the wage as a relation expressing the share of the working class in the total social product which it itself has created -hence justifying the capitalists' profit as the result of the 'productivity' of their capital (not labour). In similar fashion ground-rent was justified as the fruit of the productivity of the land, which meant that the antagonism towards land-ownership which characterised Classical theory now became meaningless and irrelevant.


The third phase of political economy, the period following the July Revolution, in the 1830s and 1840s, was a time of sharpening class antagonisms, and an ever growing number of proletarian critiques of the prevailing social order in England (John Cray, 1831 ; Bray, 1839) and in France (Pecqueuer). It was a period which also saw the first attempts by the working class at political organisation: the St. Simonists, Buchez, Louis Blanc (Organisation du travail, 1839), and Proudhon's struggle against interest-bearing capital.



The outcome was a strengthened phase in the vulgarisation and transformation of Classical political economy .[19] The last remaining vestiges of the original content of the theory were eradicated: those real contradictions of capital which were still admitted and pointed out by Malthus and Say (Malthus's theory of generalised crisis, Say's disproportionality theory) were now denied and disappeared from economic theory. In the works of F. Bastiat (1848) capitalism has been transformed into a system characterised by harmony.


The fourth phase of political economy, after 1848, falls into the period in which class antagonisms became fully developed, and unmistakably visible in the June battles in Paris, when, for the first time, the working class struggled for its own aims. The result was the complete dissolution of the Ricardian school and a departure from any real theory, which was abandoned and replaced by the historical description of phenomena (a school with W. Roscher at its head) .[20] Alternatively, economic theory was degraded to the status of a pseudo-theory, by leaving the terrain of economic reality and taking flight to the higher regions of psychology. (First attempts at a subjective theory of value by Senior and Gossen, 1853 .) Both these moves served to reach the desired end: a turning away from real class antagonisms and the granting of an equal role to capital and labour in the creation of value. The theory of costs of production, the equalisation of labour, land and capital as factors in the creation of value, was unsatisfactory as it represented a trivial circular argument. In attempting to explain the process of the creation of value, the value of products was reduced to the value of the factors jointly acting to produce the product, i.e. value is explained by value. (No such circular proof exists in Marx's labour theory of value, as it is labour which creates value, but is itself not value: it is the use-value of the commodity labour-power). The force of the critique made by the left Ricardians necessitated the abandonment of the theory of costs of production: however, since no one wished to return to the labour theory of value a way out was found in the transformation of economics into a branch of psychology. In principle Senior had already accomplished this change in his Political Economy (London, 1836). Basing himself on one of the two interpretations of labour provided by Smith, according to which labour is not seen as an objective expenditure of energy (measured by time) but rather the subjective effort employed in producing an article, Senior treated work as a psychological act of sacrifice. In order for capital to be granted an equal status with labour as a parallel factor in the creation of value, it must also be turned into a psychological variable. If the wage was seen as the reward for the effort of work, then the interest on capital became the reward for the subjective sacrifice of saving, and the renunciation of immediate consumption.


The 'development' of the individual phases of political economy, as sketched out above, forces us to the following observation. Can Marx, the theoretician of the proletariat in a progressive stage of capitalist development, take over and complete' the doctrines and categories of Classical political economy, in particular those of Ricardo, as the prevailing view maintains, if Ricardo, like Classical economy in general, expressed bourgeois interests at a much lower stage of capitalist development, a period of undeveloped class antagonisms? We must not only reject this view, but also the thesis which proposes that Marx's original achievement consists in a 'socialist critique' of capitalism - i.e. that Marx drew the socialist conclusions inherent in Ricardo's labour theory of value ; that he was a 'Ricardo turned socialist'. Since pre-Marxist socialists also made socialist criticisms of capitalism, such criticism cannot betaken as the specific differentiating feature of Marls theory. In fact, Marx reproached the egalitarian, left Ricardians for the 'superficiality' of their critique: namely that they based themselves on Ricardo's theory and merely attacked 'particular results of the capitalist mode of production', instead of its 'manifold presuppositions'. In Marx's eyes an effective socialist critique could only be made from the basis of a new, and specific, theory, and with the assistance of new economic categories.


