Historical materialism and the economics of Karl Marx

by Benedetto Croce

I

Need for more comprehensive definition of the economic principle: Reasons why the mechanical conception erroneous, economic fact capable of appraisement: Cannot be scale of values for particular action: Economic datum a fact of human activity: Distinction and connection between pleasure and choice: Economic datum a fact of will: Knowledge a necessary presupposition of will: Distinction between technical and economic: Analogy of logic and æsthetic: Complete definition of economic datum.

Esteemed Friend,

On reading the little paper, which you were courteous enough to send me, on how to state the problem of pure economics,[93] I at once felt a desire to discuss the subject with you. Other occupations have obliged me to defer the satisfaction of this wish until now; and this has been fortunate. The extracts from your new and still unpublished treatise on pure economics, which came out in the March number of this Review,[94] have obliged me to abandon in part the scheme of thought which I had in mind; for I saw from them that you had modified some of those points in your thesis, which seemed to me most open to dispute.

I have on several occasions heard something like a feeling of distaste expressed for the endless discussions about value and the economic principle which absorb the energies of economic science. It is said that if this splitting of hairs over the scholastic accuracy of its principle were abandoned, the science might throw light on historical and practical questions which concern the welfare of human society. Apparently you have not allowed yourself to be alarmed by the threatened distaste of readers; nor indeed am I. Can we silence the doubts which disturb us? Could we have assurance whilst silencing these doubts that we were not endangering just those practical issues which the majority have at heart? Issues which we ourselves have at heart since we are certainly not able, like the monks of old, to free ourselves from interest in the affairs of the age. May not science be, as Leibniz said, quo magis speculativa, magis practica? We must then go our way, and endeavour to satisfy our doubts, with all the caution and self-criticism of which we are capable; since they cannot be suppressed. On the other hand we should endeavour also not to offer our solutions to the public except when our knowledge,—wide if it may be so (yet necessarily imperfect)—of the literature on the subject, gives us some confidence that we are not repeating things already stated. Unless indeed, other considerations make us think it opportune to repeat and to impress things which have been stated, but without sufficient emphasis.

The new school of economic thought, of which you are such a worthy representative, has a merit of no small significance. It has reacted against the anti-scientific tendencies of the historical and empirical schools, and has restored the concept of a science of pure economics. This means indeed nothing more than a science which is science; the word pure, unless tautologous, is an explanation added for those who are ignorant or unmindful of what a science is. Economics is neither history nor discussion of practical issues: it is a science possessing its own principle, which is indeed called the economic principle.

But, as I had occasion to remark at another time,[95] I do not consider that this principle whose fundamental character is asserted, has hitherto been grasped in its individuality, nor conveniently defined in relation to other groups of facts, that is to the principles of other sciences. Of those conceptions of it which seem to me erroneous, the chief ones can be reduced to four which I will call the mechanical, the hedonistic, the technological and the egoistic.

You have now rejected the first two, because you think that mechanical and hedonistic considerations belong to metaphysics and psychology. But I acknowledge that I am dissatisfied with your method of arriving at this praiseworthy rejection.

You no longer say, indeed, as in your previous essay: 'L'économie pure n'est pas seulement semblable à la méchanique: c'est, à proprement parler, un genre de méchanique.' But you still say that 'Pure economics employs the same methods as rational mechanics, and has many points of contact with this science.' Although you do not pause over the mechanical considerations, it is not from a clear conviction that a datum in economics, as such, is quite different from a datum in mechanics; but merely because it seems to you convenient to omit such considerations, of which you do not deny, but rather admit, the possibility.

Now I on the contrary, say decisively that the data of economics is not that of mechanics, or that there is no transition from the mechanical aspect of a fact to the economic aspect; and that the very possibility of the mechanical point of view is excluded, not as a thing which may or may not be abstracted from, but as a contradiction in terms, which it is needful to shun.

Do you wish for the simplest and clearest proof of the non-mechanical nature of the economic principle? Note, then, that in the data of economics a quality appears which is on the contrary repugnant to that of mechanics. To an economic fact words can be applied which express approval or disapproval. Man behaves economically well or ill, with gain or loss, suitably or unsuitably: he behaves, in short, economically or uneconomically. A fact in economics is, therefore, capable of appraisement (positive or negative); whilst a fact in mechanics is a mere fact, to which praise or blame can only be attached metaphorically.

