The Socialist Economics of Karl Marx and His Followers 1
Thorstein Veblen
The Quarterly Journal of Economics, volume 20, 1906.



I. The Theories of Karl Marx

The system of doctrines worked out by Marx is characterized by a
certain boldness of conception and a great logical consistency.
Taken in detail, the constituent elements of the system are
neither novel nor iconoclastic, nor does Marx at any point claim
to have discovered previously hidden facts or to have invented
recondite formulations of facts already known; but the system as
a whole has an air of originality and initiative such as is
rarely met with among the sciences that deal with any phase of
human culture. How much of this distinctive character the Marxian
system owes to the personal traits of its creator is not easy to
say, but what marks it off from all other systems of economic
theory is not a matter of personal idiosyncrasy. It differs
characteristically from all systems of theory that had preceded
it, both in its premises and in its aims. The (hostile) critics
of Marx have not sufficiently appreciated the radical character
of his departure in both of these respects, and have, therefore,
commonly lost themselves in a tangled scrutiny of supposedly
abstruse details; whereas those writers who have been in sympathy
with his teachings have too commonly been disciples bent on
exegesis and on confirming their fellow-disciples in the faith.
     Except as a whole and except in the light of its postulates
and aims, the Marxian system is not only not tenable, but it is
not even intelligible. A discussion of a given isolated feature
of the system (such as the theory of value) from the point of
view of classical economics (such as that offered by Bohm-Bawerk)
is as futile as a discussion of solids in terms of two
dimensions.
     Neither as regards his postulates and preconceptions nor as
regards the aim of his inquiry is Marx's position an altogether
single-minded one In neither respect does his position come of a
single line of antecedents. He is of no single school of
philosophy, nor are his ideals those of any single group of
speculators living before his time. For this reason he takes his
place as an originator of a school of thought as well as the
leader of a movement looking to a practical end.
     As to the motives which drive him and the aspiration which
guide him, in destructive criticism and an creative speculation
alike, he is primarily a theoretician busied with the analysis of
economic phenomena and their organization into a consistent and
faithful system of scientific knowledge; but he is, at the same
time, consistently and tenaciously alert to the bearing which
each step in the progress of his theoretical work has upon the
propaganda. His work has, therefore, an air of bias, such as
belongs to an advocate's argument; but it is not, therefore, to
be assumed, nor indeed to be credited, that his propagandist aims
have in any substantial way deflected his inquiry or his
speculations from the faithful pursuit of scientific truth. His
socialistic bias may color his polemics, but his logical grasp is
too neat and firm to admit of an bias, other than that of his
metaphysical preconceptions, affecting his theoretical work.
     There is no system of economic theory more logical than that
of Marx. No member of the system, no single article of doctrine,
is fairly to be understood, criticised, or defended except as an
articulate member of the whole and in the light of the
preconceptions and postulates which afford the point of departure
and the controlling norm of the whole. As regards these
preconceptions and postulates, Marx draws on two distinct lines
of antecedents, -- the Materialistic Hegelianism and the English
system of Natural Rights. By his earlier training he is an adept
in the Hegelian method of speculation and inoculated with the
metaphysics of development underlying the Hegelian system. By his
later training he is an expert in the system of Natural Rights
and Natural Liberty, ingrained in his ideals of life and held
inviolate throughout. He does not take a critical attitude toward
the underlying principles of Natural Rights. Even his Hegelian
preconceptions of development never carry him the length of
questioning the fundamental principles of that system. He is only
more ruthlessly consistent in working out their content than his
natural-rights antagonists in the liberal-classical school. His
polemics run against the specific tenets of the liberal school,
but they run wholly on the ground afforded by the premises of
that school. The ideals of his propaganda are natural-rights
ideals, but his theory of the working out of these ideals in the
course of history rests on the Hegelian metaphysics of
development, and his method of speculation and construction of
theory is given by the Hegelian dialectic.
     What first and most vividly centred interest on Marx and his
speculations was his relation to the revolutionary socialistic
movement; and it is those features of his doctrines which bear
immediately on the propaganda that still continue to hold the
attention of the greater number of his critics. Chief among these
doctrines, in the apprehension of his critics, is the theory of