In his critique Marx proceeds from the mystifying character of the materialised forms of value, i.e. the fact that the relations between persons in the process of production appear as relations between objects, things, in which the material form of the real relations between people becomes obscured. Marx therefore speaks of the deceptive appearance of all forms of value. In contrast to the transparent, pre-capitalist forms, the relations between exploiter and exploited in the modern capitalist form of value are made opaque by the fact that the wage-relation, i.e. a form of value which regulates the 'exchange' between the worker and the employer, gives rise to the semblance that the worker is fully recompensed for all the work performed, and carries out no unpaid labour .[21]


According to the Classicals' theory all exchange transactions correspond strictly to the law of value, i.e. equal amounts of labour time always exchange for equal amounts of labour time: this principle also applies to exchange relations between workers and employers. However, for Marx it is quite evident that there is no exchange of equivalents between worker and employer. If the worker were to receive as much in wages (measured in labour) from the employer as he gives in labour then profit, surplus accruing to the employer, would be impossible, and hence too the capitalist economy which is based on this profit .[22] And since both profit and capitalism do in fact exist, no exchange of equivalents can have taken place. Marx's entire efforts were directed at showing that the transaction between the capitalist and the worker is as much an exchange of equivalents as of non-equivalents, depending on whether this transaction is regarded as being within the sphere of circulation (the market), or as taking place during the process of production. The exchange of equivalents between worker and capitalist on the market is merely a semblance arising from the form of exchange. Despite the apparent exchange of equivalents, 'the laws based on the production of commodities . . . become changed into their direct opposite . . . . The relation of exchange between capitalist and worker becomes a mere semblance belonging only to the process of circulation; it becomes a mere form, which is alien to the content of the transaction itself, and merely mystifies it. The constant sale and purchase of labour-power is the form ; the content is the constant appropriation by the capitalist, without equivalent, of a portion of the labour of others which has already been objectified, and his repeated exchange of this labour for a greater quantity of the living labour of others .'[23]


Marx considered that one of Smith's great merits was that he at least sensed that the exchange between capital and wage-labour represented a chink in the law of value; although he could not explain it he could see, 'that in the actual result the law is suspended.'[24] According to Marx it is precisely the form of exchange-value which mystifies the real content. 'The wage form thus extinguishes every trace of the division of the working day into necessary labour and surplus labour, into paid labour and unpaid labour. '[25] And just as with the wage-form, so all the other forms of value emerging in the process of exchange also serve to mystify the content of exchange.[26] The material forms of value (exchange-value, ground-rent, profit, interest, wages and prices etc .) disguise and invert the real relations between people, by making them appear as the 'fantastic form of a relation between things', 'a social hieroglyphic', 'a mystery .[27]


In fact Classical political economy sought to reduce the mystifying categories of value to 'labour', and thought that in doing so they had grasped the essence behind the deceptive appearance of the phenomena. Marx wanted to demonstrate that this attempt at a solution leads to contradictions which could not be overcome from the standpoint adopted by the Classical economists. Any glance backwards at earlier economic epochs shows that mystifying forms of value first arose in the period of commodity production and exchange .[28] If these forms of value are reduced to 'labour', the consequence would be that their mystifying character would be a form of appearance which would permanently accompany all social processes, as 'labour' is itself a 'nature-imposed necessity' of human existence.[29] However, experience contradicts this view, and makes this contradiction insoluble from the standpoint of the Classical economists.


For Marx, who wanted to capture the 'concrete' in thought, the mystifying categories of value cannot simply be eliminated or ignored, to be replaced by other 'true' categories. Even though the phenomena of exchange-value are mystifying, they are still an important component of reality. The point is not to eliminate the mystifying factor and substitute another category for it, but rather to explain the necessary connection between the two, and hence what is deceptive in the phenomena of value. Because capitalist reality is a dual reality, possessing a mystifying and a non-mystifying side, which are bound together into a concrete unity, any theory which reflects this reality must likewise be a unity of opposites.


It has become almost banal to say that Marx taught that monetary processes should not be regarded as the primary elements in economic events, but simply as their characteristic reflexive forms, and that the real processes associated with the commodity should be sought behind the monetary veil, within the process of production. The polar opposition, which is acknowledged to exist between commodity and money, is repeated within the world of commodities itself as the opposition between the value of the commodity and its use-value: the reason being that it is not the metallic existence of money which is deceptive, but rather its character as value.[30] Marx sarcastically criticises the 'crude vision' of political economy which sees what is misleading in exchange-value solely in its 'completed form as money, but not as already existing in the form of the values of commodities, to the extent that they appear as mutual equivalent forms for each other.[31] It is precisely this equivalent form which Marx regards as providing the mystery: the 'hidden contradiction of useful form and value' within the individual commodity becomes visible in the 'external opposition' of two commodities, in which one counts 'only as use-value' and the other commodity - money -'only as exchange-value .[32]


The illusion is not due merely to the money-form, but to the value-form as a whole. Consequently, one does not only have to search behind the veil of money to find the real economic processes, but also behind the veil thrown up by value in general.

