Reconstituted Socialist Party of Great Britain (1991) Socialist Education Series - Marx's Theories for the Twenty First Century

The main theories of Karl Marx are known as THE MATERIALIST CONCEPTION OF HISTORY, THE LABOUR THEORY OF VALUE and THE POLITICAL HISTORY OF THE CLASS STRUGGLE and they form the theoretical basis of the Reconstituted Socialist Party of Great Britain (1991). Our adherence to these theories is reflected in our DECLARATION OF PRINCIPLES and they have been the subject of articles and lectures since the formation of the party in 1904 to the present day. The party has also produced pamphlets dealing with the MCH and Marxian economics and many others including Religion and War, there is hardly anything written or spoken without the application of Marx's theories.

It is important to understand that these theories are linked together and therefore should not be seen as separate and unrelated. They are about changing society, eg why and how Feudalism gave way of capitalism and in turn why capitalism must give way to Socialism. They deal with social relations of production and the law of value as the expression of capitalist relations of production. Marx did not see Socialism as an ideal society which he opposed to capitalism. He saw it as the outcome of contradictions which have developed within capitalism. He saw that capitalism had developed the productive forces to a stage where they come into conflict with the relations of production. He saw that the working class, who produced and worked those productive forces, were an exploited class and therefore were potentially a revolutionary class, their class interest being in the establishment of a society of the common ownership and democratic control of the means of production.

Although there is a certain amount of interest in Marx's theories, unfortunately there is also a great deal of ignorance, misrepresentation and distortion. Marx is rarely read, with too much reliance on the interpretations of other writers. For example, in Marx on Economics, published by Penguin and edited by Robert Freedman, Freedman states - "Most students of Marxian economics rarely read the master, but are content to let his critics speak for him". It was the economist, the late Maynard Keynes, who described Marx's principle work Capital as an "obsolete text book", he thought it was without interest or application for the modern world. It is the most persistent criticism that Marx is out of date.

Of course, we know that there have been great changes since the 1860's when Marx wrote Capital. Capitalism is now a world-wide system, the working class generally have a higher standard of living. The workers, with the aid of more sophisticated technology which they have produced have increased their productivity in all spheres of production and through trade unions have obtained some of this increase. The composition of the working has also changed, there are many more white collar workers relative to manual workers today.

There has also been great technical changes since Marx's day with the development of aircraft, motorcars, TV, refrigeration central heating, computers, etc. But the fact is Marx was well aware that capitalism was changing and would continue to develop its productive forces. Marx saw capitalism as a dynamic system - not a static one.

Even with all these changes, in essentials capitalism remains the same. In any case, Marx was concerned with the underlying structure of capitalism. It is the underlying structure which reveals the class struggle between workers and capitalists, and how the working class are exploited. When the working class understand the Labour Theory of Value they will understand the nature of their exploitation and therefore their class interest in abolishing capitalism and establishing Socialism.

It is understandable then that capitalists and their representatives should be afraid of Marx and week to misrepresent his theories. After all, they are a threat to their system. As Marx said in the preface to VOLUME I of CAPITAL

"… In the domain of Political Economy, free scientific enquiry meets not merely only the same enemies as 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. The English Established Church, eg, will more readily pardon an attack on 38 of its 39 articles than 1/39th of its income".

In the above-mentioned book, MARX ON ECONOMICS, Harry Schwartz, who wrote the introduction, said"Marx and Engels had little to say about the kind of society that would follow capitalism, but most of what they did say has been outrun by the march of events". Schwartz points out that, in the COMMUNIST MANIFESTO Marx and Engels listed ten measures which the victorious proletariat would take shortly after seizing power. Schwartz continues … at least half of these measures - among them free universal education for children, heavy progressive income tax, and gradual abolition of the distinction between town and country - are today regarded as commonplace in western capitalist countries. This passage from the manifesto is often quoted by Marx's critics, but what they all fail to point out is, that, in the preface of the 1888 edition of the Communist Manifesto Engels says: "No special stress is laid on the revolutionary measures at the end of section . That passage would, in many respects, be very differently worded today".