value, with its corollaries: (a) the doctrines of the
exploitation of labor by capital; and (b) the laborer's claim to
the whole product of his labor. Avowedly, Marx traces his
doctrine of labor value to Ricardo, and through him to the
classical economists.2 The laborer's claim to the whole product
of labor, which is pretty constantly implied, though not
frequently avowed by Marx, he has in all probability taken from
English writers of the early nineteenth century, 3 more
particularly from William Thompson. These doctrines are, on their
face, nothing but a development of the conceptions of natural
rights which then pervaded English speculation and afforded the
metaphysical ground of the liberal movement. The more formidable
critics of the Marxian socialism have made much of these
doctrinal elements that further the propaganda, and have, by
laying the stress on these, diverted attention from other
elements that are of more vital consequence to the system as a
body of theory. Their exclusive interest in this side of
"scientific socialism" has even led them to deny the Marxian
system all substantial originality, and make it a (doubtfully
legitimate) offshoot of English Liberalism and natural rights.4
But this is one-sided criticism. It may hold as against certain
tenets of the so-called "scientific socialism," but it is not
altogether to the point as regards the Marxian system of theory.
Even the Marxian theory of value, surplus value, and
exploitation, is not simply the doctrine of William Thompson,
transcribed and sophisticated in a forbidding terminology,
however great the superficial resemblance and however large
Marx's unacknowledged debt to Thompson may be on these heads. For
many details and for much of his animus Marx may be indebted to
the Utilitarians; but, after all, his system of theory, taken as
a whole, lies within the frontiers of neo-Hegelianism, and even
the details are worked out in accord with the preconceptions of
that school of thought and have taken on the completion that
would properly belong to them on that ground. It is, therefore,
not by an itemized scrutiny of the details of doctrine and by
tracing their pedigree in detail that a fair conception of Marx
and his contribution to economics may be reached, but rather by
following him from his own point of departure out into the
ramifications of his theory, and so overlooking the whole in the
perspective which the lapse of time now affords us, but which he
could not himself attain, since he was too near to his own work
to see why he went about it as he did.
     The comprehensive system of Marxism is comprised within the
scheme of the Materialistic Conception of History.5 This
materialistic conception is essentially Hegelian,6 although it
belongs with the Hegelian Left, and its immediate affiliation is
with Feuerbach, not with the direct line of Hegelian orthodoxy.
The chief point of interest here, in identifying the
materialistic conception with Hegelianism, is that this
identification throws it immediately and uncompromisingly into
contrast with Darwinism and the post-Darwinian conceptions of
evolution. Even if a plausible English pedigree should be worked
out for this Materialistic Conception, or "Scientific Socialism,"
as has been attempted, it remains none the less true that the
conception with which Marx went to his work was a transmuted
framework of Hegelian dialectic.7
     Roughly, Hegelian materialism differs from Hegelian
orthodoxy by inverting the main logical sequence, not by
discarding the logic or resorting to new tests of truth or
finality. One might say, though perhaps with excessive crudity,
that, where Hegel pronounces his dictum, Das Denken ist das Sein,
the materialists, particularly Marx and Engels, would say Das
Sein macht das Denken. But in both cases some sort of a creative
primacy is assigned to one or the other member of the complex,
and in neither case is the relation between the two members a
causal relation. In the materialistic conception man's spiritual
life -- what man thinks -- is a reflex of what he is in the
material respect, very much in the same fashion as the orthodox
Hegelian would make the material world a reflex of the spirit. In
both the dominant norm of speculation and formulation of theory
is the conception of movement, development, evolution, progress;
and in both the movement is contrived necessarily to take place
by the method of conflict or struggle. The movement is of the
nature of progress, -- gradual advance towards a goal, toward the
realization in explicit form of all that is implicit in the
substantial activity involved in the movement. The movement is,
further, self-conditioned and self-acting: it is an unfolding by
inner necessity. The struggle which constitutes the method of
movement or evolution is, in the Hegelian system proper, the
struggle of the spirit for self-realization by the process of the
well-known three-phase dialectic. ln the materialistic conception
of history this dialectical movement becomes the class struggle
of the Marxian system.
     The class struggle is conceived to be "material," but the
term "material" is in this connection used in a metaphorical
sense. It does not mean mechanical or physical, or even