It seems to me that on this point we ought easily to be agreed. To ascertain it, it is sufficient to appeal to internal observation. This shows us the fundamental distinction between the mechanical and the teleological, between mere fact and value. If I am not mistaken, you assign to metaphysics the problem of reducing the teleological to the mechanical, value to mere fact. But observe that metaphysics cannot get rid of the distinction; and will only labour, with greater or less good luck, at its old business of reconciling opposites, or of deriving two contraries from one unity.

I foresee what may be advanced against this assertion of the non-mechanical nature of the economic principle. It may be said: What is not mechanical, is not measurable; and economic values, on the contrary, are measured. Although hitherto the unit of measurement has not been found, it is yet a fact that we distinguish very readily larger and smaller, greater and least values and construct scales of values. This suffices to establish the measurability and hence the essentially mechanical nature of economic value. Look at the economic man, who has before him a series of possible actions a, b, c, d, e, f, ...; which have for him a decreasing value, indicated by the numbers 10, 9, 8, 7, 6 ... just because he measures value, he decides on the action a=10, and not on c=8 or f=6.

And there is no fault in the deduction granted the existence of the scale of values, which we have just illustrated by an example. Granted the existence: but, supposing this to be an illusion of ours? If the man in the example, instead of being the homo œconomicus were the homo utopicus or heterocosmicus, not to be found even in imaginative constructions?

This is precisely my opinion. The supposed scale of values is an absurdity. When the homo œconomicus in the given example, selects a, all the other actions (b, c, d, e, f, ...) are not for him values smaller than a; they are merely non-a; they are what he rejects; they are non-values.

If then the homo œconomicus could not have a, he would be acting under different conditions: under conditions without a. Change the conditions and the economic action—as is well known—changes also. And let us suppose that the conditions are such that, for the individual acting, b represents the action selected by him; and c, d, e, f, ... those which he omits to do, and which are all non-b, i.e. have no value.

If the conditions change again and it is supposed that the individual decides on c, and then on d, and then on e, and so on. These different economic actions, each arising under particular conditions, are incommensurable amongst themselves. They are different; but each is perfectly adapted to the given conditions, and can only be judged in reference to these conditions.

But then what are these numbers, 10, 9, 8, 7, 6 ...? They are symbols, symbols of what? What is the reality beneath the numerical symbol? The reality is the alteration in the actual conditions; and these numbers show a succession of changes: neither more nor less than is indicated by the alphabetic series, for which they are substituted.

The absurdity involved in the notion of greater or smaller values is, in short, the assumption that an individual may be at the same moment under different conditions. The homo œconomicus is not at the same moment in a, b, c, d, e, f ... but when he is in b, he is no longer in a; when he is in c he is no longer in b. He has before him only one action, approved by him; this action rules out all the others which are infinite, and which for him are only actions not preferred (non-values).

Certainly physical objects form part of the data of economics; and these, just because they are physical, are measurable. But economics does not consider physical things and objects, but actions. The physical object is merely the brute matter of an economic act: in measuring it we remain in the physical world, we do not pass over to that of economics, or else, when measured, the economic fact has become volatile. You say that 'political economy only concerns itself with choices, which fall on things that are variable in quantity and capable of measurement'; but pardon me, dear friend, you would be much perplexed if you had to justify this wholly arbitrary limitation; and if you had to show that the attribute measurabilility influences in any way the attribute of belonging to economics.

I think that I have explained, shortly, but adequately for a wise man like yourself, the reasons why the mechanical conception of the economic principle is untenable. If calculations and measurements come into problems that are called economic they do so just in so far as these are not problems in pure economics.

This non-mechanical datum, which is an economic datum, you call choice. And this is all right. But to choose means to choose consciously. A choice made unconsciously, is either not a choice or not unconscious. You speak of the unconscious actions of man; but these cannot be the actions of the man in so far as he is man but movements of man in so far as he is also animal. They are instinctive movements; and instinct is not choice except metaphorically. Hence the examples you bring forward of dogs, of cats, of sparrows, of rats, and of asses from Buridano, are not facts of choice; and hence are not economic facts. You consider animal economics as an unfruitful science, which exhausts itself in descriptions. Look more closely and you will see that this science does not exist. An economics of the animals, understood in the sense of the naturalists, has not been written, not because it is not worth while, but because it is impossible to write it. Whence could it be obtained unless from books such as the Roman de Renart and the Animali parlanti?

