The Story of a Great Discovery, Vygodsky, 1965

Chapter 2

Marx's economic studies. Investigation of crises. The Notebooks. "... one is received not-with compliments but with economic categories". First results of the economic investigations. "Basically, there has been no progress in this science since A. Smith and D. Ricardo". The presuppositions for revolutionary transformation in political economy. The "Grundrisse der Kritik der politischen Ökonomie". Critique of Proudhonism. "Communism must rid itself above all of this 'false brother'".

A Mont Blanc of facts

In July 1850 or thereabouts, Marx made a start with new and intensive studies of political economy and the political history of the last ten years. For this purpose, he utilized not only the theoretical works of the economists but also specialist literature dealing with the history of prices, the banking system and the economic crises in England and on the Continent of Europe. I "want to use my time as productively as possible[1], Marx wrote to Engels at the beginning of December 1850. Already by 7th January 1851 he sent Engels a letter which contained a comprehensive critique of Ricardo's theory of land-rent.[2] This letter is evidence that Marx's hard work in the field of economic theory was bringing its first results.

Marx's studies were exceptionally wide-ranging and covered all the spheres of the science of economics, from economic theory and history to the concrete economy and economic policy of various capitalist countries. He consequently studied all the aspects of the capitalist mode of production and its superstructure. And when Marx, as he himself admitted, became aware of his lack of factual knowledge in 1842/43, his economic studies during the 1850's resulted in his becoming an expert in questions of economic theory and practice in the true sense of the word. This was stimulated by his long association (1851 to 1862) with the "New York Tribune", a radical American newspaper. "Since a considerable part of my contributions consisted of articles dealing with important economic events in Britain and on the Continent", remarked Marx, "I was compelled to become conversant with practical details which, strictly speaking, lie outside the sphere of political economy."[3] It is enough just to list a few of the headlines of articles by Marx for the "New York Tribune" and other newspapers to see the range of the economic problems with which Marx concerned himself: pauperism and Free Trade-the impending slump, Disraeli's Budget, trade prosperity, the bleak financial situation, the decrees of the Bank of England, finances, the clergy and the fight for the ten-hour day, new financial trickery or 'Gladstone and the Pennies', the Budget, pounds, shillings, pennies: or class budgets and who profits from them, conversion of the British National Debt, tax on newspaper supplements, the East India Company, its history and the results of its activities. Irish Tenant Right, the working-class movement in England, the fight for the Ten-Hour Bill, the financial failure of the Government, etc.

In these articles and in the letters of the 1850's Marx paid great attention to the problem of slumps. This was not by chance since by 1858/59 Marx and Engels had identified a direct link between the occurrence of slumps and the emergence of revolutionary situations. This also explains the enormous interest they showed in the analysis of economic cycles. "... apres les derniers evenements je suis plus convaincu que jamais", wrote Marx on 27th December 1851, "qu'il n'y aura pas de revolution serieuse sans crise commerciale".[4] ("... from the recent events I am more convinced than ever before that there can be no serious revolution without a slump.")

As early as 1855 Marx predicted the approach of a new economic crisis (as is well-known, this was the slump of 1857). The untiring, day-in, day-out analysis of the state of the capitalist economy bore fruit. "As regards the various economic questions which you submitted to me", Marx wrote to Lassalle on 23rd January 1855, "up till now, to my knowledge, there exist neither official nor scientific surveys ... It will now certainly rain with works on these questions. In England, the time of the slump is simultaneously that of theoretical investigation."[5]

And in actual fact a serious slump occurred in the autumn of 1857. "The American slump-predicted by us in the November Revue of 1850 as breaking out in New York-is beautiful"[6] wrote Marx. "Though myself in such financial distress, I have not felt so cosy since 1849 as in this outbreak."[7] From the middle of October onwards, Marx worked "as though crazy", as he put it, on the completion of his economic studies. At the same time, he had collected such a wealth of material on the problem of slumps that, in addition to a whole series of articles for the "New York Tribune", he intended to write a special work on this subject.[8] Apart from the interest which the slump as such attracted, however, it also spurred on Marx above all in the rapid elaboration of his theory of economics.