physiological, but economic. It is material in the sense that it
is a struggle between classes for the material means of life.
"The materialistic conception of history proceeds on the
principle that production and, next to production, the exchange
of its products is the groundwork of every social order."8 The
social order takes its form through the class struggle, and the
character of the class struggle at any given phase of the
unfolding development of society is determined by "the prevailing
mode of economic production and exchange." The dialectic of the
movement of social progress, therefore, moves on the spiritual
plane of human desire and passion, not on the (literally)
material plane of mechanical and physiological stress, on which
the developmental process of brute creation unfolds itself. It is
a sublimated materialism; sublimated by the dominating presence
of the conscious human spirit; but it is conditioned by the
material facts of the production of the means of life.9 The
ultimately active forces involved in the process of unfolding
social life are (apparently) the material agencies engaged in the
mechanics of production; but the dialectic of the process - the
class struggle - runs its course only among and in terms of the
secondary (epigenetic) forces of human consciousness engaged in
the valuation of the material products of industry. A
consistently materialistic conception, consistently adhering to a
materialistic interpretation of the process of development as
well as of the facts involved in the process, could scarcely
avoid making its putative dialectic struggle a mere unconscious
and irrelevant conflict of the brute material forces. This would
have amounted to an interpretation in terms of opaque cause and
effect, without recourse to the concept of a conscious class
struggle, and it might have led to a concept of evolution similar
to the unteleological Darwinian concept of natural selection. It
could scarcely have led to the Marxian notion of a conscious
class struggle as the one necessary method of social progress,
though it might conceivably, by the aid of empirical
generalization, have led to a scheme of social process in which a
class struggle would be included as an incidental though perhaps
highly efficient factor.10 It would have led, as Darwinism has,
to a concept of a process of cumulative change in social
structure and function; but this process, being essentially a
cumulative sequence of causation, opaque and unteleological,
could not, without an infusion of pious fancy by the speculator
be asserted to involve progress as distinct from retrogression or
to tend to a "realization" or "self-realization" of the human
spirit or of anything else. Neither could it conceivably be
asserted to lead up to a final term, a goal to which all lines of
the process should converge and beyond which the process would
not go, such as the assumed goal of the Marxian process of class
struggle which is conceived to cease in the classless economic
structure of the socialistic final term. In Darwinianism there is
no such final or perfect term, and no definitive equilibrium.
     The disparity between Marxism and Darwinism, as well as the
disparity within the Marxian system between the range of material
facts that are conceived to be the fundamental forces of the
process, on the one hand, and the range of spiritual facts within
which the dialectic movement proceeds this disparity is shown in
the character assigned the class struggle by Marx and Engels. The
struggle is asserted to be a conscious one, and proceeds On a
recognItion by the competing classes of their mutually
incompatible interests with regard to the material means of life.
The class struggle proceeds on motives of interest, and a
recognition of class interest can, of course, be reached only by
reflection on the facts of the case. There is, therefore, not
even a dIrect causal connection between the material forces in
the case and the choice of a given interested line of conduct.
The attitude of the interested party does not result from the
material forces so immediately as to place it within the relation
of direct cause and effect, nor even with such a degree of
intimacy as to admit of its being classed as a tropismatic, or
even instinctive, response to the impact of the material force in
question. The sequence of reflection, and the consequent choice
of sides to a quarrel, run entirely alongside of the range of
material facts concerned.
     A further characteristic of the doctrine of class struggle
requires mention. While the concept is not Darwinian, it is also
not legitimately Hegelian, whether of the Right or the Left. It
is of a utilitarian origin and of English pedigree, and it
belongs to Marx by virtue of his having borrowed its elements
from the system of self-interest. It is in fact a piece of
hedonism, and is related to Bentham rather than to Hegel. It
proceeds on the grounds of the hedonistic calculus, which is
equally foreign to the Hegelian notion of an unfolding process
and to the post-Darwinian notions of cumulative causation. As
regards the tenability of the doctrine, apart from the question
of its derivation and its compatibility with the neo-Hegelian
