From The Young Hegel, Georg Lukacs 1938

3.5 Hegel’s economics during the Jena period

THE Economic and Philosophic Manuscripts contain a crucial criticism of The Phenomenology of Mind in the course of which Marx gives a precise account of the achievement and the failing of Hegel’s views on economics.

‘Hegel’s standpoint is that of modern political economy. He grasps labour as the essence of man – as man’s essence in the act of proving itself. He sees only the positive, not the negative side of labour. Labour is man’s coming to be for himself within alienation, or as alienated man’.

The present analysis of Hegel’s economic views will confirm the accuracy of Marx’s observations, both in their positive and in their negative aspects. Hegel did not produce a system of economics within his general philosophy, his ideas were always an integral part of his general social philosophy. This is in fact their merit. He was not concerned to produce original research within economics itself (for this was not possible in Germany at the time), but instead he concentrated on how to integrate the discoveries of the most advanced system of economics into a science of social problems in general. Moreover – and this is where we find the specifically Hegelian approach – he was concerned to discover the general dialectical categories concealed in those social problems.

Needless to say, Hegel was not the first to attempt a synthesis of economics, sociology, history and philosophy. The isolation of economics from other areas of the social sciences is a feature of the bourgeoisie in its decline. The leading thinkers of the seventeenth and eighteenth centuries ranged through the whole territory of the social sciences and even the works of the outstanding economists such as Petty, Steuart and Smith constantly ventured forth beyond the frontiers of economics in the narrower sense. The real originality of Hegel’s exploitation of economic discoveries would only be determinable in the context of a history which sets out to explore the interplay between philosophy and economics in modern times (and even in Plato and Aristotle). Unfortunately Marxist historiography has entirely failed to make such a study, so that almost all the necessary groundwork still remains to be done. The pointers to such work in the writings of the classics of Marxism-Leninism have been largely ignored.

Nevertheless, something can be said about Hegel’s originality here with relative accuracy. For the philosophy of the Renaissance and the Enlightenment, mathematics, geometry and the burgeoning natural sciences and especially physics were the decisive models. The outstanding thinkers of the day consciously based their method on that of the natural sciences, even when their own subject-matter was drawn from the social sciences. (Of course for that very reason, it would be interesting and important to discover whether and to what extent the study of economics had had any influence on their general methodology.) Not until the advent of classical German idealism can any other methodological model be found. Naturally, this model also had its antecedents, I need refer only to Vico whose great achievement in this area has likewise been consigned to oblivion by the scholars of subsequent ages.

The shift in methodology is a product of the new emphasis on the ‘active side’ in philosophy, an emphasis to be found more clearly in Fichte than in Kant. But subjective idealism necessarily held a far too constricted and abstract view of human praxis. In subjective idealism all interest is concentrated on that aspect of human praxis that can be included under the heading of ‘morality’. For this reason the economic views of Kant and Fichte had little bearing on their general method. Since Fichte viewed society, as well as nature as a merely abstract back drop for the activities of moral man, for ‘homo noumenon’, and since that backdrop confronted morality as an abstract negative, rigidly indifferent to the moral activity of man, it naturally did not occur to him to investigate the particular laws governing it. His Closed Commercial State shows that he had made a study of the Physiocrats. However, the main ideas of the work are not influenced by the knowledge he had acquired. It is a dogmatic attempt to apply the moral principles of his philosophy to the various spheres of society and represents a Jacobin dictatorship of morality over the whole of human society

Kant’s thought is in some respects more flexible and less narrow than Fichte’s but he too does not get beyond the point of applying general abstract principles to society. Kant had indeed read the works of Adam Smith and gleaned from them an insight into the nature of modern bourgeois society. But when he attempts to put this knowledge in the service of a philosophy of history he arrives at quite abstract formulae. This is what happens in his interesting little essay Idea for a Universal History with a Cosmopolitan Purpose, where he attempts to make a philosophical study of the principles of progress in the development of society. He comes to the conclusion that Nature has furnished man with an ‘unsocial sociability’ as a result of which man is propelled through the various passions towards progress.

‘Man desires harmony; but Nature understands better what will profit his species; it desires conflict.’

The influence of English thinkers is clear enough. All that has happened is that the discussions have become more abstract without gaining any philosophical substance. For the end-product is nothing but the bad infinity of the concept of infinite progress.

