A Critique of Political Economy
Marx's critique of political economy was not a proposal for a new 'socialist economics'. For Marx, socialism implied the dissolution of economics and the categories like capital and wages it dealt with. Socialism will have no wages system, no labour market, no wage labour being exploited to produce surplus value, no commodities and no profit through class exploitation.
In a letter to Lassalle, Marx set out what his project entailed:
“The work we are discussing is a Critique of Economic Categories or, if you like, the system of bourgeois economy in a critical description”.
(Marx to Lassalle 22/2/1858 in MARX AND ENGELS, 1983 page 51).
For Marx, classical political economy represented the attempts economists like Smith and Ricardo to grasp the nature of modern society. Their categories and methods of thought gave the highest theoretical expression to the contradictions of capitalist social relations.
What economics took for granted as 'natural' and 'rational', Marx saw as the inhuman and irrational shell inside which the human life of the worker was imprisoned. Marx's critique is inseparable from the Socialist struggle to free labour from being chained to capital.
Marx characterised the 'classical political economists' as those who, 'since the time of W Petty have examined the real internal framework of bourgeois relations of production' (CAPITAL Vol. I: 174-5 1976).
As he wrote in a well-known letter:
“Once insight into the connectedness has been gained, all theoretical belief in the permanent necessity of existing conditions collapses before the practical collapse”. (Marx to Kugelmann 11/7/1868, in MARX AND ENGELS, 1983 p.149).
But as workers under capitalism we all live inside these class relations, so how can we get hold of this 'insight into the connectedness'? The critique of political economy was Marx's answer to this question.
In examining the work of the classical political economists, Marx was investigating an attempt to understand capitalism and assist the working class to change it in a revolutionary way. The fundamental difference between Marx on the one hand and Smith and Ricardo on the other is political. The latter economists had no intention of replacing capitalism with another social system. They did not see the working class as an agent for revolutionary change. Instead Marx’s critique of political economy opened the way for 'revolutionary practice', in which 'human activity or self-change' could be seen to coincide with 'the changing of circumstances' (THESIS OF FEUREBACH.).
Marx also drew a distinction between Classical and vulgar economy. The latter tried to understand the inner workings of capitalist production but were imprisoned in their “bourgeois skin”; while the vulgar economists reveled in the appearance of capitalist production degenerating into various schools of “gunslingers and hired hands” for the ruling class.
Marx argued that science starts with appearances and then goes on to discover the underlying reality.
Inquiry, he wrote, “has to appropriate the material in detail, to analyse its different forms of development, to trace out the inner connections. Only after the work is done can the actual movement be adequately described. If this is done successfully…the life of the subject matter is ideally reflected as in a mirror” (CAPITAL, Preface to the second edition).
In CAPITAL Marx pointed out that whereas the “vulgar economists” dealt only with the surface appearances of capitalism, his critique of political economy seeks to uncover the real relations of commodity production underlying the appearances, and on that basis explain the appearances.
“The way of thinking of the vulgar economists”, wrote Marx, “derives from the fact that it is always the immediate form in which relationships appear which is reflected in the brain, and not their inner connections. If the latter were the case, moreover, what would be the need for a science at all”?
And explaining his own method of scientific analysis of capitalism, he pointed out that at the end of it:
“…we have arrived at the forms of appearance which serve as the starting point for the vulgar: ground rent coming from the earth, profit (interest) from capital, and wages from labour. But from our point of view the thing is now seen differently. The apparent movement is explained” (Letters to Engels, June 27, 1867, and April 30, 1858).
And it is from Marx’s point of view that we suggest to workers to read Marx’s writings to understand how and why they are exploited; why capitalism causes the social problems they face and why it can never be made to run in their interest. Marx’s critique of political economy makes a compelling case for revolutionary Socialism.
However, there are a number of difficulties with reading CAPITAL and this is partly the result of the technical language Marx used in his study of capitalism. There are three important expressions to come to terms with; “critique”, “economic categories” and “political economy”.
