Historical materialism and the economics of Karl Marx

by Benedetto Croce

I

OF THE SCIENTIFIC PROBLEM IN MARX'S 'DAS KAPITAL'

Das Kapital an abstract investigation: His society is not this or that society: Treats only of capitalist society: Assumption of equivalence between value and labour: Varying views about meaning of this law: Is a postulate or standard of comparison: Question as to value of this standard: Is not a moral ideal: Treats of economic society in so far as is a working society: Shows special way in which problem is solved in capitalist society; Marx's deductions from it.

Notwithstanding the many expositions, criticisms, summaries and even abbreviated extracts in little works of popular propaganda, which have been made of Karl Marx's work, it is far from easy, and demands no small effort of philosophical and abstract thought, to understand the exact nature of the investigation which Marx carried out. In addition to the intrinsic difficulty of the subject, it does not appear that the author himself always realised fully the peculiar character of his investigation, that is to say its theoretical distinctness from all other investigations which may be made with his economic material; and, throughout, he despised and neglected all such preliminary and exact explanations as might have made his task plain. Then, moreover, account must be taken of the strange composition of the book, a mixture of general theory, of bitter controversy and satire, and of historical illustrations or digressions, and so arranged that only Loria, (fortunate man!), can declare Das Kapital to be the finest and most symmetrical of existing books; it being, in reality, un-symmetrical, badly arranged and out of proportion, sinning against all the laws of good taste; resembling in some particulars Vico's Scienza nuova. Then too there is the Hegelian phraseology beloved by Marx, of which the tradition is now lost, and which, even within that tradition he adapted with a freedom that at times seems not to lack an element of mockery. Hence it is not surprising that Das Kapital has been regarded, at one time or another, as an economic treatise, as a philosophy of history, as a collection of sociological laws, so-called, as a moral and political book of reference, and even, by some, as a bit of narrative history.

Nevertheless the inquirer who asks himself what is the method and what the scope of Marx's investigation, and puts on one side, of course, all the historical, controversial and descriptive portions (which certainly form an organic part of the book but not of the fundamental investigation), can at once reject most of the above-mentioned definitions, and decide clearly these two points:

(1) As regards method, Das Kapital is without doubt an abstract investigation; the capitalist society studied by Marx, is not this or that society, historically existing, in France or in England, nor the modern society of the most civilised nations, that of Western Europe and America. It is an ideal and formal society, deduced from certain hypotheses, which could indeed never have occurred as actual facts in the course of history. It is true that these hypotheses correspond to a great extent to the historical conditions of the modern civilised world; but this, although it may establish the importance and interest of Marx's investigation because the latter helps us to an understanding of the workings of the social organisms which closely concern us, does not alter its nature. Nowhere in the world will Marx's categories be met with as living and real existences, simply because they are abstract categories, which, in order to live must lose some of their qualities and acquire others.

(2) As regards scope, Marx's investigation does not cover the whole field of economic fact, nor even that one ultimate and dominant portion, whence all economic facts have their source, like rivers flowing from a mountain. It limits itself, on the contrary, to one special economic system, that which occurs in a society with private property in capital, or, as Marx says, in the phrase peculiar to him, capitalist. There remained untouched, not only the other systems which have existed in history and are possible in theory, such as monopolist society, or society with collective capital, but also the series of economic phenomena common to the different societies and to individual economics. To sum up, as regards method, Das Kapital is not an historical description, and as regards scope, it is not an economic treatise, much less an encyclopedia.

But, even when these two points are settled, the real essence of Marx's investigation is not yet explained. Were Das Kapital nothing but what we have so far defined, it would be merely an economic monograph on the laws of capitalist society.[13] Such a monograph Marx could only have made in one way: by deciding on these laws, and explaining them by general laws, or by the fundamental concepts of economics; by reducing, in short, the complex to the simple, or passing, by deductive reasoning, and with the addition of fresh hypotheses, from the simple to the complex. He would thus have shown, by precise exposition, how the apparently most diverse facts of the economic world are ultimately governed by one and the same law; or, what is the same thing, how this law is differently refracted as it takes effect through different organisations, without changing itself, since otherwise the means and indeed the test of the explanation would be lacking. Work of this nature had been already carried out, to a great extent, in Marx's time, and since then it has been developed yet further by economists, and has attained a high degree of perfection, as may be seen, for instance, in the economic treatises of our Italian writers, Pantaleoni and Pareto. But I much doubt whether Marx would have become an economist in order to devote himself to a species of research of almost solely theoretical, or even scholastic, interest. His whole personality as a practical man and a revolutionist, impatient of abstract investigation which had no close connection with the interests of actual life, would have recoiled from such a course. If Das Kapital was to have been merely an economic monograph, it would be safe to wager that it would never have come into existence.

