Eduard Bernstein

Ferdinand Lassalle

The Open Reply Letter; its economic portion – The Iron Law Of Wages, and productive co-operative societies with state-help

THE law of wages upon which Lassalle based his theory, and to which he added the name “iron” corresponds – as I think I have demonstrated elsewhere [1] – with a particular method of production – small industry – and a condition of society resulting from it, and has, therefore, at least been outlived in the society of modern industry, with its increased facilities of communication, its accelerated cycle of crises, stagnation, and prosperity, its rapid advance in the productivity of labour, etc. Moreover, this theory presupposes an absolutely free movement of supply and demand on the labour market. But this movement is at once interfered with as soon as the working-class, as an organised body, faces the employers, or as soon as the State, by its legislation, interferes with the regulation of the conditions of labour. So that when the Liberals replied to Lassalle that his law of wages no longer held good, that it was antiquated, they were to, some extent justified. But only to some extent. For these good people, in their turn, fell into far graver errors than Lassalle.

Lassalle laid special stress upon the “iron” character of the laws determining wages, because he believed he was dealing the deadliest blow at modern Society by proving that the worker never, under any circumstances, received the full product of his labour, his full share of the commodity produced by him. Ho gave the question a legal character, which, from the propagandist point of view, proved extremely effective. But he himself by no means went to the heart of the question. Even under earlier forms of production the worker did not get the full results of his labour; and if an “iron” law prevents wages from permanently falling below a given minimum, and if this minimum itself rises – as Lassalle expressly admitted – in the course of development, rises slowly, it is true, but still rises, it became difficult to give proofs of the actual necessity for the intervention of the State.

The really material question at issue was not raised by Lassalle until later on, and then only incidentally. The position of the working-class in modern Society is so unbearable, and compares so unfavourably with every former method of production, not because the worker receives only a fraction of the now value produced by him, but because this fractional payment is combined with the uncertainty of his proletarian existence; because of the dependence of the workers upon the contractions of the world-market following one another in ever shorter periods of time, on constant revolutions of industry, and altered conditions of distribution; because of the crying contrast between the character of production, ever becoming more socialised, and its anarchical distribution; and with all this the growing impossibility for the individual workers to free themselves from the double dependence upon the employing class, and the vicissitudes of the industrial cycle; because of the constant threat of being thrown from one sphere of industry into another lower one, or into the army of unemployed. The dependence of the worker has only become greater with his apparent freedom. It is this which, with iron weight, presses upon the working-class, and its pressure grows with the growing development of Capitalism. The rate of wages, on the other hand, varies to-day with the various branches of industry, from literally starvation wages to wages which represent a certain amount of comfort. In the same way the amount of exploitation in the different industries also varies considerably, in certain cases wages being higher, in others lower, than in the earlier epochs of production. Both depend upon very variable factors; both differ, not only from industry to industry, but are in each of these subject to the greatest changes. The only thing constant is the tendency of capital to raise the rate of exploitation, to squeeze surplus-labour in one way or another out of the worker.

The chief fault of Lassalle’s proposed remedy lay, from the very outset, in his representing as the essential cause of the misery of the working-class in the Society of to-day, that which is certainly not the characteristic feature of the modern method of production – for, as we have said, the worker has at no time received the full results of his labour. He ignores, or to be just to Lassalle, he underrates the strength and extent of the laws of the production of commodities, and their economic and social re-action upon modern economic life as a whole. Here again we must carefully distinguish between Lassalle’s means and Lassalle’s end. His end was, of course, to abolish the present production of commodities; but his means left it untouched. His end was organised, social production; his means were individual association, which so far only differed from the Schulze plan in that it was to be brought about by means of State-credit and State-help. Everything else, the fusion of the associations, etc., was left to their own voluntary decisions. It was expected of them, but was not made a condition. The State was to advance the necessary means, by guaranteeing credit, but only to such workmen as desired to start associations.

