Karl Marx: Critique of Political Economy


A. Historical Notes on the Analysis of Commodities

The decisive outcome of the research carried on for over a century and a half by classical political economy, beginning with William Petty in Britain and Boisguillebert [1] in France, and ending with Ricardo in Britain and Sismondi in France, is an analysis of the aspects of the commodity into two forms of labour – use-value is reduced to concrete labour or purposive productive activity, exchange-value to labour-time or homogeneous social labour.

Petty reduces use-value to labour without deceiving himself about the dependence of its creative power on natural factors. He immediately perceives concrete labour in its entire social aspect as division of labour. [2] This conception of the source of material wealth does not remain more or less sterile as with his contemporary Hobbes, but leads to the political arithmetic, the first form in which political economy is treated as a separate science. But he accepts exchange-value as it appears in the exchange of commodities, i.e., as money, and money itself as an existing commodity, as gold and silver. Caught up in the ideas of the Monetary System, he asserts that the labour which determines exchange-value is the particular kind of concrete labour by which gold and silver is extracted. What he really has in mind is that in bourgeois economy labour does not directly produce use-values but commodities, use-values which, in consequence of their alienation in exchange, are capable of assuming the form of gold and silver, i.e., of money, i.e., of exchange-value, i.e., of materialised universal labour. His case is a striking proof that recognition of labour as the source of material wealth by no means precludes misapprehension of the specific social form in which labour constitutes the source of exchange-value.

Boisguillebert for his part, in fact, although he may not be aware of it, reduces the exchange-value of commodities to labour-time, by determining the “true value” (la juste valeur) according to the correct proportion in which the labour-time of the individual producers is divided between the different branches of industry, and declaring that free competition is the social process by which this correct proportion is established. But simultaneously, and in contrast with Petty, Boisguillebert wages a fanatical struggle against money, whose intervention, he alleges, disturbs the natural equilibrium or the harmony of the exchange of commodities and, like a fantastic Moloch, demands all physical wealth as a sacrifice. This polemic against money is, on the one hand, connected with definite historical conditions, for Boisguillebert fights against the blindly destructive greed for gold which possessed the court of Louis XIV, his tax-farmers and the aristocracy; [3] whereas Petty acclaims the greed for gold as a vigorous force which spurs a nation to industrial progress and to the conquest of the world market; at the same time however it throws into bold relief more profound fundamental differences which recur as a perpetual contrast between typically English and typically French [4] political economy. Boisguillebert, indeed, sees only the material substance of wealth, its use-value, enjoyment of it, [5] and regards the bourgeois form of labour, the production of use-values as commodities and the exchange of commodities, as the appropriate social form in which individual labour accomplishes this object. Where, as in money, he encounters the specific features of bourgeois wealth, he therefore speaks of the intrusion of usurping alien factors, and inveighs against one of the forms of labour in bourgeois society, while simultaneously pronouncing utopian eulogies on it in another form. [6] Boisguillebert’s work proves that it is possible to regard labour-time as the measure of the value of commodities, while confusing the labour which is materialised in the exchange-value of commodities and measured in time units with the direct physical activity of individuals.

It is a man of the New World – where bourgeois relations of production imported together with their representatives sprouted rapidly in a soil in which the superabundance of humus made up for the lack of historical tradition – who for the first time deliberately and clearly (so clearly as to be almost trite) reduces exchange-value to labour-time. This man was Benjamin Franklin, who formulated the basic law of modern political economy in an early work, which was written in 1729 and published in 1731. [7] He declares it necessary to seek another measure of value than the precious metals, and that this measure is labour.

"By labour may the value of silver be measured as well as other things. As, suppose one man is employed to raise corn, while another is digging and refining silver; at the year’s end, or at any other period of time, the complete produce of corn, and that of silver, are the natural price of each other; and if one be twenty bushels, and the other twenty ounces, then an ounce of that silver is worth the labour of raising a bushel of that corn. Now if by the discovery of some nearer, more easy or plentiful mines, a man may get forty ounces of silver as easily as formerly he did twenty, and the same labour is still required to raise twenty bushels of corn, then two ounces of silver will be worth no more than the same labour of raising one bushel of corn, and that bushel of corn will be as cheap at two ounces, as it was before at one, caeteris paribus [other things being equal]. Thus the riches of a country are to be valued by the quantity of labour its inhabitants are able to purchase" (op. cit., p. 265).

From the outset Franklin regards labour-time from a restricted economic standpoint as the measure of value. The transformation of actual products into exchange-values is taken for granted, and it is therefore only a question of discovering a measure of their value.