[1]V. Pareto, Les systemes socialistes, Paris, 1902, Volume II, Chap. 13 'L'economie marxiste, p. 340. Arturo Labriola, Historical Materialism and the Economics of Karl Marx, London 1914. Joseph Schumpeter, Economic Doctrine and Method, 1934. R. Wildbrandt, K. Marx, Leipzig, 1920. p. 101. Oskar Englaender, Boehm-Bawerk and Marx, in Archiv fur Sozialwissenschaft and Sozialpolitik, Vol. 60 (1928) p. 380. 'It was Karl Marx who, as a value theorist, was indeed the last great figure in the classical school'. (Paul H. Douglas), Smith's Theory of Value and Distribution in J.M. Clark, P.H. Douglas, Jacob Viner and others, Adam Smith 1776-1926, Chicago 1928, p. 91. The Socialists, Mehring, Conrad Schmidt, and above all Hilferding, held very similar views too: Hilferding did not only regard Marx as an opponent and conqueror, but also the perfector of 'Classical Economy, which begins with William Petty, and finds its highest expression in Marx'. See F. Mehring, Geschichte der deutschen Sozialdemokratie, Stuttgart, 1921, Vol. 11, p. 305. F. Mehring. Aus dem literarischen Nachlass von K. Marx and F. Engels, Stuttgart, 1920. Vol. p. 557. Conrad Schmidt, DieDurchschnittprofitrate auf Grundlage des Marxschen Wertgesetzes Stuttgart, 1889, p. 112. R. Hilferding, Das Finanzkapital, Vienna, 1910 Preface p. VII. Maurice Dobb, as well, does not go beyond this traditional view in his book Political Economy and Capitalism, London, 1938. If Marx offered no adequate 'proof of his theory of value, this was because he was not dealing with a new or unknown doctrine. 'Marx was adopting a principle . . . . The essential difference between Marx and classical political economy lay, therefore, in the theory of surplus-value'. (Chap. III op. cit. 'Classical Political Economy and Capitalism'. p. 67, 68, 75).

[2]'Smith's formulation of the problems of exchange-value and of the distribution of the national product . . . was such as almost inevitably gave rise to the doctrines of post-Ricardian socialists and to the labour theory of value and the exploitation theory of Karl Marx.' (P. H. Douglas, op. cit. p. 77). Prof. Frank H. Knight (Chicago) says much the same thing. '(Marx) is certainly the thinker who above all others worked out the classical (Ricardian) theory to its logical conclusions', (Cf. The American Journal of Sociology, Vol. XLVI July 1940, No. 1, p. 105).

[3]Theories of Surplus-Value, III, p. 501.

[4]Ibid. p. 22-3.

[5]Postface to the Second Edition of Capital Vol. I. p. 96. (Penguin edition).

[6]Theories of Surplus-Value, III, p. 468.

[7]Ibid. 11, p. 118 and I, p. 22.

[8]E.g. Adam Smith, Wealth of Nations Book IV Chap. VII/2, where he states that ground-rent and profit eat away the wage.

[9]Theories of Surplus-Value, I, p. 300-1.

[10]Theories of Surplus-Value, I, p. 301.

[11]Ibid. III, p. 22. Cf. also the Postface to the second edition of Capital Vol. I, p. 97 in which Marx states that 1830 marked the death of scientific bourgeois economics.

[12]Theories of Surplus-Value, III, p. 53.

[13]Ibid. p. 52.

[14]Ibid. p. 22-50 passim.

[15]Ibid. p. 23-26.

[16]Ibid. p. 501.

[17]See 'Opposition to the Economists (Based on the Ricardian Theory)'. ibid. p. 238-319.

[18]Theories of Surplus-Value III p. 63-4.

[19]See 'Essential Difference between Classical and Vulgar Economy', ibid. p. 498-523.

[20]Ibid. p. 502.

[21]'On the surface of bourgeois society the worker's wage appears as the price of labour, as a certain quantity of money that is paid for a certain quantity of labour'. Capital, I, p. 675.

[22]Ibid. p. 676.

[23]Ibid., p. 729-30.

[24]Theories of Surplus-Value I, p. 87.

[25]Capital I, p. 680.

[26]Ibid. p. 169, 173-4 and Contribution to a Critique of Political Economy, p. 34-5.

[27]Capital I, p. 165-67. Theories of Surplus-Value III p. 453, 456, 483.

[28]Capital I p. 153-4.

[29]Ibid. p. 175.

[30]Collected Works, London 1975, Vol. III p. 213-14.

[31]Capital, I p. 148.

[32]Ibid. p. 153.