The associations in any given industry, so long as they did not embrace the whole of that industry, would, therefore, have to compete with establishments of the same kind already in existence, and would thus be forced to submit to the conditions of such competition. The inevitable consequence of this must be that, within the associations themselves, differences of interest would arise; that every association would have to try and force up its own profits as high as possible, even though it were at the expense of other associations, or of other categories of labour. With or without State-credit, the associations remained private concerns, made up of more or less large groups of workers. Individual qualities, individual advantages, individual good fortune, played a conspicuous part in them; the question of profit and loss had the same significance for there as for other private business concerns, Lassalle certainly believed, first of all judging from the eagerness with which productive co-operative associations had been taken up in Paris in 1848 – that at least all the workers engaged in certain industries in particular localities, would immediately unite to form one great association in each such place. Secondly, he distinctly declared later on in his Bastiat-Schulze, that in each town the State would have to allow only one association in every particular trade the benefit of State-credit, leaving all workers of that trade free to enter into such an association. (See Herr Bastiat-Schulze, p.217, 1st Ed.) But even such locally homogeneously-organised associations would still remain nationally competitive. The economic consequences of this national competition were to be further neutralised by great insurance and credit unions of the associations amongst themselves. It is obvious, however, that this insurance society was a chimera, unless it was simply another name for a national organisation, and for a national monopoly of industry. Otherwise over-production would very soon break up the insurance association. And over-production was unavoidable if the. State, as required by Lassalle, kept the entrance to these associations “open” to all workers of the same trade. Here Lassalle, pricked on by his Socialist conscience, involves himself in a great contradiction. “To keep the entrance into the association open,” was to bind the association to admit every worker who applied for admission. But, according to the Open Reply Letter, the association was to be entirely independent, vis-à-vis of the State, only giving the latter the right of approving the rules, and of looking after the business management in order to safeguard its own interests. But under the arrangement set forth above, the association was, on the contrary, transformed from an independent into a publici.e., under existing conditions – into a State institute – an internal contradiction, on which it must inevitably be wrecked.

And yet another contradiction in the Lassallean productive associations. So long as the associations included only a fraction of those belonging to any given branch of industry, they were subject to the compulsory laws of competition, and this the more as Lassalle had in his eye that working of production on a great factory-like scale, which makes the great industries of the world-market. But wherever there is competition there is also commercial risk; competition forces the concern, whether managed by an individual, a joint stock company, or an association, to take its chance of its goods being at any time thrown on the market as below value – i.e., as products of not socially necessary labour. Competition and over-production, competition and stagnation, competition and bankruptcy, are, in the Society of to-day, inseparable. Command of production by the producers themselves is only possible in proportion as competition is done away with among them, is only attainable by means of monopoly. But while, in our Society of to-day, competition has the important mission of protecting the consumers against fraud, and constantly reducing the costs of production, monopoly, on the contrary, tends to defraud the consumers for the benefit of the monopolists, and to hamper, where it does not altogether arrest, the development of technical skill. And the latter is especially the case where the workers concerned are themselves the monopolists. The getting rid of their commercial risk for the associations, must, therefore, within the framework of our capitalist society, necessarily be brought about – if, indeed, it could be brought about at all-at the expense of the consumers, who, in any case, represent, as compared with the producers, the vast majority.

In a Socialist community it would, of course, be easy to prevent this. But such a community will not proceed to the socialisation of production by way of subventioned productive co-operative societies, but will, even though the co-operative form should be made use of, start with organising production on a socialised basis. Transplanted into the midst of a capitalist society however, co-operation must, in one way or another, always assume a capitalistic character. The Lassallean co-operative societies would only have differed from those of Schulze-Delitzsch quantitatively, not qualitatively; only in extent, not in essence.

Such also was the opinion of Rodbertus, who was far too accomplished an economist to overlook this weak side of the Lassallean co-operative societies. We have seen from the letter of Lassalle to Rodbertus, already quoted, how sharply Rodbertus had intended criticising these in his Open Letter, and the subsequent letters of Lassalle to Rodbertus show us clearly enough what had been the latter’s chief objection. But this is shown even more clearly in the letters of Rodbertus to Rudolph Meyer, and it may not be without interest to quote some of the passages referred to here.

On the 6th September, 1871, Rodbertus writes

... In addition to this it is also demonstrable that the collective property which the Social Democrats are today striving for – that of agrarian communities and productive co-operative associations – is a far worse form of landed and capitalist property, leading to far greater injustice than the present individualist form. In this the workers are still following Lassalle. In my letters I had, however, convinced him of the absurdities and injustice which must result from such a form of property, and (what especially annoyed him) that he was not the creator of this idea at all but had borrowed it from Proudhon’s Idée Generale de la Révolution. [2]

Letter of May 24th, 1872

I have yet a third reason, of a general nature, to urge against this mode of payment. [He is referring to the sharing of business profits.] It must remain either a bonus, as Settegast rightly says – and the social question will not be solved by means of ‘tips’ – or it must develop into a claim to participate in the management of the concern, and with this finally into collective property in the individual funds of the concern. But this collective property does not move along the lines of social development. The proof of this would take me too far afield, but still I had already forced Lassalle so far in our correspondence that he wrote to me in one of his last letters: ‘But who tells you, then, that I want the funds for carrying on the concern to belong to the productive association?’ (sic) And, indeed, it can’t be done The collective property of the workers, in the individual concerns, would be a far worse kind of property than the individualist property inland and capital, or even than the property of a capitalist association.

