The International, though, as we have seen, possessing no real solidarity in its composition, held together till the outbreak of the Franco-German war, and of the revolution of the Paris Commune. It was, of course, strongly opposed to the war, as it was to all war; and strongly in favour of the revolution, as it was of all revolution. Its precise complicity in the work of the Commune is not easy to determine, but there can be no doubt that its importance has been greatly exaggerated, both by the fears of his enemies and the vanity of its members. Some of the latter were certainly among those who sat in the Hôtel de Ville, but none of them were leading minds there; and, as for the Association itself, it never had a real membership, or ramifications, of any formidable extent. For example, the English trades unions were in connection with it, and their members might be, in a sense, counted among its members, but it is certain they never recognised it as an authority over them, and they probably subscribed to it mainly as to a useful auxiliary in a strike. The leaders of the International, however, were, undoubtedly, heart and soul with the Commune, and approved probably both of its aims and methods, and Marx, at the Congress of the International, at the Hague, in 1872, drew, from its failure the lesson, that "revolution must be solidary" in order to succeed. A revolution in one capital of Europe must be supported by simultaneous revolutions in the rest. But, while there is little ground for the common belief that the International had any important influence in creating the insurrection of the Commune, it is certain that the insurrection of the Commune killed the International. The English members dropped off from it and never returned, and at its first Congress after the revolution (the Hague, 1872), the Association itself was rent by a fatal schism arising from differences of opinion on a question as to the government of the society of the future, which would probably not have become a subject of such keen present interest at the time but for the Paris Commune. The question concerned the maintenance or abolition of the State, of the supreme central political authority, and the discussion brought to light that the socialists of the International were divided into two distinct and irreconcilable camps—the Centralist Democratic Socialists, headed by Marx, and the Anarchist Socialists, headed by Michael Bakunin, the Russian revolutionist. The Marxists insisted that the socialist régime of collective property and systematic co-operative production could not possibly be introduced, maintained, or regulated, except by means of an omnipotent and centralized political authority—call it the State, call it the collectivity, call it what you like—which should have the final disposal of everything. The Bakunists held that this was just bringing back the old tyranny and slavery in a more excessive and intolerable form. They took up the tradition of Proudhon, who said that "the true form of the State is anarchy," meaning by anarchy, of course, not positive disorder, but the absence of any supreme ruler, whether king or convention. They would have property possessed and industry pursued on a communistic principle by groups or associations of workmen, but these groups must form themselves freely and voluntarily, without any social or political compulsion. The Marxists declared that this was simply a retention of the system of free competition in an aggravated form, that it would only lead to confusion worse confounded, and that the Bakunists, even in trying to abolish the evils of laissez-faire, were still foolishly supposing that the world could go of itself. This division of opinion—really a broader one than that which parts socialist from orthodox economist—rent the already enfeebled International into two separate organizations, which languished for a year or two and passed away. And so, with high thoughts of spreading a reign of fraternity over the earth, the International Working Men's Association perished, because, being only human, it could not maintain fraternity in its own narrow borders. This is a history that repeats itself again and again in socialist movements. As W. Marr said in the remark quoted above, revolutionists will only unite on a negation; the moment they begin to ask what they will put in its place they differ and dispute and come to nought. Apprehend them, close their meetings, banish their leaders, and you but knit them by common suffering to common resistance. You supply them with a negation of engrossing interest, you preoccupy their minds with a negative programme which keeps them united, and so you prevent them from raising the fatal question—What next? which they never discuss without breaking up into rival sects and factions, fraternal often in nothing but their hatred. "It is the shades that hate one another, not the colours." Such disruptions and secessions may—as they did in Germany—by emulation increase for a time the efficiency of the organization as a propagandist agency, but they certainly diminish its danger as a possible instrument of insurrection. A socialist organization seems always to contain two elements of internal disintegration. One is the prevalence of a singular and almost pathetic mistrust of their leaders, and of one another. The law of suspects is always in force among themselves. At meetings of the German Socialists, Liebknecht denounces Schweitzer as an agent of the Prussian Government, Schweitzer accuses Liebknecht of being an Austrian spy, and the frequent hints at bribery, and open charges of treason against the labourers' cause, disclose to us now duller and now more acute phases of that unhappy state of mutual suspicion, in which the one supreme, superhuman virtue, worthy to be worshipped, if haply it could anywhere be discovered, is the virtue men honoured even in Robespierre—the incorruptible. The other source of disintegration is the tendency to intestine divisions on points of doctrine. A reconstruction of society is necessarily a most extensive programme, and allows room for the utmost variety of opinion and plan. The longer it is discussed, the more certainly do differences arise, and the movement becomes a strife of schools in no way formidable to the government. All this only furnishes another reason for the conclusion that in dealing with socialist agitations, a government's safest as well as justest policy is, as much as may be, to leave them alone. Their danger lies in the cloudiness of their ideas, and that can only be dispersed in the free breezes of popular discussion. The sword is an idle method of reasoning with an idea; an idea will eventually yield to nothing but argument. Repression, too, is absolutely impossible with modern facilities of inter-communication, and can at best but drive the offensive elements for a time into subterranean channels, where they gather like a dangerous choke-damp that may occasion at any moment a serious explosion.