It is now appropriate to give a characterization of Marx's theoretical studies during the 1850's, the studies which are of most interest to us here.

Mention must first be made here of the numerous "Notebooks" in which Marx wrote down excerpts from the works of bourgeois economists. From August 1850 to June 1853, Marx filled twenty-four of these notebooks which he himself numbered from I to XXIV (apart from these 24 notebooks there is also a series of notebooks without numbers). From this period and later, there are also a few notebooks in which Marx collected quotations on certain subjects, to some of which he added a commentary. This was the first processing, as it were, of the material he had collected. These include the notebooks with the headings "Notes" (containing a collection of quotations on land-rent problems), "Money, Credit, Crises", "Three Books on Crises", (" I have started three big books-England, Germany, France"[9], Marx wrote to Engels on 18th December 1857), the "Quotation Book" (which contains a collection of quotations for the chapter on "Capital" in the ' Outlines' (Grundrisse) for A Contribution to the Critique of Political Economy), "Completion of the system of monetary relations" and some others.[10]

The "Notebooks" form an important part of the foundation of facts on which Marx then constructed his theory of economics. The history of bourgeois political economy is the reflection of the history of capitalism and was consequently for Marx one of the principal sources for the all-round investigation of the capitalist mode of production.

How did Marx's theoretical work progress during this period? Wilhelm Pieper, the German philologist and journalist and a member of the Communist League wrote the following to Engels in January 1851: "Marx leads a very withdrawn life, his only friends are John Stuart Mill and Loyd (this refers to the works of these bourgeois economists-V. V.) and when one comes to him, one is received not with compliments but with economic categories."[11] By January 1851, Marx had already achieved the first results in his economic studies. Two of his letters to Engels testify to this.

In the letter of 7th January, Marx states that the task is "to square the law of rent with the progress of the fertility of agriculture in general; this is after all the only way to explain the historical facts and on the other hand to scrap Malthus's theory of the deterioration not merely of the 'hands' but also of the land".[12] The theory of differential rent, as developed by Ricardo, was based on the hypothesis that soil fertility decreased. "This is where Malthus found the real ground for his theory of population ..."[13] In his letter, Marx shows that this condition was not essential for Ricardo's theory of rent and that land-rent can rise when agriculture is improved although the price of the product of the land falls.

In the letter of 3rd February, Marx criticizes Ricardo's theory of circulation which was based on the quantity theory of money. According to this theory, the amount of money in circulation is the regulator of commodity prices and thus the regulator of the trade balance and of the rate of exchange. Marx indicates that the increase and decrease of the amount of money in circulation are associated neither with the trade balance nor with the rate of exchange. From this Marx draws the important conclusion that "the course of slumps, even though the system of credit is very much a condition for these, is only associated with the currency to the extent that foolish interference by the state authority in the regulating of these can make the existing crisis worse, as in 1847".[14] In other words, the circulation of money is "last affected"[15] by the slump. In addition to their theoretical significance, these questions were also of topical importance in the struggle against Proudhonism which preached a reform of the circulation of money as a cure-all for economic crises.

Both letters show that at this point of time Marx had not yet worked out his theory of rent and the theory of money and circulation. What is interesting, however, is that Marx had begun the critique of bourgeois political economy in the theory of rent and in the theory of money circulation. This circumstance should not at all be regarded as fortuitous; on the contrary it was fully in keeping with the method of research used by Marx. It can be seen here how Marx approached the investigation of capitalist reality.