postulates, it is to be added that it is quite out of harmony
with the later results of psychological inquiry, just as is true
of the use made of the hedonistic calculus by the classical
(Austrian) economics.
     Within the domain covered by the materialistic conception,
that is to say within the domain of unfolding human culture,
which is the field of Marxian speculation at large, Marx has more
particularly devoted his efforts to an analysis and theoretical
formulation of the present situation, -- the current phase of the
process, the capitalistic system. And, since the prevailing mode
of the production of goods determines the institutional,
intellectual, and spiritual life of the epoch, by determining the
form and method of the current class struggle, the discussion
necessarily begins with the theory of "capitalistic production,"
or production as carried on under the capitalistic system.11
Under the capitalistic system, that is to say under the system of
modern business traffic, production is a production of
commodities, merchantable goods, with a view to the price to be
obtained for them in the market. The great fact on which all
industry under this system hinges is the price of marketable
goods. Therefore it is at this point that Marx strikes into the
system of capitalistic production, and therefore the theory of
value becomes the dominant feature of his economics and the point
of departure for the whole analysis, in all its voluminous
ramifications.12
     It is scarcely worth while to question what serves as the
beginning of wisdom in the current criticisms of Marx; namely,
that he offers no adequate proof of his labor-value theory.13 It
is even safe to go further, and say that he offers no proof of
it. The feint which occupies the opening paragraphs of the
Kapital and the correspondIng passages of Zur Kritik, etc., is
not to be taken seriously as an attempt to prove his position on
this head by the ordinary recourse to argument. It is rather a
self-satisfied superior's playful mystification of those readers
(critics) whose limited powers do not enable them to see that his
proposition is self-evident. Taken on the Hegelian (neo-Hegelian)
ground, and seen in the light of the general materialistic
conception, the proposition that value -- labor-cost is
self-evident, not to say tautological. Seen in any other light,
it has no particular force.
     In the Hegelian scheme of things the only substantial
reality is the unfolding life of the spirit. In the neo-Hegelian
scheme, as embodied in the materialistic conception, this reality
is translated into terms of the unfolding (material) life of man
in society.14 In so far as the goods are products of industry,
they are the output of this unfolding life of man, a material
residue embodying a given fraction of this forceful life process.
In this life process lies all substantial reality, and all
finally valid relations of quantivalence between the products of
this life process must run in its terms. The life process, which,
when it takes the specific form of an expenditure of labor power,
goes to produce goods, is a process of material forces, the
spiritual or mental features of the life process and of labor
being only its insubstantial reflex. It is consequently only in
the material changes wrought by this expenditure of labor power
that the metaphysical substance of life - labor power - can be
embodied; but in these changes of material fact it cannot but be
embodied, since these are the end to which it is directed.
     This balance between goods in respect of their magnitude as
output of human labor holds good indefeasibly, in point of the
metaphysical reality of the life process, whatever superficial
(phenomenal) variations from this norm may occur in men's
dealings with the goods under the stress of the strategy of
self-interest. Such is the value of the goods in reality; they
are equivalents of one another in the proportion in which they
partake of this substantial quality, although their true ratio of
equivalence may never come to an adequate expression in the
transactions involved in the distribution of the goods. This real
or true value of the goods is a fact of production, and holds
true under all systems and methods of production, whereas the
exchange value (the "phenomenal form" of the real value) is a
fact of distribution, and expresses the real value more or less
adequately according as the scheme of distribution force at the
given time conforms more or less closely to the equities given by
production. If the output of industry were distributed to the
productive agents strictly in proportion to their shares in
production, the exchange value of the goods would be presumed to
conform to their real value. But, under the current, capitalistic
system, distribution is not in any sensible degree based on the
equities of production, and the exchange value of goods under
this system can therefore express their real value only with a
very rough, and in the main fortuitous, approximation. Under a
socialistic ráéágime, where the laborer would get the full
product of his labor, or where the whole system of ownership, and
consequently the system of distribution, would lapse, values