Schwartz also misrepresents Marx and Engels on depressions. He says "… Marx and Engels writing stresses the view that depressions arise because the exploited masses are simply unable to buy all the output of rising production made possible by the constant accumulation of capital". Of course, Marx and Engels never held such a silly view. How would it be possible for workers to buy all the output? Workers can only buy with their wages, which can only buy a part of the 'output'. If they were to buy all of the output, they would have to be in possession of the capital and the profit of the capitalist as well as their wages.

Marx said that crisis and the depression which follows are caused by the disproportion of production in the different spheres of production which inevitably take place from time to time. Commodity production is not subject to rational control; basically commodity production is an anarchy of production.

The information that most people acquire about Marx's ideas are often second hand, rarely do they read Marx for themselves. But Marx wrote for the working class, knowing that it was in their interest to understand capitalism in order for them to become class conscious and aware of their revolutionary role to establish Socialism.

The following is a brief outline of some of the main aspects of Marx's main theories. It is important to start with the Materialist Conception of History as Marx considered it to be the guiding thread in his studies.

The Materialist Conception of History is a particular way of understanding human society and why it changes eg why Feudalism was replaced by capitalism and in turn, why capitalism must give way to Socialism. It explains political, legal relations, religious ideas and art etc from the economic basis of society.

The change from one society to another does not happen automatically, but through class struggle, as Marx wrote in The COMMUNIST MANIFESTO " The history of all hitherto existing society is the history of class struggle".

The Materialist Conception of History is the exact opposite of the idealist view which explains historical development as the outcome of ideas. For the idealist the idea has an independent existence which arises spontaneously. Marx, the materialist, on the other hand said "it is not the consciousness of man that determines their existence, but on the contrary, their social existence determines their consciousness". This is not to deny the effect of ideas, it is to explain them from historically determined conditions.

Marx gives us the first premise of materialism.

"The premises from which we begin are not arbitrary ones, not dogmas, but real premises from which abstraction can only be made in imagination. They are the real individuals, their activity and the material conditions under which they live, both those which they find already existing and those produced by their activity. These premises can thus be verified in a purely empirical way".

Engels made a very good statement about the Materialist Conception of History in his speech at Marx's graveside, he said:

"Just as Darwin discovered the law of evolution in organic nature, so Marx discovered the law of evolution in human history, he discovered the simple fact, hitherto concealed by an overgrowth of ideology. That mankind must first of all eat and drink, have shelter and clothing, before it can pursue politics, science, religion, art, etc and that therefore the production of the immediate material means of life, and consequently the degree of economic development attained by a given people or during a given epoch form the foundation upon which the forms of government, the legal conceptions, the art and even the religious ideas of the people concerned have evolved, and in the light of which these things must therefore be explained, instead of vice versa as had hitherto been the case".

Engels is saying here that the way we obtain our means of life - food, clothing shelter etc, and the social relations in which we produce these things, is the economic basis which shape all our other activities including the formation of ideas.

We should be aware that, when Engels speaks of the immediate material means of life and degree of economic development, it is not simply physical existence which is in question here. There is more to it, because the degree of economic development gives rise to other social and cultural needs. Marx makes this point clear in GERMAN IDEOLOGY -

"The way in which men produce their means of subsistence depends first of all on the nature of the actual means of subsistence they find in existence and have to reproduce. This mode of production must not be considered simply as being the production of the physical existence of the individuals; rather it is a definite form of activity of these individuals, a definite form of expressing their life, a definite mode of life on their part. As individuals express their life, so they are what they are, therefore, coincides with this production, both with what they produce and how they produce".

The Materialist Conception of History also teaches us that capitalism has served a useful purpose by developing the productive forces to a degree that makes Socialism not only possible, but necessary if these social forces of production are to be used for the benefit of all members of society.