When considering Hegel’s critique of the ethics of subjective idealism, we saw how unremittingly hostile he was to this moralistic narrowmindedness, this unyielding contrast between the subjective and objective sides of social activity. We may infer from this that his view of economics differed fundamentally from that of Kant and Fichte. It was for him the most immediate, primitive and palpable manifestation of man’s social activity. The study of economics should be the easiest and most direct way to distil the fundamental categories of that activity. In our discussion of the Frankfurt period we pointed out in a rather different context that Hegel was decisively influenced by Adam Smith’s conception of labour as the central category of political economy. Hegel’s extension of the idea and systematic exposition of the principles underlying it in The Plienomenology of Mind have been fully defined by Marx in the work previously referred to

‘The outstanding achievement of Hegel’s Phenomenology ... is thus first that Hegel conceives the self-creation of man as a process, conceives objectification as loss of the object, as alienation and as transcendence of this alienation; that he thus grasps the essence of labour and comprehends objective man-true, because real man – as the outcome of man’s own labour. The real, active orientation of man to himself as a species being, or his manifestation as a real species being (i.e. as a human being), is only possible by the utilisation of all the powers he has in himself and which are his as belonging to the species – something which in turn is only possible through the cooperative action of all mankind, as the result of history – is only possible by man’s treating these generic powers as objects: and this, to begin with, is again only possible in the form of estrangement.’

Our examination of Hegel’s historical attitudes has shown us that he was guided in his ideas by an image of modern bourgeois society, but that this image was not simply a reproduction of the retrograde conditions of Germany in his age (even though this did sometimes colour his view of the world much against his will). What he had in mind was rather a picture of bourgeois society in its most developed form as the product of the French Revolution and the Industrial Revolution in England. With this image in his mind and with his insight into the role of human activity in society Hegel attempted to overcome the Kantian and Fichtean dualism of subjectivity and objectivity, inner and outer, morality and legality. His aim was to comprehend socialised man whole and undivided as he really is within the concrete totality of his activity in society.

His efforts were directed at the ultimate questions of philosophy. Kant had greatly advanced the ‘active side’ of philosophy, but the price he had paid was to tear philosophy into two parts, a theoretical and a practical philosophy which were only tenuously connected. In particular, Kant’s idealist sublimation of morality barred the way to an explanation of the concrete interplay between man’s knowledge and his praxis. Fichte’s radicalism only deepened the gulf still further. Schelling’s objectivity did indeed take a step towards reconciling the two extremes but he was not sufficiently interested in the social sciences and his knowledge of them was too slight to make any real difference here. Moreover, he was far too uncritical of the premises of Kant and Fichte.

It was left to Hegel to introduce the decisive change here and what enabled him to do so was the possibility of exploiting the conception of labour derived from Adam Smith. We shall show later on that, given his own philosophical premises, it was not possible for Hegel to explore the economic, social and philosophical implications of this idea to their fullest extent. But for the present the important thing is to emphasise that his approach to the problem was determined by his complete awareness of its crucial significance for the whole system.

To clarify the interrelations between knowledge and praxis it is essential to make the concept of praxis as broad in thought as it is in reality, i.e. it is vital to go beyond the narrow confines of the subjective and moralistic approach of Kant and Fichte. We have looked at the polemical aspect of this problem in some detail. If we now move on to Hegel’s own views on economics in Jena we notice at once that he thinks of human labour, economic activity, as the starting-point of practical philosophy. In the System of Ethics Hegel introduces his discussion of economics with these words:

‘In the potency of this sphere ... we find the very beginning of a thoroughgoing ideality, and the true powers of practical intelligence.’

In the Lectures of 1805 this idea has gained in profundity. In a discussion of tools Hegel remarks:

‘Man makes tools because he is rational and this is the first expression of his will. This will is still abstract will - the pride people take in their tools.

As is well known the ‘pure will’ is the central category of the ethics of Kant and Fichte. If Hegel now sees tools as the first expression of the human will it is evident that he is employing the term in a way directly opposed to theirs: for him it implies a conception of the concrete totality of man’s activity in the actual world. And if he describes this will as abstract this just means that he intends to proceed from there to the more complex and comprehensive problems of society, to the division of labour etc., i.e. that one can only talk concretely of these human activities by talking of them as a whole.

In economics Hegel was an adherent of Adam Smith. This is not to say that his understanding of all the important problems of economics was as profound as that of Smith. It is quite clear that he did not have the sort of insight into the complex dialectic of the ‘esoteric’ economic issues that Marx reveals in the Theories of Surplus Value. The contradictions in the basic categories of capitalist economics that Marx unveils there never became apparent to Hegel. But what Hegel does succeed in doing is to clarify a number of categories objectively implied by Smith’s economics to a degree that goes far beyond Smith himself.

Hegel’s views on economics are put forward first in the System of Ethics. This work represents the high point of his experiments with Schelling’s conceptual system. In consequence the whole argument in this work is tortuous, over-complicated and over-elaborate. Moreover, the static mode of presentation often impedes the dialectical movement implicit in the ideas themselves. Much more mature and characteristic of Hegel himself are the essays on Natural Law and the economic arguments contained in the Lectures of 1803-4 and especially those of 1805-6. The latter contain the most developed statement of his economic views in Jena before the Phenomenology and embody an attempt to trace a systematic dialectical progression from the simplest categories of labour right up to the problems of religion and philosophy. Wherever possible we shall refer to this latest stage of his development. It goes without saying that the Phenomenoloqy is a much more advanced stage even than this. But the particular method used in that work has such profound implications for his general approach that it is very hard to select extracts from it for discussion for our present purposes, although we shall of course return to it later on.