It is understandable that the categories of money and land-rent, corresponding to the more concrete production relations of capitalism, were the first object of his analysis. Marx subsequently proceeded to the `deeper' categories of the capitalist mode of production - to value or surplus-value. He took these as the point of departure and followed them in their development to the 'surface' categories - money, profit, average profit, market value, price of production and land-rent. At the beginning of the 1850's, however, Marx was of the opinion that he had already completed most of the work of revolutionizing economy. "I have got to the stage", he wrote to Engels on 2nd April 1851, "where I can be finished with the whole economic crap within five weeks.[16] When that is done, I will work out the economy at home and plunge into another science at the Museum. It is beginning to bore me. Basically, there has been no progress in this science since A. Smith and D. Ricardo, even though much has been done in individual and often super-subtle investigations."[17] "I am glad you are at last finished with the economy", answered Engels, "It really did take too much time and as long as you have a book in front of you which you think important and haven't read you

don't get round to writing."[18] But Marx still had to travel a hard and harrowing road before he was able to write his immortal "Capital".

What is important for us here is how accurately Marx assesses the position of Smith and Ricardo in the history of political economy. It must be said, however, that at this period Marx had not yet completely freed himself of a concept of classical bourgeois economics which in a certain sense may be termed as not fully objective.

In his correspondence for the "New York Daily Tribune", Marx wrote on 4th March 1853 that "First, therefore, the population of a country is driven into poverty and when no more can be sweated out of it, when they are a burden on the country, they are driven away and the sum of the net takings is reckoned out! Such is the doctrine laid down by Ricardo in his celebrated work, the Principles of Political Economy. The annual profits of a capitalist amounting to ₤ 2;000, what does it matter to him whether he employs 100 men or 1,000 men ? 'Is not', says Ricardo, the real income of a nation similar?' The net real income .of a nation, rents and profits, remaining the same, it is no subject of consideration whether it is derived from ten millions of people or from twelve millions."[19] Immediately following this, Marx quotes a place in Sismondi's "Nouveaux principes .d'economie politique" in which Sismondi likewise criticizes this thesis by Ricardo. Marx then indeed declares that he does not share the view of Sismondi who attempted to conserve outdated production relations, but he also polemicizes here against Ricardo. In 1862, when working on the "Theories of Surplus-Value", Marx quotes the same place from Ricardo but now as an example of the "scientific impartiality of Ricardo"[20].

The reason why so much space has been devoted to this question here is that the relationship to classical bourgeois economy is also in a certain sense a criterion for the maturity of-the economic views of Marx himself. We have seen that Marx at the end of the 1840's had already arrived at an overall correct estimate of bourgeois political economy. In 1852, Marx designated Ricardo as the most classic representative (interpreter) of the bourgeoisie and the most stoical adversary of the, proletariat.[21] But the most profound and universal analysis of the opinions of Ricardo is to be found in the "Theories of Surplus-Value": "Thus the ruthlessness of Ricardo was not only scientifically honest but also scientifically necessary for his standpoint. But for this reason it is also of no concern to- him at all whether the continued development of the productive forces kills landed property or workers. When this progress devalues the capital of the industrial bourgeoisie, this is just as welcome to him ... When the opinion of Ricardo largely coincides with the interests of the industrial bourgeoisie, this is so only because and to the extent that their interests coincide with those of the production or the productive development of human labour. When it is contrary to these, he is just as ruthless against the bourgeoisie as he is otherwise against the proletariat and the aristocracy."[22]

Although in April 1851 Marx assumed he could complete his studies of bourgeois political economy within five weeks, this work continued. "I am usually at the British Museum from 9 o'clock in the morning until 7 o'clock in the evening", Marx wrote to Weydemeyer on 27th June 1851. "The material which I am working on is so damned involved that despite all my efforts it will not he completed before six or eight weeks . Despite all this and everything the thing will soon be finished."[23] "... now when I am fully occupied with the economy ..."[24] is how Marx refers to this on 14th August. In November 1851, Marx and Engels discuss their plan of publishing "Economy".[25] In May 1852 Engels informs Marx about the negotiations which are "still" being held on the publication of this work on economics.[26] In December 1852 Marx's last hopes of finding a publisher in Germany for his "Economy" came to. nothing.[27] And, since the economic crisis was slow in developing, Marx also slowed down his economic studies somewhat. Engels nevertheless continued to put pressure on. Marx. "You should finish your Economy'", he wrote to him in March 1853.[28] This was the wish of Marx, too. He wrote the following lines to Adolf Class, a member of the Communist League: "I still hoped ... to be one day in such a position that I could spend a few months by myself and complete my Economy'. It seems I will not manage to do this."[29] It was only in October 1857 that Marx was able to begin the formulation of his political economy although he had already made two attempts-in the summer of 1857-to start on the description of his theory of economics but on both occasions had had to break off the work.