Forces of production and relations of production are central to the Materialist Conception of History, they form the basis for all other aspects of society. The fact is, although these forces of production could be used to produce wealth in abundance, capitalism can never use them for this purpose, ie to meet human needs. It can never produce enough, even when capitalism produces more commodities than can be sold; This apparent over-production is misleading, as Marx wrote in CAPITAL, VOL. III

"It is not a fact that au many necessities of life are produced … the reverse is true. Not enough is produced to satisfy the wants of the great mass decently and humanely".

Marx pointed out how the forces of production have outgrown capitalism.

"At a certain stage of their development, the material forces of production in society came into conflict with the existing relations of production, or - what is but a legal expression of the same thing - with property relations within which they had been at work before".

The forces of production are social forces, the process of production is a social act carried on by the total working class. But the working class are prevented from using the means of production, unless the capitalists who own them can make a profit. He capitalist class are therefore a fetter on production, they have become useless parasites.

The Materialist Conception of History explains ideas arising from the conditions of material existence. In class society the prevailing ideas are those suited to the ruling class, ideas which keep their system in existence and help it to function.

But as capitalism develops, the contradiction between the productive forces and capitalism's inability to use them for the benefit of the society becomes even greater. This causes other ideas to develop in opposition to the ideas of the ruling class, capitalism itself gives rise to the ideas of Socialism. Not just ideas but a working class whose class interest is in the establishment of Socialism. As Marx said: "Capitalism produces its own grave diggers".

The Materialist Conception of History shows that capitalism has produced all the material means for a socialist society, but to make it a reality it requires a class conscious working class to take the necessary political action.

Marx's Materialist Conception of History leads on to his LABOUR THEORY OF VALUE. A good example of Marx's materialist outlook which informs his Labour Theory of Value is evident in a letter he sent to Dr Kugelman where he writes:

"… Even if there were no chapter on 'Value' in my book, the analysis of the real relationships which I give would contain the proof of the real relation. The nonsense about the necessity of proving the concept of value arises from complete ignorance both of the subject dealt with and of the method of science.

Every child knows that a country which ceased to work, I will not say for a year, but for a few weeks would die. Every child knows too, that the mass of products corresponding to the different needs require different and quantitatively determined means of the total labour of society. That this necessity of distributing social labour in definite proportions cannot be done away with by the particular form of social production but can only change the form it assumes, is self evident. No natural laws can be done away with. What can change, in changing historical circumstances, is the form in which these laws operate. And the form in which this proportional division of labour operates, in a state of society where the interconnections of social labour is manifested in the private exchange of the individual products of labour, is precisely the exchange value of these products. The science consists precisely in working out how the law of value operates. So that if one wanted at the very beginning to 'explain' all the phenomena which apparently contradict the law, one would have to give the science before the science".

Labour must necessarily be proportioned to produce the goods which are needed in any form of society. But under capitalist commodity production it expresses itself as the value of the product. The law of value ensures that only socially necessary labour counts, under capitalism, it is the socially necessary labour embodied in products of labour which gives them their value.

As already stated then, the Materialist Conception of History was the guiding thread in Marx's studies and it was the staring point of the Labour Theory of Value.

Therefore Marx does not start with an idea of value; he starts from the simplest social form in which the product of labour presents itself, ie the commodity. Marx calls it the cell form of capitalism and it is why Marx's opening statement in CAPITAL is:

"The wealth in those societies in which the capitalist mode of production prevails, presents itself as "an immense accumulation of commodities" its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity".

Marx's Theory of Value then, is based on the analysis of the commodity. A commodity is a product of labour which is produced to sell, which means it must be useful to someone. The use-value of a commodity may be to satisfy a basic need, such as food, clothing or shelter, or it may be purely for pleasure. Such use-value must be produced in all forms of society - it is a nature-imposed necessity. But commodities are also produced to be exchanged, or sold on the market, therefore they also possess the quality of having exchange value.