What then did Marx accomplish, and to what treatment did he subject the phenomena of capitalist society, if not to that of pure economic theory? Marx assumed, outside the field of pure economic theory, a proposition; the famous equivalence between value and labour; i.e. the proposition that the value of the commodities produced by labour is equal to the quantity of labour socially necessary to produce them. It is only with this assumption that his special investigation begins.

But what connection has this proposition with the laws of capitalist society? or what part does it play in the investigation? This Marx never explicitly states; and it is on this point that the greatest confusions have arisen, and that the interpreters and critics have been most at a loss.

Some of them have explained the law of labour-value as an historical law, peculiar to capitalist society, all of whose manifestations it determines;[14] others rightly seeing that the manifestations of capitalist society are by no means determined by such a law, but comply with the general economic motives characteristic of the economic nature of man, have rejected the law as an absurdity at which Marx arrived by pressing to its extreme consequences an unfortunate concept of Ricardo.

Criticism was thus bewildered between entire acceptance, combined with a clearly erroneous interpretation, and entire and summary rejection of Marx's treatment; until, in recent years, and especially after the appearance of the third and posthumous volume of Das Kapital, it began to seek out and follow a better path. In truth, despite its eager defenders, the Marxian doctrine has always remained obscure; and, despite contemptuous and summary condemnation, it has always displayed also an obstinate vitality not usually possessed by nonsense and sophistry. For this reason it is to the credit of Professor Werner Sombart, of Breslau University, that he has declared, in one of his lucid writings, that Marx's practical conclusions may be refuted from a political standpoint, but that, scientifically, it is above all important to understand his ideas.[15]

Sombart, then, breaking openly with the interpretation of Marx's law of value as a real law of economic phenomena, and giving a fuller, and I may say, a bolder expression to the timid opinions already stated by another (C. Schmidt), says, that Marx's law of value is not an empirical but a conceptual fact (Keine empirische, sondern eine gedankliche Thatsache); that Marx's value is a logical fact (eine logische Thatsache), which aids our thought in understanding the actual realities of economic life.[16]

This interpretation, in its general sense, was accepted by Engels, in an article written some months before his death and published posthumously. To Engels it appeared that 'it could not be condemned as inaccurate, but that, nevertheless, it was too vague and might be expressed with greater precision.'[17]

The acute and courteous remarks on the theory of value, published lately in an article in the Journal des Economistes by an able French Marxian, Sorel, indicate a movement in the same direction. In these remarks he acknowledges that there is no way of passing from Marx's theory to actual phenomena of economic life, and that, although it may offer elucidation, in a somewhat limited sense, it does not appear further that it could ever explain, in the scientific meaning of the word.[18]

And now too Professor Labriola, in a hasty glance at the same subject, referring clearly to Sombart, and partly agreeing and partly criticising, writes: 'the theory of value does not denote an empirical factum nor does it express a merely logical proposition, as some have imagined; but it is the typical premise without which all the rest would be unthinkable.'[19]

Labriola's phrase appears to me, in fact, somewhat more accurate than Sombart's; who, moreover, shows himself dissatisfied with his own term, like someone who has not yet a quite definite concept in view, and hence cannot find a satisfactory phrase. 'Conceptual fact,' 'logical fact' expresses much too little since it is evident that all sciences are interwoven from logical facts, that is from concepts. Marx's labour-value is not only a logical generalisation, it is also a fact conceived and postulated as typical, i.e. something more than a mere logical concept. Indeed it has not the inertia of the abstract but the force of a concrete fact,[20] which has in regard to capitalist society, in Marx's investigation, the function of a term of comparison, of a standard, of a type.[21]

This standard or type being postulated, the investigation, for Marx, takes the following form. Granted that value is equal to the labour socially necessary, it is required to show with what divergencies from this standard the prices of commodities are fixed in capitalist society, and how labour-power itself acquires a price and becomes a commodity. To speak plainly, Marx stated the problem in unappropriate language; he represented this typical value itself, postulated by him as a standard, as being the law governing the economic phenomena of capitalist society. And it is the law, if he likes, but in the sphere of his conceptions, not in economic reality. We may conceive the divergencies from a standard as the revolt of reality when confronted by this standard which we have endowed with the dignity of law.

