The Story of a Great Discovery, Vygodsky, 1965

Chapter 5

A few words about the first volume. The result of fifteen years' research. "... these parts still contain nothing about capital". The revolutionizing of science. The manuscript of 1861/63. Work on the second part, January 1862: everything from the beginning again. A new stage in the investigations. The "inner" categories and their metamorphosed forms. The necessity for the completion of the theory of surplus-value. The theory of profit in " Grundrisse". The theory of average profit and, of production-price in the manuscript of 1861/63. A statement by Engels.

Why the second volume of
"A Contribution to the Critique of Political Economy"
was not published

In May 1858, Marx completed the work on "Grundrisse'' which we attempted to analyse in the preceding chapters and, on 26th January 1859 he sent the Berlin publisher, Duncker, the manuscript of the first part of "A Contribution to the Critique of Political Economy". The book appeared in the summer of 1859. A special chapter has not been devoted to this work by Marx here for the simple reason that the first part of "A Contribution to the Critique of Political Economy" only contains the chapter on the commodity and the chapter on money. The chapter on capital, where he had intended to describe his theory of surplus value, was to be the subject of the second part but this was never published. In place of this, the first volume of "Capital" appeared in 1867.

The answer to the question of why the second part of Marx's work was never published is of considerable significance since it can explain how he took his theory of surplus-value a stage further.

In "A Contribution to the Critique of Political Economy", Marx provided for the first time a systematic description of his theory of value. He himself had a high opinion of this work which was the result of fifteen years of research. This book, wrote Marx, represents "for the first time an important view of social relations (from a) scientific (standpoint)."[1] "I hope to win a scientific victory for our Party."[2] "In these two chapters... the foundation of the Proudhonist socialism now fashionable in France is destroyed."[3]

Although the first part did not include the theory of surplus-value, the foundations for the analysis of the capitalist mode of production were nevertheless already set out in it. Marx noted in this connection "that the specifically social but not at all absolute character of bourgeois production is analysed forthwith in the simplest form, that of the commodity".[4]

Marx realized very well that he had achieved a revolutionary transformation in political economy. In an answer to the reproach (made even by friends and fellow-militants such as Wilhelm Liebknecht, for instance) that the mode of presentation was not on a popular level, Marx emphasized that "Scientific attempts to revolutionize a science can never be really popular."[5]

Later, in the letter to Engels of 16th May 1868, Marx explained this thesis and stated that in political economy there was a great divergence between that which was of interest for practical aspects and that which was theoretically necessary.[6] The painstakingly exact analysis of the "economic cell-form" of bourgeois society seems to be one subtlety after another.[7] For the theory of surplus-value, however, these 'subtleties' were of fundamental importance. At the same time, Marx expressed the opinion that the second part would be "more readily understood since it would deal with more concrete relations."[8]

The chapter on capital, containing the theory of surplus-value, rightly occupied a central position in Marx's work as a whole. Marx made repeated references to this when he said that this chapter "is really the most important part of the first book"[9] and stressed that it has "a directly revolutionary task"[10] and that with it "the actual battle"[11] begins. This also explains the somewhat apologetic tone which runs through the letter Marx wrote to Engels shortly before he sent the manuscript of the first part to the publisher : "The manuscript is about 12 signatures (three parts) and-don't faint-although its title (is) "Capital in general", these parts still contain nothing about capital ..."[12] In the same letter, Marx informs him that the chapter on capital has been prepared in detail and would soon follow, immediately after the publication of the first part.

Thus there is every reason to assert that it was Marx's intention that the first part of his work should be followed as rapidly as possible by the second. Both the nature of the matter and also the task of propagating the Marxist economic theory and of disseminating it in the working-class movement necessitated this. The first part only contained the first two introductory chapters and even these were by no means understandable for everybody. Marx wrote to Engels that "Mr. Liebknecht has told Biskamp that 'he was never so disappointed by a book' and Biskamp himself said to me that he did not see 'à quoi bon' (i.e., the use of it)"[13].

