Historical materialism and the economics of Karl Marx

by Benedetto Croce

If then the economic factor in history should be isolated and treated separately, how is it to be distinguished? For it is essential to Croce's view of science that each science has its own concepts which can be distinguished clearly from those of other sciences. This question is discussed in Essay III Q. 5 and more specifically in Essay VI. Croce is specially anxious to distinguish between the spheres of economics and ethics. Much confusion has been caused in political economy in the past by the assumption that economics takes for granted that men behave egoistically, i.e. in an immoral way. As a result of this assumption men have had to choose between the condemnation of economics or of mankind. The believer in humanity has been full of denunciation of that monstrosity the economic man, while the thorough-going believer in economics has assumed that the success of the economic interpretation of history proves that men are always selfish. The only alternative view seemed to be the rather cynical compromise that though men were sometimes unselfish, their actions were so prevailingly selfish that for political purposes the unselfish actions might be ignored. Croce insists, and surely with justice, that economic actions are not moral or immoral, but in so far as they are economic, nonmoral. The moral worth of actions cannot be determined by their success or failure in giving men satisfaction. For there are some things in which men find satisfaction which they yet judge to be bad. We must distinguish therefore the moral question whether such and such an action is good or bad from the economic whether it is or is not useful, whether it is a way by which men get what they, rightly or wrongly want. In economics then we are merely discussing the efficiency or utility of actions. We can ask of any action whether it ought or ought not to be done at all. That is a moral question. We may also ask whether it is done competently or efficiently: that is an economic question. It might be contended that it is immoral to keep a public house, but it would also have to be allowed that the discussion of the most efficient way by keeping a public house was outside the scope of the moral enquiry. Mrs Weir of Hermiston was confusing economics with ethics when she answered Lord Braxfield's complaints of his ill-cooked dinner by saying that the cook was a very pious woman. Economic action according to Croce is the condition of moral action. If action has no economic value, it is merely aimless, but it may have economic value without being moral, and the consideration of economic value must therefore be independent of ethics.

Marx, Croce holds was an economist and not a moralist, and the moral judgments of socialists are not and cannot be derived from any scientific examination of economic processes.

So much for criticisms of Marx or rather of exaggerated developments of Marxianism, which though just and important, are comparatively obvious. The most interesting part of Signor Croce's criticism is his interpretation of the shibboleth of orthodox Marxians and the stumbling-block of economists, the Marxian theory of labour value with its corollary of surplus value. Marx's exposition of the doctrine in Das Kapital is the extreme of abstract reasoning. Yet it is found in a book full of concrete descriptions of the evils of the factory system and of moral denunciation and satire. If Marx's theory be taken as an account of what determines the actual value of concrete things it is obviously untrue. The very use of the term surplus value is sufficient to show that it might be and sometimes is taken to be the value which commodities ought to have, but none can read Marx's arguments and think that he was concerned with a value which should but did not exist. He is clearly engaged on a scientific not a Utopian question.

Croce attempts to find a solution by pointing out that the society which Marx is describing is not this or that actual society, but an ideal, in the sense of a hypothetical society, capitalist society as such. Marx has much to say of the development of capitalism in England, but he is not primarily concerned to give an industrial history of England or of any other existing society. He is a scientist and deals with abstractions or types and considers England only in so far as in it the characteristics of the abstract capitalist society are manifested. The capitalism which he is analysing does not exist because no society is completely capitalist. Further it is to be noticed that in his analysis of value Marx is dealing with objects only in so far as they are commodities produced by labour. This is evident enough in his argument. The basis of his contention that all value is 'congealed labour time' is that all things which have economic value have in common only the fact that labour has been expended on them, and yet afterwards he admits that there are things in which no labour has been expended which yet have economic value. He seems to regard this as an incidental unimportant fact. Yet obviously it is a contradiction which vitiates his whole argument. If all things which have economic value have not had labour expended on them, we must look elsewhere for their common characteristic. We should probably say that they all have in common the fact that they are desired and that there is not an unlimited supply of them. The pure economist finds the key to this analysis of value in the consideration of the laws of supply and demand, which alone affect all things that have economic value, and finds little difficulty in refuting Marx's theory, on the basis which his investigation assumes.