. In July 1857, Marx wrote the uncompleted sketch about the work of the vulgar economists, Bastiat and Carey. Since Marx chose as a headline "Harmonies Economiques", the title of the book by Bastiat mentioned in the sketch, it can he concluded that Marx had intended to write a comprehensive review of this book but had then decided it was not worth detailed consideration and had consequently abandoned his original intention.

This sketch which Marx has left us goes far beyond the scope of a review. In the "Avant-propos" at the start of the sketch, Marx briefly sets out the state of bourgeois political economy at that time: For the first time, he gives an accurate indication of the limits of classical bourgeois economy which began at the end of thel7th century with the works of Petty and Boisguillebert and terminated in the first third of the 19th century with the books by Ricardo and Sismondi. As demonstrated by Marx, the later bourgeois economists were either their imitators or reactionary critics of the classical authors. The books by the French economist Bastiat and the American Carey are examples of this reactionary criticism of the standard authors of political economy, especially of Ricardo. Both consider it necessary "to demonstrate the harmony of the relations of production where the classical economists naively described their antagonisms."[30]

In masterly fashion, Marx analyses the economic conditions which produced the views held by these two economists and notes that "The national environments, which are certainly different, even contradictory, and constitute the backgrounds against which these two write, cause them nevertheless to undertake the same endeavours."[31] Carey compared American economic relations with the English ones and asserted that bourgeois society did not exist in its pure- form in England and that its development was hampered and affected by the relations of the feudal period, reflected principally in the intervention on the part of the State in the economic life of the country. He claimed that from this resulted the antagonisms which split English society and the disharmonies which England brought into the world market. In America, on the other hand, where there were no feudal remainders, Carey considered that the production relations developed in complete harmony.

Here it was a question of the general character of the economic laws of capitalism. Marx refuted Carey and showed, firstly; that American capitalism, apart from certain developmental features, in its essentials differed in nothing from English capitalism.

Secondly, Marx showed that the disharmonies of the world market of which Carey spoke are merely the most advanced expression of the inner contradictions of capitalist society in one country or another.

In contrast to Carey, Bastiat explained the antagonism of French bourgeois society by the backward character of economic relations in France and considered that England represented the ideal example of an harmonious capitalist development. In this connection, Bastiat, who-as Marx noted - "just imagines harmony"[32], is on a lower level than Carey. However, in Marx's opinion, both were ahistorical in the same way when they considered capitalist production as the eternal and natural ideal of an harmonious development of society.

Marx opposed the views of these two vulgar economists with his doctrine of the economic formation of society, according to which the more highly industrialized capitalist country only shows the image of its own future to the less advanced state. This is why Marx's economic theory, although largely elaborated on the basis of facts from the economic development of England, really does possess a general validity.

The other fragment-the famous Introduction to "A Contribution to the Critique of Political Economy"-was written by Marx at the end of August and the beginning of September 1857. He interrupted -his work on the Introduction in the middle of September.

Marx later wrote these words: "A general introduction, which I had drafted, is omitted, since on further consideration it seems to me confusing to anticipate results which still have to be substantiated, and the reader who really wishes to follow me will have to decide to advance from the particular to the general."[33] Although this ' Introduction' is in the nature of a draft and was never completed; it is nevertheless enormously important since it is here that Marx sets out in more detail than anywhere else his ideas on the subject and the method of the theory of economics which he had founded.