And Engels, who was keenly aware of all these circumstances, urged his friend on 31st January 1860 to prepare the second part of his work for printing as quickly as possible. "I consider this to be the most important thing for the time being ... Be a little less conscientious for once in your own affairs ... That the thing is written and will be published is what matters ... and if eventful times occur, what good is it if the whole thing is interrupted before you are yet finished with capital in general? I am very well aware of all the other interruptions which come between but I also know that the principal delay is always caused by your own scruples. After all, it's better that the thing appears than that it is not published at all for the same misgivings."[14]

But the whole of 1860 passed and it was only in August 1861 that Marx at last began work on the second part of "A Contribution to the Critique of Political Economy". This work was the beginning of a mighty manuscript covering 200 printed sheets which Marx called, like the first part, "A Contribution to the Critique of Political Economy" (Zur Kritik der politischen Ökonomie). Marx wrote this manuscript between August 1861 and July 1863. It consists of 23 parts and the pages are numbered consecutively from 1 to 1,472. Its composition, however, is quite heterogeneous.

The first five parts, which Marx wrote in the period from August to December 1861, reflect his work on the second part of "A Contribution to the Critique of Political Economy". Here he dealt with the transformation of money into capital and the production of absolute and relative surplus-value. But when he reached the section on machines, Marx interrupted the positive description of his economic theory and, in January 1862, began a searching critical analysis of the history of bourgeois political economy, which forms the greater part of the manuscript from 1861 to 1863 and comprises more than 100 printed sheets. Marx called this historical-critical part of the manuscript "Theories of Surplus-Value". He had originally intended that this historical digression should complete the section on the production-process of capital in the same way that the chapters on the commodity and on money are followed by historical notes in the first part of "A Contribution to the Critique of Political Economy".

Marx's work on the "Theories of Surplus-Value" was indeed a tremendous critical analysis of the whole of bourgeois political economy. As such, it marked a new stage in his scientific investigations. However, Marx did not simply carry out an historical-critical examination of bourgeois political economy but, following his method of inquiry, also continued to work on his theory of economics. This also explains the numerous theoretical digressions in the "Theories of Surplus-Value" which sometimes account for hundreds of pages and are devoted to the cardinal problems of political economy. In the letter of 15th August 1863, Marx informed Engels about his work on this manuscript and remarked : "By the way, when I now look at the concoction and see how I have had to throw everything overboard and had to put even' the historical part together from material which was to some extent completely unknown ..."[15]

What did Marx have to "throw overboard" in the course of the work on the "Theories of Surplus-Value" and what was the "material which was to some extent completely unknown" of which he speaks?

The crux of the matter was that the theory of surplus-value in the form in which it had been elaborated in "Grundrisse" could not be regarded as complete. With the discovery of surplus-value Marx had got to the most profound secret of capitalist economics. Having got this far, however, he had to retrace his steps and demonstrate bow surplus-value 'regulates' all the other categories of the capitalist mode of production: profit, average profit, land-rent, interest, etc. This had to be done because on the surface of bourgeois society there is neither value nor surplus-value. There it is a question of market-prices, prices of production, profit and so on. It had to he shown that these categories acting on the surface of bourgeois society are regulated by value and surplus-value. Only after this could the theory of surplus-value be regarded as complete and the law of motion of capitalist society as adequately substantiated. In short, the theory of surplus-value had to be supplemented by the theory of average profit and of price of production. This was the task which Marx performed in the course of his work on the "Theories of Surplus-Value".

Let us take another quick look at "Grundrisse" to check that Marx had not yet developed his theory of average profit and of production-price in this manuscript. Some Soviet scholars take the contrary view. L. A. Leontyev writes in a book on "Grundrisse" that "the most important theses of the doctrine of the rate of profit and of price of production which are developed in the third volume of Capital' had already been elaborated in Grundrisse '".[16] We take the view that this was not the case and we will try to show why. It is sufficient to note here that the basic theses of the doctrine of profit-rate and production-price were not developed for the first time by Marx in the third volume of Capital' (1865), as asserted by L. A. Leontyev in his book, but in the "Theories of Surplus-Value" (1862). What is to be found in "Grundrisse" about this ?