To quote Franklin again: “Trade in general being nothing else but the exchange of labour for labour, the value of all things is, as I have said before, most justly measured by labour” (op. cit., p. 267).

If in this sentence the term labour is replaced by concrete labour, it is at once obvious that labour in one form is being confused with labour in another form. Because trade may, for example, consist in the exchange of the labour of a shoemaker, miner, spinner, painter and so on, is therefore the labour of the painter the best measure of the value of shoes? Franklin, on the contrary, considers that the value of shoes, minerals, yarn, paintings, etc., is determined by abstract labour which has no particular quality and can thus be measured only in terms of quantity. [8] But since he does not explain that the labour contained in exchange value is abstract universal social labour, which is brought about by the universal alienation of individual labour, he necessarily fails to recognize in money the direct embodiment of this alienated labor*. He therefore fails to see the intrinsic connection between money and labour which posits exchange-value, but on the contrary regards money as a convenient technical device which has been introduced into the sphere of exchange from outside. [9] Franklin’s analysis of exchange-value had no direct influence on the general course of the science, because he dealt only with special problems of political economy for definite practical purposes.

The difference between concrete useful labour and labour which creates exchange-value aroused considerable interest in Europe during the eighteenth century in the following form: what particular kind of concrete labour is the source of bourgeois wealth? It was thus assumed that not every kind of labour which is materialised in use-values or yields products must thereby directly create wealth. But for both the Physiocrats and their opponents the crucial issue was not what kind of labour creates value but what kind of labour creates surplus value. They were thus discussing a complex form of the problem before having solved its elementary form; just as the historical progress of all sciences leads only through a multitude of contradictory moves to the real point of departure. Science, unlike other architects, builds not only castles in the air, but may construct separate habitable storeys of the building before laying the foundation stone. We shall now leave the Physiocrats and disregard a whole series of Italian economists, whose more or less pertinent ideas come close to a correct analysis of the commodity, [10] in order to turn at once to Sir James Steuart, [11] the first Briton to expound a general system of bourgeois economy. The concept of exchange-value like the other abstract categories of political economy are in his work still in process of differentiation from their material content and therefore appear to be blurred and ambiguous. In one passage he determines real value by labour-time ("what a workman can perform in a day"), but beside it he introduces wages and raw material in a rather confusing way. [12] His struggle with the material content is brought out even more strikingly in another passage. He calls the physical element contained in a commodity, e.g., the silver in silver filigree, its “intrinsic worth,” and the labour-time contained in it its “useful value.”

The first is according to him something “real in itself,” whereas “the value of the second must be estimated according to the labour it has cost to produce it.... The labour employed in the modification represents a portion of a man’s time.” [13]

His clear differentiation between specifically social labour which manifests itself in exchange-value and concrete labour which yields use-values distinguishes Steuart from his predecessors and his successors.

"Labour,” he says, “which through its alienation creates a universal equivalent, I call industry.”

He distinguishes labour as industry not only from concrete labour but also from other social forms of labour. He sees in it the bourgeois form of labour as distinct from its antique and mediaeval forms. He is particularly interested in the difference between bourgeois and feudal labour, having observed the latter in the stage of its decline both in Scotland and during his extensive journeys on the continent. Steuart knew very well that in pre-bourgeois eras also products assumed the form of commodities and commodities that of money; but he shows in great detail that the commodity as the elementary and primary unit of wealth and alienation as the predominant form of appropriation are characteristic only of the bourgeois period of production, and that accordingly labour which creates exchange-value is a specifically bourgeois feature. [14]

Various kinds of concrete labour, such as agriculture, manufacture, shipping and commerce, had each in turn been claimed to constitute the real source of wealth, before Adam Smith declared that the sole source of material wealth or of use-values is labour in general, that is the entire social aspect of labour as it appears in the division of labour. Whereas in this context he completely overlooks the natural factor, he is pursued by it when he examines the sphere of purely social wealth, exchange-value. Although Adam Smith determines the value of commodities by the labour-time contained in them, he then nevertheless transfers this determination of value in actual fact to pre-Smithian times. In other words, what he regards as true when considering simple commodities becomes confused as soon as he examines the higher and more complex forms of capital, wage-labour, rent, etc. He expresses this in the following way: the value of commodities was measured by labour-time in the paradise lost of the bourgeoisie, where people did not confront one another as capitalists, wage-labourers, landowners, tenant farmers, usurers, and so on, but simply as persons who produced commodities and exchanged them. Adam Smith constantly confuses the determination of the value of commodities by the labour-time contained in them with the determination of their value by the value of labour; he is often inconsistent in the details of his exposition and he mistakes the objective equalisation of unequal quantities of labour forcibly brought about by the social process for the subjective equality of the labours of individuals. [15] He tries to accomplish the transition from concrete labour to labour which produces exchange-value, i.e., the basic form of bourgeois labour, by means of the division of labour. But though it is correct to say that individual exchange presupposes division of labour, it is wrong to maintain that division of labour presupposes individual exchange. For example, division of labour had reached an exceptionally high degree of development among the Peruvians, although no individual exchange, no exchange of products in the form of commodities, took place.