Since the literature on Hegel has with very few exceptions simply ignored his preoccupation with economics, and since even those bourgeois writers who were not unaware that it did form an important part of his work were nevertheless quite unable to assess its significance, it is absolutely essential in our view to begin by stating just what his views were. Marx has shown both the importance and the limitations of Hegel’s ideas in the passages we have quoted. But he presupposes a knowledge of those ideas; it is obvious, then, that we must begin with exposition if we wish to be able to appreciate the rightness of Marx’s assessment. We can reserve our own criticisms for a later stage.

It is very striking that even in his earliest attempts to systematise economic categories Hegel not only uses the triadic form, but also that the various categories are grouped together by means of Hegel’s very characteristic mode of deduction. Thus in the System of Ethics he begins his discussion with the triad: need, labour and enjoyment and he advances from there to the other, higher triad: appropriation, the activity of labour itself and possession of the product. We have already spoken of Hegel’s definition of labour as a purposive annihilation of the object as man originally finds it and we have quoted Hegel’s own statements about this. In the Lectures of 1805 we find the whole matter treated much more clearly, both the content (the relations of man to the object in the work-process) and the form (the dialectics of deduction as the dialects of reality itself). Hegel writes:

‘Determination [dialectic] of the object. It is, therefore, content, distinction – distinction of the deductive process, of the syllogism, moreover: singularity, universality and their mediations. But (a) it is existent, immediate; its mean is thinghood, dead universality, otherness, and (b) its extremes are particularity, determinacy and individuality. In so far as it is other, its activity is the self’s – since it has none of its own; that extreme is beyond it. As thinghood it is passivity, communication of [the self’s] activity, but as something fluid, it contains that activity within itself as an alien thing. Its other extreme is the antithesis (the particularity) of this its existence and of activity. It is passive; it is for another, it [merely] touches that other – it exists only to be dissolved (like an acid). This is its being, but at the same time, active shape against it, communication of the other.

‘Conversely, [dialectic of the subject]: in one sense, activity is only something communicated and it [the object] is in fact the communication; activity is then pure recipient. In another sense, activity is activity vis-à-vis an other.

‘(The gratified impulse is the annulled labour of the self, this is the object that labours in its stead. Labour means to make oneself immanently [diesseitig] into a thing. The division of the impulsive self is this very process of making oneself into an object. ( (Desire [by contrast] must always start again from the beginning, it does not reach the point of separating labour from itself.) ) The impulse, however, is the unity of the self as made into a thing.)

‘Mere activity is pure mediation, movement; the mere gratification of desire is the pure annihilation of the object.

The dialectical movement that Hegel attempts to demonstrate here has two aspects. On the one hand, the object of labour, which only becomes a real object for man in and through labour, retains the character which it possesses in itself. In the Hegelian view of labour one of the crucial dialectical moments is that the active principle (in German idealism; the idea, concept) must learn to respect reality just as it is. In the object of labour immutable laws are at work, labour can only be fruitful if these are known and recognised. On the other hand, the object becomes another through labour. In Hegel’s terminology the form of its thinghood is annihilated and labour furnishes it with a new one. This formal transformation is the result of labour acting on material alien to it yet existing by its own laws. At the same time this transformation call only take place if it corresponds to the laws immanent in the object.

A dialectic of the subject corresponds to this dialectic in the object. In labour man alienates himself. As Hegel says, ‘he makes himself into a thing’ This gives expression to the objective laws of labour which is independent of the wishes and inclination of the individual. Through labour something universal arises in man. At the same time, labour signifies the departure from immediacy, a break with the merely natural, instinctual life of man. The immediate gratification of one’s needs signifies, on the one hand, the simple annihilation of the object and not its transformation. On the other hand, thanks to its immediacy it always starts up again in the same place: it does not develop. Only if man places labour between his desire and its fulfilment, only if he breaks with the instinctual immediacy of natural man will he become fully human.

The humanisation of man is a theme treated at length in the Lectures of 1805. Hegel’s idealist prejudices make themselves felt in his belief that man’s spiritual awakening, his transition from the world of dream, from the ‘night’ of nature to the first act of conceptualisation of naming, his first use of language, can take place independently of labour. In tune with this he puts labour on a higher plane altogether, one where man’s powers are already developed. However, isolated remarks indicate that he did have some glimpses of the dialectic at work here. Thus in his discussion of the origins of language he shows how in the process both object and the self come into being. In a marginal note, however, he observes:

‘How does this necessity or stability come about so that the self becomes its existence, or rather, that the self, that is its essence, becomes its existence? For existence is stable, thing-like; the self is the form of pure unrest, movement or the night in which all is devoured. Or: the self is present, (universally) immediate in the name; now through mediation it must become itself through itself. Its unrest must become stabilisation: the movement which annuls it as Unrest, as pure movement. This [movement] is labour. Its unrest becomes object, stabilised plurality, order. Unrest becomes order by becoming object.’