Such a passage as is here quoted, appears in none of the hitherto published letters of Lassalle to Rodbertus. But it is hardly to be supposed that Rodbertus would have spoken so positively unless he had had the actual test before him, Probably he later on mislaid this letter. Moreover, there is no valid reason against Lassalle’s having, in fact, once expressed himself in this way. In all Lassalle’s speeches it is rather of the interest which the associations are to pay the State on the capital advanced that he speaks. Thus, in this sentence there is not even a concession to the standpoint of Rodbertus. But, on the other hand, we do find such a concession, and so strong a one that it is tantamount to a condemnation – unconsciously – of the productive associations in Lassalle’s letter to Rodbertus on the 26th May, 1863. He there says:

But, on the other hand, it is clear as daylight that when the land, capital, and the products of labour belong to the worker [3], there can be no question of a solution of the social problem. The same result will, therefore, be approximately attained also when land and capital are provided for the worker’s use, and the product of labour belongs to him. In the agricultural associations the worker will then get either more or less than the product of his labour. In industrial associations he will, as a rule, get more than the results of his labour. I know all this perfectly, and when I write my economic work I shall demonstrate it very explicitly.

In the next letter, either because Rodbertus had not thoroughly grasped the import of the above passage, or because be wanted to force Lassalle into a corner, Lassalle declares himself still more definitely. He writes [I omit a parenthesis of no importance here]: “My statement: ‘In agricultural associations the worker will then get either more or less than the product of his labour,’ is surely easy enough to understand so far as the ‘more concerned. I can’t in the least understand any difficulty arising with regard to this passage.”

The associations in the more favourable or better situated lands, would, in the first instance, get exactly the same rent of land as the individual owner of them does now. And consequently get more than their actual produce, the actual product of labour.

But from this fact alone, that an individual in Society gets more than his legitimate product of labour, it follows that another must get less than with a legitimate division of the product of labour – as we both understand this (see the end of your third Social Letter) – he would receive as the reward of his labour.

More accurately; What is the fair product of my labour (in the sense of the final solution of the social question, therefore, in the sense of the ‘idea’ which I here always assume as the criterion and measure of comparison in the ‘more or less’)? Is it the agricultural or industrial product which I individually can, under certain given conditions, produce, while another, under more advantageous conditions, can, with the same amount of labour, produce more, and a third, under more unfavourable conditions, with the same amount of labour, produce less? Surely not! My product of labour would be the share in the common socialised productions, which is determined by the relations in which my quantum of labour stands to the quantum of labour of the whole of Society.

After the conclusion of your third Social Letter, you cannot possibly dispute this.

And consequently, so long as the workers of the one association receive rent of land, the workers of the other associations that are not in this position, get less than their due share, less than the legitimate product of their labour.

Thus far, Lassalle. A misunderstanding is here no longer possible. The “idea” which Lassalle assumes in his “more or less,” is the Communist idea, which takes the total social product of labour, and not the product of labour of an individual or a group. Lassalle was perfectly conscious of this: that so long, as the latter forms the standard of comparison, a portion of the population will receive more, another necessarily less than under a fair division should come to it as its share of the common socialised labour; i.e., that, in the first instance, the associations would create a new inequality. And for this very reason he had, as Lassalle declares again and again, carefully avoided the words, “solution of the social question” – in the working out of his proposal, “not from any practical timidity and diffidence, but on these theoretical grounds.”

In the course of his letter, Lassalle explains that the inequality between agricultural co-operative associations could easily be overcome by a graduated land tax, which is to “abolish all rents of land, i.e., placing them in the hands of the State, and leaving the workers only the actually equalised results of their labours” – rents of land in the Ricardian sense. [4] The land tax would provide for the payment for the handing over of the soil to the associated workers, and – as Lassalle expresses it – “even from justice or envy, would be warmly supported” by the agricultural associations. But this rent of land would “supply the State with means for defraying the costs of education, science, art, and public expenditure of all kinds.” In the industrial associations, on the other hand, equalisation was to be brought about by the associations of every single branch of trade, as soon as they were combined in one great association, abandoning all private middle-man business, all sales being carried on in salerooms provided by the State. “Would not this at the same time make an end of what to-day men call over-production and industrial crises?”