A consideration of Marx's own argument forces us therefore to the conclusion that either Marx was an incapable bungler or that he thought the fact that some things have economic value and are yet not the product of labour irrelevant to his argument because he was talking of economic value in two senses, firstly in the sense of price, and secondly in a peculiar sense of his own. This indeed is borne out by his distinction of value and price. Croce developing this hint, suggests that the importance of Marx's theory lies in a comparison between a capitalist society and another abstract economic society in which there are no commodities on which labour is not expended, and no monopoly. We thus have two abstract societies, the capitalist society which though abstract is very largely actualised in modern civilisation, and another quite imaginary economic society of unfettered competition, which is continually assumed by the classical economist, but which, as Marx said, could only exist where there was no private property in capital, i.e. in the collectivist state.

Now in a society of that kind in which there was no monopoly and capital was at everyone's disposal equally, the value of commodities would represent the value of the labour put into them, and that value might be represented in units of socially necessary labour time. It would still have to be admitted that an hour of one man's labour might be of much greater value to the community than two hours of another man, but that Marx has already allowed for. The unit of socially necessary labour time is an abstraction, and the hour of one man might contain two or any number of such abstract units of labour time. What Marx has done is to take the individualist economist at his word: he has accepted the notion of an economic society as a number of competing individuals. Only he has insisted that they shall start fair and therefore that they shall have nothing to buy or sell but their labour. The discrepancy between the values which would exist in such a society and actual prices represent the disturbance created by the fact that actual society is not a society of equal competitors, but one in which certain competitors start with some kind of advantage or monopoly.

If this is really the kernel of Marx's doctrine, it bears a close relation to a simpler and more familiar contention, that in a society where free economic competition holds sway, each man gets what he deserves, for his income represents the sum that society is prepared to pay for his services, the social value of his work. In this form the hours worked are supposed to be uniform, and the differences in value are taken to represent different amounts of social service. In Marx's argument the social necessity is taken as uniform, and the difference in value taken to represent differences in hours of work. While the main abstract contention remains the same, most of those who argue that in a system of unfettered economic competition most men get what they deserve, rather readily ignore the existence of monopoly, and assume that this argument justifies the existing distribution of wealth. The chief purpose of Marx's argument is to emphasise the difference between such an economic system and a capitalist society. He is here, as so often, turning the logic of the classical economists against themselves, and arguing that the conditions under which a purely economic distribution of wealth could take place, could only exist in a community where monopoly had been completely abolished and all capital collectivised.

Croce maintains that Marx's theory of value is economic and not moral. Yet it is hard to read Marx and certainly Marxians without finding in them the implication that the values produced in such an economic society would be just. If that implication be examined, we come on an important difficulty still remaining in this theory. The contention that in a system of unfettered economic competition, men get the reward they deserve, assumes that it is just that if one man has a greater power of serving society than another he should be more highly rewarded for his work. This the individualist argument with which we compared Marx's assumes without question. But the Marxian theory of value is frequently interpreted to imply that amount of work is the only claim to reward. For differences in value it is held are created by differences in the amount of labour. But the word amount may here be used in two senses. When men say that the amount of work a man does should determine a man's reward; they commonly mean that if one man works two hours and another one, the first ought to get twice the reward of the second. 'Amount' here means the actual time spent in labour. But in Marx's theory of value amount means something quite different, for an hour of one man's work may, he admits, be equal to two of another man's. He means by amount a sum of abstract labour time units. Marx's scientific theory of value is quite consistent with different abilities getting different rewards, the moral contention that men should get more reward if they work more and for no other reason is not. The equation of work done by men of different abilities by expressing them in abstract labour time units is essential to Marx's theory but fatal to the moral claim sometimes founded upon it.

Further the great difficulty in allowing that it is just that men of different abilities should have different rewards, comes from the fact that differences of ability are of the nature of monopolies. In a pure economic society high rewards would be given to rare ability and although it is possible to equate work of rare ability with work of ordinary ability by expressing both as amounts of abstract labour time units, it surely remains true that the value is determined not by the amount of abstract labour time congealed in it but by the law of supply and demand. Where there are differences of ability there is some kind of monopoly, and where there is monopoly, you cannot eliminate the influence of the relation of supply and demand in the determination of value. What you imagine you have eliminated by the elimination of capital, which you can collectivise, remains obstinately in individual differences of ability which cannot be collectivised.

But here I have entered beyond the limits of Croce's argument. His critical appraisement of Marx's work must be left to others to judge who have more knowledge of Marx and of economics than I can lay claim to. I am confident only that all students of Marx whether they be disciples or critics, will find in these essays illumination in a field where much bitter controversy has resulted in little but confusion and obscurity.