Why did Marx use the term Critique?
Marx had been drawn to political economy by his friend Frederich Engels. Engels had written on political economy as early as 1843 when he published “OUTLINES OF A CRITIQUE OF POLITICAL ECONOMY. His paper is a remarkable piece of writing containing many of the themes Marx s later to develop in CAPITAL. For example, it carries a rudimentary critique of the utility theory of value thirty years before it came to be formulated by Mengers and Jevons. There is also a brief comment of economic crises; “…the alteration of boom and crisis, overproduction and slump…”
Engels gave this definition of political economy:
“Political economy came into being as a natural result of the expansion of trade, and with its appearance elementary, unscientific huckstering was replaced by a developed system of licensed fraud, an entire science of enrichment”(www.marxists.org/archive/marx/works)
Political economy, for Engels was created by the development of free trade; a reflection of the interests of an emerging capitalist class supported in their avarice for social wealth by Smith’s Wealth of Nations and Ricardo’s Principles of Political economy.
The term “Critique” had been used by the idealist philosopher Immanuel Kant in his works on reason and experience. In his CRITIQUE OF PURE REASON (1781), Kant wrote: “Our age is the genuine age of criticism, to which everything must submit…there is nothing so important because of its utility, nothing so holy, that it may be exempted from the searching review and inspection, which shows no respect for persons” (pp100-101 Cambridge 1999). Note for Kant, criticism is just criticism. It lacks a political dimension.
This led Marx to state that philosophers have only interpreted the world in many ways; the point is to change it. And revolutionary change can only be political.
As early as 1843 Marx would write: “It is all the more clear what we have to accomplish at present…ruthless criticism of all that exists, ruthless both in the sense of not being afraid of the results it arrives at and in the sense of being just as little afraid of conflict with the powers that be(MECW 1, p. 144).
Critique for Marx is political as well as being a critical examination or analysis that investigates what is correct and what is incorrect in an object of study. When a critique is applied by Marx to Political Economy it is to the texts of the Classical School of Economics from Petty to Ricardo he has in mind.
Where Smith or Ricardo, for example, made valid points Marx acknowledges them. When they make mistakes Marx shows why these were made and gives a solution to them. A critique is not the same as a simple attack or destructive criticism. Marx used the term critique in his reading of the Gotha Programme in the same way as he did with CAPITAL; carrying with it a revolutionary political dimension. Marx was not afraid of conflict “with the powers that be”.
What of the expression Political Economy? Political Economy was regarded by Thomas Carlyle as “the dismal science”. And dismal it really is. A grounding in mathematics is the only inroad into understanding most of what is now written as “economics”. And its practitioners are so smug. They all might disagree among themselves but they all believe that we live in the best of all possible worlds that markets are here to stay and there is no viable alternative to buying and selling.
Most, if not all of economics is produced by workers but in the main economists are extremely hostile to trade unions seeing them as a “monopoly”. For economists the “consumer” is king conveniently ignoring the fact that the capitalist is a “consumer” of labour power. Workers are merely a factor of production and economists’ writing on workers gives the impression that they had been directly paid by Rupert Murdoch or Richard Branson.
Economic Categories
Marx used another term; “categories” to describe the various aspects of a capitalist economy. For Marx, categories like commodities, money, wages, and capital are historically specific to capitalism.
Marx criticised Proudhon for not understanding: “that economic categories are only abstract expressions of these actual relations and only remain true while these relations exist…the political-economic categories (are) abstract expressions of the real, transitory, historical social relations” (LETTERS, Marx to P. V. Annenkov, December 28, 1846).
Value, money, capital and wages would not exist in Socialism. Instead there would be free access to what is required produced by free men and women within the framework of common ownership and democratic control of the means of production and distribution by all of society.