To begin with, it can be stated that Marx in "Grundrisse" advances his theory of profit as the metamorphosed form of surplus-value on the basis of the distinction he makes there between variable and constant capital. Marx notes that the category of surplus-value is missing in the bourgeois economists and writes: "... au fond (- strictly speaking) surplus-value-insofar as it is indeed the basis of profit but is still distinguished from the commonly so-called profit-has never been developed."[17]

In an analysis of the theory of Ricardo, Marx said that "The difference between profit and surplus-value does not exist for him..."[18] Marx also noted the errors and contradictions which follow from this in the bourgeois economists, "that profit is not understood as a self-derivative, secondary form of surplus-value".[19]

He explains that "In its direct form profit is nothing but the sum of the surplus-value expressed in proportion to the total value of the capital." The "profit of the capitalist class ... cannever be greater than the sum of the surplus-value".[20]

In "Grundrisse", Marx formulates "two... laws which are apparent in this transformation of surplus-value into the shape of profit ..." The first is that the profit-rate is always less than the rate of surplus-value, the second states that "the profit-rate decreases".[21]

Marx also propounds in "Grundrisse" the laws of the change in the profit-rate and in the rate of surplus-value: ".... the greater the growth ... in the relative surplus-value, ... the greater the drop in the rate of profit."[22]

In "Grundrisse", Marx worked out in detail the law of the tendency of the profit-rate to fall and characterized it as "the most important law of modern political economy", "which despite its simplicity has never been understood up till now and even less has been consciously expressed".[23] The consequence of this law is that "beyond a certain point, the development of the productive forces is a barrier for capital; this means that the capital relation is a barrier for the development of the productive forces of labour." "The growing unsuitability of the productive development of society for its prevailing production relations is expressed in the slashing contradictions, crises and convulsions."[24] "... the highest development of productive power together with greatest expansion of existing wealth will coincide with depreciation of capital, degradation of the labourer, and a most straightened exhaustion of his vital powers." "... these regularly recurring catastrophes lead to their repetition on a higher scale, and finally to its (i.e., capital) violent overthrow."[25]

It is thus evident that Marx, in "Grundrisse", did not stop at the discovery of surplus-value but proceeded with the explanation of forms, metamorphosed on the basis of surplus-value, which take effect on the surface of capitalist society. Above all, he developed the theory of profit but did not come to a halt here either.

In "Grundrisse", Marx notes a fact of fundamental significance. Since the organic composition of capital differs in the individual branches, the "proportions of surplus-labour" (i.e., the individual rates of profit) are also unequal. "Equal surplus-value, i.e., an equal relation of surplus-labour and necessary labour, being assumed, profit can thus be unequal and must be unequal in relation to the magnitude of the capital."[26] The same profit-rate for capital investments of the same magnitude would only be possible if the whole of the surplus-value were distributed in proportion to the magnitude of the capital sums invested. Marx draws attention to the fact that a distribution of this kind does take place in various branches as a result of competition between the capitalists. In one branch prices fall below the value, in another they rise above it.[27] However, the capitalists, "can divide among themselves nothing but surplus-value".[28] Marx emphasizes that "the distribution of the surplus-value among the capital sums, the calculation of the total surplus-value among the individual capital sums," is a "secondary economic operation".[29]

The material quoted here justifies the assertion that Marx in "Grundrisse" comes very close to the discovery of the law of average profit and of 'production-price: he comes to the conclusion that unequal individual profit-rates necessarily exist in the different branches of production and that profits must be redistributed at a general profit-rate as a result of the competition between different branches. The general profit-rate is established by the redistribution of the surplus-value produced in all branches of capitalist production in proportion to the magnitude of the invested capital. Commodities are sold at prices which differ from their value, i.e., from the facts as such, at production-prices which in one branch are above and in another below the value of the commodities.

Marx is very close to the theory of price of production here but does not Vet comprehend it' in its full significance. This is also the reason why the theory of average profit and of price of production is not taken further in "Grundrisse". Price of production as a category does not appear in "Grundrisse" either[30] ; the production-price here is not yet developed as a metamorphosed form of value. To be able to do that, Marx had first to show that competition within a particular branch transforms the individual value into the market-value and how the competition between different branches changes market-values into prices of production. In capitalism, the centre around which market-prices fluctuate is no longer the value but the price of production. it is precisely this fundamental distinction in price-formation which occurs with the transition from a simple commodity economy to capitalist production which is not yet explained by Marx in "Grundrisse". It is at a later date, between 1861 and 1863, that Marx deals with this problem exhaustively in the course of his work on "Theories of Surplus-Value".