After the fall of the International, Marx took no further part in public movements, but occupied his time in completing his work Das Capital, under frequent interruption from ill-health, and he died in Paris in the spring of 1883, leaving that work still unfinished.
The Das Capital of Marx may be said to be the sacred book of contemporary socialism, and though, like other sacred books, it is probably a sealed one to the body of the faithful, for it is extremely stiff reading, it is the great source from which socialist agitators draw their inspiration and arguments. Apart from the representative authority with which it is thus invested, it must be at once acknowledged to be an able, learned, and important work, founded on diligent research, evincing careful elaboration of materials, much acuteness of logical analysis, and so much solicitude for precision that a special terminology has been invented to secure it. The author's taste for logical distinctions, however, as he has actually applied it, serves rather to darken than to elucidate his exposition. He overloads with analysis secondary points of his argument which are clear enough without it, and he assumes without analysis primary positions which it is most essential for him to make plain. His style and method carries us back to the ecclesiastical schoolmen. His superabounding love of scholastic formalities is unmodern; and one may be permitted to hope that the odium more than theological with which he speaks of opponents has become unmodern too.
Marx's argument takes the form of an inquiry into the origin and social effects of capital; understanding the word capital, however, in a peculiar sense. Capital, according to the elementary teaching of political economy, always means the portion of wealth which is saved from immediate consumption to be devoted to productive uses, and it matters not whether it is so saved and devoted by the labourer who is to use it, or by some other person who lends it to the labourer at interest or employs the labourer to work with it at a fixed rate of wages. A fisherman's boat is capital as much as a Cunard Company's steamer, although the boat is owned by the person who sails it and the steamer by persons who may never have seen it. The fisherman is labourer and capitalist in one, but in the case of the steamer the capital is supplied by one set of people and the labour undertaken by another. Now Marx speaks of capital only after this division of functions has taken place. It is, he says, not a logical but a historical category. In former times men all wrought for the supply of their own wants, the seed and stock they received was saved and owned by themselves, capital was an instrument in the hands of labour. But in modern times, especially since the rise of foreign commerce in the 16th century, this situation has been gradually reversed. Industry is now conducted by speculators, who advance the stock and pay the labourer's wages, in order to make gain out of the excess of the product over the advances, and labour is a mere instrument in the hands of capital. The capitalist is one who, without being personally a producer, advances money to producers to provide them with materials and tools, in the hope of getting a larger sum of money in return, and capital is the money so advanced. With this representation of capital as money, so long as it is but a popular form of speech, no fault need be found, but Marx soon after falls into a common fallacy and positively identifies capital with money, declaring them to be only the same thing circulating in a different way. Money as money, he says, being a mere medium of exchange, is a middle term between two commodities which it helps to barter, and the order of circulation is C—M—C, i.e. commodity is converted into money and money is reconverted into commodity. On the other hand, money as capital stands at the two extremes, and commodity is a middle term, a medium of converting one sum of money into another and greater; the order of circulation being expressed as M—C—M. Of course capital, like other wealth, may be expressed in terms of money, but to identify capital with money in this way is only to introduce confusion, and the real confusion is none the less pernicious that it presents itself under an affectation of mathematical precision.
Capital, then, as Marx understands it, may be said to be independent wealth employed or its own increase, and in "societies in which the capitalistic method of production prevails" all wealth bears distinctively this character. In more primitive days, wealth was a store of means of life produced and preserved for the supply of the producer's future wants, but now it "appears as a huge collection of wares," made for other people's wants, made for sale in the market, made for its own increase. What Marx wants to discover is how all this independent wealth has come to accumulate in hands that do not produce it, and in particular from whence comes the increase expected from its use, because it is this increase that enables it to accumulate. What he endeavours to show is that this increase of value cannot take place anywhere except in the process of production, that in that process it cannot come from the dead materials, but only from the living creative power of labour that works upon them, and that it is accordingly virtually stolen from the labourers who made it by the superior economic force of the owners of the dead materials, without which indeed it could not be made, but whose service is entitled to a much more limited reward.