David Ricardo, unlike Adam Smith, neatly sets forth the determination of the value of commodities by labour-time, and demonstrates that this law governs even those bourgeois relations of production which apparently contradict it most decisively. Ricardo’s investigations are concerned exclusively with the magnitude of value, and regarding this he is at least aware that the operation of the law depends on definite historical pre-conditions. He says that the determination of value by labour-time applies to

“such commodities only as can be increased in quantity by the exertion of human industry, and on the production of which competition operates without restraint.” [16]

This in fact means that the full development of the law of value presupposes a society in which large-scale industrial production and free competition obtain, in other words modern bourgeois society. For the rest, the bourgeois form of labour is regarded by Ricardo as the eternal natural form of social labour. Ricardo’s primitive fisherman and primitive hunter are from the outset owners of commodities who exchange their fish and game in proportion to the labour-time which is materialised in these exchange-values. On this occasion he slips into the anachronism of allowing the primitive fisherman and hunter to calculate the value of their implements in accordance with the annuity tables used on the London Stock Exchange in 1817. Apart from bourgeois society, the only social system with which Ricardo was acquainted seems to have been the “parallelograms of Mr. Owen.” Although encompassed by this bourgeois horizon, Ricardo analyses bourgeois economy, whose deeper layers differ essentially from its surface appearance, with such theoretical acumen that Lord Brougham could say of him:

"Mr. Ricardo seemed as if he had dropped from another planet.”

Arguing directly with Ricardo, Sismondi not only emphasises the specifically social character of labour which creates exchange-value, [17] but states also that it is a “characteristic feature of our economic progress” to reduce value to necessary labour-time, to

"the relation between the needs of the whole society and the quantity- of labour which is sufficient to satisfy these needs.” [18]

Sismondi is no longer preoccupied with Boisguillebert’s notion that labour which creates exchange-value is distorted by money, but just as Boisguillebert denounced money so does Sismondi denounce large industrial capital. Whereas Ricardo’s political economy ruthlessly draws its final conclusion and therewith ends, Sismondi supplements this ending by expressing doubt in political economy itself.

Since the determination of exchange-value by labour-time has been formulated and expounded in the clearest manner by Ricardo, who gave to classical political economy its final shape, it is quite natural that the arguments raised by economists should be primarily directed against him. If this polemic is stripped of its mainly trivial [19] form it can be summarised as follows:

One. Labour itself has exchange-value and different types of labour have different exchange-values. If one makes exchange-value the measure of exchange-value, one is caught up in a vicious circle, for the exchange-value used as a measure requires in turn a measure. This objection merges into the following problem: given labour-time as the intrinsic measure of value, how are wages to be determined on this basis. The theory of wage-labour provides the answer to this.

Two. If the exchange-value of a product equals the labour-time contained in the product, then the exchange-value of a working day is equal to the product it yields, in other words, wages must be equal to the product of labour. [20] But in fact the opposite is true. Ergo, this objection amounts to the problem, – how does production on the basis of exchange-value solely determined by labour-time lead to the result that the exchange-value of labour is less than the exchange-value of its product? This problem is solved in our analysis of capital.

Three. In accordance with the changing conditions of demand and supply, the market-price of commodities falls below or rises above their exchange-value. The exchange-value of commodities is, consequently, determined not by the labour-time contained in them, but by the relation of demand and supply. In fact, this strange conclusion only raises the question how on the basis of exchange-value a market-price differing from this exchange-value comes into being, or rather, how the law of exchange-value asserts itself only in its antithesis. This problem is solved in the theory of competition.

Four. The last and apparently the decisive objection, unless it is advanced – as commonly happens – in the form of curious examples, is this: if exchange-value is nothing but the labour-time contained in a commodity, how does it come about that commodities which contain no labour possess exchange-value, in other words, how does the exchange-value of natural forces arise? The problem is solved in the theory of rent.