would reach a true expression, if any.
     Under the capitalistic system the determination of exchange
value is a matter of competitive profit-making, and exchange
values therefore depart erratically and incontinently from the
proportions that would legitimately be given them by the real
values whose only expression they are. Marx's critics commonly
identify the concept of "value" with that of "exchange value," 15
and show that the theory of "value" does not square with the run
of the facts of price under the existing system of distribution,
piously hoping thereby to have refuted the Marxian doctrine;
whereas, of course, they have for the most part not touched it.
The misapprehension of the critics may be due to a (possibly
intentional) oracular obscurity on the part of Marx. Whether by
his fault or their own, their refutations have hitherto been
quite inconclusive. Marx's severest stricture on the iniquities
of the capitalistic system is that contained by implication in
his development of the manner in which actual exchange value of
goods systematically diverges from their real (labor-cost) value.
Herein, indeed, lies not only the Inherent iniquity of the
existing system, but also its fateful infirmity, according to
Marx.
     The theory of value, then, is contained in the main
postulates of the Marxian system rather than derived from them.
Marx identifies this doctrine, in its elements, with the
labor-value theory of Ricardo,16 but the relationship between the
two is that of a superficial coincidence in their main
propositions rather than a substantial identity of theoretic
contents. In Ricardo's theory the source and measure of value is
sought in the effort and sacrifice undergone by the producer,
consistently, on the whole, with the Benthamite-utilitarian
position to which Ricardo somewhat loosely and uncritically
adhered. The decisive fact about labor, that quality by virtue of
which it is assumed to be the final term in the theory of
production, is its irksomeness. Such is of course not the case in
the labor-value theory of Marx, to whom the question of the
irksomeness of labor is quite irrelevant, so far as regards the
relation between labor and production. The substantial diversity
or incompatibility of the two theories shows itself directly when
each is employed by its creator in the further analysis of
economic phenomena. Since with Ricardo the crucial point is the
degree of irksomeness of labor, which serves as a measure both of
the labor expended and the value produced, and since in Ricardo's
utilitarian philosophy there is no more vital fact underlying
this irksomeness, therefore no surplus-value theory follows from
the main position. The productiveness of labor is not cumulative.
in its own working; and the Ricardian economics goes on to seek
the cumulative productiveness of industry in the functioning of
the products of labor when employed in further production and in
the irksomeness of the capitalist's abstinence. From which duly
follows the general position of classical economics on the theory
of production.
     With Marx, on the other hand, the labor power expended in
production being itself a product and having a substantial value
corresponding to its own labor cost, the value of the labor power
expended and the value of the product created by its expenditure
need not be the same. They are not the same, by supposition, as
they would be in any hedonistic interpretation of the facts.
Hence a discrepancy arises between the value of the labor power
expended in production and the value of the product created, and
this discrepancy is covered by the concept of surplus value.
Under the capitalistic system, wages being the value (price) of
the labor power consumed in industry, it follows that the surplus
product of their labor cannot go to the laborers, but becomes the
profits of capital and the source of its accumulation and
increase. From the fact that wages are measured by the value of
labor power rather than by the (greater) value of the product of
labor , it follows also that the laborers are unable to buy the
whole product of their labor, and so that the capitalists are
unable to sell the whole product of industry continuously at its
full value, whence arise difficulties of the gravest nature in
the capitalistic system, in the way of overproduction and the
like.
     But the gravest outcome of this systematic discrepancy
between the value of labor power and the value of its product is
the accumulation of capital out of unpaid labor and the effect of
this accumulation on the laboring population. The law of
accumulation, with its corollary, the doctrine of the industrial
reserve army, is the final term and the objective point of Marx's
theory of capitalist production, just as the theory of labor
value is his point of departure.17  While the theory of value and
surplus value are Marx's explanation of the possibility of
existence of the capitalistic system, the law of the accumulation
of capital is his exposition of the causes which must lead to the
collapse of that system and of the manner in which the collapse
will come. And since Marx is, always and everywhere, a socialist
agitator as well as a theoretical economist, it may be said