From a formal point of view there is nothing absurd about the investigation undertaken by Marx. It is a usual method of scientific analysis to regard a phenomenon not only as it exists, but also as it would be if one of its factors were altered, and, in comparing the hypothetical with the real phenomenon, to conceive the first as diverging from the second, which is postulated as fundamental, or the second as diverging from the first, which is postulated in the same manner. If I build up by deductive reasoning the moral rules which develop in two social groups which are at war one against another, and if I show how they differ from the moral rules which develop in a state of peace, I should be making something analogous to the comparison worked out by Marx. Nor would there be great harm (although the expression would be neither fortunate nor accurate) in saying, in a figurative sense, that the law of the moral rules in time of war is the same as that of the rules in time of peace, modified to the new conditions, and altered in a way which seems, ultimately, inconsistent with itself. As long as he confines himself to the limits of his hypothesis Marx proceeds quite correctly. Error could come in only when he or others confuse the hypothetical with the real, and the manner of conceiving and of judging with that of existing. As long as this mistake is avoided, the method is unassailable.

But the formal justification is insufficient: we need another. With a formally correct method results may be obtained which are meaningless and unimportant, or mere mental tricks may be performed. To set up an arbitrary standard of comparison, to compare, and deduce, and to end by establishing a series of divergencies from this standard; to what will this lead? It is then, the standard itself which needs justification: i.e. we need to decide what meaning and importance it may have for us.

This question too, although not stated exactly in this way, has occurred to Marx's critics; and an answer to it has been already given some time ago and by many, by saying that the equivalence of value and labour is an ideal of social ethics, a moral ideal. But nothing could be imagined more mistaken in itself and farther from Marx's thought than this interpretation. What moral inference can ever be drawn from the premiss that value is equal to the labour socially necessary? It we reflect a little, absolutely none. The establishment of this fact tells us nothing about the needs of the society, which needs will make necessary one or another ethical-legal system of property and of methods of distribution. Value may certainly equal labour, nevertheless special historical conditions will make necessary society organised in castes or in classes, divided into governing and governed, rulers and ruled; with a resulting unequal distribution of the products of labour. Value may certainly equal labour; but even supposing that fresh historical conditions ever make possible the disappearance of society organised in classes and the advent of a communistic society, and even supposing that in this society distribution could take place according to the quantity of labour contributed by each person, this distribution would still not be a deduction from the established equivalence between value and labour, but a standard adopted for special reasons of social convenience.[22] Nor can it be said that such an equivalence supplies in itself an idea of perfect justice (even though unrealisable), since the criterion of justice has no relation to the difference often due to purely natural causes, in the ability to do more or less social labour and to produce a greater or smaller value. Thus neither a rule of abstract justice nor one of convenience and social utility can be derived from the equivalence between value and labour. Rules of either kind can only be based on consideration of a quite different grade from that of a simple economic equation.

Sombart, avoiding this vulgar confusion, has been better advised in looking for the meaning of the standard set up by Marx in the nature of society itself, and apart from our moral judgments. Thus he says that labour is the economic fact of greater objective importance, and that value, in Marx's view, is nothing 'if not the economic expression of the fact of the socially productive power of labour, as the basis of economic existence.'

But this investigation appears to me to be merely begun and not yet worked out to a conclusion; and if I might suggest wherein it needs completion, I should remark that it is necessary to attempt to give clearness and precision to this word objective, which is either ambiguous or metaphorical. What is meant by an economically objective fact? Do not these words suggest rather a mere presentiment of a concept instead of the distinct vision of this concept itself?

I will add, merely tentatively, that the word objective (whose correlative term is subjective) does not seem to be in place here. Let us, instead, take account, in a society, only of what is properly economic life, i.e. out of the whole society, only of economic society. Let us abstract from this latter all goods which cannot be increased by labour. Let us abstract further all class distinctions, which may be regarded as accidental in reference to the general concept of economic society. Let us leave out of account all modes of distributing the wealth produced, which, as we have said, can only be determined on grounds of convenience or perhaps of justice, but in anycase upon considerations belonging to society as a whole, and never from considerations belonging exclusively to economic society. What is left after these successive abstractions have been made? Nothing but economic society in so far as it is a working society.[23] And in this society without class distinctions, i.e. in an economic society as such and whose only commodities are the products of labour, what can value be? Obviously the sum of the efforts, i.e. the quantity of labour, which the production of the various kinds of commodities demands. And, since we are here speaking of the economic social organism, and not of the individual persons living in it, it follows that this labour cannot be reckoned except by averages, and hence as labour socially (it is with society, I repeat, that we are here dealing) necessary.