There is a great deal of indirect evidence for the validity of this thesis. At the end of the first chapter of "A Contribution to the Critique of Political Economy", Marx lists the basic problems of political economy but does not include average profit or price of production. The problem of land-rent, which is closely connected with the question of price of production, is merely reduced here to "... how does the exchange-value of natural forces arise ?''[31]

In the letter to Lassalle of 11th March 1858, Marx speaks about the contradiction between Ricardo's profit and labour-value theories. "I believe I have cleared up the matter"[32], is what he writes. The same contradiction is also discussed at the end of the first chapter of "A Contribution to the Critique of Political Economy"[33]. Obviously, it is a question here of the first of the two contradictions in Ricardo's theory which subsequently resulted in the downfall of the Ricardian School of bourgeois political economy (as noted by F. Engels in the foreword to the second volume of "Capital").

This contradiction consisted in the inability of Ricardo and his followers to bring exchange between labour and capital into harmony with the law of value and to explain the production of surplus-value with the exchange of equivalents as a basic condition. But neither in the letter mentioned nor at the end of the first chapter of "A Contribution to the Critique of Political Economy" is there any mention of the second contradiction in Ricardo's theory, of its inability to explain average profit and price of production within the framework of the law of value. Instead of giving this explanation, Ricardo and his school, like A. Smith, identified value with the price of production.

It is only after 1862 that Marx speaks of this "dogma of Smith and Ricardo" after he had discovered and criticized this contradiction in the theory of Ricardo and, at the same time, provided the positive solution of the problem.[34]

Marx mentions the law of average profit and of the price of production for the first time in "Theories of Surplus-Value", to be exact, in the chapter devoted to A. Smith: "Yes, as I shall prove below, even the average price of commodities (this is how Marx often refers to price of production in the manuscript of 1861/63-V. V.) is always different from their value."[35] This shows that Marx had already solved the basic problem of the theory of average profit and price of production-at least in his head-in January 1862.

It may be assumed that he found the answer to this problem between 1860 and 1861. The first elaboration of the law of average profit dates from the spring of 1862.[36] Marx formulated the law of average profit and price of production between June and August 1862 (similarly in "Theories of Surplus-Value"). It is to this time that the letters also refer in which Marx and Engels provide detailed information about the discoveries made concerning the theory of average profit and price of production and the theory of land-rent which is closely associated with it.[37]

By the end of 1862, Marx saw that the basic problems of the theory of surplus-value had been solved and this caused him once again to think about continuing the publication of his theory of economics. On 28th December 1862, he wrote to Kugelmann: "I was very glad to learn from your letter that you and your friends take so warm an interest in my Critique of Political Economy. The second part is at last finished, apart from making a fair copy and the final polishing for the press. It will be about thirty printed sheets. It is actually a continuation of Part I, but will appear independently under the title Capital with A Contribution to the Critique of Political Economy only as a sub-title."[38]

The "fair copy and the final polishing for the press" alone still took more than four years and the 30 printed sheets referred to were consequently transformed into the four volumes of Capital". All this only shows that the transition from research to the description of problems which have already been examined and the arrangement of the layout of "Capital" was a no less complicated process than the task of research itself.

How Marx elaborated his theory of economics in the 1850's was described by F. Engels in 1893 : "Marx worked out the theory of surplus-value quietly and entirely by himself during the Fifties and stubbornly refused to publish anything about it until he was fully clear about it and all the consequences. Thus the non-appearance of the second and following parts of 'A Contribution to the Critique of Political Economy'..."[39]

After everything which has been said so far, there is no longer any doubt that Engels, when he refers to the "consequences" of the theory of surplus-value, means the further development of this theory, the explanation of average profit, price of production, land-rent and so on. All these problems were solved by Marx in the course of the work on the manuscript of 1861/63, when he again carried out a critical examination of the entire field of bourgeois political economy. While making this examination Marx wrote the historical part of the future "Capital"-the "Theories of Surplus-Value"- and at the same time completed his own theory of surplus-value. This meant that publication of the second part of "A Contribution to the Critique of Political Economy" was now possible. But at the end of 1862, Marx decided to change the title of his work on economics which was now to be published immediately in one volume and no longer in the form of separate parts.