This analysis ought to lead us to conceive of an economic datum as an act of man; i.e. as a fact of human activity.

And from this recognition is inferred in its turn the true criticism of the hedonistic conception of the economic principle. You say that 'the equations of pure economics express merely the fact of a choice, and can be drawn up independently of the ideas of pleasure and pain,' but you admit at the same time that the fact of the choice 'can be expressed equally well as a fact of pleasure.'

It is true that every case of economic choice is at the same time, a case of feeling: of agreeable feeling if the economic choice is rightly made, of disagreeable feeling, if it is ill made. Man's activity develops itself in the human mind, not under a pneumatic bell, and an activity which develops rightly, brings as its reflex, a feeling of pleasure, that which develops badly, one of displeasure. What is economically useful, is, at the same time pleasurable.

But this judgment cannot be converted. The pleasurable is not always economically useful. The mistake in the hedonist theory consists in making this conversion. Pleasure may appear unaccompanied by man's activity, or may be accompanied by a human activity which is not economic. Herein lies the fundamental distinction between pleasure and choice. A choice, is in the concrete, inseparable from the feeling of pleasure and displeasure; but this feeling is separable from choice, and may in fact exist independently of it.

If psychology be understood (as it is usually understood) as the science of psychical mechanism, economics is not a psychological science; this Herr von Ehrenfels fails to grasp. I do not know whether you have read the two volumes hitherto published on the System der Werttheorie.[96] After devoting some hundred pages to psychological disquisitions—which I do not mean to discuss here—he wishes, finally, to prove that his definitions of value remain sound, from whatever theory of psychology you start. He does this as he asserts (§ 87), not because he is doubtful of himself, but to safeguard his economic conclusions, which are so important for the practical problems of life, from unjustified attacks based on the standpoints of schools of psychology other than his own, the method of the barrister, who composes an apparent conclusion, and makes several demands that are connected therewith subordinately. It is true that there is no need for economists to spend their time on details of theoretical psychology; so true that Professor Ehrenfels might spare us his: but is it not true that economics remains the same whatever psychological theory is accepted. The unity of science means that a modification at one point is never without some reaction on the others; and the reaction is greatest when it is a question of the way of conceiving two facts, distinct but inseparable, like the economic and the psychical fact.

An economic datum is not then a hedonistic datum, nor, in general, a mechanical datum. But as the fact of man's activity, it still remains to determine whether it is a fact of knowledge or of will: whether it is theoretical or practical.

You, who conceive it as choice, can have no doubt that it is a fact of practical activity, i.e. of will. This is also my own conclusion. To choose something can only mean to will it.

But you somewhat obscure the conclusion now indicated when you speak of logical and illogical actions, and place actions properly economic amongst the former. Logical and illogical bring us back to theoretical activity. A logical or illogical action is a common way of speaking; but it is not a way of speaking exactly or accurately. The logical work of thought is quite distinct from the action of the will. To reason is not to will.

Nor is to will to reason; but the will presupposes thought and hence logic. He who does not think, cannot even will. I mean by willing, what is known to us by the evidence of our consciousness; not Schopenhauer's metaphysical will.

In knowledge, in so far as it is a necessary presupposition of economic action, is found, if not a justification, an explanation of your phrases about logical and illogical actions. Economic actions are always (we say so, at any rate) logical actions, i.e. preceded by logical acts. But it is necessary to distinguish carefully the two stages: the phenomenon and its presupposition, since from lack of distinction between the two stages has arisen the erroneous conception of the economic principle as a technological fact. I have criticised at length in other essays this confusion between technical and economic, and I may be allowed to refer both to what I have written in my review of Stammler's book Wirthschaft und Recht, and to the more exact analyses in my recent memorandum on the Estetica. Stammler maintains precisely that the economic principle can be nothing but a technical concept. I would advise anyone who wishes to see at a glance, the difference between the technical and the economic to consider carefully in what a technical error and in what an economic error respectively consist. A technical error is ignorance of the laws of the material on which we wish to work: for instance the belief that it is possible to put very heavy beams of iron on a delicate wall, without the latter falling into ruins. An economic error is the not aiming directly at one's own object; to wish this and that, i.e. not really to wish either this or that. A technical error is an error of knowledge: an economic error is an error of will. He who makes a technical mistake will be called, if the mistake is a stupid one, an ignoramus; he who makes an economic mistake, is a man who does not know how to behave in life: a weak and inconclusive person. And, as is well known and proverbial, people can be learned without being men (practical or complete).