The decisive importance of labour in the process of humanisation is shown most vividly when Hegel writes his ‘Robinsonade’: his story of the transition to civilisation proper. His attitude to the so-called state of nature is quite free of the value judgement, whether positive or negative, which the state of nature so frequently invited in the literature of the Enlightenment. His view is closest to that of Hobbes and is expressed most trenchantly in a paradoxical thesis which he defended at his doctoral examination:

‘The state of nature is not unjust, and for that very reason we must leave it behind us.’

The development of this idea leads Hegel as early as The System of Ethics to formulate his ‘Robinsonade’ of ‘master and servant’. This theme is taken up again in The Phenomenology of Mind and remains an integral part of his philosophy ever after.

Let us now consider this, Hegel’s most mature statement of the transition from a state of nature of civilisation, as we find it set out in The Phenomenology of Mind. The starting-point is Hobbes’ bellum omnium contra omnes, the internecine wars of man in his natural condition which Hegel describes as annihilation without preservation. The subjugation of some people by others gives rise to the condition of mastery and servitude. There is nothing novel or interesting in this. What is important is Hegel’s analysis of the relations between master and servant and between them and the world of things.

‘The master, however, is the power controlling this state of existence, for he has shown in the struggle that he holds it to be merely something negative. Since he is the power dominating existence, while this existence again is the power controlling the other (the servant), the master holds, par conséquence, this other in subordination. In the same way the master relates himself to the thing mediately through the servant. The servant being a self-consciousness in the broad sense, also takes up a negative attitude to things and annuls them; but the thing is, at the same time, independent for him, and, in consequence, he cannot, with all his negating get so far as to annihilate it outright and be done with it; that is to say, he merely works on it. To the master, on the other hand, by means of this mediating process, belongs the immediate relation, in the sense of the pure negation of it, in other words he gets the enjoyment. What mere desire did not attain, he now succeeds in attaining, viz., to have done with the thing, and find satisfaction in enjoyment. Desire alone did not get the length of this because of the independence of the thing. The master, however, who has interposed the servant between it and himself, thereby relates himself merely to the dependence of the thing, and enjoys it without reserve. The aspect of its independence he leaves to the servant, who labours upon it.’

It is just this unconfined dominion, this wholly one-sided and unequal relationship that precipitates its own reversal and makes of the master a purely ephemeral episode in the history of the spirit while the seminal moments in the development of man spring from the consciousness of the servant.

The truth of the independent consciousness is accordingly the consciousness of the servant.... Through work this consciousness comes to itself. In the moment which corresponds to desire in the case of the master’s consciousness, the aspect of the non-essential relation to the thing seemed to fall to the lot of the servant, since the thing there retained its independence. Desire has reserved to itself the pure negating of the object and thereby unalloyed feeling of self. This satisfaction, however, is purely ephemeral, for it lacks objectivity or subsistence. Labour, on the other hand, is desire restrained and checked, it is the ephemeral postponed; in other words, labour shapes and fashions the thing. The negative relation to the object passes into the form of the object, into something that is permanent and remains; because it is just for the labourer that the object has independence. This negative mediating agency, this activity giving shape and form, is at the same time the individual existence, the pure self-existence of that consciousness, which now in the work it does is externalised and passes into the condition of permanence. The consciousness that toils and serves accordingly attains by this means the direct apprehension of that independent being as its self.’

We know from Hegel’s philosophy of history that individuality is the principle that elevates the modern world to a higher plane than that reached by antiquity. In his youth Hegel had completely overlooked the presence of slavery in Greek civilisation and directed his attention exclusively towards the non-labouring freeman of the city-states. Here, however, the dialectics of work leads him to the realisation that the high-road of human development, the humanisation of man, the socialisation of nature can only be traversed through work. Man becomes human only through work, only through the activity in which the independent laws governing objects become manifest, forcing men to acknowledge them, i.e., to extend the organs of their own knowledge, if they would ward off destruction. Unalloyed enjoyment condemns to sterility the master who interposes the labour of the servant between himself and the objects and it raises the consciousness of the servant above that of his master in the dialectics of world-history. In the Phenomenology, Hegel sees quite clearly that the labour of man is sheer drudgery with all the drawbacks that slavery entails for the development of consciousness.

But despite all that the advance of consciousness goes through the mind of the servant and not that of his master. In the dialectics of labour real self-consciousness is brought into being, the phenomenological agent that dissolves antiquity. The ‘configurations of consciousness’ which arise in the course of this dissolution: scepticism, stoicism and the unhappy consciousness (primitive Christianity) without exception the products of the dialectics of servile consciousness.