The critical analysis of bourgeois political economy in "Theories of Surplus-Value" is a brilliant illustration of Marx's method of economic, research. When Marx investigated bourgeois political economy, he did not demand at all from this or that bourgeois political economist that he should take the standpoint of the working-class. Thus Marx defended Ricardo who was accused by his "sentimental opponents" of sacrificing the interests of the workers to the interests of production and of wanting production for the sake of production. Marx stressed that Ricardo, for his time, was correct and that from the bourgeois standpoint his position "was not only scientifically honest but scientifically necessary."[40]Marx criticized the bourgeois economists only because they did not pursue their original theses-formulated from the purely bourgeois standpoint-, such as the labour-value theory, to the logical conclusion.

In his analysis, Marx always follows the standpoint of bourgeois political economy in this or that question right to the end. Since he did this from the position of the working-class, he was free from the narrowness which prevented bourgeois political economy from pursuing its own theory-the labour-value theory-to the logical conclusion. Marx drew the conclusions from the labour-value theory and in this way-as we have seen-arrives at his theory of surplus-value.

This can be illustrated by two examples from the manuscript of 1861/63.

1. In a general analysis of classical bourgeois economy, Marx notes that it has "reduced to the one form of profit all forms of revenue and all independent shapes and titles under which the non-labourer participates in the value of the commodity."[41] At this point, the bourgeois economists stopped. They were unable to distinguish "surplus-value" as a separate category in its true form and identified it with the category of "profit". Marx's analysis begins at that point where bourgeois political economy came to a halt.

To begin with, Marx shows that in fact a theory of surplus-value can be found in Ricardo. "In the critique of Ricardo, we must now distinguish what he himself did not distinguish. (Firstly) his theory of surplus-value, which naturally exists in him, although he does not fix surplus-value as differing from its special forms of profit, rent and interest."[42] At another place, Marx declares that where Ricardo in his remarks abstracts from constant capital, i.e., where profit is shown as a product of variable capital, he is in fact talking about surplus-value.[43]

Marx also shows that classical bourgeois economy represents surplus-value as the result of unpaid labour. In the classical authors, says Marx, "Profit, however, is reduced to surplus-value since the value of the whole commodity is reduced to labour; the amount of paid labour embodied in the commodity constitutes wages, consequently the surplus over and above it constitutes unpaid labour …"[44] But to determine the surplus value it was first of all necessary to determine the 'value of labour' (a term coined by the bourgeois economists), for the surplus value appears as a surplus above and beyond the 'value of labour'. In Ricardo's theory, the value is determined by the food necessary for the maintenance of the workers and the reproduction of their kind. But why was the value of labour determined in precisely this way? Ricardo explained this by saying that the law of supply and demand reduces the average price of labour to the means of existence necessary for the maintenance of the worker. "He determines here the value, in a basic point of the system as a whole, by supply and demand"[45], i.e., Ricardo really disassociates himself from the theory of labour value.

Marx analyzed the theory of the standard authors in this decisive question and remarked that Ricardo "instead of labour, should have spoken of labour power. But this would have represented capital as the real conditions of work confronting the worker as an independent power. And capital would have immediately been represented as a specific social relation. Thus for Ricardo it is distinguished only as 'accumulated labour' from `immediate labour'.

"And (it) is something merely factual, merely an element in the labour process, from which the relation of labour and capital, wages and profit, can never be developed."[46] Here we have a model example of Marx's constructive critical approach. In the confrontation with Ricardo, Marx developed his own theory of labour-power as a commodity which, as noted before, had already been elaborated in "Grundrisse".

2. Marx analyzes the "dogma of Smith and Ricardo", which states that value and price of production are identical, and shows that in Ricardo there is in actual fact a distinction between these two terms. "It is curious", says Marx, "how Ricardo at the end almost touches on what is correct with the word but does not take it further..."[47] Marx quotes the places in Ricardo's book in which there is in fact a distinction between value and price of production (a distinction which Ricardo himself did not grasp and did not develop) and then goes on to give his own answer to the problem, formulating his theory of average profit and of the price of production.[48]

From these examples, it is clearly evident that Marx worked out the political economy of the working class by overcoming the limitations of bourgeois economic theory.

Now, after everything which has been said, we can turn our attention to the main part of the manuscript of 1861/63-the "Theories of Surplus-Value"-and follow the process in which Marx elaborated his theory of average profit and price of production and his theory of land-rent.

Footnotes

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