We can consider three examples described by Marx as economic categories; capital, wage labour and money. They are not eternal but specific to capitalism.
Of capital Marx wrote:
Capital consists of raw materials, instruments of labour and means of subsistence of all kinds, which are utilised in order to produce new raw materials, new instruments of labour and new means of subsistence. All these component parts are creations of labour, products of labour, accumulated labour. Accumulated labour which serves as a means of new production is capital.
So say the economists.
What is a Negro slave? A man of the black race. The one explanation is as good as the other.
A Negro is a Negro. He only becomes a slave in certain relationships. A cotton-spinning machine is a machine for picking cotton. Only in certain relationships does it become capital. Torn from these relationships it is no more capital than gold in itself is money or sugar the price of sugar (WAGE-LABOUR AND CAPITAL, Foreign Language Press, p.29).
The same applies to the category “wage labour” or the “wages system”, Workers only become employees-a class who receives a wage or salary -under capitalism because they do not own the means of production and are forced by pain of starvation onto the labour market in order to get a job. The mental and physical ability the worker sells as a commodity to the capitalist is not “eternally binding” but forms part of a historical and transitory social relationship. Outside capitalism, say in Socialism, labour will just be labour and machinery just machinery used together by free men and women to produce useful things for people’s needs. Marx’s conclusion to his study of capitalism-one he impressed onto the working class-was the abolition of the wages system.
Marx’s writings on money are totally at odds with those of the economists. One so-called “Marxist”, Suzzanne De Brunhoff decried Marxists who saw money in terms of social alienation, fetishism and a social relation between classes masquerading as a thing. She believed that a Marxist theory of money could be plucked out of CAPITAL, reformulated into a mathematical model to compete with academic theories of money (MARX ON MONEY, 1976, p.xii).
Even though Marx spent a great deal of time on the technical issue of money, he never lost sight of the corrosive and toxic social power money exercised in society generally and between classes specifically.
In CAPITAL, Marx quoted Shakespeare, as support for the idea of money as a “God” which perverted human relations. Columbas was cited as saying that “gold can even enable souls to enter paradise”, Sophocles as stating that “nothing so evil as money ever grew to be current among men” (CAPITAL Volume 1 Ch. 3 pp. 229-30), and Boisguiollebert, an early French political economist, as saying that “money declares war on the whole of humanity” (CAPITAL, Volume 1 Ch 3. page 239).
Commodity fetishism was inseparable from money fetishism. Money became the object of production-capital for the sake of capital, and in this process the social bond between people gave way to “Purely atomistic” relations which were “independent of their control and their conscious individual action” (CAPITAL Volume 1 , Ch 3 p. 189).
In fact, Marx criticized economists like David Ricardo for only concentrating on the technical aspects of money rather than the alienating aspect of money. He would have characterized de Bronhoff’s analysis of money as false and one-sided. This is what Marx wrote:
“With Ricardo,…,this false conception of money is due to the fact that he concentrates exclusively on the quantitative determination of exchange-value, forgetting on the other hand the qualitative characteristic, that individual labour must present itself as abstract, general social labour only through its alienation” (THEORIES OF SURPLUS VALUE VOLUME II, p. 504).
Marx argues that money becomes an object of worship and greed because it contains an alienated social power (ECONOMIC AND PHILOSOPHICAL MANUSCRIPTS, p. 168). This train of thought is carried over into his critique of political economy. Just as “one man is king only because other men stand in relation of subject to him, and they, on the contrary, imagine that they are subjects because he is king” (CAPITAL VOLUME I Ch. 15 p.570) so the appearance that money is all powerful, and all other commodities are subservient to money is also unavoidable.
It is said that “money is the root of all evil”. The proverb does not go far enough. It was Marx who showed how and why the capitalist class was obsessed with making money to reinvest to make more money. They were compelled to do so. It was not an act of free will. Capitalists have to exploit and they have to ensure the self-expansion of capital. The Socialist case against capitalism is not a moral one. Capitalism was a necessary and painful period in human social evolution; a necessity acknowledged by Marx and Engels as early as THE COMMUNIST MANIFESTO.