The idea of State-ownership or the socialisation of rents of land [5] is a thoroughly rational one – i.e., contains no intrinsic contradiction. And in my opinion it is extremely probable, that at a certain stage of development it will, in some way, be realised. The idea of uniting into one body the associations is, on the contrary, only a pious hope, which may be brought about, but need not necessarily be accomplished so long as participation in it is left to the good pleasure of the individual associations. And even should this be accomplished, this would by no means prevent members of the individual associations from receiving in their share of the proceeds of them a larger, or under certain conditions, a smaller quota of the common socialised product, than would be due to them on the basis of the totality of labour expended. There would still be the interests of the associations as against the social interests.

Let us listen once more to Rodbertus.

In a letter to Rudolp Meyer of the 16th August, 1872, he refers to an article in the Neue Social Democrat [6], which maintained that Lassalle had belonged to the “most advanced tendency of Socialism,” and thinks this is probably true, but “it is just as true that Lassalle, and the (New) Sozial Democrat originally had striven for a productive co-operative association like that which Schulze-Delitzsch wanted, that is, one in which the profits of capital were to belong to the workers themselves, only that Schulze-Delitzsch wanted them to save the capital for this purpose themselves, and Lassalle wanted the State – our present State, too – to provide it for them (whether as gift or loan, is perhaps not quite clear). But a productive association, which pockets the profits of capital, assumes capitalist property, and ownership. How then is it possible to reconcile that most advanced tendency with such an association?”

Rodbertus now considers the question whether the productive association could be regarded as a “provisional institution,” and after a few remarks of a general nature, continues: “Enough, the productive association which Lassalle and the Sozial Democrat really did strive for, cannot even serve as a transition stage towards those ‘most advanced’ aims, for, given human nature, it would not lead to universal brotherhood, but would take us back to the most acute form of corporate property, in which only the persons of the possessors were changed, and that would prove a thousand times more hateful than the individualist property of to-day. The transition from this to universal State property can never be by means of guild or collective property (they come much to the same thing); rather, it is exactly this individual property which is the transition from co-operative property to State property. And in this lies the confusion of the Social Democrats (and in it lay Lassalle’s): i.e., that along with this most advanced aim (which, with Lassalle, too, was not yet to excite any practical interest), productive association is to be attained by means of capitalist profits, and therefore, capitalist property. Never, then, has the cart been put before the horse so thoroughly as by the Berlin Social Democrats (and their leader, Lassalle, also, in as much as he, too, strove after this ‘most advanced aim’) and Marx knows this very well.” (Letters, etc., of Rodbertus-Jagetzow, I, 226 et. seq.)

I have quoted Rodbertus so fully because his was the most objective attitude assumed towards Lassalle, because his conception of the State had much in common with Lassalle’s, and because no one probably discussed the productive associations with Lassalle so thoroughly as he did. Certainly his judgment is not altogether unbiased either, for it is notorious that he had a theory of his own on the solution of the “social question” – i.e., the working normal work day (fixed not only by time but by the amount of work done), and wages of labour in proportion. But in the main matter he places his finger quite rightly on the weak point in the Lassallean association when he says that it puts the cart before the horse. Lassalle desired the socialisation of production, and of the means of production, and because he thought the time not come for saying so already to the “mob” – by which he meant the rabble of idealess persons of all parties – and yet wished to disseminate the idea itself among the masses, he set forth what seemed to him a less dangerous postulate of productive co-operative associations with State-credit.

In this he committed the same mistake which, in his essay on Franz von Sickingen, he represented as the tragic fault of Sickingen. As that essay puts it, he “juggled” with the “idea,” and deceived his friends more than his enemies. But, like Sickingen, he did so in good faith. Though Lassalle repeatedly assured Rodbertus that ho was ready to give up the associations as soon as the latter would show him an equally easy and effective means to the same ends, we should not conclude from this that Lassalle was not thoroughly convinced of the excellence of his own means. Everyone makes such declarations, and the greater his faith in his own cause, the more readily will he make them. And how much this was the case with Lassalle is shown by his last remarks on the associations in answering Rodbertus: “In short, I can’t understand how anyone can fail to see that the association, proceeding from the State, is the organic germ of development that will lead on to all that lies beyond.” He must, then, be entirely acquitted of the reproach of having, in this demand, recommended to the workers something of whose justice he was not convinced, a reproach that would be far more serious than the making of a theoretical blunder.