Note: MECW has “he is bound to mistake money for the direct embodiment of this alienated labour.” The original German is “verkennt er notwendig Geld als die unmittelbare Existenzform dieser entäußerten Arbeit.”


1. A comparative study of Petty’s and Boisguillebert’s writings and characters – apart from illuminating the social divergence between Britain and France at the close of the seventeenth century and the beginning of the eighteenth – would explain the origins of those national contrasts that exist between British and French political economy. The same contrast reappears in Ricardo and Sismondi.

2. Petty treats the division of labour also as a productive force, and he does so on a much grander scale than Adam Smith. See An Essay Concerning the Multiplicetion of Mankind, Third Edition, 1686, pp. 35-36. In this essay he shows the advantages which division of labour has for production not only with the example of the manufacture of a watch – as Adam Smith did later with the example of the manufacture of a pin – but considers also a town and a whole country as large- scale industrial establishments. The Spectator of November 26, 1711,refers to this “illustration of the admirable Sir William Petty.” McCulloch’s conjecture that the Spectator confused Petty with a writer forty years his junior is therefore wrong. (See McCulloch, The Literature of Political Economy, a Classified Catalogue, London, 1845, p.102.) Pctty regards himself as the founder of a new science. He says that his method “is not yet very usual,” “for instead of using only comparative and superlative Words, and intellectual Arguments,” he proposes to speak “in Terms of Number, Weight or Measure; to use only Arguments of Sense, and to consider only such Causes, as have visible Foundations in Nature; leaving those that depend upon the mutable Minds, Opinions, Appetites, and Passions of particular Men, to the Consideration of others” (Political Arithmetick, etc., London, 1699, Preface). His audacious genius becomes evident for instance in his proposal to transport “all the movables and People of Ireland, and of the Highlands of Scotland ... into the rest of Great Britain.” This would result in the saving of labour-time, in increasing productivity of labour, and “the King and his Subjects would thereby become more Rich and Strong” (Political Aritlmetick, Chapter 4 [p. 225]). Also in the chapter of his Political Arithmetick in which – at a time when Holland was still the predominant trading nation and France seemed to be on the way to becoming the principal trading power – he proves that England is destined to conquer the world market: “That the King of England’s Subjects, have Stock competent and convenient, to drive the Trade of the whole Commercial World” (op. cit., Chapter 10 [p. 272]). 'That the Impediments of England’s greatness, are but contingent and removable” (p. 247 et seq.). A highly original sense of humour pervades all his writings. Thus he shows for example that the conquest of the world market by Holland, which was then regarded as the model country by English economists just as Britain is now regarded as the model country by continental economists, was brought about by perfectly natural causes “without such Angelical Wits and Judgments, as some attribute to the Hollanders” (op. cit., pp. 175-16). He champions freedom of conscience as a condition of trade, because the poor are diligent and “believe that Labour and Industry is their Duty towards God” so long as they are permitted “to think they have the more Wit and Understanding, especially of the things of God, which they think chiefly belong to the Poor.” “From whence it follows that Trade is not fixt to any Species of Religion as such; but rather ... to the Heterodox part of the whole” (op. cit., pp. 183-86). He recommends special public contribution for rogues, since it would be better for the general public to impose a tax on themselves for the benefit of the rogues than to be taxed by them (op. cit., p. 199). On the other hand, he rejects taxes which transfer wealth from industrious people to those who “do nothing at all, but Eat and Drink, Sing, Play, and Dance: nay such as Study the Metaphysicks” [op. cit., p. 198]. Petty’s writings have almost become bibliographical curiosities and are only available in old inferior editions. ‘This is the more surprising since William Petty is not only the father of English political economy but also an ancestor of Henry Petty, alias Marquis of Lansdowne, the Nestor of the English Whigs. But the Lansdowne family could hardly prepare a complete edition of Petty’s works without prefacing it with his biography, and what is true with regard to the origin of most of the big Whig families, applies also in this case – the less said of it the better. The army surgeon, who was a bold thinker but quite unscrupulous and just as apt to plunder in Ireland under the aegis of Cromwell as to fawn upon Charles II to obtain the title of baronet to embellish his trash, is not a suitable image of an ancestor for public display. In most of the writings published during his lifetime, moreover, Petty seeks to prove that England’s golden age was the reign of Charles II, a rather heterodox view for hereditary exploiters of the “glorious revolution.”