Thus an economic fact is a fact of practical activity. Have we attained our object in this definition? Not yet. The definition is still incomplete and to complete it we must not only cross another expanse of sea, but avoid another rock: viz. that of the conception of economic data as egoistic data.

This error arises as follows: if an economic fact is a practical activity, it is still necessary to say how this activity is distinguished from moral activity. But moral activity is defined as altruistic; then, it is inferred, economic data will be egoistic. Into this mistake has fallen, amongst others, our able Professor Pantaleoni, in his Principî d'economia pura, and in other writings.

The egoistic is not something merely different from a moral fact; it is the antithesis of it; it is the immoral. In this way, by making the economic principle equivalent to an egoistic fact, instead of distinguishing economics from morality, we should be subordinating the former to the latter, or rather should deny it any right to exist, recognising it as something merely negative, as a deviation from moral activity.

A datum in economics is quite different. It does not form an antithesis to a moral datum; but is in the peaceable relation of condition to conditioned. It is the general condition which makes the rise of ethical activity possible. In the concrete, every action (volition) of man is either moral or immoral, since no actions are morally indifferent. But both the moral and the immoral are economic actions; which means that the economic action, taken by itself, is neither moral nor immoral. Strength of character, for example, is needed both by the honest man and by the cheat.

It seems to me that you approach gropingly to this conception of the economic principle, as relating to practical actions, which taken in the abstract, are neither moral nor immoral; when at one point in your last essay, you exclude from economic consideration choices, which have an altruistic motive; and further on, exclude also those which are immoral. Now, since choices are necessarily either altruistic or egoistic, either moral or immoral, you have no way of escaping from the difficulty except the one which I suggest; to regard economics as concerned with practical activity in so far as it is (abstractly) emptied of all content, moral or immoral.

I might enlarge further on this distinction and show how it has an analogy in the sphere of theoretical activity, where the relation of economics to ethics is repeated in the relation of æsthetics to logic. And I might point out the reason why scientific and æsthetic productions cannot be subjects of economic science, i.e. are not economic products. The reason given, in this connection, by Professor Ehrenfels, is, to say the least of it, curious: he remarks that: 'the relations of value upon which the data of logic and æsthetics rest, are so simple that they do not demand a special economic theory.' It should not be difficult to see that logical and æsthetic values are theoretical and not practical values, whereas economic value is a practical value, and that it is impossible to unite an economics of the theoretical as such. When, some years ago, the lamented Mazzola sent me the introduction in which he had discussed Economics and Art, I had occasion to write to him and afterwards to say to him by word of mouth, that much more fundamental relations might be discovered between the two groups of phenomena; and he urged me to expound my observations and inquiries. This I have done in the essay on Estetica, referred to above. I am sorry to be obliged to refer so many times in writing to you and to the public. But here the need for brevity and clearness constrains me.

This, then, is a rapid statement of how I arrive at the definition of the data of economics, which I should like to see at the beginning of every economic treatise. The data of economics are the practical activities of men in so far as they are considered as such, independent of any moral or immoral determination.

Granted this definition, and it will be seen also that the concept of utility, or of value or of ofelimity, is nothing but the economic action itself, in so far as it is rightly managed, i.e. in so far as it is really economic. In the same way as the true is thinking activity itself, and the good is moral activity itself.

And to speak of things (physical objects) as having or not having value, will appear simply a metaphorical usage to express those causes which we think efficacious to produce the effects which we desire, and which are therefore our ends. A is worth b, the value of a is b, does not mean (the economists of the new school knew it well) a=b; nor even as is said a>b; but that a has value for us, and b has not. And value—as you know—exists only at the moment of exchange, i.e. of choice.

To connect with these general propositions the different problems which are said to belong to economic science, is the task of the writer of a special treatise on economics. It is your task, esteemed friend, if after having studied these general propositions, they seem to you acceptable. To me it seems that they alone are able to safeguard the independence of economics, not only as distinct from History and Practice but as distinct from Mechanics, Psychology, Theory of Knowledge, and Ethics.

Naples, 15th May 1900.[97]