No increase of value, he contends, can occur in the process of exchange, for an exchange is a mere transposition of things of equal value. In one sense both parties in the transaction are gainers, for each gets a thing he wants for a thing he does not want. The usefulness of the two commodities is thus increased by the exchange, but their value is not. An exchange simply means that each party gives to the other equal value for equal value, and even if it were possible for one of them to make a gain in value to-day—to get a more valuable thing for a less valuable thing—still, as all the world is buyer and seller in turn, they would lose to-morrow as buyers what they gained to-day as sellers, and the old level of value would be restored. No increase whatever would be effected. There is indeed a class of people whom he describes as always buying and never selling—the unproducing class who live on their money, and who, he says, receive by legal titles or by force wealth made by producers without giving anything in exchange for it. And it may be supposed that perhaps value is created by selling things to this class of persons, or by selling things to them above their true value, but that is not so; you would have brought no new value into the world by such a transaction, and even if you got more for your goods than their worth, you would only be cheating back from these rich people part of the money that they had previously received for nothing. Another supposition remains. Perhaps new value is created in the process of exchange when one dealer takes advantage of another—when Peter, say, contrives to induce Paul to take £40 worth of wine for £50 worth of iron. But in this case there has been no increase of value; the value has merely changed hands; Peter has £10 more than he had before, and Paul £10 less. The commodities have between them after the transaction, as they had before it, a total value of £90, and that total cannot be increased by a mere change of possessor.
Having thus established to his satisfaction that commerce, being only a series of exchanges, cannot produce any increase of value, or what he terms surplus value, Marx says that that only makes the problem of the origin of surplus value more enigmatical than ever. For we are thus left in presence of an apparent contradiction: surplus value cannot spring up in the circulation of commodities because circulation is nothing but an exchange of equivalents; and yet surplus value cannot spring up anywhere except in circulation, because the class of persons who receive it and live by it do not produce. Here, then, is a riddle, and Marx sets himself to rede it. True, he says, value is not created directly in the market, but a commodity is purchased in the market which has the remarkable property of creating value. That commodity is the human powers of labour. The very use of these powers, their consumption, their expenditure, is the creation of value. But marvellous as they are, their possessor is obliged to sell them, because while they are yielding their product he must meanwhile live, and he sells a day's use of them for a day's means of living. They create in a day far more than the value of the wages for which they are bought. This excess is surplus value, and is the secret and fountainhead of all accumulations of capital. Powers which can create six shillings worth in a day may be procured in the market for three shillings, because three shillings will pay for their necessary maintenance. Surplus value is the difference between the value of the labourer's necessary maintenance and the value of the labourer's production, and it is in the present system entirely appropriated by the dealer who advances him his wages.
Marx thus bases his argument on two principles which he borrows from current economic writers, without, however, observing the limitations under which those writers taught them, and introducing besides important modifications of his own. The one principle is that value comes from labour, or as economists stated their law, that the natural value of commodities is determined by the cost of their production. The second is only a special application of the first; that the natural wages of labour are determined by the cost of its production, and that the cost of the production of labour is the cost of the labourer's subsistence. The fault he finds with the present system is accordingly this, that while labour creates all value it is paid only by its stated living, no matter how much value it creates; and he then goes over the phenomena of modern industrial life to show how each arrangement is invented so as to extract more and more value out of the labourer by prolonging his hours of work or enhancing its speed without giving him any advantage whatever from the increase of value so obtained. We shall get a fair view of Marx's argument, therefore, if we follow it through the successive heads: 1st, Value; 2nd, Wages; 3rd, Normal day of labour; 4th, Machinery; 5th, Piecework; 6th, Relative over-population.
1st. Value. Marx holds that all capital—all industrial advances except wages—is absolutely unproductive of value, and therefore not entitled to the acknowledgment known as interest. The original value of all such capital—the purchase price of the materials, together with a certain allowance made for tear and wear of machinery—is carried forward into the value of the product, and preserved in it, and even that could not be done except by labour. The old value is preserved by labour, and all new value is conferred by it, and therefore interest is a consideration entirely out of the question. It is obvious to object that labour by itself is as unproductive as capital by itself, but Marx would reply that while labour and capital are equally indispensable to produce new commodities, it is labour alone that produces new value, for value is only so much labour preserved, it is merely a register of so many hours of work. His whole argument thus turns upon his doctrine of the nature of value, and that doctrine must therefore be closely attended to.
What, then, is value? Marx considers that most errors on this subject have arisen from confusing value with utility on the one hand or with price on the other, and he regards his discrimination of value from these two ideas as his most important contribution to political economy. He takes his start from the distinction current since the days of Adam Smith between value in use and value in exchange, and of course agrees with Smith in making the value of a commodity in exchange to be independent of its value in use. Water had great value in use and none in exchange, and diamonds had great value in exchange and little in use. Value in use is therefore not value strictly so called, it is utility; but strictly speaking value in exchange, according to Marx, is not value either, but only the form under which in our state of society value manifests itself. There was no exchange in primitive society when every family produced things to supply its own wants, and there would be no exchange in a communism, for in an exchange the transacting parties stand to one another equally as private proprietors of the goods they barter. And where there was no exchange there could of course be no exchange value. No doubt there was value for all that in primitive times, and there would be value under a communism, though it would manifest itself in a different form. But as we live in an exchanging society, where everything is made for the purpose of being exchanged, it is in exchange alone that we have any experience of value, and it is only from an examination of the phenomena of exchange that we can learn its nature.