without hesitation that the law of accumulation is the climax of
his great work, from whatever point of view it is looked at,
whether as an economic theorem or as a tenet of socialistic
doctrine.
     The law of capitalistic accumulation may be paraphrased as
follows:18 Wages being the (approximately exact) value of the
labor power bought in the wage contract; the price of the product
being the (similarly approximate) value of the goods produced;
and since the value of the product exceeds that of the labor
power by a given amount (surplus value), which by force of the
wage contract passes into the possession of the capitalist and is
by him in part laid by as savings and added to the capital
already in hand, it follows (a) that, other things equal, the
larger the surplus value, the more rapid the increase of capital;
and also (b), that the greater the increase of capital relatively
to the labor force employed, the more productive the labor
employed and the larger the surplus product available for
accumulation. The process of accumulation, therefore, is
evidently a cumulative one; and, also evidently, the increase
added to capital is an unearned increment drawn from the unpaid
surplus product of labor.
     But with an appreciable increase of the aggregate capital a
change takes place in its technological composition, whereby the
"constant" capital (equipment and raw materials) increases
disproportionately as compared with the "variable" capital (wages
fund). "Labor-saving devices" are used to a greater extent than
before, and labor is saved. A larger proportion of the expenses
of production goes for the purchase of equipment and raw
materials, and a smaller proportion -- though perhaps an
absolutely increased amount - goes for the purchase of labor
power. Less labor is needed relatively to the aggregate capital
employed as well as relatively to the quantity of goods produced.
Hence some portion of the increasing labor supply will not be
wanted, and an "industrial reserve army," a "surplus labor
population," an army of unemployed, comes into existence. This
reserve grows relatively larger as the accumulation of capital
proceeds and as technological improvements consequently gain
ground ; so that there result two divergent cumulative changes in
the situation, -- antagonistic, but due to the same set of forces
and, therefore, inseparable: capital increases, and the number of
unemployed laborers (relatively) increases also.
     This divergence between the amount of capital and output, on
the one hand, and the amount received by laborers as wages, on
the other hand, has an incidental consequence of some importance.
The purchasing power of the laborers, represented by their wages,
being the largest part of the demand for consumable goods, and
being at the same time, in the nature of the case, progressively
less adequate for the purchase of the product, represented by the
price of the goods produced, it follows that the market is
progressively more subject to glut from overproduction, and hence
to commercial crises and depression. It has been argued, as if it
were a direct inference from Marx's position, that this
maladjustment between production and markets, due to the laborer
not getting the full product of his labor, leads directly to the
breakdown of the capitalistic system, and so by its own force
will bring on the socialistic consummation. Such is not Marx's
position, however, although crises and depression play an
important part in the course of development that is to lead up to
socialism. In Marx's theory, socialism is to come by way of a
conscious class movement on the part of the propertyless
laborers, who will act advisedly on their own interest and force
the revolutionary movement for their own gain. But crises and
depression will have a large share in bringing the laborers to a
frame of mind suitable for such a move.
     Given a growing aggregate capital, as indicated above, and a
concomitant reserve of unemployed laborers growing at a still
higher rate, as is involved in Marx's position, this body of
unemployed labor can be, and will be, used by the capitalists to
depress wages, in order to increase profits. Logically, it
follows that, the farther and faster capital accumulates, the
larger will be the reserve of unemployed, both absolutely and
relatively to the work to be done, and the more severe will be
the pressure acting to reduce wages and lower the standard of
living, and the deeper will be the degradation and misery of the
working class and the more precipitately will their condition
decline to a still lower depth. Every period of depression, with
its increased body of unemployed labor seeking work, will act to
hasten and accentuate the depression of wages, until there is no
warrant even for holding that wages will, on an average, be kept
up to the subsistence minimum.19 Marx, indeed, is explicit to the
effect that such will be the case, that wages will decline below
the subsistence minimum; and he cites English conditions of child
labor, misery, and degeneration to substantiate his views.20 
When this has gone far enough, when capitalist production comes
near enough to occupying the whole field of industry and has