Hegel’s discussion of work has already shown that the mere fact of work indicates that man has exchanged the immediacy of nature for a universal mode of existence. As he investigates the determinations of work he uncovers a dialectic in which technology and society interact to the benefit of both. On the one hand, Hegel shows how tools arise out of the dialectics of labour. Starting with the man, who by using tools, exploits the laws of nature operative in work, he passes through various transitions until he reaches the nodal point where the concept of the machine emerges. On the other hand, though inseparably from the first process, Hegel shows how the universal, i.e. the socially determined aspects of work lead to the increasing specialisation of particular types of labour, to a widening gulf between the labour of the individual and the satisfaction of the needs of the individual. As we have emphasised, these two processes are intimately connected. As a disciple of Adam Smith Hegel knows perfectly well that a high degree of technical competence presupposes a highly advanced division of labour. By the same token he is no less aware that the perfection of tools and the development of machinery itself contributes to the extension of the division of labour.

Descriptions of this process can be found in all of Hegel’s writings on economics. We shall quote his most mature statement of the theme in the Lectures of 1805-6:

‘The existence and scope of natural wants is, in the context of existence as a whole, vast in number; the things that serve to satisfy them are processed, their universal inner possibility is posited as something external, as form. This processing is itself manifold; it is consciousness transforming itself into things. But since it is universal it becomes abstract labour. The wants are many; to absorb this quantity into the self, to work involves the abstraction of the universal images, but it is also a self-propelling formative process. The self that exists for self is abstract; it does indeed labour, but its labour too is abstract. Needs are broken down into their various aspects; what is abstract in them is their self-existence, activity, labour. Because work is only performed for an abstract self-existing need the work performed is also abstract. This is the concept, the truth of the desire we have here. And the work matches the concept. There is no satisfaction of all the desires of the individual as he becomes an object for himself in the life he has brought forth. Universal labour, then, is division of labour, saving of labour. Ten men can make as many pins as a hundred. Each individual, because he is an individual labours for one need. The content of his labour goes beyond his own need; he labours for the needs of many, and so does everyone. Each person, then satisfies the needs of many and the satisfaction of his many particular needs is the labour of many others.’

Hegel also deduced technical progress from this dialectic of the increasing universality of labour. Naturally, his arguments relating to tools and machines were determined down to the very last detail by Adam Smith. Germany as it then was, and especially those parts known personally to Hegel, could not provide him with the direct experience of the sort of economic realities that might yield such knowledge. On such matters he had to rely almost exclusively on what he had read about England and the English economy. His own contribution was to raise the dialectic immanent in economic processes to a conscious philosophical level.

The double movement which takes place in man and in the objects and instruments of work is on the one hand the increasing division of labour with its consequent abstraction. On the other hand, there is a growing understanding of the laws of nature, of how to induce nature to work for man. Hegel always emphasises the connection between the division of labour (together with the human labour transformed by it) and technical progress. For example he demonstrates the necessity for machines in the following passage:

‘His [i.e. man’s] labour itself becomes quite mechanical or belongs to a quite simple order of things. But the more abstract it is, the more he becomes pure abstract activity, and this enables him to withdraw from the work-process altogether and to replace his own labour with the activity of external nature. He requires only movement and this he finds in external nature, or in other words, pure movement is just a relationship of the abstract forms of space and time – abstract external activity, machines.’

But Hegel is the disciple of Adam Smith (and his teacher Bergson) not only as an economist, but also as a critical humanist. That is to say, he is concerned to describe a process, to explain its subjective and objective dialectic as fully as possible and to show that it is not just an abstract necessity but also the necessary mode of human progress. But he does not close his eyes to the destructive effects of the capitalist division of labour and of the introduction of machinery into human labour. And unlike the Romantic economists he does not present these features as the unfortunate side of capitalism which has to be improved or eliminated so as to achieve a capitalism without blemish. On the contrary, he can clearly discern the necessary dialectical connections between these aspects of capitalism and its progressive implications for both economics and society.

In the Lectures of 1803-4, too, Hegel speaks of the movement towards universality as a result of the division of labour and the use of tools and machinery. He begins by illustrating the dialectical process, by showing how the inventiveness of an individual may lead to a general improvement, a higher level of universality:

‘Faced with the general level of skill the individual sets himself up as a particular, sets himself off from the generality and makes himself even more skilful than others, invents more efficient tools. But the really universal element in his particular skill is his invention of something universal; and the others acquire it from him thereby annulling his particularity and it becomes the common immediate possession of all.’

Thus through the use of tools the activity of man becomes formal and universal, but it remains ‘his activity’. Not until the arrival of the machine is there any qualitative change. He goes on to describe the impact of machinery on human labour.