Money as alienation has a social cost; money becomes an obsession; it unleashes negative human behaviour and creates disorganization in production. Overcoming the social alienation associated with money requires overcoming the social relations within capitalism through socialist revolution.
Read Marx not Secondary Sources
Marx began his critique of Political Economy with capitalism as it appeared to people in their ordinary lives; a world of commodities. Along the way he demolished one after the other; the various arguments used by economists to justify class exploitation. And it was precisely these failed arguments which were used to create academic economics after his death- market harmony, factors of production, capital as a thing, and so on.
There is no course of study within university departments called “A Critique of Political Economy”. A critique of political economy brings with it not only a labour theory of value but the materialist conception of history and a political concept of class struggle. It is inconceivable that the capitalist State would fund such a course.
The courses and books which claim to teach “Marxist economics” are run by either supporters of State capitalism and Trotskyists or those economists taking aspects of Marx’s CAPITAL to apply to trends in academic economics.
The supporters of State capitalism with their journals like CRITIQUE, REVIEW OF RADICAL POLITICAL ECONOMICS, CONFERENCE OF SOCIALIST ECONOMISTS or CAPITAL AND CLASS have added nothing to Marx’s own critique of Political Economy except to spread confusion and turn Marx into the means to secure papers for publication on the way to this or that professorial chair. It should not be forgotten that many of the contributors to these magazines claimed Marx’s theory of value was “internally inconsistent”. They dismissed Marx’s important conclusions that the sum of surplus value equals the sum of profit; the sum of values the sum of prices of production around which market prices cohere and the total rate of value equals the total rate of profit measured in money.
The “eclectics” have tried in vain to turn Marx into a mere economist by straining out his Socialism so he becomes lost in the history of economics; “a minor post Ricardian”, “a precursor to Keynes” or a “trace” in the economic theory of some more fashionable contemporary economist.
An example of the former is POLITICAL ECONOMY (1952) by John Eaton, then a member of the Communist Party of Great Britain. The book claimed to be a study of Marxist Political Economy rather than a Critique of Political Economy and ends with a section misleadingly entitled “Wages in a Socialist Society” (182-185) in which Eaton made the fatuous and anti-Marxian claim that workers in the Soviet Union were not exploited. The Socialist Party of Great Britain applied Marx’s Labour Theory of Value to post 1917 Russia and argued that the law of value held there just as it did in any other capitalist country. Furthermore Russian capitalism could not escape the vagaries of the world market.
As an example of the eclectics we have the economist, P. N. Junankar. In his book “MARX'S ECONOMICS” (1982), Junankar writes:” Marx provided an interesting analysis of money and circulation which in effect, was the first growth model of the von Neumann or Harrod type” (p12) as though Marx’s CAPITAL was politically neutral and just a contribution to capitalist economics.
Worse still is the book “FIFTY MAJOR ECONOMISTS” by Steven Pressman (1999) which sees Marx inserted between the economists John Stuart Mill and Leon Walras. Marx was no more an “academic Economist” than he was a “philosopher”.
So what has happened to CAPITAL? On the one hand the questions it asked have been politically blocked by academics who claim that Marx was either “inconsistent” or held to a theory of value that is now “out-dated”. Marx had anticipated this reaction. He wrote that: “In the domain of Political Economy, free scientific enquiry meets not merely the same enemies in all other domains. The peculiar nature of the material it deals with, summons as foes into the field of battle the most violent, mean and malignant passions of the human breast, the Furies of private interest (CAPITAL, Preface to the First German edition p.21).
If someone wants to change society in a revolutionary way there are vested interests who want society to remain exactly as it is and they will do whatever it takes to try and silence the revolutionary. Marx was no exception.