Thus labour-value would appear as that determination of value peculiar to economic society as such, when regarded only in so far as it produces commodities capable of being increased by labour.

From this definition the following corollary may be drawn: the determination of labour value will have a positive conformity with facts as long as a society exists, which produces goods by means of labour. It is evident that in the imaginary county of Cocaigne this determination would have no conformity with facts, since all goods would exist in quantities exceeding the demand; similarly it is also evident that the same determination could not take effect in a society in which goods were inadequate to the demand, but could not be increased by labour.

But hitherto history has shown us only societies which, in addition to the enjoyment of goods not increasable by labour, have satisfied their needs by labour. Hence this equivalence between value and labour has hitherto had and will continue for an indefinite time to have, a conformity with facts; but, of what kind is this conformity? Having ruled out (1) that it is a question of a moral ideal, and (2) that it is a question of scientific law; and having nevertheless concluded that this equivalence is a fact (which Marx uses as a type), we are obliged to say, as the only alternative, that it is a fact, but a fact which exists in the midst of other facts; i.e. a fact that appears to us empirically as opposed, limited, distorted by other facts, almost like a force amongst other forces, which produces a resultant different from what it would produce if the other forces ceased to act. It is not a completely dominant fact but neither is it non-existent and merely imaginary.[24]

It is still necessary to remark that in the course of history this fact has undergone various alterations, i.e., has been more or less obscured; and here it is proper to do justice to Engels' remark in reference to Sombart; that as regards the way in which the latter defines the law of value 'he does not bring out the full importance which this law possesses during the stages of economic development in which it is supreme.' Engels makes a digression into the field of economic history to show that Marx's law of value, i.e. the equivalence between value and the labour socially necessary, has been supreme for several thousand years.[25] Supreme is too strong a term; but it is true that the opposed influences of other facts to this law have been fewer in number and less intense under primitive communism and under mediæval and domestic economic conditions, whilst they have reached a maximum in the society based on privately owned capital and more or less free universal competition, i.e. in the society which produces almost exclusively commodities.[26]

Marx, then, in postulating as typical the equivalence between value and labour and in applying it to capitalist society, was, as it were, making a comparison between capitalist society and a part of itself, isolated and raised up to an independent existence: i.e. a comparison between capitalist society and economic society as such (but only in so far as it is a working society). In other words, he was studying the social problem of labour and was showing by the test implicitly established by him, the special way in which this problem is solved in capitalist society. This is the justification, no longer formal but real, of his method.

It was in virtue of this method, and by the light thrown by the type which he postulated, that Marx was able to discover and define the social origin of profit, i.e. of surplus value. Surplus value in pure economics is a meaningless word, as is evident from the term itself; since a surplus value is an extra value, and thus falls outside the sphere of pure economics. But it rightly has meaning and is no absurdity, as a concept of difference, in comparing one economic society with another, one fact with another, or two hypotheses with one another.

It is also in virtue of the same premise that he was able to arrive at the proposition: that the products of labour in a capitalist society do not sell, unless by exception, for their value, but usually for more or less, and sometimes with great deviations from their value; which is to say, to put it shortly, value does not coincide with price. Suppose, by hypothesis the organisation of production were suddenly changed from a capitalist to a communistic system, we should see at once, not only that alteration in the fortunes of men which appeals so much to popular imagination, but also a more remarkable change: a change in the fortunes of things. A scale of valuation of goods would then fashion itself, very different for the most part, from that which now exists. The way in which Marx proves this proposition, by an analysis of the different components of the capital employed in different industries, i.e. of the proportion of fixed capital (machines, etc.) and of floating capital (wages), need not be explained here in detail.

And, in the same way, i.e. by proving that fixed capital increases continually in comparison with floating capital, Marx tries to establish another law of capitalist society, the law of the tendency of the rate of profits to fall. Technical improvement, which in an abstract economic society would show itself in the decreased labour required to produce the same wealth, shows itself in capitalist society in a gradual decline in the rate of profits.[27] But this section of Volume III of Das Kapital is one of the least developed in this little worked-out posthumous book; and it seems to me to be worth a special critical essay, which I hope to write at another time, not wishing to treat the subject here incidentally.[28]