In his observations, Marx takes as his starting point the basic theses of the materialist conception of history, especially the thesis that social production is given primacy. Unlike the bourgeois economists who consider bourgeois production to be eternal and reason about production in general, Marx designates socially determined production, modern bourgeois production, as the subject of his theoretical analysis.

Marx carries out a critical investigation of the division of the subject of political economy customary in bourgeois literature into production, distribution, exchange and consumption and substantiates in detail the thesis of the primacy of production. He demonstrates that social production is the subject of economic research, and shows that production, distribution, exchange and consumption are parts of a single whole and that one acts on the other, as is the case in every organic whole.

Marx succeeded in explaining an important though paradoxical particularity of classical political economy. The classical economists subscribed to the labour-value theory, - were ' theoreticians of production' and nevertheless declared that distribution was the only subject of political economy. As Marx showed, this was because they considered production as eternal and unchangeable but considered the forms of distribution as being separate from the forms of production and thus could not take account of them in their change and development. Secondly, in their endeavour to identify the structure of social production, the classical economists instinctively felt that the distribution of the instruments of production and of the members of society among the various spheres of production is an inner moment of production and determines the structure of the latter. It was precisely for this reason that Ricardo declared that it was not production but distribution which was the real subject of political economy. The analysis of the dialectical unity of all elements of social production enabled Marx to overcome the narrowness of bourgeois political economy in understanding the subject that it investigated and to pass from the forms of distribution, which are only an expression of the forms of production, to analysis of the relations of production as the actual subject of political economy.

The section in the 'Introduction' about the method of political economy is of great importance. Here, for the first- time, Marx characterizes the scientific method of progressing from the abstract to the concrete; at the same time, he criticizes the idealist Hegelian understanding of this method. The dialectical materialist interpretation of the method of progressing from the abstract to the concrete means that the concrete, which forms the starting point for analysis, appears at the end of the investigation as the unity of diverse aspects, as the synthesis of many definitions. Scientific abstraction is here inseparably associated with the concrete, with reality, as its presupposition and -the course of abstract thinking must correspond to the actual historical process.

The 'Introduction' shows that Marx had already worked out the methodological fundamentals of his theory of economics in detail by the autumn of 1857.

At the end of 1857, under the direct influence of the slump which had occurred in the meantime, Marx finally began to sum up the results of his research work of the 1850's. On the 21st December 1857, he wrote to Lassallc that "The present commercial crisis has stimulated me to give serious attention now to the formulation of my principles of economy ..."[34]

Engels, who provided Marx with regular information on the course of the crisis, wrote that "In this crisis, over-production has been so general as never before ..."[35] Modern investigators of the history of crises fully confirm these remarks by Engels.

Marx made haste in every way imaginable with the elaboration of his theory of economics. "I am working like mad all through the night on the summing up of my Economic Studies so that I can at least have the outlines clear before the deluge."[36] This was on 8th December, while on the 18th of the same month he wrote "I am doing a colossal amount of work, mostly until four in the morning."[37]

The crisis of 1857 did not lead to the revolutionary situation awaited with such great impatience. Subsequently, when Marx worked out his theory of economic crises, he noted that one of the chief features of crises caused by over-production in capitalism consists in their periodicity which is based on the renewal of fixed capital. "There are no permanent crises", commented Marx.[38] He showed that the economic crisis is the real concentration and the violent settlement of all the contradictions of bourgeois economics and, at the same time, a mighty accelerator of the growth of the productive forces.[39] Marx stressed that "Hence crises arise, which simultaneously drive it [capitalist production] onward and beyond [its own limits] and force it to put on seven-league boots, in order to reach a development of the productive forces ... which could only be achieved very slowly within its own limits."[40] This expresses the antagonistic nature of capitalist production.

As the expression of the economic contradictions of capitalist society, the economic crisis as such does not yet indicate therefore that the capitalist mode of production has exhausted all its possibilities of development.