Marx stressed that value was a social relation of production between men, which is expressed as a social relation between things. Value therefore arises from a particular form of society, where the product of labour is exchanged. But the appearance is as if value is a natural property of things, yet there is no way of discovering the nature of value by examining the physical properties of commodities.

If we look at two commodities in an exchange relation, two different commodities, say coffee and sugar where a given quantity of one is equated with a given quantity of the other, this equation tells us that, the two different things must be equal to a third, which is neither one of the other. Therefore as exchange values they are reducible to this third thing. Exchange values must therefore be capable of being expressed in terms of something common to both, so what is common to both of these very different products?

This is what Marx says it is:

"If then we leave out of consideration the use-values of commodities; they have only one common property left, that of being products of labour. But even the product of labour itself has undergone a change in our hands … We make abstraction from its use value … it can no longer be regarded as the product of labour of the joiner, the mason, the spinner, or any other definite kind of productive labour … there is nothing left but what is common to them all; all are reduced to one and the same sort of labour, human labour in the abstract".

As values, then, they are products of labour - human labour in the abstract, and the magnitude of value is measured in time - socially necessary labour time. Commodities requiring the same amount of labour time to produce are equal in value. The longer it takes, the greater the value.

Socially necessary labour means that if a certain kind of commodity under its normal conditions of production is produced with the aid of machinery, this would represent the socially necessary labour required for its production. If a producer of the same kind of commodity used a less efficient method taking longer to product it, the product would not contain more value as the value is determined only by that which is socially necessary.

It is not individuals who create value, it is society and society ensures that only socially necessary labour is expended in the production of commodities.

The Labour Theory of Value explains the nature of exploitation under capitalism. Under social systems based on slavery, the slaves were exploited by producing wealth for their masters who owned them. Under Feudalism, the serfs had to work part of the time on the land owned by the 'feudal lords'. Under capitalism, workers are exploited by producing surplus value for the owners of the means of production - the capitalists.

Marx discovered the secret of surplus-value, and that it was the driving force of capitalism. Surplus-value, or profit, does not come from buying cheap and selling dear. Surplus-value is still produced even though commodities are sold at their value.

Where does surplus-value come from? When a capitalist invests capital to produce commodities, he buys means of production and labour power. It is a mistake to think that workers are paid for their labour. They are paid for their labour power.

Labour power is a commodity, but it has a quality no other commodity possesses. It is a value-producing commodity and it produces a greater value that itself. This means that workers can produce a value which is equivalent to the valour of their labour power, ie their wages during part of a week, but the rest of the week he produces a surplus-value for the capitalist employer. Exploitation consists in workers producing a greater value than what they receive in wages.

The Labour Theory of Value explains wages and profit - the struggle between worker and capitalist. It is a theory of social relations of production under capitalism, not of products and prices.

Bohn-Bawerk, an economist of the Austrian school, put forward a different view of value, he criticised Marx's theory insisting that it was not socially necessary value which determined value; it was the utility of the product. But this is to confuse why commodities are exchanged with what constitutes their value.

The Labour Theory of Value teaches us that socially necessary labour time is the common measurable factor which enables exchange to take place, and that underlying the exchange value is a social-relation of production.

A theory of utility does not start from a social relation, it starts from a relation between the individual and a thing. This is a subjective relation which cannot be measured, it is a relationship which must exist in all forms of society, including Socialism. But value can only exist in a commodity producing society - capitalism.

Only under capitalism can social labour be expressed as the value of the product. This is the particular form social labour takes under capitalism. If it was the degree of utility which determined value, then a loaf of bread would contain more value than a diamond, but we know that in the commodity producing society of capitalism this is not the case.

Another criticism of Marx by Bohm-Bawerk is that Marx contradicted himself, because in Vol. I of CAPITAL he said commodities sold at their value. But in Vol. III he said commodities do not sell at value but at prices above or below value, at what Marx called their prices of production.