‘With the advent of machines man himself annuls his own formal activity and makes the machine perform all his work for him. But this deception which he practises against nature and with the aid of which he remains fixed within the particularity of nature, does not go unavenged. For the more he profits from the machine, the more he subjugates nature, then the more degraded he himself becomes. He does not eliminate the need to work himself by causing nature to be worked on by machines, he only postpones that necessity and detaches his labour from nature. His labour is no longer that of a living being directed at living things, but evades this negative living activity. Whatever remains becomes more mechanical. Man only reduces labour for society as a whole, not for the individual; on the contrary, he increases it since the more mechanical the work is the less valuable it is and so the more labour he must perform to make good the deficiency.’

When one considers the time when these remarks were written, and especially the fact that they were written in Germany they clearly represent a quite remarkable insight into the nature of capitalism. He cannot be reproached for thinking of capitalism as the only possible form of society and for regarding the function of machines in capitalism as their only possible function. On the contrary, it must be emphasised that Hegel displays the same refreshing lack of prejudice and narrowmindedness that we find in the classical economists Smith and Ricardo: he can see the general progress in the development of the forces of production thanks to capitalism and the capitalist division of labour while at the same time he is anything but blind to the dehumanisation of the workers that this progress entails. He regards this as inevitable and wastes no time in Romantic lamentations about it. At the same time he is much too serious and honest a thinker to suppress or gloss over unpalatable truths.

This can be seen particularly clearly when he proceeds to argue that the division of labour in capitalism and the increase in the forces of production leads necessarily to the pauperisation of great masses of people. The economic causes of this have already been indicated in the remarks just quoted. In the Lectures of 1805-6 he describes the process even more vividly:

‘But by the same token the abstraction of labour makes man more mechanical and dulls his mind and his senses. Mental vitality, a fully aware, fulfilled life degenerates into empty activity. The strength of the self manifests itself in a rich, comprehensive grasp of life; this is now lost. He can hand over some work to the machine; but his own actions become correspondingly more formal. His dull labour limits him to a single point and the work becomes more and more perfect as it becomes more and more one-sided.... No less incessant is the frenetic search for new methods of simplifying work, new machines etc. The individual’s skill ‘s his method of preserving his own existence. The latter is subject to the web of chance which enmeshes the whole. Thus a vast number of people are condemned to utterly brutalising, unhealthy and unreliable labour in workshops, factories and mines, labour which narrows and reduces their skill. Whole branches of industry which maintain a large class of people can suddenly wither away at the dictates of fashion, or a fall in prices following new inventions in other countries, etc. And this entire class is thrown into the depths of poverty where it can no longer help itself. We see the emergence of great wealth and great poverty, poverty which finds it impossible to produce anything for itself.’

Hegel elsewhere presents this insight in summary, almost epigrammatic form:

‘Manufacturers and workshops found their existence on the misery of a class.’

Hegel here describes social realities with the same ruthless integrity and the same habit of plain speaking that we find in the great classical economists. The insight is almost incredible by German standards of the time and it is not in the least diminished by certain misconceptions that make their appearance from time to time, such as the illusion that the ills he describes could be remedied by the intervention of the state or the government. For such idealistic illusions are always accompanied by a sober assessment of the limits imposed on state intervention. Moreover, as we know, he consistently opposes all theories that advocate what he regards as excessive government control of economics and society. Hegel does indeed cherish the belief that the state and the government have it in their power to reduce the glaring contrast of wealth and poverty, and above all the notion that bourgeois society as a whole can be kept in a state of ‘health’ despite the gulf between rich and poor. We can obtain a clear picture of Hegel’s illusions in this respect if we quote one of his remarks from the System of ethics:

‘The government should do all in its power to combat this inequality and the destruction it brings in its wake. It may achieve this immediately by making it harder to make great profits. If it does indeed sacrifice a part of a class to mechanical and factory labour, abandoning it to a condition of brutalisation, it must nevertheless preserve the whole in as healthy a state as is possible. The necessary or rather immediate way to achieve this is through a proper constitution of the class concerned.’

This amalgam of profound insight into the contradictions of capitalism and naive illusions about the possible panaceas to be applied by the state marks the whole of Hegel’s thought from this time on. In The Philosophy of Right Hegel formulates his view in essentially the same terms but on a higher level of abstraction. And we see that his illusions are largely unchanged except that he now regards emigration and colonisation as possible methods of ensuring the continued health of capitalist society. He says there:

‘It hence becomes apparent that despite an excess of wealth civil society is not rich enough, i.e. its own resources are insufficient to check excessive poverty and the creation of a penurious rabble.’

Thus in Hegel’s eyes capitalism becomes an objective totality moving in accordance with its own immanent laws. In the System of Ethics he gives the following description of the nature of its economic system (or as he calls it: the system of needs):

‘In this system the ruling factor appears to be the unconscious, blind totality of needs and the methods of satisfying them.... It is not the case that this totality lies beyond the frontiers of knowledge in great mass complexes.... Nature itself ensures that a correct balance is maintained, partly by insignificant regulating movements, partly by greater movements when external factors threaten to disrupt the whole.