depressed the condition of its laborers sufficiently to make them
an effective majority of the community with nothing to lose,
then, having taken advice together, they will move, by legal or
extra-legal means, by absorbing the state or by subverting it, to
establish the social revolution, Socialism is to come through
class antagonism due to the absence of all property interests
from the laboring class, coupled with a generally prevalent
misery so profound as to involve some degree of physical
degeneration. This misery is to be brought about by the
heightened productivity of labor due to an increased accumulation
of capital and large improvements in the industrial arts; which
in turn is caused by the fact that under a system of private
enterprise with hired labor the laborer does not get the whole
product of his labor; which, again, is only saying in other words
that private ownership of capital goods enables the capitalist to
appropriate and accumulate the surplus product of labor. As to
what the régime is to be which the social revolution will bring
in, Marx has nothing particular to say beyond the general thesis
that there will be no private ownership, at least not of the
means of production.
     Such are the outlines of the Marxian system of socialism, In
all that has been said so far no recourse is had to the second
and third volumes of Kapital. Nor is it necessary to resort to
these two volumes for the general theory of socialism. They add
nothing essential, although many of the details of the processes
concerned in the working out of the capitalist scheme are treated
with greater fulness, and the analysis is carried out with great
consistency and with admirable results. For economic theory at
large these further two volumes are important enough, but an
inquiry into their contents in that connection is not called for
here.
     Nothing much need be said as to the tenability of this
theory. In its essentials, or at least in its characteristic
elements, it has for the most part been given up by latterday
socialist writers. The number of those who hold to it without
essential deviation is growing gradually smaller. Such is
necessarily the case, and for more than one reason. The facts are
not bearing it out on certain critical points, such as the
doctrine of increasing misery; and the Hegelian philosophical
postulates, without which the Marxism of Marx is groundless, are
for the most part forgotten by the dogmatists of to-day.
Darwinism has largely supplanted Hegelianism in their habits of
thought.
     The particular point at which the theory is most fragile,
considered simply as a theory of social growth, is its implied
doctrine of population, implied in the doctrine of a growing
reserve of unemployed workmen. The doctrine of the reserve of
unemployed labor involves as a postulate that population will
increase anyway, without reference to current or prospective
means of life. The empirical facts give at least a very
persuasive apparent support to the view expressed by Marx, that
misery is, or has hitherto been, no hindrance to the propagation
of the race; but they afford no conclusive evidence in support of
a thesis to the effect that the number of laborers must increase
independently of an increase of the means of life. No one since
Darwin would have the hardihood to say that the increase of the
human species is not conditioned by the means of living.
     But all that does not really touch Marx's position. To Marx,
the neo-Hegelian, history, including the economic development, is
the life-history of the human species; and the main fact in this
life-history, particularly in the economic aspect of it, is the
growing volume of human life. This, in a manner of speaking, is
the base-line of the whole analysis of the process of economic
life, including the phase of capitalist production with the rest.
     The growth of population is the first principle, the most
substantial, most material factor in this process of economic
life, so long as it is a process of growth, of unfolding, of
exfoliation, and not a phase of decrepitude and decay. Had Marx
found that his analysis led him to a view adverse to this
position, he would logically have held that the capitalist system
is the mortal agony of the race and the manner of its taking off.
Such a conclusion is precluded by his Hegelian point of
departure, according to which the goal of the life-history of the
race in a large way controls the course of that life-history in
all its phases, including the phase of capitalism. This goal or
end, which controls the process of human development, is the
complete realization of life in all its fulness, and the
realization is to be reached by a process analogous to the
three-phase dialectic, of thesis, antithesis, and synthesis, into
which scheme the capitalist system, with its overflowing measure
of misery and degradation, fits as the last and most dreadful
phase of antithesis. Marx, as a Hegelian, -- that is to say, a
romantic philosopher, -- is necessarily an optimist, and the evil
(antithetical element) in life is to him a logically necessary
evil, as the antithesis is a necessary phase of the dialectic;
and it is a means to the consummation, as the antithesis is a
means to the synthesis.