Marx did not contradict himself, he assumed in Capital, Vol. I that commodities exchanged at their value as determined by the socially necessary labour time needed for their production. This was usually the case in the early stage of capitalism before machinery etc developed.

As capitalism developed, the law of value was modified so that instead of commodities exchanging at their value they exchanged at prices of production.

It is important to understand that value can only be produced by workers applying their mental and physical energy to produce commodities. But with the development of machinery etc the composition of capital is not the same for all spheres of production.

The composition of capital means the ratio of labour power to the means of production Some industries employ more workers in relation to means of production than others, therefore they will produce more surplus value than capitals of equal value but which employ less workers, which also means they will have a higher rate of profit.

Capitalism could not function with some spheres of production constantly receiving very high rates of profit and others very low rates. In reality the different spheres of production receive an average rare of profit because commodities sell at prices of production.

Prices of production means what it costs the capitalist to produce a commodity, plus the average rate of profit. The average rate of profit is arrived at through competition between capitals in the various spheres of production, causing capital to flow from spheres with low rates to spheres with high rates of profit. The result of this movement is a rise in price and contracting output in one sphere and expansion and lower prices in another. Marx writes in CAPITAL, Vol. III:

"The whole difficulty arises from the fact that commodities are not exchanged simply as commodities, but as products of capital which claim equal shares of the total amount of surplus value, if they are of equal magnitude, or shares proportional to their different magnitudes".

All of this can only be explained on the basis of the Labour Theory of Value, as Marx in Theories of Surplus Value wrote:

"The average rate of profit, and therefore also the production prices, would be purely imaginary and without basis if we did not take the determined value as the foundation. The equalisation of the surplus values in different spheres of production make no difference to the absolute magnitude of this total surplus value but only alters its distribution among the different spheres of production. The determination of the surplus value itself however only arises from the determination of value by labour time. Without this the average profit is an average of nothing, a mere figment of the imagination. And in that case it might just as well be 1,000%, as 10%.

The Labour Theory of Value reveals that, for as long as capitalism lasts, workers will remain an exploited class. The Materialist Conception of History informs us that Socialism will be the outcome of the class struggle between workers and capitalists. Workers are forced to struggle over wages and working conditions within capitalism. But however successful workers are in this economic struggle, it still leaves them as an exploited class.

This leads us to the political theory of the class struggle, because Socialism can only be established by class conscious workers taking political action. As Marx said the emancipation of the working class must be the work of the working class itself. This means in the words of our DECLARATION OF PRINCIPLES:

"That as the machinery of government including the armed forces of the nation, exists only to conserve the monopoly by the capitalist class of the wealth taken from the workers, the working class must organise consciously and politically for the conquest of the powers of government, national and local, in order that this machinery, including these forces, may be converted from an instrument of oppression into the agent of emancipation and the overthrow of privilege, aristocratic and plutocratic".

The material conditions exist which makes Socialism a practical proposition. It remains for a majority of the working class to take the necessary political democratic action through the ballot and parliament to make Socialism a reality.

So are Marx's theories out of date as his critics would have us believe? His theories speak for themselves; they are not out of date, on the contrary it is capitalism which is well past its sell-by-date. Proof of this is in the fact that it has produced the capability for a world of abundance, yet capitalism is incapable of producing actual abundance. Capitalism has served its useful purpose, but it is now a barrier to progress.

Dreaming of an impossible Utopia is futile, but to reject an infinitely far better way of life which is practical is a self-inflicted punishment.

Marx's Labour Theory of Value shows that capitalism cannot be run in everyone's interest. Capitalism creates problems it cannot solve - problems which devastate people's lives. The future must be Socialism, this is what Marx is about.

The reformers - the capitalists and their agents, politicians, philosophers, economists, journalists, etc - they all give us their interpretations of how they will solve our problems. But they all say capitalism must remain, it is the best of all possible worlds.

Marx's answers in a single sentence:

"The philosophers have only interpreted the world in different ways; the point is to change it".

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