Thus, like Adam Smith, Hegel sees the capitalist economy as an autonomous self-regulating system. It is self-evident that in 1801 he could only think of disruptions as caused by external factors and not as crises brought about by contradictions within the system itself.

In the context of this self-propelling system of human activities, of objects which generate this activity and are activated by it, Hegel’s concept of alienation receives a new, more concrete definition. In the Lectures of 1803-4 Hegel describes this system as follows:

These manifold exertions of needs as things must realise their concept, their abstraction. Their general concept must be a thing like them, but one which as an abstraction can represent them all. Money is that materially existing concept, the unitary form or the possibility of all objects of need. By elevating need and work to this level of generality a vast system of common interest and mutual dependence is formed among a great people, a self-propelling life of the dead, which moves hither and thither, blind and elemental and, like a wild animal, it stands in constant need of being tamed and kept under control.’

This ‘self-propelling life of the dead’ is the new form that ‘positivity’ assumes in Hegel’s thought: ‘externalisation’. Work not only makes men human according to Hegel, it not only causes the vast and complex array of social processes to come into being, it also makes the world of man into an ‘alienated’, ‘externalised’ world. Here, where we can see the concept embedded in its original, economic context, its dual character becomes particularly obvious. The old concept of ‘positivity’ had placed a one-sided emphasis on the dead, alien aspect of social institutions. In the concept of ‘externalisation’, however, we find enshrined Hegel’s conviction that the world of economics which dominates man and which utterly controls the life of the individual, is nevertheless the product of man himself. It is in this duality that the truly seminal nature of ‘externalisation’ is to be found. Thanks to it the concept could become the foundation and the central pillar of the highest form of dialectics developed by bourgeois thought.

At the same time this duality points to the limitations of Hegel’s thought, the dangers implicit in his idealism. His great sense of reality leads him to emphasise this duality in his analysis of bourgeois society and its development erecting its contradictions into a conscious dialectic. Despite the sporadic appearance of illusions he is much too realistic even to play with the idea that ‘externalisation’ could be overcome within capitalist society itself. But, for that very reason, as our discussion of The Phenomenology of Mind will show, he extends the concept of ‘externalisation’ to the point where it can be annulled and reintegrated n the subject. Socially, Hegel cannot see beyond the horizon of capitalism. Accordingly, his theory of society is not utopian. But the idealist dialectic transforms the entire history of man into a great philosophical utopia: into the philosophical dream that ‘externalisation’ can be overcome in the subject, that substance can be transformed into subject.

In the Lectures of 1805-6 Hegel gives a very simple and succinct definition of the process of ‘externalisation’

‘(a) In the course of work I make myself into a thing, to a form which exists. (b) I thus externalise this my existence, make it into something alien and maintain myself in it.’

These latter remarks refer to exchange. The previous quotation alluded to money. Thus in the course of our discussion of Hegel’s view of capitalist society we have advanced to the higher categories of political economy: exchange, commodity value, price and money.

Here too, in all essentials, Hegel’s remarks do not diverge from their basis in Adam Smith. But we know from Marx’s criticism that this is where the contradictions in Smith’s work appear, rather than in what he has to say about work and the division of labour. And naturally enough Hegel’s dependence on Smith shows to much greater disadvantage here than in his discussion of work. There was no economic reality in Germany at the time which might have given Hegel the opportunity to test these categories himself and perhaps arrive at his own critique of Smith. Hegel’s achievement is that he was not confined to the contemporary economic state of Germany, his philosophical examination of economic ideas does not reflect the backwardness of Germany, but is an attempt to analyse what his reading had taught him about the English economy. Given the greater complexity of economic categories and the fact that they inevitably contained contradictions, the effect on Hegel was that partly he just accepted those contradictions without comment and without recognising them for what they were and partly he was forced to seek analogies in German conditions and to explain advanced theories in terms of the backward German economy.

This situation is apparent at many points in Hegel’s discussions of economics, most of all in the fact that despite his fine dialectical appraisal of the philosophical implications of the Industrial Revolution in England he comes to the conclusion that the central figure in the whole development of capitalism was that of the merchant. Even where Hegel speaks with perfect justice about the concentration of capital and where he shows his understanding that this concentration is absolutely indispensable in capitalism he thinks of it in terms of merchants’ capital.

‘Like every mass wealth becomes a force. The increase of wealth takes place partly by chance, partly through its universality, through distribution. It is a focus of attraction which casts its net widely and collects everything in its vicinity, just as a great mass attracts a lesser. To him that hath, more is given. Commerce becomes a complex system which brings in money from all sides, a system which a small business could not make use of.’