How much the ruling class and its agents fear Marx and his ideas can be seen by the almost daily negative references to him in the media –the Tory MP and TIMES columnist, Michael Gove, recently wrote off CAPITAL’s literary style as an example of “stale flatulence” (TIMES,10.06.08). Not much intellectual rigour there, then, Mr Gove, an example of conservatism displaying the highest form of ignorance and the lowest form of thought. It should be remembered that Mr Gove had his straw in the recent Westminster gravy train.
On the other hand, Marx’s CAPITAL and his scientific objective “to lay bare the economic law of motion of modern society (p. 20 ibid) has been kept alive and developed by Socialists of The Socialist Party of Great Britain. Socialists are not dogmatists. If a theory is wrong then the accusation has to be taken seriously, and if true, the theory replaced by a better explanation.
However Socialists have seen neither inconsistency nor out-datedness in Marx’s labour theory of value and the ideas he developed in CAPITAL. The relationship of the production of gold to other forms of commodity production, money and price is not “out-dated” and gives useful insights to an understanding to productivity and inflation. The mystical school of banking has been rightly criticised on the basis of the labour theory of value by demonstrating that wealth cannot be created “by the stroke of a pen”.
The class struggle is explained by the extraction of surplus value from the working class. Taxation has been shown to be a burden that ultimately falls onto the capitalist class. And Marx’s political conclusion has been kept clear-the abolition of capitalism and establishment of Socialism by a class conscious working class. More importantly Socialists have treated the three volumes of CAPITAL as a whole rather than a pick and mix of theories to be improved or corrected.
One Word of Caution
There is a comedy sketch from NOT THE NINE O'CLOCK NEWS about a group of earnest young professional revolutionaries poring over a copy of CAPITAL. One of them looked up and began reading out a particularly difficult passage. He paused, turned to his fellow conspirators and uttered words to the effect of: “Sod this for a game of soldiers, let’s just go out and bomb something…”
Of course Marx did not write for “earnest young professional revolutionaries” anymore than he advocated terrorism. But the prose style of volumes II and III are very dense, difficult, often stilted and clumsy. And for a very good reason. The second and third volumes of CAPITAL were not completed by Marx at his death.
Both volumes dealt with important topics relating to capital’s movement and the discussion of value started in the first volume of CAPITAL. The second volume was a study of circulation, reproduction and extended accumulation while the third volume was a study of capital as a whole. Volume II was worked up in draft form but the third volume was in a more difficult state to edit coherently. A lengthy discussion of the various independent forms of money capital, including credit, occurs in part 5 of the third volume of CAPITAL, but this material was pieced together from a “disordered jumble of notes” (Engels, Preface CAPITAL VOLUME III, p. 95).
Engels edited and published what he considered to be a definitive English edition of Vol. I of CAPITAL in 1890, and brought out Vols. II and III of that work in 1885 and 1894 by carefully editing and arranging Marx’s draft manuscripts.
Engels took the view of not presenting a polished text similar to the first volume of CAPITAL. He tried to present, where possible, Marx in his own words from primitive drafts which would have been worked up by Marx in a more lucid and approachable style.
Consequently, the prose-style in Volume II of CAPITAL is often hard to read even though it is basically complete. However there were further problems with the drafts Marx left for volume III. Engels was faced with sentences in which thoughts are written down just as they arose which “became instead longer and more intricate” (Preface, p. 93). Engels retained the character of the original draft but as a result Marx’s presentation is laid out in an unfinished way, peppered with gaps, repetitions, and silences.
Some academics believe that volumes II and II of CAPITAL should be re-edited or discarded for the original manuscripts before they were edited by Engels.
I believe this to be an error. While Marx’s original manuscripts are important Engels worked closely with Marx and I would trust his editorship of Capital rather than those who have turned “Marxism” into an academic discipline rather than a revolutionary set of ideas to assist the working class in their struggle to replace capitalism with Socialism.