Lassalle believed that in the means of co-operative associations with State-credit, means that were to serve the final end – i.e., the realisation of a Socialist society – all the chief essentials of that aim were already contained; and that here, in fact – and upon this he lays such great stress – “the means themselves are absolutely imbued with the very nature of the end.” Now, certainly, co-operation in a small way is, of course, a partial realisation of the Socialist principle of Communism, and the demand for State-help is an application of the idea for using the State machinery as a means towards the economic emancipation of the working-class, while it is also a means of possibly maintaining the connection of this with the question as a whole – a connection that was lost in the associations of the Schulze type. So far, we not only cannot reproach Lassalle, but must warmly acknowledge the unity of his conception. We have seen what his conception of the State was, how for him the State was not the existing political expression of a particular social condition, but the realisation of an ethical concept, the eternal “truth” of whose nature might be modified by existing historical influences, but could not be subverted. Holding such a view, it is, however, only logical to see in the demand for State-help something more than a mere practical measure, and as Lassalle did, to ascribe to it as a fundamental principle of Socialism the significance of an independent principle. [7]

And in the same way, the demand for productive co-operative societies stands in the closest intellectual relation to Lassalle’s theory of the iron law of wages. It is based upon the same economic hypotheses. In a word, I should say that everything here is cast in the same mould.

But that Lassalle believed in the rightness of his means does not justify him in expressing himself as vaguely as possible as to his aims. He who, in the already quoted essay on Franz von Sickingen, had so admirably demonstrated the danger that lurks “in concealing the true and final aim of the movement from others (and often, therefore, even from oneself);” he who had seen in this concealment of Sickingen his “moral crime” that must lead inevitably to his destruction, the result of a want of confidence in the strength of the ideas he represented, a “deviation from his own principle,” a “half defeat,” – he should have been the last to direct the movement towards a means, instead of to its actual end. The excuse that the “mob” must not yet be told what this end was or that the masses were not yet to be won over to it, does not hold. If the masses could not yet be interested in the actual end of the movement, the movement itself was premature and then, even were the means attained, they would not lead to the desired end. In the hands of a body of working-men not yet able to understand their historical mission, universal suffrage might do more harm than good, and productive co-operative societies – with State-credit could only benefit the existing powers of the State, and provide it with a praetorian guard. But if the body of working-men was sufficiently developed to understand the end of the movement, then this should have been openly declared. It need not have even then been represented as an immediate aim, to be realised there and then. Not only the leaders, however, but every one of the followers that were led ought to have known what was the end these means were to attain, and that they were only means to that end. The public would have been no more incensed than they were by the struggle to attain the means alone. Lassalle himself points out how subtle is the instinct of the governing classes, when it is a question of their own existence. “Individuals,” he rightly says, in this connection, “may be deceived, classes never.”

Those who consider what I have said above as doctrinaire may be referred to the history of the movement under Lassalle, and after him. To the consideration of that history I now proceed.




1. See Neue Zeit: 1890-91: The Iron Law of Wages.

2. Proudhon himself had “borrowed” his productive associations from Louis Blanc, or, more correctly, had botched up Louis Blanc’s association-plan in his own way. Lassalle’s proposition comes midway between those of Louis Blanc and of Proudhon; in common with the former, he asks for State aid, and with the latter the independence of the associations.

3. In Professor Ad, Wagner’s edition of Lassalle’s letters the passage reads “does not belong,” The “not,” however, as the subsequent text shows, is a printer’s error. Nor does it appear in Rudolph Meyer’s reproduction of the letter. (See loc. cit., p.463.)

4. i.e., as the excess of the product of the land, above a certain minimum amount, below which, indeed, the land is not cultivated, because it does not even yield an equivalent for the labour put into it.

5. Not to be confounded with the suggestions of Henry George, Flürscheim, etc., since Lassalle assumes the universal existence of the associations, without which, as we have seen earlier, every reform of taxation must, in his opinion, be wrecked by the iron law of wages.

6. The New Social Democrat.

7. So, too, holding this view, it was only logical for Lassalle, in his Leipzig speech on The Working-Class Question, e.g., to blame the so-called Manchester men among other things, because if they could, they “would allow the State to be submerged in Society.” As a matter of fact, however, the really characteristic point is that the Manchester men would like the State to be submerged in Capitalist Society.


Last updated on 16.3.2003