Hegel talks here in very general terms. But we shall later on consider other statements, especially those concerned with the class structure of society from which it is apparent what when Hegel thinks of concentration of capital on a large scale, he always has merchants’ capital in mind. For example, in the System of Ethics he refers to commerce as the ‘highest point of universality’ in economic life. This cannot be a matter for astonishment if we reflect that the most developed form of manufacturing in Germany at that time was linen weaving which was still organised as a cottage industry.

For these reasons we can see all sorts of uncertainties and confusions Hegel’s definition of economic categories, especially in his notion of value. Hegel never understood the crucial development in the classical theory of value, viz. the exploitation of the worker in industrial production. It is in this light above all that we may interpret Marx’s criticism of Hegel, quoted above, that Hegel only took the positive ideas about labour from classical economics, and not the negative sides. We have seen that he clearly sees and frankly describes the facts about the division of society into rich and poor. However, many progressive French and English writers saw and proclaimed this before him without coming any closer than he to a labour theory of value.

Hegel’s confusion here is reflected also in his definition of value. He constantly hesitated between subjective and objective definitions, without ever coming down on one side or the other. Thus in the later Lectures we find such subjective definitions as: ‘Value is my opinion of the matter. And this despite earlier statements, both in the same lectures and elsewhere, from which it is quite clear that he wishes to think of value as an objective economic reality. Thus in the System of Ethics he says that the essence of value lies in the equality of one thing with another:

‘The abstraction of this equality of one thing with another, its concrete unity and legal status is value; or rather value is itself equality as an abstraction, the ideal measure; whereas the real, empirical measure is the price’.

However, all these unclarities and hesitations, and the confusion of economic and legal categories such as we find in this quotation and which we shall consider in detail later on, do not prevent Hegel from pursuing the dialectics of objective and subjective, universal and particular right into the heart of the categories of economics. In the process he brings a mobility into economic thought which was only objectively present in the works of the classical economists, or to put it in Hegelian terms, a mobility which was only present in itself, implicitly, and not explicitly, for us. Not until forty years later in the brilliant essay of the young Engels in the Deutsch-Franzoesische Jahrbücher, do the dialectical structure and the interplay of the various categories of economics come to the surface once again, and this time, of course, at quite a different theoretical level, both economically and philosophically.

For example, in his analysis of exchange Hegel writes as follows:

‘The concept [of exchange] is mobile, it is destroyed in its antithesis, it absorbs the other thing opposed to it, replacing that which it previously possessed; and it does so in such a way that that which existed before as an idea, now enters as a reality ... an ideal which by its nature was at first a practical ideal, existing prior to enjoyment. Externally, exchange is two-fold, or rather a repetition of itself., for the universal object, superfluity, and then the particular, viz. need, is in substance a single object, but its two forms are necessarily repetitions of the same thing. But the concept, the essence of the matter is transformation ... and its, absolute nature is the identity of opposites ... .

The dialectic of the categories of economics is much more striking in Hegel’s discussion of money where the reader can see even more clearly how in his view the structure of capitalism culminates in trade. Writing about the role of money he says:

‘All needs are comprehended in this single need. Need which had been a need for a thing, now becomes merely an idea, unenjoyable in itself. The object here is valid only because it means something, and no longer in itself, i.e. to satisfy a need. It is something utterly inward. The ruling principle of the merchant class then is the realization of the identity of the essence and the thing: a man is as real as the money he owns. Imagination vanishes, the meaning has immediate existence; the essence of the matter is the matter itself, value is hard cash. The formal principle of reason is present here. (But this money which bears the meaning of all needs is itself only an immediate thing) – It is the abstraction from all particularity, character, etc., individual skill. The outlook of the merchant is this hard-headedness in which the particular is wholly estranged and no longer counts; only the strict letter of the law has value. The bill must be honoured ‘whatever happens – even if family, wealth, position, life are sacrificed. No quarter is given.... Thus in this abstraction spirit has become object as selfless inwardness. But that which is within is the Ego itself, and this Ego is its existence. The internal constellation is not the lifeless thing – money, but likewise the Ego.’

For all the obscurity of parts of this argument two highly progressive and extremely profound ideas emerge from these passages. First, Hegel has a much greater understanding of the nature of money than many eighteenth century English writers on economics (such as Hume) who failed to recognize the objectivity of money, its reality as a ‘thing’, in Hegel’s term, and who saw money as no more than a relation. Second, here and in a number of other places it is evident that Hegel had at least a glimmering of the problem that Marx was later to describe as ‘fetishism’. He stresses the objectivity of money, its thinghood, but sees no less clearly that in the last resort it is a social relation between men. This social relation appears here in the form of an idealist mystification (The Ego), but this does not detract in the least from the brilliance of Hegel’s insight; it merely shows us once again the intimate connections between his achievements and his failings.


Further reading:

System of Ethics, Hegel, 1802-3 | Jena Lectures, Hegel, 1805-6
Hegel’s First System, Herbert Marcuse, 1941 | Hegel’s Theory of the Modern State, Shlomo Avineri, 1972