3. As against the “black art of finance” of his time, Boisguillebert says: “The science of finance consists of nothing but a thorough knowledge of the interests of agriculture and commerce” (Le détail de la France, 1697. In Eugene Dalre’s edition of Economistes financiers du XVIII siècle, Paris, 1843, Vol. I, p. 241).

4. But not Romance political economy, since the contrast of English and French economists is repeated by the Italians in their two schools one at Naples and the other at Milan; whereas the Spaniards of the earlier period are either simply Mercantilists and modified Mercantilists like Ustariz, or follow Adam Smith in observing the happy mean like Jovellanos (see his Obras, Barcelona, 1839-40)

5. “True wealth ... is the complete enjoyment not only of the necessaries of life but also of all the superfluities and of everything that can give pleasure to the senses” (Boisguillebert, Dissertation sur la nature de la richesse, etc., p. 403). But whereas Petty was just a frivolous, grasping, unprincipled adventurer, Boisguillebert, although he was one of the intendants of Louis XIV, stood up for the interests of the oppressed classes with both great intellectual force and courage.

6. French socialism as represented by Proudhon suffers from the same national failing.

7. Benjamin Franklin, A Modest Inquiry into the Nature and Necessity of a Paper Currency, in The Works of Benjamin Franklin, edit. by J. Sparks, Vol. II, Boston, 1836.

8. Remarks and Facts relative to the American Paper Money, 1764 (l.c.).

9. See Papers on American Politics, and Remarks and Facts relative to the American Paper Money, 1764 (l.c.).

10. See for instance Galiani, Della Moneta, Vol. III, in Scrittori classici Italiani di Economia Politica (published by Custodi), Parte Moderna, Milano, 1803. He says: “It is only toil” (fatica) “which gives value to things,” p. 74. The term “fatica” for labour is characteristic of the southerner.

11. Steuart’s work An Inquiry into the Principles of Political Economy, Being an Essay on the Science of Domestic Policy in Free Nations was first published in London in 1767, in two quarto volumes, ten years earlier than Adam Smith’s Wealth of Nations. I quote from the Dublin edition of 1770.

12. Steuart, op. cit., Vol. I, pp. 181-83.

13. Ibid., pp. 361-62.

14. Steuart therefore declares that the patriarchal form of agriculture, whose direct aim is the production of use-values for the owner of the land, is an abuse, although not in Sparta or Rome or even in Athens, but certainly in the industrial countries of the eighteenth century. This “abusive agriculture” is not “trade” but a mere means of subsistence. Just as bourgeois agriculture clears the land of superfluous mouths, so bourgeois manufacture clears the factory of superfluous hands.

15. Adam Smith writes for instance – “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. The price which he pays must always be the same, whatever may be the quantity of goods which he receives in return for it. Of these, indeed, it may sometimes purchase a greater and sometimes a smaller quantity, but it is their value which varies, not that of the labour which purchases them.... Labour alone, therefore, never varying in its own value, is alone the ultimate and real standard by which the value of all commodities can ... be estimated.... It is their real price...." [Wealth of Nations. Book I, Chapter V.]

16. David Ricardo, On the Principles of Political Economy, and Taxation, Third Edition, London, 1821, p. 3.

17. Sismondi, Etudes sur l’économie politique, tome II, Bruxelles, 1838. “Trade has reduced the whole matter to the antithesis of use-value and exchange-value.” P. 162.

18. Ibid., pp. 163-66 et seq.

19. It probably assumes the most trivial form in J. B. Say’s annotations to the French translation – prepared by Constancio – of Ricardo’s work, and the most pedantic and presumptuous in Mr. Macleod’s recently published Theory of Exchange, London, 1858.

20. This objection, which was advanced against Ricardo by bourgeois economists, was later taken up by socialists. Assuming that the formula was theoretically sound, they alleged that practice stood in conflict with the theory and demanded that bourgeois society should draw the practical conclusions supposedly arising from its theoretical principles. In this way at least English socialists turned Ricardo’s formula of exchange-value against political economy. The feat of declaring not only that the basic principle of the old society was to be the principle of the new society, but also that he was the inventor of the formula used by Ricardo to summarise the final result of English classical economics, was reserved to M. Proudhon. It has been shown that the utopian interpretation of Ricardo’s formula was already completely forgotten in England, when M. Proudhon “discovered” it on the other side of the Channel. (Cf. the section on la valeur constituée, in my Misere de la philosophie..., Paris, 1847.a) [See Karl Marx, The Poverty of Philosophy, Moscow, 1962, pp. 43-49 – Ed.]