In January 1859, in his Preface to "A Contribution to the Critique of Political Economy", Marx drew the important conclusion that "No social order is ever destroyed before all the productive forces for which it is sufficient have been developed ..."[41] In our opinion, the concrete study of the crisis of 1857 carried out by Marx in 1857/1858 was of major significance in enabling him to formulate this thesis. (Marx had even planned to write a special work. together with Engels, on this crisis.[42]) But the most important thing was that it was precisely during these years that Marx discovered the law of motion of bourgeois society and formulated his theory of surplus-value.

For the time being, however, Marx regarded all this in a somewhat different way. "A new revolution is only possible following a new crisis. But it is just as certain as this is."[43] Marx correctly stresses the objective character of the revolution but here still follows too direct an approach to the relationship between revolution and the cyclical development of the capitalist mode of production.

But be this as it may, it is precisely to the crisis of 1857 that we owe a work of genius by Marx, the "Grundrisse der Kritik der politischen Ökonomie" (Outlines of the Critique of Political Economy). Whilst working on this, Marx made many outstanding discoveries.

Marx wrote the "Grundrisse", which amounted to no less than 50 printed sheets, within an exceptionally short time, between the middle of October 1857 and May 1858. In this, and for the first time in detail, Marx formulated his theory of value and surplus-value and made his second great discovery (after the elaboration of the materialist concept of history). The "Grundrisse" takes us into Marx's ' creative laboratory' and enables us to follow step by step the process in which Marx worked out his economic theory.

At a later date, Marx set out his theory of value and surplus-value in the first volume of "Capital". But, as emphasized by Marx himself-and it was precisely this which was important-,"Of course the method of presentation must differ in form from that of inquiry. The latter has to appropriate the material in detail, to analyse its different forms of development, to trace out their inner connexion. Only after this work is done, can the actual movement be adequately described."[44] The method of inquiry of which Marx speaks is retained in the "Grundrisse". When we study this, we can be present, as it were, at the birth of a new theory.

Marx began work on his theory with a critique of the petty-bourgeois economic views of. Proudhon. There was good reason for this. Marx considered that the critique of Proudhonism, the definition of this pseudo-socialist `false brother', was an important task of scientific socialism. Later, Marx wrote that it was necessary, "in order to prepare the way for critical and materialist socialism, which sets out to make the real, historical development of social production understandable, to make an abrupt break with that ideology in economy whose last embodiment Proudhon unwittingly was."[45] The revolutionary situation which Marx and Engels had expected in connection with the crisis of 1857 called for complete clarity about the necessity to overthrow the bourgeois order of society by revolutionary means. This is why the thesis of the Proudhonists on the possibility of eliminating the antagonistic contradictions of capitalism by a bank reform had to he theoretically refuted.

Marx had already criticized, in "The Poverty of Philosophy", Proudhon's theory which aimed at the reformation of bourgeois society but on that occasion still had to rely to a significant extent on the economic views of Ricardo. It was now a question of overwhelming Proudhonism from the position of Marx's economic theory, from the standpoint of scientific socialism. It had to be proved that the antagonistic contradictions of capitalist society are "never to be exploded by silent metamorphoses"[46] and that the attempts of the Proudhonists to maintain bourgeois society and remedy its "faults" implied a scandalous Utopia which disorganized the working class and distracted it from the preparation of the socialist revolution. How important this task was may be judged from Engels's introduction to Marx's "The Civil War in France". In this introduction, Engels makes the Proudhonists directly responsible for the economic mistakes of the Commune. He wrote that the Commune was "the grave of the Proudhon school of Socialism"[47].

In the "Grundrisse", Marx carried out the task set. In this work he formulated his own theory of value and surplus-value and at the same time inflicted a decisive defeat on Proudhonism.

But the main object of this ' constructive' critique in "Grundrisse" was, of course, classical bourgeois economy since Marx, in his inquiries, always took the best achievements of his predecessors, the bourgeois economists, as his starting point.

Footnotes

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