Notes

1. The substance of lectures before students in Harvard
University in April, 1906.

2. Cf. Critique of Political Economy, chap. i, "Notes on the
History of the Theory of Commodities," pp. 56-73 (English
translation, New York, 1904).

3. See Menger, Right to the Whole Produce of Labor, section iii-v
and viii-ix, and Foxwell's admirable Introduction to Menger.

4. See Menger and Foxwell, as above, and Schaeffle, Quintessence
of Socialism, and The Impossibility or Social Democracy.

5. See Engels, The Development of Socialism from Utopia to
Science, especially section ii. and the opening paragraphs of
section iii.; also the preface of Zur Kritik der politischen
Oekonomie.

6. See Engels, as above, and also his Feuerbach: The Roots of
Socialist Philosophy (translation, Chicago, Kerr & Co., 1903).

7. See, e.g., Seligman, The Economic Interpretation of History,
Part I.

8. Engels, Development of Socialism, beginning of section iii.

9. Cf., on this point, Max Adler, "Kausalitat und Teleologie in
Streite um die Wissenschaft" (included in Marx -- Studien, edited
by Adler and Hilfendirg, vol. i), particularly section xi; cf.
also Ludwig Stein, Die soziale Frage im Lichte der Philosophie,
whom Adler criticizes and claims to have refuted.

10. Cf., Alder as above.

11. It may be noted, by way of caution to readers familiar with
the terms only as employed by the classical (English and
Austrian) economists, that in Marxian usage "capitalistic
production" means production of goods for the market by hired
labor under the direction of employers who own (or control) the
means of production and are engaged in industry for the sake of
profit. "Capital" is wealth (primarily funds) so employed. In
these and other related points of terminological usage Marx is,
of course, much more in touch with colloquial usage than those
economists of the classical line who make capital signify "the
products of past industry used as aids to further production."
With Marx "Capitalism" implies certain relations of ownership, no
less than the "productive use" which is alone insisted on by so
many later economists in defining the term.

12. In the sense that the theory of value affords the point of
departure and the fundamental concepts out of which the further
theory of the workings of capitalism is constructed, -- in this
sense, and in this sense only, is the theory of value the central
doctrine and the critical tenet of Marxism. It does not follow
that Marxist doctrine of an irresistible drift towards a
socialistic consummation hangs on the defensibility of the
labor-value theory, nor even that the general structure of the
Marxist economics would collapse if translated into other terms
than those of this doctrine of labor value. Cf. Bohm-Bawerk, Karl
Marx and the Close of his System; and, on the other hand, Frans
Oppenheimer, Das Grundgesetz der Marx'schen Gesellschaftslehre,
and Rudolf Goldscheid, Verelendungs -- oder Meliorationstheorie.

13. Cf., e.g., Bohm-Bawerk, as above; Georg Adler, Grundlagen der
Karl Marx'schen Kritik.

14. In much the same way, and with an analogous effect on their
theoretical work, in the preconceptions of the classical
(including the Austrian) economists, the balance of pleasure and
pain is taken to be the ultimate reality in terms of which all
economic theory must be stated and to terms of which all
phenomena should finally be reduced in any definitive analysis of
economic life. It is not the present purpose to inquire whether
the one of these uncritical assumptions is in any degree more
meritorious or more serviceable than the other.

15. Bohm-Bawerk, Capital and Interest, Book VI, chap. iii; also
Karl Marx and the Close of his System, particularly chap. iv;
Adler, Grundlagen, chaps. ii and iii

16. Cf. Kapital, vol. i, chap. xv, p.486 (4th ed.). See also
notes 9 and 16 to chap. i of the same volume, where Marx
discusses the labor-value doctrines of Adam Smith and an earlier
(anonymous) English writer and compares them with his own.
Similar comparisons with the early -- Classical -- value theories
recur from time to time in the later portions of Kapital.

17. Oppenheimer (Das Grundgesertz der Marx'schen
Gesellschaftslehre) is right in making the theory of accumulation
the central element in the doctrines of Marxist socialism, but it
does not follow, as Oppenheimer contends, that this doctrine is
the keystone of Marx's economic theories. It follows logically
from the theory of surplus value, as indicated above, and rests
on that theory in such a way that it would fail (in the form in
which it is held by Marx) with the failure of the doctrine of
surplus value.

18. See Kapital, vol. i, chap. xxiii.

19. The "subsistence minimum" is here taken in the sense used by
Marx and the classical economists, as meaning what is necessary
to keep up the supply of labor at its current rate of efficiency.

20. See Kapital, vol. i, chap. xxiii, sections 4 and 5.